Corridors for Shared Prosperity Transfer Journeys of Indian Inclusive Business Models case studies Intellecap S H A P I N G O U T C O M E S PB | 1 This assessment was conducted and document written for the International Finance Corporation (IFC) by Intellectual Capital Advisory Services (Intellecap). disclaimer IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. This report was commis- sioned by IFC through its Inclusive Business Models Group, which is leading efforts to promote inclusive business across IFC by catalyzing ideas and innovation; convening IFC clients, investment professionals and leading thinkers on inclusive business; and communicating which models work, and generating and disseminating knowledge on best practices. The conclusions and judgments contained in this report should not be attributed to, and do not necessarily represent the views of, IFC or its Board of Directors or the World Bank or its Executive Directors, or the countries they represent. IFC and the World Bank do not guarantee the accuracy of the data in this publication and accept no responsibility for any conse- quences of their use. For more details about this study, please write to Pallavi Shrivastava (pshrivastava1@ifc.org) corridors for shared prospertity: case studies Background and Context Corridors of Shared Prosperity is the collaborative effort of IFC, a member of the World Bank Group and Intellecap to accelerate the transfer of inclusive business models across developing countries. It consists of knowledge and information around ‘what works’ in successful transfer. Eleven inclusive businesses, which expanded from India to other developing countries, and over 44 industry practitioners interested in the issue of transfer were consulted to gather empirical evidence. The insights resulting from this analysis have been used to create a framework and roadmap to inform systematic inclusive business transfer with a specific focus on India-Africa transfer. Additional knowledge resources that use the framework as a foundation have also been created. These include a deep-dive report, a companion guide with detailed case studies and a downloadable toolkit comprising of a self-diagnostic tool and checklists. Transfer Journeys of Indian Inclusive Business Models is a compilation of eleven case studies that have been used to bring the framework to life. Each case brings out different nuances of transfer, and illuminates how resource constrained inclusive busi- nesses succeeded in taking their models and their impact to new markets. 2|3 Acknowledgements This report is the product of a study carried out by the International Finance Corporation (IFC), a part of the World Bank Group, and Intellecap. It seeks to inform systematic transfer of Indian inclusive business models to other developing countries, with a specific focus on African countries. We are deeply indebted to Indian inclusive businesses that shared their successes and failures in transferring to new markets, as well as to private and public sector organizations in India and Africa that shared their insights and perspectives on this issue. Our special thanks to Anil Sinha, Regional Head of South Asia Inclusive Business, World Bank Group for his direc- tion, guidance and advice. The South Asia Inclusive Business Group, IFC The preparation of this report and toolkit was led by Ishira Mehta and Pallavi Shrivastava from IFC, South Asia Inclusive Busi- ness Group The Business Consulting Team, Intellecap Authors: Usha Ganesh, Manisha Singh, Manish Shankar, Vasu Kangovi, Dipika Prasad, Manasi Agaskar Senior Advisors: Anil Sinha (World Bank Group), Nisha Dutt (Intellecap) Limitations The Inclusive Business Transfer Framework is specifically designed for small and medium inclusive businesses and is less relevant for other types of business models. It is intended to be an early guide for businesses that are considering transfer to Africa, but given the wide variety of business contexts in India and Africa – this report should only be treated as a broad guide. It is recommended that inclusive businesses validate all insights garnered from this report through their own research and efforts as well. Finally, owning to the lack of reliable and granular data in many of the African countries considered in this report, it relies on qualitative insights from industry experts and inclusive businesses, and hence the insights and recom- mendations should be treated as broad indicators. corridors for shared prospertity: case studies Contents agriculture 06 Digital Green 07 Global Easy Water Products 16 Manasa Agro 24 Shree Kamdhenu Electronics 31 healthcare 40 Aravind Eye Care 41 Dimagi 49 Novartis Arogya Parivar 57 Operation ASHA 68 renewable energy 75 Astonfield Solesa 77 Greenlight Planet 87 SKG Sangha 95 4|5 Agriculture Agriculture contributes 32 percent of GDP across the African continent, providing jobs and livelihoods to over 65 percent of the labor force1. The International Food Policy Research Insti- tute has stated that, “In most African countries, agriculture is the engine of economic growth, and agricultural growth is the cornerstone of poverty reduction” . The agribusiness market in Africa is expected to grow to $1 tril- Case Studies lion by 20302 - with opportunities across the value chain from pre-harvest to post-harvest stages. However, as in most develop- 1. Digital Green ing countries, the sector is also affected by market inefficien- cies such as fragmented land-holdings, inadequate know-how 2. Global Easy Water Products (GEWP) about and access to improved inputs and techniques, limited post-harvest value-addition, and information asymmetry 3. Manasa Agro between farmers and buyers which puts excessive power in the hands of middle-men. 4. Shree Kamdhenu Electronics (SKEPL) This interplay of a large market opportunity and significant challenges creates a perfect test bed for Indian inclusive business models, many of which have been devised to tackle similar challenges. 