Out of Africa - Wrapping Up Details 11-8-08

11-1-08

The music from the ICC club, not more than a few hundred feet from the Pamela Lodge lasts until about 2 AM. The good news is that it’s really good; bongo flavor, afro hip hop music. I want to go over and find out some of the artists, but the club doesn’t give off the warm fuzzy feeling that would invite me to go alone. We actually stopped in a few nights ago and had a nightcap. It was devoid of decorations. A plain cement floor, a simple counter and a wrought iron fence delineating the patrons from the bartender. When you order a beer or drink, it’s passed through a square opening in the bars after you hand over the money.

The next day I send Leonard the new term sheet and we all go for a long hike into the valley to the east. We follow a dirt path that people in the valley below use to get to town. The descent is very steep. We drop perhaps 1200 feet in a very short time. The view is stunning. No high tension wires, no planes, no roads, nothing but scrub land, patches of trees, and houses scattered through the huge valley. There is evidence of a river where a lighter green snakes away from a large lake at one end of the valley and we mistakenly believe that we can make it there and back before dark. The descent takes us past a small community of perhaps fifteen mud huts. The path actually takes us between the huts, which are round and have thatch roofs. It’s so very cool. They stop and stare and break out into huge smiles and waves when we say Mambo, or shikumoo (respectful greeting) We stop, a little lost as the path gives out, and a young girl points the way to continue down into the valley. It’s almost like a re-creation community from Plymouth Rock in Massachusetts, but this is the real deal.

The path leads us down to the valley floor. We walk past other houses and a few people out tending to their banana trees. Everyone stops and waves hello. Not many people hike through here, let alone white people, so we attract a lot of attention. Threatening rain clouds and the late hour force us to turn around before reaching the river. Walking past a little down town (I use that term very lightly) we are invited to join a group of people drinking a white milky liquid from coke bottles. It’s obviously some sort of home brew, but we are afraid of asking too many questions as this might lead to an invitation to drink we’d find difficult to refuse. A store keeper brings out cokes and fantas and we sit and drink. Our Swahili is not good enough to communicate very well, and their English is nonexistent. A young man comes over and introduces himself with some English. He tells us that we are very welcome here. He is happy that we are here visiting and tells us that these people are happy to see us. We feel no hostility or resentment. Though curious, people are very easy going and full of smiles and shikumoo’s to us. Children may stop and stare, but as soon as you smile at them they light up with a bright smile back. Adults wave and yell Habari easily and often.

On the way back from the hike, we are sweaty and hot and greedily take the African “not so hot” shower. It feels great. We watch the news over dinner and hope for Obama. The country is on the verge of imploding, the financial crisis seems to be an unending nightmare, and we are here in TZ planning this business and a safari to the Serengeti.

The next day, wandering around Kayanga I stop into a little shop and discover lanterns. These lanterns are all made from cut up cans. I realize that I have been looking for the glass jars I saw in Haiti. Because glass is a pretty valuable commodity on it’s own, people make lanterns out of cans. I start buying these lanterns and show everyone else. We amass a collection to take back with us; beer cans, aerosol cans, used oilcans, tomato cans, coffee cans are the most popular versions. Some are quite nice. The top of the aerosol is cut off and attached upside down to the bottom so that it acts like a little elegant stand. These lanterns are inventive and unique. We’ll take back as many as we can and hopefully use them as a marketing tool to get attention to the project.

The news of the war breaking out in the DRC confirms that the flashes we saw a few weeks back on the horizon was artillery or some other explosions. I noticed them first, then Cynthia and Joel noticed them from their room at Hotel at Home. We rationalized that it must have been lighting, even though they were orange and in the general direction of Rwanda. There is a surreal disconnection sitting in this little quiet community. Even though we know the border is a mere 200 km from where we are, and we’ve heard stories about refugees and guerilla fighting, it doesn’t seem real. We three, (before Dave and Jill show up) discuss the escape route and wonder or rather hope we’ll never have to use it. Now at breakfast we hear on the radio that the fighting has erupted in the DRC and threatens to spill over into Rwanda. Dave and I talked about the risks with these projects while safe and sound in SF. Currency fluctuations, political disruption, theft, and war. All of these problems were abstract prior to coming here. We understood them and made contingency plans should anything happen, but it’s like any insurance. You are betting against ever having to use it. Now, watching the flashes again on the horizon and hearing the news on the radio it starts to make sense to get the US consulate’s phone number plugged into your cell phone. Like a scene from a movie, we sit on the hotel balcony playing Gin Rummy and discuss who the first people each of us will call to help pave the way for us to get to Bukoba, on our way to Uganda.

11-5-08

I wake up and open the curtains of my hotel room in the Serengeti and see a Giraffe wander past. The elegant gait and gentle disposition is mesmerizing to watch. She stops and munches on some leaves before carefully walking along. Her long legs taking delicate steps, her head swinging side to side. It's a proper way to greet this day as I later learn that Obama has become the 44th president of the US. Everyone we meet today and for the next few days congratulates us as if we personally had made it happen. It's a great feeling to have been in Africa on this historic day, and something I won't soon forget.

11-8-08

This trip wraps up. We'll head back to the States and organize all the events, paper and receipts in order to prepare for the next stage of the project. I'm torn between feeling as though we didn't accomplish nearly any of the things we had hoped to and realizing that the pace of things is drastically different in Africa. However, based on all the feedback and contacts we've made I'm certain of the future success.

Jill Williams - Guest Blog

That which governs our lives

The book, “In the Wild” by John Krakaeur describes Chris McAndless’s adventure in Alaska, living as one with nature to determine his true self , as a human being living off the land. Interestingly, he journaled almost exclusively about what he ate in the wild, how he found food and what he thought of it. 

When you examine cultures living in the developing world, you also find that their world is basically governed by food. Whether they are a farmer making their living selling food, or just working to buy food for their families, their lives are ruled by the demand and supply of food.

So, it doesn’t surprise me when I examine my journal after weeks in Tanzania that every entry revolves around what we have eaten. It should be a surprise because the food leaves little to be desired and it takes an average of 3-4 hours to receive it after ordering at a café, but none-the-less, we still depend on it and revolve our lives around the three meals per day that we expect. We groan and grimace at the Nyombe (beef) consisting of mostly bone that arrives on our plates with yet another cup of wali (rice) and maharaga (beans), but we still look forward to the next meal. Breakfasts usually involve fresh eggs boiled or cooked into a greasy omelette made with hydrogenated fat, along with chapate or thick white, dry bread. Lunch at Mama Roida’s Annex can be anything from pilou (spiced rice) with Nyombe and maharaga to tambi (pasta) with dry, tough kuku (chicken) and maharaga…throw in a little nbizi (banana) and you have the full extent of the diet in the Karagwe region in Tanzania. 

