Summer Spotlight

Arvind Gopal is a Columbia Business School student working with the East Africa Agriculture Portfolio Team this summer. At Columbia, he has focused on international development. He is currently VP of Investments for Microlumbia, a student-run fund focused on making debt investments in microfinance organizations. Additionally, he provided consulting advice to Broad Cove Partners, a Boston-based social venture fund, on a potential investment opportunity in a Liberian mortgage finance business. Prior to business school, Arvind held various positions in the U.S. and Singapore. He worked in New York in investment banking at Bear Stearns, before moving to Lightyear Capital, a private equity firm focused on the financial services sector. In Singapore he worked at Argus Software, a real estate software provider, guiding their business development in Asia.

I have spent the past few weeks researching the agriculture market in Kenya with the objective of identifying sustainable business models that could help the country’s ~6 million smallholder farmers and their families (~30m people), most of whom live in extreme or near extreme poverty. One of the largest bottlenecks in the agriculture supply chain is access to credit. A survey conducted in 2007 by the Tegemeo Research Institute of Agriculture Policy and Development revealed that only 30% of the country’s smallholder farmers have access to any kind of credit. After several visits to farmers across the country, I began to understand this reality. Formal financial institutions are between 30 km and 50 km away from the farms and in many cases, will not lend to the farmers I interviewed. As a result, the majority of these farmers receive credit through either input providers (fertilizer and seed companies) or informal groups. The credit available through these channels is usually small and short term and limits farmers’ investments in the essential ingredients needed to increase their productivity. Based on this information, I decided to take a deeper look on why microfinance institutions have had such a limited impact in the agriculture sector. I found some interesting data points, both from a global and East Africa perspective.

Microfinance has received a lot of attention over the past few years and rightfully so. Since Muhammad Yunus started the Grameen Bank in 1976, microfinance has helped millions of people access credit across the developing world. In 2006 alone, over 100 million micro-borrowers accessed about US$25 billion in loans (Deutsche Bank Microfinance Report, December 2007). The industry has even shown surprising resilience to the global financial crisis, which has brought down some the world’s largest financial institutions.

While the success of microfinance is undisputable, a huge funding gap remains and the market is still substantially underserved (market demand is estimated at over 1 billion borrowers world wide). A part of this gap will be filled with the growth of the current microfinance model, but we will also need new innovative approaches in order to provide access to rest of the BoP. The dominant microfinance models of today depend on small, short-term and high interest rate loans to assure strong repayments and cover operating costs. Some key success factors for this model include higher population densities and portfolio diversification. In contrast, much of today’s poor lives in rural areas and relies mostly on agriculture to generate income. These borrowers typically need larger loans with longer durations that coincide with crop cycles. Additionally, the returns generated by farmers are lower than that of micro-enterprises, and high interest rates of 2% to 4% per month erode farmers’ incomes, causing them to become trapped in poverty. These loans are inherently riskier to microfinance institutions because they are longer in duration, sensitive to weather conditions and international food prices, and limit loan diversification. Considerable agriculture expertise is needed to due-diligence loan applicants, monitor existing loans and train farmers on best practices including negotiating input prices and finding markets for their products.

In Kenya, the microfinance model has been very successful in urban areas – enough so that commercial banks are now reentering the high-end of the microfinance market as they recognize the income-generating potential and stability of this group. However, only 0.8% of smallholder farmers have access to credit through microfinance institutions — surprisingly, more farmers access credit through commercial banks (about 1%) than microfinance institutions. Equity Bank, a Kenyan commercial bank focused on the lower-income population, has made some inroads in rural areas through innovative approaches like mobile banking that have reduced the costs of conducting business in sparsely populated areas and allowed it to disburse longer-term loans at 1% monthly interest rates. However, most of their loans target rural enterprises and not farmers. Almost all the farmers, research analysts and MFI consultants I spoke with agreed that a better system has to be developed in order to reach the majority of small farmers.

Microfinance organizations, commercial banks, government organizations and NGOs in Kenya have all spent considerable time trying to develop a model that effectively targets the agriculture sector. As a result, a few innovative approaches that have focused on asset leasing and microfinance linkages with other parts of the agriculture value chain such as input providers and distributors of agriculture products have emerged in recent years. While these strategies are still in their early stages, the models are likely to address the limitations of today’s microfinance institutions and could provide future investment opportunities for Acumen Fund and others in this space.

Bekezela Ncube is a Summer Portfolio Associate in the East Africa office of  Acumen Fund. She is pursuing a joint MBA from the Wharton School at the University of Pennsylvania and Masters in Public Policy from the Harvard Kennedy School. Prior to graduate school, Beke was a Senior Regional Analyst at the Clinton Foundation on the Laboratory Services Team where she provided technical assistance on developing HIV lab systems to governments in Africa, Asia, and Latin America. Before that, Beke worked in Finance Consulting at CRA International and in Equity Research at Sanford Bernstein, where she covered large-cap banks and consumer finance companies.  She holds a BA with honors in Economics from Harvard University.

