All hands on deck for international social enterprise
Uche Onuora is the Co-Founder of HITCH, a start-up out of Velocity, a leading entrepreneurship program at the University of Waterloo. HITCH has developed technology to provide internet services in rural Africa, where broadband data is incredibly expensive. MEDA is excited about this emerging technology and the opportunity to explore its use in upcoming projects.
To a casual observer skimming news headlines it may appear that the world is heading in the wrong direction. But look deeper and you will see that humanity is on the precipice of achieving something unprecedented: the elimination of extreme poverty in the next two decades.
It’s a cliché, but the world is shrinking, still. Smartphones, digitalization and the falling cost of technology are bringing the most economically isolated and impoverished communities ever closer to the economic mainstream.
Within the international development arena, things are changing too. Again, you may only see the bad news. The United States is pulling aid funding across the board. Nationalist and isolationist trends threaten the disengagement of governments that have for decades provided the resource base that undergirds progress on global development.
But there is good news. A new order of social entrepreneurs are rising to the challenge with eyes wide to the realities facing those who live in poverty. Enabled by increasingly inexpensive and robust technologies, and with access to more and more corners of a shrinking world, they are taking up the mantle of the bureaucrats and directly providing solutions that support the achievement of clean water, energy, food, education and healthcare for all.
While the core mission of these enterprises is to provide a social good, they recognize that doing so while relying on a shrinking tap of public grants will not allow them to reach their lofty goals. They are developing innovative business plans to meet the needs of those living at the base of the economic pyramid while slowly and relentlessly edging towards profitability.
These are early days, and there are few exemplars that have made the tenuous jump to financial sustainability. Nevertheless, a great number have begun to attract the attention of private sector investors who understand the huge growth potential of emerging markets. They recognize that these true economic pioneers are driving emergent cycles of local economic development, and thereby creating future demand for the private sector to meet.
The East African off-grid solar energy sector offers a prime example. The emergence of mobile banking technology, which benefits from the almost universal penetration of mobile phones in the region, has allowed social enterprises to successfully sell hundreds of thousands of solar home systems to those living at the economic margins. These systems are comprised of a solar panel, battery, LED lights, cell phone charger, and small efficient appliances that draw minimal power.
Rather than having to pay the full cost of the system up front – an impossibility for so many – mobile banking allows customers to make small intermittent payments over time, simply by sending an SMS message. Many believed that these companies were fools to think that their customers would be able to meet payment schedules, but it is amazing what people will do for a better life. It is by no means uncommon for companies that sell solar home systems in East Africa to report repayment rates of 90% or more.
Mobisol, one the most successful of these companies, uses a computer algorithm to determine the likelihood of repayment from each prospective customer. Once they pay off their systems, Mobisol customers can, for the first time, proudly walk into a bank with hard proof of their credit-worthiness.
Mobisol is a German start-up. Similarly successful companies such as M-Kopa, Bboxx, D.light, and Sun Electric have American and British roots. There are, unfortunately, few shining Canadian examples, and this holds beyond the solar energy sector in East Africa. Across the landscape of international social enterprise you will be hard pressed to find a success story with Canadian providence.
But many are trying. HITCH is an early-stage start-up founded by one of the authors of this piece who immigrated to Canada from Nigeria and is a proud member of Canada’s premier start-up scene in Waterloo, ON. HITCH has developed a technology to provide internet services in rural Africa, where broadband data is incredibly expensive. With HITCH, users pool their data access and let the router decide what content to save according to trends and patterns in internet traffic. Cached videos can provide information to help smallholder farmers increase crop yields, supplement educational curricula at schools, and so on.
The struggle to get HITCH off the ground illustrates some of the shortcomings of the international social enterprise support infrastructure that exists in this country, even in a hotspot like Waterloo.
Few mentors understand emerging markets, and even fewer financiers are willing to back companies like HITCH that serve customers in unknown markets. The support that is instrumental to the success of traditional start-ups is simply not available to companies like HITCH, no matter how persistent their efforts. Amidst this vacuum, a great number of promising international business ideas and Canadian-made technologies fall by the wayside.
But there is real opportunity here. Entrepreneurs like Uche, HITCH’s founder, are part of a wave of skilled immigrants to Canada who arrive with a deep understanding of the emerging markets that they come from. This knowledge is immensely valuable, and in a country of immigrants, it is a strength to be taken advantage of.
There is no good reason why Canada’s social entrepreneurs should continue to take a backseat to their American, German and British counterparts. In order to take advantage of our position the Canadian start-up scene needs to draw in more experts from the international business community to act as mentors, and to diversify its connections within the world of finance to include investors that have experience in Africa, Latin America and developing Asia.
The federal and provincial governments, too, need to expand their social enterprise support infrastructure to benefit entrepreneurs with international aspirations. The federal government in particular must get wise to the opportunities afforded by the convergence of this agenda with their international development priorities.
While social enterprise may look like small potatoes, over the long term it can contribute to the diversification of Canada’s economic aspirations. This is more important than ever due to the ongoing complications that are upending our economic relationship with our preferred trading partner to the south.
If your gaze is shallow you may see the growth of the East African solar market as a passing fancy, hardly worth the time of Canada’s self-interested business community. But that, again, would be missing the deeper point. Economic self-interest aligns with a much more aggressive strategy to support international social enterprise.
As extreme poverty is reduced and eliminated, new breadbaskets of consumer demand will emerge throughout the developing world. The experience of our social enterprise pioneers will therefore become invaluable to the Canadian private sector’s ability to respond to these opportunities.
HITCH (www.hitch.video) intelligently delivers affordable educational video content in emerging markets
WISE (www.wise.uwaterloo.ca) is the Waterloo Institute for Sustainable Energy at the University of Waterloo