1. World Bank Development Indicators Database. Accessed in November 2014. 2. Growing Africa: Unlocking the Potential of Agribusiness. World Bank. 2014. case study 1 digital green Transfer format: Wholly-owned subsidiary case study 1 Countries of operation: India, Ghana, Ethiopia, Tanzania, Niger, Mozambique digital green Digital Green (DG) mobilizes rural communities and educates them about agriculture, healthcare and livelihoods using videos and other multimedia. It works closely with grassroots organizations for outreach and engagement, and customizes media content for local language and context. snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for Transfer transfer that led to transfer choices Imperative: DG aimed to scale the Management readiness: DG’s India Local farmer organizations: Presence impact of its model by transferring it to team travelled to Africa to build market of a significant number of producer/ new markets, and was also motivated understanding and activate networks, social groups that collectivize farmers by donors’ interest in supporting its and it also recruited a team of local and rural communities. expansion. professionals to drive operations. It subsequently hired senior staff Implementing partners: Presence of Preparation: It conducted extensive in Ethiopia to focus on the Africa like-minded partners with existing due-diligence ahead of expansion. operations. relationships with farmers to It examined donor interest and facilitate adoption of GAP. government support in different Financial readiness: It secured countries, and identified ways in which grant funding from the World Cocoa Internet: Penetration of internet its model would need to be adapted to Foundation and other international and telecom connectivity (broad- be effective outside India. funders ahead of expansion. band connection) for storage and dissemination of videos among Format preference: It transferred Operational readiness: It developed farmers and rural communities. through country level branch offices robust information technology started by its US based not-for-profit systems for cost-effective program Active donor organizations: Access affiliate as its legal status of a Trust in implementation, monitoring and to adequate and long-term grant India did not permit expansion to other evaluation. support to implement projects. countries. Validating need for product/service: Country preference: DG’s country The donors that funded DG’s expansion choices were driven by donors such helped to validate the need for its value as World Cocoa Foundation, BMGF proposition in destination geographies. and DFID who funded its expansion to Africa. key challenges in transfer Ecosystem: Inadequate penetration of telecom and internet connectivity, and erratic power supply Sector: Limited aggregation of farmers and rural communities through farmer groups, cooperatives and producer organizations. Business: Higher cost of skilled human resources in African countries than in India key transfer insights ■■ Given its reliance on grant funding for operations, DG secured partnerships with donors ahead of expanding to new markets. In addition, it identified services that can be made remunerative to create long-term sustainability of the model ■■ It assessed the local environment in destination countries by partnering with grassroots organizations, which also assisted it in community mobilization ■■ It gathered on-ground information and feedback in order to identify what works in each market and accordingly modified its business model 6|7 Digital Green combines technology and social organization to build capacity of community members on improved, sustainable agriculture, livelihood, and health interventions. The firm was set up in 2008. Since inception, it has reached 5,000 villages across India, Ethiopia, and Ghana and improved the lives of more than 500,000 community members (70 percent women) in South Asia and Sub-Saharan Africa. headquarters: Delhi year of founding: 2008 founders: Rikin Gandhi legal structure: Trust (in India) business model: Business-to-business (B2B) sector and sub-sector: Agriculture, Technology introduction Credit: Digital Green Rikin Gandhi started Digital Green (DG) as a project in Microsoft Research India’s “Technology for Emerging Markets” digital green’s business model team in 2006. The project spun out as a trust in 2008, and in india uses a digital platform to disseminate information on good agriculture practices (GAP) to small and marginal farmers to A majority of small farmers in India have limited access to help improve crop yields. DG’s agriculture extension3 methods agriculture extension services. The existing agricultural