Again, I emphasize, even given the fact the diet wouldn’t excite a prisoner who was released after a life sentence, it still governs our daily life and leaves us talking about lunch right after we finish breakfast, and talking about dinner right after we finish lunch.

Some say religion governs our lives, some say politics does, but more and more, I believe the world around, food is that which governs our lives.

Final Days in Kayanga - 10-25-08

The Pamela Lodge is a decided upgrade from Hotel at Home. There is a balcony that Dave and Jill’s and Joel and Cynthia’s room open onto where we have breakfast and work. The rooms are larger and Mola, the woman who runs is a really nice and generous with our weird western ways. We’ve worked it out with her to cook meals in her kitchen for a small fee. It’s a little off the beaten path. But it’s a nice relief from Hotel at Home, where the central courtyard attracted lots of people and drinking. Pamela Lodge’s neighbor’s rooster wakes us up at god-awful hours when we first moved in, but I have either gotten used to it, or it was dinner one night. The first night it started crowing at about 4AM I wanted to go kill it, but I’m sure that would have caused a complete financial meltdown to the owner.

Too the weather has changed. Mornings are cooler, and a low-lying blanket of clouds cover the valley to the west. The days fluctuate between cool temps with intermittent thunderstorms and scorching hot sun. We plan for the coming days sitting on our balcony, watching the progression of weather approach and pass us. Dark storm clouds gather to the east, and we can see the rain hit the soccer field 30 meters away, while we sit dry on the balcony. The wind picks up and starts blowing quite hard. The gathering storm almost feels like a tornado, or reminds me of the summer storms on the east coast. A fresh smell to the air, the stiff breeze, then the storm hits with a clap of thunder. A fierce rain comes down, turning the road to mud. People dash for cover and then before it takes hold, it continues on to the valley to the west, towards Rwanda. Then the sun comes out and life in Kayanga continues.

Mr. Blandes joins us in the hotel. He’s a Tanzanian MP on his way to a friend’s funeral. We discuss the project with him. He seems interested in our progress and wants us to keep him informed. He tells us that if there is anything he can do to help to please let him know. He knows Leonard and KADERES and believes in out project. As this is his district he is keenly aware of the people’s needs, and likes the fact that this is designed to help his wards.

We will look for ways to bring the project to the next step, although we seem to be struggling to find a balance between making it sustainable and achieving the widest impact to the community. Leonard from KADERES, our NGO partner looks to get the cost down to the lowest amount, while we struggle with trying to find the sweet spot of income to cover expenses with a little left over to ensure that new lights can be bought. We also want to ensure that we can point to this project as fulfilling the three things needed to attract additional downstream investment; creditworthy community, risk assumption, and profitability.

The next day over breakfast Dave, Joel, Cynthia, Jill and I come up with a new model. The model itself is nothing new, but our application to this project is new for us and better fits Leonard’s idea of how we could see success. The previous model involved a user fee paid to the community bank. The enterprise expenses were then paid out of this income. Then whatever was left over was split between KADERES, the project and ourselves. A lot of money generated was intended for re-invested into the project to grow it. We had a rental amount and a percentage split in mind. After a lot of discussion, and the realization that we would NEVER be able to run the show for the six SACCOs, control the overall enterprise or even be able to conduct the transaction/rental and inventory process, it seemed to make more sense to shift to a lease program. If we lease the equipment to KADERES and let them run the show, they can charge their customers any amount they desire. This satisfied Leonard’s need to control the SACCO’s, kept us out of the day-to-day operation of the SACCO, and kept the enterprise sustainable. This was more in alignment with the focus Leonard wanted and helped us to steer clear of needing to run the show. Based on this new model I craft a term sheet, which lays out expectations.

The following Sunday while eating breakfast we are joined by a young TZ man who is hard of hearing. Jill and Dave sign with him and we learn he makes soap and drums. An interesting combination, but not so surprising as life in these small villages is hard scrabble which necessitates flexibility coupled with an entrepreneurial spirit. Later we go across the street to the Pentecostal Church. There is singing and dancing and some very intense praying. After the service the Pastor invites us up to introduce ourselves. It’s very warm and welcoming. After lunch and a stroll through down the street we come back and start working on the new model.

Many of our assumptions need to be refined – through meeting with Leonard and newly understood aspects of the enterprise. Costs are different in reality than what we thought we knew from the comfort of our SF office. Food and lodging is very cheap. Internal transport is very expensive. Things are very slow. For example I ordered 90 lights from Barefoot Power to run a pilot program. I had anticipated setting this pilot up while we were here. I wanted to see how the transaction would work, how the SACCO’s would account for the inventory, account for the payments, and how the technology would work. I pulled the trigger to have them shipped from Uganda, where they were sitting as left over from another order. I though the four weeks of time to get them a couple hundred miles would be enough, but DHL (DHL is not my friend) still has not gotten them to our destination address. As of today the lights are somewhere between Dar and Bukoba. They had gotten held up because DHL had no record of the duties being paid. In fact they had, and DHL f*&^%ed up. Needless to say this was a hard lesson to learn; things not only move very slowly in Africa, even what one might consider as a developed world vendor assumes African timeframes. If it’s this long for 90 lights I can’t imagine what our order of 3,000 lights will be like to get through customs and overland across the country.

We’ve met with Leonard again and based on some of the points realized in this meeting we’ll need to re-work the model. He believes that basically the model will work. He thinks the people will like the lights. He thinks the initial amount of lights is too small. He also has some very definite ideas in mind that we will need to use to re-craft our model around. However, based on our very preliminary market research there is much more “elasticity” in the market. True - fuel prices are coming down, but the quality of light is vastly improved by using our LED lights. Currently people pay between $2.20 and $5.00 per month on kerosene. Samuel pays $2.50 every month for candles. (In fact we’ll make a present of one of the lights to him.) We anticipate coming in well under that price point. But the price Leonard desires will make the project fold after 18 months. No one wants that and we are trying very hard to find a sweet spot we can all live with. This is a very hard problem to solve. There is a tension between the “free money” of the grant, and creating a sustainable model that will grow to access a growing number of people over time. We start with 3,000 but have modeled it to grow to 12,000. This isn’t just solving for the technology gap, but also the dominant paradigm. We all work under certain assumptions and conventional wisdom. Reality often reinforces this, but if you look deeper there are numerous examples of how to succeed working around barriers created by assumptions that don’t really fit. “Poor people can’t pay their bills” and “poor people don’t understand credit” are two ideas that we’ve seen numerous examples of not being true. Karadea, the solar training center here in Karagwe uses credit and has an almost hundred percent re-payment record. Layaway and micro credit are used in lots of transactions. Even the service model that we thought would be a difficult hurdle to overcome is readily accepted by almost everyone we speak to. “Aid and assistance is the only way to get people out of poverty” is another example of an outdated mode of thinking. We are fighting this today. Lower the price to save poor people money versus creating opportunities to help people create their own wealth seems to be the tension we are experiencing. Additionally, I see a cultural difference between looking for today, tonight, tomorrow, and maybe next week. But there is less focus on next month or next year. It’s not quite as bad as Haiti where people struggle to put food on the table that day and so can’t think about tomorrow. Here there is more stability, so that people should start planning. However, as many people are still used to aid, (which is critical in many communities), wealth building opportunities are still somewhat foreign. The common model for outside help is a donor model and not a financial model