The abject and glacial dismay brought on by a 6am alarm clock going off is possibly the Worst Feeling in the World. Waking to that feeling, I reach for that mysterious store of resilience known as “the will to get out of bed,” I shower through a fog of denial, anger and sleepy disbelief. It’s only when I brush my teeth and the shock of raw Listerine hits my mouth cavity that I am sledge-hammered awake by the force of Tartar Control.

Today is the day of my first outreach observation, and I curse my self-crafted Workplan, where I eagerly detailed to my supervisor how I would try to understand the market for mobile eye care services partly by observing eye camps. This morning, I am joining the PCEA Kikuyu Hospital outreach team as they travel about 30 kilometers off-site to examine patients without the money or ability to travel to the hospital. They will deliver eye care, orthopedic, and diabetic diagnoses to a community that has been prepared in advance for their visit. While the Kikuyu mobile eye care team’s mission is mainly to find and remove cataracts, I am there to research the potential for camps targeting Diabetic Retinopathy, a disease that can result in severe vision loss or even blindness.

Diabetic Retinopathy (DR) occurs when abnormal new blood vessels grow on the surface of the retina and, because their walls are thin and fragile, burst and leak blood. It is the leaking of the blood vessels that causes blindness. Vision loss, however, is preventable by a simple procedure that uses a laser to burn off the proliferated blood vessels. Unfortunately, many patients seek care only when retinopathy is advanced and it is too late to operate.

The extent of DR in Kenya is not well-known, but the eye doctors at Kikuyu are alarmed at the number of patients with DR who come to their facilities. Dr Kibata, one of the specialists working with PCEA, is particularly keen to raise public awareness of the disease and find patients before the disease advances beyond his ability to help. On the day of my early start, I have to make a 35 kilometer trip to Kikuyu so that I can join their outreach team.

After a remarkably traffic-free drive of 45 minutes, I arrive at 7:55am at Kikuyu for my strict 8am appointment time. I make a phone call. The 6am despair again slides down my throat and settles in my small intestine when my contact, Macharia, drops it to me that he’ll be with me “in 20 minutes.”

20 minutes?!

As every living human knows, the insane alchemy of time-before-10am means that Mr. Macharia has deprived me of the equivalent of 2 hours prep / dream / shower time. I swallow. I forgive him. Magnanimously. When Macharia shows up 35 minutes later, he tells me he was up all night taking a sick colleague to the hospital. Ok.

Like scavenger hunters, we assemble the team piece-by-piece, picking up some from the Eye Care Unit (Margaret and Faith), others from Rehab (Jackie and Edward), and a lone ranger from Diabetes (Jane). Macharia is clearly their leader and cheer-leader, energizing us all like a vocal Red Bull. More motivational than Caesar, he rallies us to throw off grumpy sleepiness and get excited about finding cataracts.

Our destination is Renguti Women’s Guild Dispensary, a church organization affiliated with the Presbyterian hospital we are driving from. When we pull into the (wrong) gate, we are met with the sight of clusters of mostly women sitting on the grass, indifferent to the tender morning sun as only people who live near the Equator can be. Faces expressionless, they have mastered the infinite patience that the Hollywood Martial Arts Disciple climbs arduous mountains to achieve. Even after we keep them waiting while our hosts welcome us with compulsory morning tea, there are no clucks of indignation or a sense of “hurry-up.”

Eventually, after a prayer-service-cum-educational-talk during which I admire Jane’s exhortative charisma, camp stations are set up. I lurk as others work and try to be helpful (I am not). Ridiculous surfer sunglasses already give me up as an outsider, but nothing makes me more self-conscious than not being able to understand the rapid Kikuyu tumbling over rolling tongues around me. Stripped of the ability to understand human speech, I have become truly stupid. An ancient lady with a mature cataract sits down next to me as I perch on a bench next to Jane’s Diabetes station. Her only recompense for her relentless attempt to talk to me is an ever-more-desperate blank grin. I am a deaf-mute maniac. I start taking notes at a feverish pace, and find any excuse I can to snap photographs of the professionals at work.

At lunch time there is no break to eat, but I do need to use the toilet. It’s a long drop. I’m grateful that after the deed there is a tap of running water for washing hands. The little girl that shows me (village idiot) how to turn it on and off is rewarded with a toffee. The other kid that shows up as I fish around in my bag is rewarded for her opportunism and great sense of timing.

The orthopedic exam room is a genteel place, detached from the congregation of the diabetic and eye exam hall. Nestled here in case any patient needs privacy as their bones are poked and prodded, the sanctuary of Jackie and Edwards’s orthopedic exam room is appropriately housed in the church vestry. My fairy grandmother shows up again assertively stomping her foot at James to demonstrate her pains. He gently folds back her skirt hem to reveal her strong legs, unmarred by unsightly veins or spots. When she goes to Jackie for her prescribed creams, she looks at me repeatedly. Jackie is too kind to tell me what she is saying. I scribble at my note pad.

