2010 SEEP Annual Conference: Wednesday's Value Chain Track panelists encourage creative thinking
Sarah Buitoni of the Center for Microfinance Leadership at Women's World Banking is guest blogging at the 2010 SEEP Annual Conference.
Wednesday’s Value Chain Development Track, “Understanding Social Investors,” covered strategies for serving the base of the pyramid (BoP) through impact investment. Although each organization takes a different approach to identifying investment opportunities and deploys different financial products to support them, there are notable common takeaways. All are seeking to have a demonstration effect, to push the boundaries of impact investing and find “irreverent” and innovative ways of serving the BoP.
One of the innovative ideas for reaching the BoP market described by panelist Jaime Ramirez (Grassroots Business Fund) was a “milk-to-own” microleasing scheme for the dairy industry in Kenya. This gives lessees (i.e. poor dairy farmers) access to a physical asset, income-generating capacity and the opportunity to build collateral. The leaser gets paid back at the end of the season, ensuring sustainability.
All panelists stressed the need to start with the market—be responsive to customers’ needs and help partners and beneficiaries to develop the skills required to sustain income generation. Often, as Eliza Erikson (Calvert Foundation) pointed out, this can mean taking established models and throwing them out the window. The way that a product arrives to a person living on $2 per day may be fundamentally different from the channels used to reach high-income consumers. The key to success, according to Bhakti Mirchandani (Unitus Capital) is to serve the BoP segment by providing products that are good for them and not exploitative in order to leverage the enormous potential of the lower segment of mass markets.
The panel on “Informal Regulation of Markets – Market Constraint or Market Opportunity” on Wednesday afternoon focused on the role of culture and worldview in determining market access and successful integration into the value chain. Perveen Shaikh (ECDI) described her work with homebound women in Pakistan and strategies for working within the cultural constructs of appropriate spheres of activity for men and women. She also suggested that while some cultural norms act as barriers to women’s inclusion, it is important to look at possible opportunities in existing social structure. Alison Griffith (Practical Action) talked about a structural market project addressing mistrust and suboptimal outcomes for cattle farmers in rural Zimbabwe that existed in part because of opposing cultural norms.
A group discussion followed on how to build trust in systems where there are different and opposing worldviews and how to identify and cultivate intermediaries who can travel between defined spheres of activity. Regarding trust, the group discussed the introduction of technologies and vocabulary common to two groups so that, while they can continue to operate within their existing value system or cosmology, a bridge is built between the two worlds. In the case of Zimbabwe, farmers and buyers aligned to use weight as the basis for pricing cattle. On finding intermediaries in cultures where there are strict gender roles, the group concluded that involving men who can act as champions could be a way to use acceptable channels of communication to encourage broader economic participation by women. For example, these men could share success stories about the income benefits of their wives’ market integration.