The trip is wrapping up and we are looking forward to the final week in TZ spent on safari (which is a Swahili word for journey). Safari is in fact the correct word for what the past four weeks have been like. I have made many new friends; Joel and Cynthia, Samuel, Robert, and Olivia as well as re-enforced old friendships with Dave and Jill. I learned a ton about Kayanga and working here in Africa. I’ve learned about lights, lighting, power and electricity. I’ve also learned about the people of Kayanga and of Tanzania. They have been warm and inviting. Everyone I’ve met has welcomed me and stopped to listen to my story. I’ve learned about their lives and about my preconceived notions of people from another culture. It’s been a fantastic experience and I look forward to learning more as there is still much to do.

Some of our new friends include:

Samuel teaches us Swahili. He has a quick smile and an infectious laugh. His small boy is a little tubba bubba and a wonder to us as Samuel is so skinny.

Robert is a wealth of connections and information. His reassuring “for sure, for sure” has taken hold and we find ourselves saying it to one another. Robert drives us around, and helps is get the African price for things versus the mazungo price, which is considerably higher.

Olivia is a beautiful little girl who’ mom cooks at the Roida Café Annex. She is so sweet and always with a big smile. She teaches us Swahili words and loves having her picture taken. She always yells out after us Sin-tia as she waves hello.

Mola at the Pamela Lodge takes very good care of us, lets us cook in her kitchen, and tolerates our endless time on the balcony.

New Blood 10-22-08

New Blood – The team is complete 10-22-08

Everyone asks about Obama and the election. There is a tension here, as much as anywhere else in the world wondering what will happen on Nov 4th. It isn’t just about the fact that Obama is black, although that is considered. It is about stability and prosperity. There is a fundamental belief here in TZ that the US government has been a very destabilizing force in the world. The wars we’ve started, the excess that we consume has all led to strain on markets here in particular. On the other hand, there is also a belief that as the US stabilizes and grows; money, energy and prosperity will “trickle” down to TZ offering help and hope. Investment, aid, and assistance it is believed whether true or not flows from the growth of the US. It might not flow directly, but if the US grows, then donor nations, particularly Europe will grow too, and in turn continue to funnel money to East Africa. I can’t full tell whether there is a suspicion on the part of Tanzanians. I wonder if there is a contempt for the help or investment that mazungo’s (rich or white people) bring or a happiness for it. I wonder if people here are annoyed that either they need the investment or help, or desire it. Is there a: “We can make our own country work, who the hell do you think you are sticking your nose here. Haven’t you done enough in the world and caused problems, so stay out.” Or is it “Yes please come work with us and let’s make Tanzanian great together.”

The American election is being followed closely because of how the next President will handle the financial crisis too. The economy of Tanzania, of Africa and obviously the world is so closely tied to America that there is a common belief that the election will put the “giant ship” USS US back on a positive course and settle the uncertainty that exists in the markets here. It hasn’t yet affected life in these rural areas too directly, but people are interested. People complain about the price of fuel. They discuss the level of money and air flowing into the country, but to what I experience there is nothing that has been directly affected. Life goes on almost as it has for a while.

I took the god awful early bus from Kayanga to Bukoba on Monday to meet Dave and Jill at the Bukoba airport. It’s exciting to have them arrive. I look forward to sharing the whole thing with them as much as see their transition. I lived it for myself so it was difficult to discern the actual day that eating loads of gristle goat with rice and beans became somehow normal. I look forward to sharing with them all the large and small things that have made life here interesting and exciting; the dirt packed roads, the crazy drivers. When we walk down the streets I want to see their faces when the hear and understand the shouts of shikamoo (respectful greeting) from the children or mambo (hey how’s it going) from adults. I want to take them to Mama Roida’s Annex for walli and kuku. I look forward to getting caught in the crazy heavy downpour (no pina colada’s), the Pamela Hotel and endless Tusker beers. It all is exciting and new to me still, and so to share that life with Dave and Jill will be exciting too. We are a bit like rock stars here too. Being one of a half dozen white people in a community of 20,000 makes you stand out. Everyone knows your business, everyone know where you have been, and where you are going. Whether they say hi to you or not, they know almost all there is to know about your visit. It’s also so cool to be here starting this project with them. It seemed like yesterday, although it was a little less than a year ago, when we were sitting in Dave and Jill’s kitchen discussing what the project would look like and I began writing the first draft for the World Bank. Now, that we are all here, sharing this adventure with Joel and Cynthia it’s actually coming together (albeit slowly and differently).

William from Kiroyera Tours meets us at the Yasila Hotel. We sit and have a beer on the beach overlooking Lake Victoria waiting for their plane to arrive. We actually see it come in over the lake and all hop in Williams’s Jeep and drive the two minutes to the airport. They are hidden amongst a group of mourners coming to Bukoba for a funeral. After a decompress at the hotel, a nice dinner and a good nights sleep, Mr. Super takes us to Kayanga the next day. On the drive Dave and I discuss the goals of the project. The reality is to use this fantastic opportunity to create a platform to prove our model.

Credit – Poor can pay their bills, and make good on their word
Risk – We can structure the deals to remove, mitigate, or accept project risk
Profitability – The projects have to make money in order to continue to provide the service (in this case lights) to the people.

That’s night we have dinner and drinks at the Diana Annex. I swore I’d never eat there again, but there are few options. The discussion got heated for me as I let my emotions take control. I start arguing with everyone! Later, as Dave and I work it out, he reminds me that I had predicted this at the airport when he dropped me off. He said - I said that this will be quite intense and in all likelihood we’d argue because we are all wrapped up in this project working very hard to make it work. Low and behold it happened not 24 hours into Dave and Jill’s arrival. Jet lag and beer contributed to it, but I realized later that I was looking at this project through my heart so to speak rather than my brain. Not surprising really, as I have invested a lot of my heart in it, but that would not be the best filter to use in making decisions. It was a good short lesson in friendship, trust, and business. Later, sitting in my hotel room, discussing it all, Dave said that to him this was the dream project. He could make a real difference in someone’s life by proving this particular mode.