At about 3pm, all patients have been seen and camp supplies are packed away. As we munch on a well-deserved bag of banana chips, a solitary late-comer sidles up to Macharia, complaining of pain in his leg. Edward gamely unpacks his box of creams and makes gentle ministrations of the offending limb while the rest of us pile into the van, jokingly threatening to leave him behind. When he’s done, we tally the day’s work. In 4 hours, the mobile camp has seen over 100 different patients, and dispensed dozens of medications. Itchy eyes have been soothed, painful muscles relieved, and even cataract surgeries booked. Although I had nothing to do with any of it, it was a privilege to watch Macharia and his team in action. At the end of it all, I’m glad I got out of bed today.

Deepna Nandiga is currently a Business Development intern in Acumen Fund’s office in Hyderabad. She recently finished a masters degree in Anthropology from Columbia University, with a concentration in International Development. Previously, she worked with Accenture as a Business Consultant and also worked with Relief International, a humanitarian aid and development organization where her work was focused mainly on planning programs in public health, women’s education and microcredit in Darfur, Sri Lanka and Afghanistan. Prior to joining Acumen Fund, she worked for six months with Bhumi, a growing social enterprise with initiatives that target underprivileged communities in Hyderabad.

Rather recently, I found myself as guest in the home of Srinivas Yadav, a small holding sweet-orange farmer living in the Nalgonda District of Andhra Pradesh, an area located on the outskirts of Hyderabad. We ate rice and chicken curry off banana leafs on the floor of his home at lunchtime, which was truly royal treatment. Serving meat as part of a meal is quite an expensive undertaking for farmers like Srinivas, despite owning a substantial portion of land and receiving crop yields of up to ten tons per acre in good months.

I was flanked on either side by a senior professor from the Hyderabad Agriculture University, two government officials who work on subsidy schemes for farmers and a director of Safal, an organization that tries to provide a direct link between fruit and vegetable growers and consumers set up jointly by the Indian government and Mother Dairy Ltd. The purpose of the visit was for Acumen Fund to better understand the problems Indian farmers face and to look for opportunities for innovation in the highly inefficient producer-to-consumer agricultural supply chain. At one point in conversation with the professor from the Agriculture University, he mentioned the recently proposed government Right to Food Act. On further inquiry, he said, “Yes, in your country you have rights like the right to free speech and the right to bear arms and in our country we have the right to food for every person.” His words made a strong impact on me. The thought of having to guarantee something so basic to human survival and something I take for granted on a daily basis shifted my paradigms of freedom and human rights. Like many other experiences during my time here in India, it was quite the reality check.

Unlike the Constitution of the United States that protects mainly the infringement of civil rights, since its conception in 1950, the Indian Constitution ensures socio-economic freedoms as well. This is for good reason; the 2006 National Family Health Survey showed that the child under-nutrition rate in India is 46%, almost double that of sub-Saharan Africa, which is economically poorer than India (Source: India Development Blog) The Right to Food Act, which is currently under debate in the Indian Congress is the latest iteration of the government’s legislative attempt to end hunger.

In a letter to Prime Minister Manmohan Singh, Congress Party President Sonia Gandhi has made a strong pitch for providing the 35 kg of cereals at Rs.3 a kg that has been proposed under the new Act each month to the poor. The Food Security Act has also received a thumbs-up from Nobel Laureate and economist Amartya Sen, famous for his human-development centered approach to solving problems of poverty. The current debate focuses on the terms of the Act and on defining the threshold of the below poverty line (BPL) population. By one committee estimation, 77% of the Indian population or 836 million people are not able to spend more than Rs. 20 a day, which will not buy more than two square meals per day. (Source: Deccan Chronicle). Ironically, often those facing hunger are the farmers themselves. Lately, every news report I watch mentions the dire state of farmers due to the unusually dry weather of the last few months over the Indian plains. I’ve learned however, that weather is not the only limiting factor in farmers’ inability to provide for themselves. An estimated 200,000 farmers have committed suicide in Andhra Pradesh over the last 15 years.

India’s hunger problem more than anything else, lies in inefficient distribution. In fact, India is the third largest agriculture producer in the world, following China and the United States. As I witnessed at Srinivas Yadav’s farm, lack of access to markets, transport inability, a lack of cold storage options and a number of other reasons relating to supply chain inefficiencies are to blame.

In spite of these bleak statistics, the day’s conversations on the farm left me feeling optimistic. It was an example of the times I get most excited about my work here. Acumen Fund is finding innovative market solutions in places where government policy and humanitarian aid falter. I was reminded of Acumen Fund’s unique place in not only encouraging creative new business models, but also in impacting legislative and human rights imperatives in meaningful ways. My belief in the need for Acumen Fund’s work (and for smart solutions in sectors like agriculture and nutrition) in countries like India was re-affirmed. It’s heartening to be a part of an organization like this that is working to fill this vital gap.

Patient capital around the world: The need for patient capital is increasingly being written about, as in this article from DAWN, Pakistan’s leading English-language publication, or this post on the Harvard Business Review blog.