We pull out the pedal generator today and set it up. Cynthia pedals and starts charging the battery. As she quickly discovers it’s not easy. The generator is effective at making electricity when you are no where near the grid, but the plug to charge the 12 volt battery looks so tempting when you are pedaling and sweating your ass off. However, we’ve all grown up with cheap electricity. Would you use the generator if you had nothing? Or would you stick with candles and kerosene? Or would you walk 10 k instead to get a battery charged? Another thing that we talked about was giving all the bicycle riders or car drivers a small generator and battery and creating a true distributed grid. Could you organize it to be effective and efficient? What would products look like that could use flexible or refined power, like the cell phones that everyone carried? Lights are our mechanism to distribute power in a different way. Another way to look at it is: the life in Kayanga proper is pretty good. People have, for the most part water, food, and electricity. They get most of what they need here, and lack for few things. (Life is generally shorter, and the average GDP is low, but there are few people on the streets starving.) There is entertainment, transportation, religion, and education. Donor groups provide some of these things, and China and importers provide other things; pirated DVD’s, plastic bowls, cheap cutlery, bad electronics, knock off products (SQNNY, TONDA) but they exist here. We are Westerners complain about creature comforts; hot showers everyday, salads, variety of food, bugs and strange creepy crawly animals, bats, and incredibly slow internet. Our lights won’t make much difference for cosmopolitian people living in or near town. A mere 30 minutes walk away from town, away from the grid connection life is dramatically different. Samuel, who always smiles, is teaching us Swahili and has a wife and two children has a very different life. He talks about getting the final 3 tin panels at $6.00 each to complete his roof, or another 150 bricks for his house. His neighbors live in mud huts and use kerosene lanterns. They might walk barefoot, or eat rice and beans for weeks at a time. They may have a radio, but pay a poverty premium (A BOP term) for any products they want or buy. Our lights could make a huge difference for him. Not only would it be light, but it would be power too.

The Clean Tech Market In Africa - Project Update October 2008

Clean Tech Blog Report:

Working in Africa requires patience, local friends, patience, and patience. I forget what the World Bank rating is for Tanzania on ease of setting up a business, but it takes a certain luxury of time and money. The process is mostly transparent, although it helps to have a good advocate or lawyer (there is a difference in Tanzania) to assist in creating the necessary documents and then submitting them to the government. Lines in Dar to submit the paperwork can be long and confusing, so again it helps to have local assistance. The basic costs start to finish is about $1000.00 USD.

dissigno’s Tanzania project may begin by setting up the entity. We have several recommendations for lawyers garnered from local contacts and networking in-country. Face to face meeting helps immensely as telephones and e-mails are either ignored or used only to set up a time and place for a meeting.

A. Immediate – Implementation
1. Setting up an entity – notes from several lawyers include:
a. Having a TZ national on the board, with a share stake makes formation easier and faster. The number of foreign versus TZ nationals determines whether the company will be identified as a national or foreign company. A wholly foreign company is deemed as removing value from the country. There are many ways to accomplish this, but the final solution includes using someone that you trust.

b. The recommendation that we incorporate as a national versus a foreign company (more board members that are TZ than foreign) seemed less important to us. The US and Tanzania do not have a tax treaty. Thus, if a US company simply registered to work in TZ (rather than create a TZ entity) the TZ government would be allowed to examine the US company’s books.

c. A registered company can then register with the Tanzania Investment Center (TIC) The TIC was created to encourage investment in TZ, and offers many incentives. 0% VAT on capital goods, low or deferred income taxes, easy work and living permits, easy repatriation of profit, protection from nationalization, are among the many financial incentives to encourage investment. However, the incentives are different between foreign and national companies.

d. The cost to form the entity is about $1000.00 including the lawyer fees, forms, state fees, and stamps. There are other indirect costs, such as office space that must reflect a three-year commitment and employees among others. It can take anywhere form 1-3 months to complete. If articles of incorporation are prepared ahead of time the time may be shorter.

2. Contracts with local partners are essential to conducting business. However, enforcing them might be an entirely different story. In the end they are a starting point to negotiations, a way to refer responsibilities, obligations and expectations between partners.

3. Living space and office space are essential to creating a comfortable and harmonious work environment. Working in the emerging markets is very difficult. Cultural differences, expectations, language barriers, among the myriad of other details that can confuses the partnerships are all very difficult to overcome. So in order to work at your best, it’s essential to take the extra time to locate comfortable living and work spaces.

4. Warehouse pilfering and theft are common occurrences. A safe and guarded place to store equipment will be essential.

B. Renewable Energy in General
1. In Tanzanian solar home systems (SHS) are very common. There are several big players in this sector and many minor ones. It seems that every corner hardwar store sells PV panels, and 12 volt batteries. The few shop owners we spoke to all expressed interest in building other equipment (wind, hydro, etc) to create power. The SHS model is much easier to organize and implement than a utility or PPA model. One off sales can be made through stores, can be financed through community or commercial banks, and can be backed by manufacturer warranty. Supply chains, although slow and cumbersome, can be established to bring equipment to almost anywhere in the country. This model does not require organizing the community for a cooperative structure. It does not require large plots of land with dubious title clearance. (The Tanzania government owns 100% of the land, and citizens lease plots for 99 years enabling them to build and pass land on to their heirs)

PPA’s or utility models will be on the 10-100 kW scale. Loads are typically lights radios, and TV’s. The PPA model is difficult because it requires community buy in, a lead organization to control, and finally a pay-per-use system to ensure user fees are collected. Pay per use models can be implemented, ESKOM in South Africa has successfully deployed pay-per-use meters, but the equipment can be expensive, and only really makes economic sense on larger scale projects.

2. Community organization can be accomplished through strong local partnerships. It is essential to have local partners and that they are established with a good reputation in the community. Local NGO’s, religious organizations, or other groups can act as local champions and have a good community penetration to reach the often dispersed community members.

3. Partnering with existing operations can help provide a base of customers. Like working with NGO’s they will provide instant credibility and customer base with which to expand. Care must be used in due diligence in order to ensure the reputation of the established company is one that will provide the best opportunity for the project.

4. Supply chain’s exist and can be used to provide initial products while entities create their own supply chains. In addition, working together can reduce costs, so it is essential to look for opportunities to piggy-back supply transport.

5. Importation constraints can include government taxes, laws, financial risk, and in some cases war and rebel attacks. An expeditor can help get goods through customs and to the company warehouse.

6. Market research is essential to understanding the customer base. Understanding the product value, what the price tolerance will be, and the best way to reach the customers.

7. Promotion and marketing can be performed through an understanding of the market performed during market research. For example an illiterate customer base will not respond to written posters, or poor customers might not have a radio to hear radio advertisements.

C. Pedal Power TZ
1. Meeting with SACCO (community banks) board members to present project plans
2. The pilot project will be used to see how the rental process can work, prove out the technology, and act as a promotion plan which will show people the lights
3. Culture and language must be understood before implementing any project
4. The supply chain will provide access to project equipment. Plan ahead as this will be slower and more expensive that planned for.
5. Project capital goods that make sense for the end users.
6. Reporting and milestones will enable project implementers to track progress and show success. This will be essential to getting any further rounds of investment.

Final Thoughts:
The market is obviously open in Africa in general and Tanzania specifically. In TZ right now there is big demand for solar home systems (SHS). Sales are strong and supplies somewhat constrained. I saw only one large solar supply shop in Mwanza (the second largest city in TZ) and several smaller ones. In Bukoba I saw two shops, but they simply carried panels and batteries along with other materials typically found in a hardware store. I spoke with a lot of people about larger scale PV installs – on the order of 10-300kW. Most agreed that there is big demand, but making the financials work is very difficult. The country has lot of hydro and thermal currently. Creditworthy entities exsist in the form of coffee curing and processing, and breweries, but already pay a very low kw hour rate. The selling point might be reliable energy and a PPA that would act as a financing model for the eventual sale at the end of the PPS term. Demand is low compared to installed capacity. Tanesco claims to have 837 MW installed while only seeing 680 MW demand. This is slightly misleading, as there is only about 8-15% electrification in the whole country. In addition, some electricity comes from Uganda, particularly the communities near the Ugandan border. The TZ government keeps the cost down very low, but the current infrastructure is poor and there are frequent outages. In the area where we are working there are three sub stations. We have been able to identify two on a map, but cannot find evidence of a third. Power lines do no penetrate very far from these subs, though there are families living with out grid connection in the areas.

Tanzania Time 10-12-08

Habari--

The day started off as an rest day - being Sunday. We went with Robert, the local double E (electrical engineer) a new friend, to his son’s baptism. We drove to his father’s house and had breakfast with his family. His father then performed an intimate naming ceremony calling Robert’s son Asante (thank you in Swahili).We then walked a short distance to attend the service at his fathers Apolositc Church. It was a sweet service with singing and prayers. Robert’s father, Rev J introduced us and we made a short speech of thanks to the congregation, then we walked back to their house for lunch. It was a large feast, complete with Belimi beers! Quite an experience. Very generous people who showed us a good time. His family has been in TZ for several generations. Very religious and connected to the church. We talked with Robert’s father about religion, Africa, and life in general.

Then quite by accident we mentioned that we had seen the Karadea Solar Training Center the day before on one of our forays to the next town. I had been trying to get in touch with them for sometime as I knew they were near Kayanga and were focused on solar. Since it was Saturday it wasn’t open, but we poked around and made a plan to come back for a visit. Turns out that Robert’s father is on the board. Well that opened up a whole new conversation about power and electricity, what we were doing in TZ, and how we might work together. They were very interested in the project. They thought the use of the SACCO’s was a very good idea. It enabled people to rely on the project. In the past other people had come with projects, but since they were operated by “outsiders”, they stopped when those people left. In addition, since there wasn’t a sustainable model they failed because no local person had an vested interest. Rev J and Robert and his brother asked about regional PV power in the 10-100kW size. He said that there were only three or four substations in the area with little electrical penetration off the substations. When I asked about our need for a lawyer Rev J and Robert said they had a very good one they used when they started a consulting firm for local electrical work. Strangely enough it turns out their suggestions was the same one the our NGO partners use. Not sure if this is a good idea.

William Rutta from Kiroyera tours recommended this same lawyer too. Yesterday he had texted us to tell me that his lawyer was in Kayanga town visiting from Bukoba. (Seems that everyone texts here. Because cell phones are about $0.50/min. and texts are about $0.06 each, most everyone texts when they can. E-mail is less used because not everyone has access to computers or the internet. I noticed this a lot in India too. I have learned to text the old school way, without a QWERTY keyboard. Like Swahili, practice makes perfect.) He suggested calling and setting up an appointment. We kept trying to meet last night, but this being Africa, we missed each other. I figured that I’d meet him in Bukoba, on my way to Mwanza. However, Robert got Kubanga on the phone and arranged a meeting. After stuffing ourselves with food we left to go back to Kayanga.

On the way back we checked out a house that Robert’s brother knew about. A neighbor was looking to rent out a house that he was finishing up construction. The area was not perfect, the house needed a few details (tiling and the last of the plumbing), and there was no real western kitchen. It seemed comfortable enough, but the area was a little far from town, and one that we would have to get used to. Robert then took Joel and I to meet Kabugana the lawyer.

After our meeting we all met Leonard and had drinks. We agreed that the short term plan is to: finalize our Tanzania entity, sign a term sheet with KADERES, having a meeting with the SACCO’s to present our project plans & get feedback, and start a small pilot project at one of the SACCO’s to see how it runs. Grand plans that will take effort and planning based on the constraints of Africa.

10-13-08

I’m about to get on the bus for a 3 hour drive to Bukoba. I’ll then get the overnight ferry to Mwanza. I have been able to set up at least one appointment with a lawyer and investigate batteries and solar equipment at a store run by another LADM winner. I’m also meeting Joel’s friend Mukumbo who apparently has good connections. He said he would make some introductions to advocate friends that he has worked with.

Badai! (Bye

Karagwe, TZ 10-11-08

The water is out. I’m not sure what this means; whether there is no water, the delivery guy hasn’t made it, or something is broken. I only understand that there is no water whatsoever. It’s been like this for two days. Either way, at about 7AM there is a tapping at my door and a woman says Maji moto. When I struggle awake, and open the door I see a small red bucket with a Foama Gold sticker on the side – laundry detergent. Ahhhh- maji moto – hot water for washing up.

My stupid western mind can’t comprehend how to function with the bucket of hot water for my morning shit, shower, and shave. I fumble with the various buckets and cups trying not to mix up the ones for the toilet with the one for my face or body. I manage to get a shave and wash my face hoping for the best. I can’t imagine doing this every day. Balancing the water use with the body part, and the cleanliness factor; shaving, contact lens, washing my face, washing my arse. I suppose like anything I would get use to it. However I’m sure the exhibition would make any Tanzanian person laugh! For me it’s a new experience, but for most of the people of the world this is daily life. Gathering water, water use, and cleanliness are all factors that effect how people live and die. If you don’t have water nearby the struggle must be immense. I fear that this will only get worse as impacts on the environment and the struggle for resources continues due to increased population.

We sit at breakfast waiting for Robert to show up to take us to see a few more houses today. Robert is a guy that Joel met. He’s an electrical engineer who lives here in Kayanga Town with his wife and two children. A sweetheart of a guy, who speaks excellent English and has a four-wheel drive Land Cruiser. He’s spent time in Europe going to school, but loves his town and country. He’s been an excellent resource and has shown us several houses yesterday. The first one was almost finished, and had a beautiful view of the plains in the valley below. It was large and looked very nice. The second he showed us was close by and also seemed very nice. He has a few more to show us today, and we all look forward to seeing what is available. Getting a comfortable place to stay, where we can spread out and eat healthier food is a priority.