Friends in the news: Our friend Liz Ellers was cited in Main Line Media News for her creation of and work with the collaborative funding partnership globalislocal, which has supported some Acumen Fund investments.

“The Boss”: The Sunday New York Times included a feature on Acumen Fund CEO Jacqueline Novogratz.

Summer spotlighted in the FT: Abhay Nihalani, one of our summer associates in Kenya, has been writing about his work there for the Financial Times’ MBA blog, as well as in an article in the FT’s print publication.

India investees in the news: Two of our investees were featured recently in Outlook India: D.Light and LifeSpring.

Lorrayne Ward is starting her second year of an MPP/MBA joint degree at Harvard Kennedy School and Harvard Business School. Prior to graduate school, Lorrayne worked at the Clinton Foundation HIV/AIDS Initiative, the Global Fund to Fight AIDS, Tuberculosis and Malaria, and McKinsey & Company.

For most of us, a mosquito bite is an itchy annoyance – a small price to pay in exchange for warm weather and lazy days outside. But in much of the world, a mosquito bite can be a life-or-death issue. For the hundreds of millions of people living in malaria endemic areas, fighting mosquitoes, and the deadly parasites they carry, is a daily struggle. Controlling malaria isn’t rocket science, and for the price of a sandwich in New York City you can equip a family with an effective set of tools for preventing and treating malaria: a long-lasting insecticide-treated bed net (LLIN) and artemisinin-based combination therapy (ACTs), a drug used for the treatment of malaria. Both of these products only came to market a few years ago, as a result of focused efforts and collaboration by various public and private sector organizations.

Acumen Fund had a significant role to play in scaling up the global production of LLINs, through its investment in A-Z Textile Mills in Tanzania. It helped to broker a technology transfer partnership between chemical giant Sumitomo, who had developed an innovative way to weave durable polyethylene fibers with a time-release insecticide, and A-Z, who transformed itself from a producer of simple bednets to more complex, higher-value LLINs. A-Z is now one of the largest global manufacturers of LLINs, and one of the single biggest employers in Tanzania.

Voila, Acumen Fund’s appetite for malaria investment was born! The A-Z investment was followed by a deal with Bio-Extracts EPZ in Kenya, the only African manufacturer of the active ingredient in ACTs; and DART, a new joint venture between Vestergaard-Frandsen, Richard Allan and the Acumen Fund to develop and market an insecticide-treated wall lining.

But since Acumen’s original loan to A-Z, the malaria space has changed dramatically. Global funding for malaria has increased exponentially, to over a billion dollars per year. Coverage of key methods to prevent and treat malaria has also grown substantially. Challenging these positive developments are looming threats like the parasite’s growing resistance to the active ingredients in LLINs and ACTs, the economic crisis curtailing donor outlays, and climate change making more areas of the world potentially susceptible to malaria.

So, Acumen Fund asked itself what role its “patient capital” approach could play in the marketplace for malaria products and services. That’s where I came in, since I had some background in malaria through my pre-Acumen Fund experiences. “Think big,” said Chief Investment Officer Brian Trelstad when asking me to conduct this market review. “Leave no stone unturned – there have to be innovative opportunities out there that would benefit from our capital and management assistance.”

With those words in mind, I started my analysis. What companies, big and small, are active now in the market? What are the major gaps? How could small and medium enterprises like those that Acumen Fund supports be better represented in this space? What new innovations could change the market? I asked over 30 leading stakeholders in the malaria world these and many other questions. I expected a wide range of responses, but with very few exceptions, I was surprised by the experts’ consensus, and the resulting short list of potential opportunities for Acumen Fund investment.

After presenting my findings to the team, there was nothing patient about moving from proposal to action. The Acumen team has already set about to perform preliminary due diligence on some interesting companies as well as explore ways to leverage our connections in the international policy and funding worlds to raise the profile of several innovative small and medium enterprises.

Personally, it was exciting to see my summer’s worth of work being so enthusiastically embraced and translating into concrete actions. For me, it represented Acumen Fund’s modus operandi at its best – sourcing ideas from an eclectic base, thinking creatively about how to best apply its resources towards resolving an issue of global social importance, and moving swiftly to capitalize on opportunities.  Hopefully, through the actions of Acumen Fund and all the other stakeholders striving in this space, the millions around the world currently suffering from malaria can have the luxury of someday writing off a mosquito bite as just a pesky side effect of an otherwise perfect summer day.

Mike McCreless is currently serving as a summer associate on the Portfolio team.  He is a joint-degree student at Harvard Business School and Harvard Kennedy School’s MPA-ID program. He has worked as a consultant for Monitor Company in New York, Madrid, Paris and Morocco, and as a Research Associate for Professor Michael Porter at Harvard Business School, where he wrote case studies and research notes about economic development in Rwanda, foreign aid and other topics.