Otherwise the pace is slow and languorous. It's quite a life. Slow and steady. Nothing rushed, but a steady pace that eventually gets things down. Everyone has a cell phone and is either talking or texting. Sometimes I think it just for fun, or for the look.

Food is a challenge. I look forward to a house so that we can eat some of the fresh vegetables I see in the market but are ignored in the restaurants. Most of the food we have eaten is some type of grilled meat; either goat or beef. The cuts are “odd”, across bones, or across what others might consider a good cut of meat. When it’s served, it is chunks on a bone, complete with cartilage and tendon. The sauces are hit or miss. Sometimes they are delicious other times they have a very gamey flavor. There is curry that is often times mixed with a meat of some type. Ungali is also served with meals. It’s a dough like ball that you take with your fingers and dip into the sauce. It’s very thick and seemingly glutinous. They usually serve too much for my western tastes. There is also beans and rice which can be tasty. The variety is limited and often times we’ll eat meat of some type 2 times a day. The two restaurants we like are Mama Roider Annex, (I know, the irony of the name is not lost on us), and the Hotel at Home. It seems that a lot of places are named Annex. I think it’s because people think this indicated that their establishment is larger than it might be.

And of course there is beer. The best so far is Belimi, a thicker, more amber brew which has a higher alcohol content. It’s brewed locally in Karagwe. Second is Tusker, which is a little lighter. On the low end of the scale to my taste is Kilimanjaro. The ads, “It’s Kili time” are always fun to see but don’t deliver on the expectations.

Right now the challenges are finalizing the contracts, setting up the TZ entity, registering with the government’s TIC, and finding a local source for 12 volt batteries.

Arusha 10-9-08

5AM call for prayer wake me up. I'm dreaming that I'm back in Arusha,
backtracking to when I landed in Kilimanjaro, but actually I'm in
Bukoba. The dream is full of anxiety, but most of that has really
washed away, now that I'm so close. Perhaps too it is about the new
set of challenges to face. Bigger and more complicated, these are
about starting the project, helping people, and putting tools and
technology where it might not have been in the past.

Wandering around Bukoba with Joel and Cynthia I see a small town much
like those in India or even Haiti. Chaotic, noisy, and even dirty,
people go about their lives much like they do anywhere else in the
world. It's exciting to try out the few words of Swahili and see
people's faces light up. This is the small connection that makes me
happy that I'm here. We meet William from Kiroyerea Tours who has
helped me with my inter Tanzania travels. Joel met him earlier and we
will get some equipment sent to his office for pick up later. He's a
warm affable man with a quick smile and generous spirit. He knows
Leonard, our main contact for this project and explains that he is
very well known in the area. William explains that he has done a lot
of good for the people living here. Its' exciting to know that we
have lucked onto a good contact.

We investigate batteries and stores selling solar equipment. A few
older panels and inverters. We talk to a shop owner about batteries
and try to make connections for later use. We wander through the
food market; Cynthia and Joel fearless in the lead. Joel has made
good use of his time here, learning Swahili, meeting the players in
town, and understanding how things work.

One of William's tour guides will drive us and our equipment from
Bukoba to Karagwe. So after lunch of rice, beans and some type of
meat we walk back to Kiroyera tours and meet Mr Super. He's a gentle,
older man who speaks excellent English. There is some complications
as they try to change the American dollars I've paid them with
Tanzanian shillings and the bank won't accept bills printed 1996 or
earlier. (Dave look at your USD and bring only bills older than 1996)
I couldn't get a reasonable explanation, other than they might think
the bills will no longer be accepted from their end or be de-valued, a
common problem for Africans in general.

After a delay we are off, and drive through beautiful countryside.
The road is paved until the split and we turn left onto a red clay
packed road. Mr. Super doesn't let up on the speed and we climb
towards Kayanga (aka Karagwe). We finally arrive and unload at the
hotel called Home.

I go over to say hello to Leonard and he and I discuss the project. He is very excited to see us finally there. He has been talking about the project for a long time and had hoped we'd start in September. This would have been very good as the rainy season would start in October, and the harvest starts then too. People will have less money to spend on lights. Unfortunately through circumstances beyond our control we could only get to TZ now. None the less he is happy to finally have us here. There is a lot of work to do, but he has some great ideas. KADERES, his organization has a radio station which can advertise the lights. Since he already has a contract with the SACCO's he can really run the local operators. This was our original intention. It would be really difficult for us to oversee 20 plus charging stations in far flung regions of Karagwe. However, there is some risk in this too, as we won't have oversight. We'll have to work these details out. In addition to lights, economic development is essential to our project. It's isn't only about lights but employment and investment. This will give KADERES more credibility and income and help us achieve our goals. Leonard is passionate about his work, and it shows how connected he is to it emotionally. He is important because of the work he is doing. Everyone knows him and his family. He is already thinking about how to get the lights from Dar to Karagwe, who will work the stations and how this will run. I remind him that we need to back up and deal with a few operational things first. Lawyers and contracts are always the beginning.

A beautiful sunset of orange and red spreads from the thick thunderheads hanging over the valley to the west. It's dusk here, and my day is winding down. I have accumulated a long list of things to accomplish. But it’s nice to share the load of work with Joel. The journey of a thousand lights starts with the first watt. We walk around the town and then stop by Diana's Annex for dinner. I wonder who Diana is and where the first place is that this place would be the annex. After a dinner and beers I finally asleep for first full night. Tomorrow comes too quickly.

Africa 10-8-08

Africa 10-8-08
Figurative tears run down my cheeks. After 5 days, 3 planes, 3 continents, many taxis, buses and cars myself and my precious cargo is a mere two hours jeep ride from the final destination. In this modern age, it really hasn't been difficult, but rather time consuming to get the pedal generator, a bunch of supplies, and all the cargo to keep my mortal coil spinning here on African soil. Cynthia (Joel's girlfriend) and I step down from the 19 seater turbo prop plane onto the red dirt runway of Bukoba and are greeted by Joel and William. The flight was exciting over Lake Victoria. The more so as we neared Karagwe dragging the large metal container carrying the pedal generator. It is nearing the end of this leg of the journey, but also the start of something new and exciting.

Although I don't see much of Bukoba after landing, it smells and feels like the Africa I have been dreaming about since starting this project. It is lush and green. The roads are mostly red dirt packed hard after numerous carts, people and cars have driven it. It has a humid feel that I will get used to. Siting in the front seat of the van I watch the shore of Lake Victoria roll past.

It is nice to be met by Joel. Friendly faces who take over some of the heavy lifting and responsibility of the gear that I have been worrying over since leaving SFO. Although it hasn't been difficult it has been pyschologically draining as I wonder who and where I will be stymied in my effort to get the gear to Karagwe. I feel much like the intrepid 19th century travels lugging cases and steamer trucks around with them on their visits. I am exhausted too from travel and time change. This project is so important on so many levels; for the people of Karagwe, for the kids, for us, and for Kaderes.

Joel and Cynthia and I eat dinner and Joel enthusiastically tells me about the people he's met and the ideas he's got. He has developed an understanding of who knows who, how they know each other, what they know and what they think about the project. He sees the potential. He's excited and that makes me excited. You can see in his eyes that he's been bitten by the project bug.

Alfred Wise's visit to Karagwe

Friday, August 29, 2008

Karagwe and Pedal Power

Somehow I thought Karagwe was a 5 hour drive from Dar es Salaam, but as I’m flying to the northwest corner of Tanzania, to Mwanza, where I switch to a small propeller plane to go to the farther northwest corner town of Bukoba, on the western side of Lake Victoria, close to Rwanda, I’m realizing how important it is to check the spelling of a town name (Karagwe not Korogwe?) before committing to something.

I was introduced to Gary Zieff, who runs a firm called dissigno, that focuses on appropriate technology solutions in developing countries. Gary and team are launching an initiative in Karagwe to install a system using human powered generators - Pedal Power -- which will charge battery-powered lights that will replace kerosene lanterns and candles. Most of the region, like 95% of Tanzania, is off the grid and so households use kerosene lanterns (which are toxic and expensive). The Pedal Power initiative aims to set up a system so that people can rent these human power-recharged batteries and lights at a price below kerosene cost.

Dissigno was one of the sixteen winners of the World Bank Development Marketplace Lighting Africa competition. They competed against 500 participants, were selected and awarded $200,000 to test their pilot project in Tanzania.

Flying from Mwanza, on one side of lake Victoria, to Bukoba, on the other, took 40 minutes. The lake, the biggest in Africa, is truly vast, covering 26,000 square miles, making it the largest tropical lake in the world. It is bordered by Tanzania, Uganda, and Kenya, and is home to more than 3,000 islands. Rocky outcroppings dot a landscape of folded hills with occasional villages of scattered houses of cinderblock and tin or thatch. I learn that this land is well suited for the coffee and bananas that grow here.

Gary had asked if I could meet with their NGO partner, KADERES (Karagwe Development & Relief Services) to assess their level of enthusiasm and interest in the project. I spent my first afternoon with the Executive Director. This should have been familiar territory as I’ve done this due diligence questioning with a hundred nonprofits in the U.S. But this somehow was different.

Questions I asked, such as - how do people choose which Savings and Credit Organization (SACCO) to join, were met with answers beginning with, “we don’t do things here the way you do in America...” There is a decided tension to this development work (based on my, oh, one or two data points). On one hand, western development work is truly needed and welcomed. The government of Tanzania relies on western donors for 45% (!!!) for its annual operating budget. On the other hand, I get the feeling that there is a real desire to develop and implement home-grown solutions, and a touch of resentment of mzungu efforts.

The Pedal Power project is, like so much of the appropriate technology work being done here, designed to be an intermediate step. Using rechargeable batteries is not a hoped for permanent solution. But until billions of dollars are spent on infrastructure - to wire the country and get clean water - it will be many many years before most people have access to basic services.

I was put up in the $13 a night Hotel at Home. Water in the bathroom was in a large plastic tub for washing, and in the morning, they’d bring in another tub of hot water. This was as remote as I’d been. I was out of safe ex-pat comfortable Dar and in real Africa. It was exciting and surprisingly, didn’t make me as nervous as I thought I’d be. (Although if I start an NGO here, it will be called Hot Shower-Aid, because in my book, you gotta have a hot shower in the morning.

Hotel at Home did have a bar with plenty of cold beers, and I spent the evening talking to the local priest, who apparently was at the bar each evening. He asked me if I wanted to go to mass. When I told him I wasn’t Catholic, he started a guessing game, “Muslim? Anglican? Bahai?” When I said Jewish, he started laughing and said, “I know about that from studying at seminary.”

I travelled with Optatus, the accountant at KADERES, who provides technical assistance to the SACCO’s in the region. We drove out rutted dirt roads for many miles to visit three of them. When we went in, each a small office the size of two office cubicles, we were formally handed a guest book to sign. I signed, and scanned the names above. On each page, Optatus’s formal sign-in over the past few months was officially noted, and little else.

Each of these SACCO’s had about 2,000 members, and served as the regional savings bank and lender as farmers weather the cycles of crop harvests. I learned that virtually all of the members of the SACCO’s depended on kerosene for light in their house. I also asked for estimates of the amount spent per month, and all replied that approximately 5 liters were used per household per month, costing about $12. This is a huge burden for families getting by on under $400/year.

Before the visit, I thought the project was innovative but maybe cute. After the visit, I realize what a significant difference in so many lives, such a simple idea can have. The groups were excited. The biggest issue that they believe will need to be addressed is the initial plan to serve 3,000 families when so many more will be demanding the batteries.

Journey of a 1,000 miles starts with the first light

Over beers the other day a friend and I were discussing dissigno's impact.  He wondered aloud to me whether we should be interfering with peoples live.  He said something to the effect “they lead a simple, uncomplicated life.  What can we provide that will make it better?  Does adding electricity or stuff (or as Jared Diamond’s friend Yali refers to it in the book Guns, Germs and Steel - cargo) really make their lives better?”  I thought for a minute about where to begin this discussion.  My friend is a very intelligent, thoughtful person.  He’s done work for the ACLU, traveled extensively, and I consider him worldly.  But I thought this might be a concept others might share.  Who are we to interfere with people’s lives?  Who are we to believe we know what is “better”?  I remember discussing this with Dave when we first started thinking about the work we wanted to do.

Facts/figures -

According to Hugh Warwick and Alison Doig in their important study Smoke – The Killer In The Kitchen which they produced for Intermediate Technology Development Group

2.4 billion people worldwide use biomass for cooking and heating (Coal bumps that to 3 billion.)

Indoor air pollution (created by cooking and lighting) kills 1.6 million people worldwide, mostly women and children. This represents three people killed per minute.  This is as much as unsafe water and unsanitary conditions and greater than malaria.  Women are hit hard because they are the cooks, spending 3-7 hours a day by a cooking fire.  Children not only use lanterns to study their schoolbooks, but also spend most of their time close to their mothers, inside. 

Current trends indicate that another 200 million people will be using biomass by 2030.

The diseases tend to be acute respiratory infection, chronic bronchitis, lung cancer, asthma, TB, low birth weight, infant mortality and cataracts.

Around 2/3rds of woman in China and India with lung cancer are non-smokers.