A couple of years ago, Larry Summers gave a guest lecture at a class I was taking on international development. He delivered a fascinating 20-minute lecture as if reading it from a transcript in his mind’s eye, and then took questions for an hour. I asked him why foreign aid had delivered so much less ‘development,’ by any definition, than expected, and what should we be doing with our time and money instead?

He took a long pause, staring into space, and then said slowly that that was perhaps the most profound question in economics, causing me simultaneously to swell with pride and recoil at my own pretentiousness. He listed several of the standard arguments for aid’s ineffectiveness, but what really stuck with me was his contention that advances in technology, not foreign aid, would do most to eradicate poverty in the long run.

Well, that made sense, but I wasn’t sure what to do about it. It was not as if I had a stockpile of socially valuable technological innovations saved up for just such an occasion. I was a white twenty-something from the American ‘burbs, with no technological expertise and limited experience in Africa, but enough experience with the foreign aid system to give me misgivings about a career with the big multilaterals.

I didn’t have any technological innovations, but I did have ideas about how to make the foreign aid system more effective. Before enrolling in grad school, I spent time in Rwanda, researching economic development and in particular, the efforts of aid agencies on the ground. As I traveled around the country and met its people, I was astonished at the level of deprivation that they endured despite the vast inflows of aid. It appeared that aid had delivered surprisingly little ‘development,’ though of course the counterfactual might have been much worse. Moreover, the academic and popular press was awash with possibilities to improve the management practices of aid agencies. I hoped that better measurement of project outcomes, and alignment of organizational structures and staff incentives with those outcomes, would help donors and recipients alike get more out of the $100 billion spent on aid every year.

I am in a three-year program in which students work in internship programs during the two intervening summers. Last summer, I had the opportunity to test some of these ideas during an internship at a large aid institution. My role was to help design the next version of an internal system to track project outcomes. I worked with project managers to understand how they select projects, manage them over time, and measure their impact. I tried to assess the potential for better management practices at U.S. headquarters to improve results on the ground in Africa.

I also tried to understand the culture of the organization and how I might fit in. I tried to understand managers’ jobs, how they spent their time day-to-day, and more importantly, how they felt about their jobs. What did their work mean to them? Did they feel like they were making a difference? Did they believe that somewhere out there, in some forgotten urban slum or rural village, someone’s life was improved, their burdens eased by the work we did behind our desks in the U.S.?

During these conversations, I was often reminded of a quote from Liar’s Poker, Michael Lewis’ memoir of his time on Wall Street during the 1980s: “Goodness was not taken into account on the trading floor. It was neither rewarded nor punished. It just was. Or it wasn’t.” On a trading floor, this is as it should be, but I did not expect it to be as true of aid institutions in 2008 as it was of Salomon Brothers in 1987.

Many of the managers I spoke to care deeply about development, and think critically and often about whether their work actually helps anyone. Others wish they worked at a purely commercial enterprise, where they would not have to be bothered by concerns about social impact. To some, a job in the foreign aid system simply meant a comfortable life in the U.S. and enhanced status in the socio-political elite of their home country. Most staff simply assume that what they do helps people, without really checking to make sure. Their hearts are in the right place, and they have faith in the system to direct their efforts toward socially valuable ends. In fairness, it is extraordinarily difficult to know whether one’s activities in U.S. headquarters actually help anybody on the ground. I was nevertheless taken aback at how little people cared to find out.

I realized that my ideas about reforming management practices at aid agencies were a technocratic solution to a cultural problem. Managerial fixes such as systems to track results and incentive plans aligned with results help on the margins, but do not directly address the fundamental cultural issues that constrain the effectiveness of foreign aid.

For my second summer internship, I focused on smaller organizations that I believed shared my values, and my interest in experimenting with new modes of foreign assistance. To make a long story short, this June I found myself at Acumen Fund. The fourth day of my internship was “World Metrics Day,” declared as such by Acumen Fund and its partners to celebrate the progress they have made in measuring the social impacts of their investments. As we sat down to a World Metrics Day teleconference, Acumen Fund Chief Investment Officer Brian Trelstad turned to me. “World Metrics Day! What better way to inaugurate your first week!” He stared at me expectantly. I wasn’t used to this level of excitement about measuring social impact. I stared dumbly back, trying to figure out if he was joking or not, if I should laugh or nod. He has a wry sense of humor, but he wasn’t joking. The man really cares to know whether what he does actually helps anybody. It was going to be a different kind of summer.

I have spent half of my time working on a deal to use innovative biomass technology to electrify rural off-grid villages in India, and half of my time thinking about how to integrate the many approaches Acumen takes to measuring the social impacts of its investment. The biomass project has vividly demonstrated the potential for innovation to create tremendous social impact. This social impact may be difficult to measure, but Acumen Fund’s investment in impact measurement also demonstrates that an organization that truly wants to measure its impact can find a way to do so.

In the end, Larry Summers was right. My quest for an organization that was serious about high-efficiency social impact led me to an organization that invests in innovations—innovations not only in technology, but also in distribution and delivery of essential products and services to the poor.

On the surface it may seem like Acumen Fund, and venture philanthropy in general, seems to just be the hot new thing these days. They blog, and tweet, and use fancy words like ‘philanthro-capitalism.’ They are undoubtedly in fashion. That’s great, because it gets new people excited about the work they do. But look past all that. Acumen Fund could fall out of fashion tomorrow—no more headlines, no more keynote speeches—and what would be left is a handful of people who actually care whether what they do is valuable. Not to the blogosphere and the editors of The Economist, but to poor people in India, Pakistan, Kenya, Uganda and Tanzania. That is my experience of Acumen Fund this summer: a small group of people who are in it for the right reasons, a handful of villages in India that have access to clean electricity for the first time (and the prospect of bringing electricity to many more), and all for much less than it would have cost my former employer to accomplish the same. The fashion may fade, but the impact will remain.

"excellent visual aid" by Flickr user what not

Brian Murray is a summer associate in the Knowledge & Communications team.  He is a former PricewaterhouseCoopers consultant, ex-technology entrepreneur and a Returned Peace Corps volunteer currently pursuing his MBA at the Yale School of Management.  This is not him crying pictured at left.

Rob Katz, my colleague and BoP obsessive, joked to the New York summer associates that Acumen Fund is like the Eagles song Hotel California: “you can check out any time you like, but you can never leave”. While we laughed at the time, I now see the truth in his joking statement.

Acumen hopes to be (and in many ways, already is) more than an organization – it is a movement driven by the belief that now is the time to change the way people approach philanthropy and international development. Being a part of this movement, one that will make the world a better place, is a rare opportunity.

There were over 700 people who applied to work at Acumen this summer, demonstrating enormous interest in this field. However, this number also illustrates the challenges faced by those entering the social entrepreneurship sector and specifically the relatively young Impact Investing field. Simply put - supply greatly outweighs the demand. As outlined by Ashni Mohnot from PopTech in her article “Who’s in the Social Entrepreneurship Club – and who isn’t?” it is a problem that needs to be addressed.

Unfortunately, this is not going to be cleared up this year, or by the time you graduate or anytime in the near future. So, what should you do? Actually, since I’ll be in the same boat - graduating in the Spring of 2010 - what should you and I do?

I do not have all the answers to this question, but after my experience here at Acumen, I have a much better idea of where to start. I have developed a list of how I got started this summer and the activities that I plan to continue. I’m sure there are more ideas out there and I welcome you to share by commenting below.

- Start by getting yourself up to speed:

• Add nextbillion.net and their great blogroll to your Google Reader
  
• Download and read (or use as reference) the Next 4 Billion report
• Read this great Monitor report on Impact Investing
• Learn about the members of the ANDE network

- Join twitter and be a part of the conversation – get started by adding Social Edge’s top 100 tweeters in the social sector

- Start a blog and find your voice: what do you care about? Is it a country, region, sector? Is it measuring social returns? Is it just finding your voice in the function you are interested in? Good examples: Sasha Dichter, Luke Barbara Cashewman,

- Do a deep dive on a sector and a region. Begin doing research on water challenges in southern India (see: Ripple Effect) or agriculture issues in Western Africa.

- Travel and listen to people on the ground. What are their pain points? Where is the market not functioning for SGBs? 

- Learn the operational challenges of a Small and Growing Business here in the states, where can you contribute? Accounting? Marketing?

- If you are a student, start a group on campus to meet periodically and discuss new trends (i.e. social metrics, getting into the sector) - Start meetings with a TED Talk.

- Get involved with Acumen

• In NYC? Join our Young Professionals group. Not in NYC? Our team is working on it: Stay tuned or post ideas in our comments section below.
• Are you currently in college? Contact one of our student leaders and find out how to assist their efforts or start a movement on your campus by emailing Acumen’s Aden Van Noppen
• Join us on Twitter, Facebook or follow us by email
• Encourage others to donate on your birthday through Facebook
• Send us an idea about how you can help us fundraise or raise awareness at ideas@acumenfund.org
• Learn about our portfolio

And because we all need some inspiration along our career journeys:

• Watch this brief Economist interview of Acumen CEO, Jacqueline Novagratz
• Read the New York Times article, “A Social Solution, Without Going the Non-Profit Route”:
• Watch Seth Godin inspire the student leaders
• TED: Jacqueline Novogratz
• TED: Katherine Fulton on the future of philanthropy
• TED: Iqbal Quadir says mobile fight poverty
• TED: Hans Rosling

If you take nothing away from this post except one thing it would be this - don’t wait for things to happen or fall in your lap - your energy and contributions are desperately needed. Just not in the traditional way… yet.

As the summer comes to a close, I can agree with my colleague’s use of “Hotel California”, except for one small change: “you can check out anytime you like but you won’t want to leave.”

Julia is a summer associate in the East Africa office for Acumen Fund working in the energy portfolio. He is also a second year MBA student at Columbia Business School where she is an active member of the Social Enterprise Program and co-director of Pangea Advisors. Prior to Columbia, she worked for four years at KPMG Advisory where she advised private equity firms in their investments in Madrid, London and various international offices. Julia received a diploma in Business Studies from the Universidad Pontificia de Comillas, Madrid.