Women also bear the burden of fuel collection in addition to use.  Two to twenty hours a week can be spent collecting fuel and tending fires.  Distances tend to be at least two and as many as 20 km from houses.  This time could be better spent tending to children, going to school, or earning money.  Not only are people spending a long time walking to collect and retrieve the fuel, but also they bear the burden of the weight.  Loads of wood can be 20kg.  One gallon of kerosene is almost seven pounds.

The light from lanterns and candles is extremely inefficient. The open flame of kerosene lanterns is not only a fire and burning risk, but produces only about 1/100th the light output of a single 15-watt CFL bulb.  Lanterns create non-directional lighting that is difficult to control for practical functionality.  Similar to an incandescent bulb, much light is lost to heat. A typical three stone fire is 18% energy to heat the pot, 8% release to smoke, and 74% waste heat.

In the excellent report: Per IFC Lighting at the Bottom of the Pyramid GEF Project March 2006 -

Based on electrification rates and demands, $38 billion/year is spent on fuel-based lighting worldwide.  This money, as shown below and referenced by Dave is his Fistful of Lumens blog, is higher per lumen than we in the US spend.

Candle provide 1.1 lumen and costs $58.40 USD a year to operate

Simple Wick provides 1.1 lumen and costs $8.92 USD a year to operate

Kerosene Lantern provides 182 lumen and costs $56.73 USD a year to operate

1 W LED provides 320 lumen and costs $4.38 USD a year to operate

Typical lighting accounts for 10-15% of household energy use, but represents as high as 30% of household expenses.  In most cases this can be translated to 2-3 hours of poor light per evening

Is step change enough?  Is there a difference between providing electricity at US rates and services?  Is some electricity better than all fossil fuel lighting.  These are some of the questions that dog development work.  People’s lives and livelihoods are dependent on the level of change we are able to accomplish.

Fistful of dollars... for lumens?

Light is one of those "things" that some of us are able to take for granted. The 1960's Supreme Court Justice Stewart Potter's observation about obscenity fits well, I know it when I see it. We may not really understand the duality of light. Is it a wave or a particle? But, we do know how much it costs to keep the lights on right? Well what does it cost to run the light at your desk right now. Let's just think about it. Figure it is a 100 Watt bulb and you pay $0.12/kWh (typical here in San Francisco). So, that means in one hour you would use 100 W hours or (0.100 kWh). Therefore, I spent a bit more than a penny while I typed out this post. Luckily, we live in a world where 1.2 cents is well below my threshold to care. I mean, I care but...

Now, picture your desk is in a quaint house in Tanzania. There is no electricity to run the lamp. So, we have a wick Kerosene lantern. Turns out that that most of the energy is converted to heat rather than light with this type of lantern. It is about 170 times more lumens for the incandescent light for the San Francisco desk lamp than the Tanzania. So, we need to burn a lot more Kerosene to get the same lighting effect. In fact, the lamp would have to burn more than 1.6 liters of Kerosene. That's nearly $2.30! That's 190 times what it costs to get the same amount of light here in California. Remember that burning Kerosene is dangerous and bad for your health. Oh, and in Tanzania we only make around $5 a day. That means we paid more actual dollars (if we had them) for a worse product that could eventually kill us. This is definitely above our threshold to care.

There is an actual premium being paid because they are poor. This "poverty premium" was made famous by C.K. Prahalad's Fortune at the Bottom of the Pyramid. Poverty premium gives dissigno two benefits. First, there is a lot of room to help make things better. Second, there is real economic potential for business. These "base of the pyramid" consumers are spending dollar for dollar (if not more) as their San Francisco counterparts. Companies that can reach these people can improve their quality of life and truly make a profit.

Community banks are essential

Light user fees will be paid direct to the community bank on a monthly schedule by end users.  An established and trusted entity such as the community bank builds confidence on sides of the transaction that the payments are safe and properly accounted.  Revenue in the projects community bank account not only supports enterprise growth, but also enables the bank to make loans to other community enterprises.  Reserves enable community banks to grow capacity and provide additional financial instruments to community members.  These could include credit, interest bearing savings accounts, collateral backed mortgages and business loans.  Financial instruments improve availability of capital to the community creating wealth-generating opportunities. 

Paradigm Shift

Since starting dissigno the conversation we've had with people has shifted.  When we approached people to partner with, all piss and vinegar, passion in our voices, but little else to show for our goals, many people looked at us with a sad smile.  They couldn't understand how were were going to sell products and services to poor people.  "They're poor after all, how can they afford stuff". We also heard, with more derision in their tone, "...you're going to make poor people pay for things?  You going to make a profit from poor people?"

Well, yes and yes.  But in the same enterprise we are going to help those poor people to build wealth, establish enterprises within their community to access improved products, and to attain stability.  At least that was the unpopular notion three years ago.  Now, with CK Prahalad's book Fortune at the Bottom of the Pyramid, Jeffrey Sachs End of Poverty, Harvard Medical, Aravind Eye Care, Unliver's success, Dell Computers, the Indian small scale neighborhood garbage removal, India's Dabbawla's (shall I continue or do you get the picture?) and any number of LED lanterns business, solar distributors etc.  Countless businesses have either developed out of rural poor communities or have been co created with the base of the pyramid specifically in mind.  These business have provided products for sale and created job and investment opportunity.  They have thrived or failed, just as in the developed world based on all the variables that exist for businesses.  But all have the same intention; addressing the needs of the poor.

Prahalad wrote about the poverty premium.  It exist where there is little competition and constrained access.  Due to limited competition, rural markets actually pay, on a percentage basis, higher costs for lower quality products.  Dollars for kilowatts in Tanzania is 1000 to 1 compared to the US.  This is due to the fact that the US has had 80 years to develop the infrastructure to deliver electricity very cheaply.  Whereas in Tanzania, there is no infrastructure in many places, so in order to deliver a similar mechanism the costs have to include distribution.

We were invited to attend the IDEO/Rockefeller Foundation Conference called Design for Social Impact.  Many organization (for profit and non-profit alike) attended.  The conversation was focused on "what do poor people want/need?"  The conference already had the paradigm shift of assuming that the models existed to complete the transaction and now the problems were focused on fulfilling the needs.  Now it's true that the commerce aspect still needs focus, but for major design firms to recognize that this a design gap existed and that filling it wold not just positively affect the world but crate a business opportunity for their bottom line. From a business point of view you can not ignore 5 billion potentially new customers.  However, care must be taken to avoid exploitive opportunistic businesses that poison the market and compound the problem.

Game on!

May 8th 2008

Wow!  We are awarded one of the 16 grants by the World Bank.  The final night of the conference the WB hands out 54 plaques to all participants.  It's a nice gesture.  They then call out 16 names of proposals judged to be exceptional and worth funding.  We are chosen and given $200,000 to put our idea into action.  I call Dave to let him know.  Now it's time to get to work and make this happen.