“Pata stima, lipa pole-pole” (swahili) means “Find electricity, pay slowly”. This advertising campaign can be found in newspapers and on bill boards all around Kenya.  The campaign promotes a joint initiative of KPLC (the state-owned energy distributor) and Equity Bank to provide loans to those low income consumers willing to get connected to the grid but unable to pay the full $660 fee up-front.

These types of measures are much needed in Kenya. It is widely understood that Kenya has an under-developed energy sector, with insufficient power supply and low demand. But it is not until one experiences the power outages that one realizes how much urgent action is needed. Kenya energy per capita consumption is around 130 Kwh which is 18 times below the world average and only 15.3% of the population has energy access, falling to 3.8% in rural areas.

Biomass energy accounts for about 70% of all energy consumed while petroleum and electricity account for only 21% and 9%, respectively. Hydro Power constitutes 71% of this capacity and is mainly provided by the state-owned generator company, Ken Gen. Independent Power Producers (IPPs) have not had historically a relevant role in the market, but this trend is changing with the current liberalization of the sector. Current power deficit is aggravated by the deforestation of the Mau Forest and the closure of the Masinga hydro power plant due to drought.  Drought is on-going in Kenya and other hydro power dams may soon face closure as well.

But not everything is bad news, as a summer associate at Acumen Fund, I feel lucky to be here to live a moment of transformation in the sector.  Transformation has taken place from both the public and the private sector side. The public sector has realized the importance of bringing the private sector on-board and has announced a feed-in-tariff in which KPLC will sign a PPA (Power Purchase Agreement) and pay a tariff to those IPPs operating wind, hydro and biomass technologies selling power to the grid. This new incentive will help many projects become commercially viable. On the private sector side, there has been an increase in the interest of producing energy and of improving access for low income communities. It is encouraging to see that, despite not having any government incentive or subsidy, solar companies are exploring products, financial schemes and distribution networks to reach rural areas and/or low income consumers.

In the one month that I have spent at Acumen in Nairobi, I have dedicated half of my time to conduct research of the energy sector and talked to all types of players in the industry from the regulatory body, the UN, the International Finance Corporation, IPPs and potential entrepreneurs and I have learned a great deal about the sector along the way. The other half of my time has been spent analyzing potential investment opportunities for Acumen. These have been memorable experiences and I will always remember the emotion on the face of an entrepreneur as he signed the PPA for his small hydro power plant.

Acumen has tremendous opportunity in the energy sector in East Africa, although it doesn’t lack important challenges. Amongst them, ensuring that the private sector initiatives effectively reach low income communities and are not just driven by the new economic incentives, addressing the real energy needs of the low income consumers with appropriate strategies, and sorting out the necessary financing and distribution. A long way forward, but for sure Acumen has energy for that and for more!

Geetika Agrawal is pursuing her MBA at the Stern School of Business at New York University, specializing in Finance and Social Impact & Innovation. She is currently a Summer Associate at the Acumen Fund India office, where her focus is on building out the Agriculture portfolio and consuming as many mangoes as possible. She holds a BS in Computer Science from Stanford University.

The agriculture industry employs 60 percent of the Indian labor force, according to the CIA World Factbook. The backbone of this sector is the small holder farmer, those living off less than five acres and earning on average about 160 INR per person per day (approx $3 USD). While the Green Revolution increased the productivity of the farming sector and helped alleviate some hunger issues in the country, it did little to increase the livelihoods of the farmers.

In fact, within the fruit and vegetable sector today, there is a post-harvest wastage of 20-40% due to many factors: a lack of storage facilities, poor transportation logistics, a complicated web of middlemen, a dearth of quality controls and other critical supply chain inefficiencies.  This means farmers are often unable to fully realize the value of their crops. These issues in the agriculture sector are further thrown into relief by the fact that while India is the second most productive country in the world when it comes to produce variety, quality, and quantity, its total fruit production represents 8% of the world market share and its vegetable production equals only 15%. Illustrating where the inefficiencies hurt India, the Netherlands imports mangoes from Chile, at half the price, despite the fact that Chile is twice as far away.

On the bright side, supply chain inefficiencies and a demand for innovation regarding sourcing are a cries for help - and for creative business models. With these motivations, the Acumen Fund India team has started to build out a strategy and pipeline for investments in the agriculture industry. As a Summer Associate, my first task is to build a detailed case for Acumen’s involvement in the fruit and vegetable market. After a week of office ramp-up (i.e., numerous hours of quality time with the computer), it was time to get on the ground and understand how the kilos of mangoes I’d be consuming since I arrived in India actually got from the small market to my plate.

I jumped into an autorickshaw and headed to Rythu Bazaar in Hyderabad, a government supported market that allows farmers to sell directly to the customer. These bazaars are still relatively new, created to cut through the complicated set of middle men who would eat away profits through commission and price gouging.

My trip to Rythu was a unique opportunity to converse with the farmers and understand better their daily activities. They were open and eager to share their different methods of getting their produce to market.  I was also incredibly humbled to see how hard each of them works. One farmer, selling a variety of greens, described how he starts his day at 4 AM, first harvesting and then bundling the 500 bunches of greens he brings into market. He then carries the large sacks of greens on the back of his motorcycle two to three hours to bring them from his farm to the mundi.

Other farmers bring their produce by local bus, or they rent autos. On a good day, the “greens” farmer – like many others – will have leftovers which either go to hotels or wholesalers at mass discounts or simply get dumped, due to lack of cold storage.  The fact that this food often just goes to waste is tragic considering the high rate of malnutrition in India - especially in many of the surrounding villages. Storage is limited to cheap tarps and large leaves, leaving a day or less before produce spoils in the heat and humidity of monsoon-season Hyderabad.

When pressed on whether they would prefer cold storage however, many of the farmers shook their heads and simply said “No, madam, who wants to sell old vegetables? That’s not how it’s done.” After reading report after report on how important cold storage was and then hearing their stories, this was a good reminder of the difference between understanding needs and wants.

After a little while in the mundi, I had accumulated a little entourage of young farmers who would take me from one friend’s stand to another.  I was handed samples of mangoes, posed for pictures and they answered my questions before I even asked, since they had memorized them.  Then the tables turned and I was grilled on my life in Hyderabad, what I thought of being here, and most importantly, more details on my iPhone, which I was using to take pictures. I left feeling re-energized and committed to helping these entrepreneurial, energetic people find a way to reap more of the fruits of their labor.

The field trip was also an important reminder of how important it is to reconnect with the client, and how much knowledge can be lost if you just spend time behind the desk. It is also clear to me that we have a long road ahead of us as we seek to make an impact in this space - but it is one that won’t be without its rewards.

Jessica Lupo is a Master of Public Policy candidate at the University of Michigan, where she focuses on international economic development. Most recently, Jessica worked at The Associated Press as Special Projects Coordinator and Assistant Editor. Previously, she was a Media Development Manager for a venture capital network in Buenos Aires, Argentina. She has also consulted with various nonprofits on strategic communications. Jessica received a BS in Communications Studies and Sociology from Northwestern University.

With diligence being done, deals being made, communities engaged and the problem of global poverty grappled with, every day in the New York office is exciting.

Knowledge & Communications, where I work, is a growing part of the organization. The department is working to build a community and share knowledge with the aim of extending Acumen Fund’s impact beyond that of its portfolio. Acumen Fund acknowledges that even if its goals are met—$100 million in investments, touching 50 million lives— 98% of the poor will be unaffected by its work. This makes Knowledge & Communications an essential part of the Acumen Fund goal: changing the way we think and talk about poverty.

In truth, however, I’m only part associate. I’m also part human sponge, trying to absorb every last piece of information about growing an enterprise that I can. My first week on the job, I slipped stealthily into conference calls and meetings, blending in best I could.

I found myself in an all-staff Norms meeting on my second day. I couldn’t imagine what could possibly be “normal” about this wonderfully abnormal office, where it seems half the staff is always away in far-off countries working with entrepreneurs and experienced investors choose to invest in companies serving a customer base whom both the governments and the typical private company have deemed too difficult to reach.

“Okay, let’s talk about the kitchen,” was Director of Talent Harry Dellane’s opening. I looked up to see large sheets of white paper covered in what seemed to be a laundry list of rules dictating office behavior.

A rousing conversation began about best practices and lessons learned. It was Refrigerator Management 101! “Wow, these people are really into a tidy kitchen,” was my first thought upon realizing how engaged and articulate everyone was on the subject.

“How do you feel about this norm?” Harry probed. As the conversation continued and the staff hotly debated the best way to keep the sink clean, I smiled and let a brief laugh escape. At my previous offices, there wasn’t a chance in corporate hell that this conversation would have occurred – and even if it did everyone knew just to smile and nod.

What I realized, as the meeting progressed from cell phone use to greening the office, was that this was innovation at its best. Building a truly innovative environment starts with the everyday. By encouraging staff to speak up and share information across departments, you help avoid the “yes, sir,” groupthink culture that can grow within any organization and prevent the best ideas from coming forth.

Innovation is simply a necessity in social enterprises, which seem to ignore the traditional business wisdom by incorporating social returns into their bottom lines. It is particularly important to build this environment in developing countries where entrepreneurship and innovation may be stunted by years of distortionary aid.

This pro-innovation environment is seen in all aspects of Acumen Fund, making working here all the more exciting.  Staffers are encouraged to share knowledge and resources, to develop new ideas and frameworks, to challenge each other and the traditional business wisdom. I didn’t expect to learn a business lesson when I walked into the Norms discussion, but I learned a great one: bottom-up approaches are as important to innovation as they are to poverty alleviation. At Acumen Fund, the culture begins and ends with innovation – from portfolio management to kitchen management.