exten- have greater efficacy4 and cost effectiveness5 than traditional sion system in India is not very effective in moving farmers to agriculture extension methods. adopt scientific and modern techniques. Moreover, the costs of reaching small farmers, especially in remote regions, are DG adopts a participatory approach to make videos on high. DG addresses this information asymmetry by focusing GAP in crop husbandry, from pre-sowing to production and on knowledge dissemination, process innovation, and channel post-harvest phases.6 The DG team partners with local public, innovation. private, and civil society organizations to disseminate these videos among small farmers to encourage GAP adoption. "Good agricultural practices are effectively adopted by Currently, DG operates in six Indian states - Karnataka, Bihar, farmers only when information is shared by the community Jharkhand, Uttar Pradesh, Madhya Pradesh, and Odisha – and members who face similar constraints themselves." is engaged with over 1 million farmers across 11,000 villages. In 2010, DG registered its not-for-profit arm in the U.S. to Vinay Kumar undertake projects in other countries such as Mozambique, coo, digital green Ghana, Ethiopia, and Tanzania. 3. Agricultural extension is the application of scientific research 5. A controlled evaluation of DG’s method proved that it was ten and new knowledge to agricultural practices through farmer times more cost-effective than traditional methods of agricul- education. Traditionally, agriculture extension is facilitated by ture extension. government-appointed agriculture extension workers or through 6. Apart from agriculture, DG also produces videos on health, special radio and television programs committed to agricultural nutrition, and sanitation. However, the bulk of its work is in the extension. agriculture sector. 4. In a controlled evaluation of DG’s method, the uptake of new practices was found seven times more than with traditional methods. corridors for shared prospertity: case studies figure 1 digital green’s operating model government and other funders Funding support and enabling regulatory Monitoring and evaluation reports environment Subscription fee general digital franchisee public Free information from green website and open-source datatbase X Sans grants X Knowledge on GAP Y Information for Y Monitoring and Evaluation Knowledge corporates implementing on GAP Time (seed company, agencies farmers organic (ngos) Subscription fee Knowledge fertilizer and time on GAP company etc.) X Y 1. Funding (grant) for program Implementation 1. Progress report in terms of achievement against planned 2. Technology support (hardware like camera, pico- targets on number of videos shot, edited, approved, projectors, systems and accessories) uploaded and disseminated 3. Maintenance support for hardware and software 2. Recruitment of field staff and Facilitation of 4. Capacity building of management team and field staff of training for field staff implementing agencies/corporates/Franchisees 3. Cooperation on monitoring and evaluation for Digital 5. Training on editing and uploading of approved videos in Green implementation Digital Green’s website and database 6. Program management, and inputs on better program implementation 8|9 the key elements of dg’s business model include: Business process innovation agencies at the state level, the Ministry of Agriculture and Rural Development, and state-level agriculture and rural DG works closely with implementing partners, such as NGOs, development departments. It also partners with government public sector development agencies, or corporate firms such as and non-government agencies to secure grant funding. DG Syngenta Foundation, to reach marginal farmers. It provides establishes forward links with the following players for effec- technical assistance, program management, and financial sup- tive dissemination: port to field agencies. DG maintains quality by adhering to its proprietary standard operating procedures and quality assur- • Local implementing agencies that work closely with ance framework. The videos are simple, easy to comprehend, farmers, carry strong credibility with the community, and and locally relevant. DG facilitates information dissemination possess domain expertise in agriculture by featuring progressive farmers from the same or neighboring villages in the GAP video. Video screening is synchronized • Corporate firms that procure commodities from small with cropping schedules in that area so that the information is and marginal farmers timely and is used within a few days of dissemination. Videos are screened to farmer groups i n the presence of community • Individuals and agencies that help DG in strategy, mediators who moderate discussions. The mediators address research, documentation, capacity-building, and monitor- farmer queries and participate in dialog during the screenings ing and evaluation and feedback sessions. The videos are an efficient, cost-effective, and resource–light method to increase adoption rates. • Hardware and software vendors and agencies responsible for their maintenance. Knowledge and information dissemination DG is exploring ways to make its model self-sustainable. It DG uses existing large-scale government programs to shares recurring costs with partners according to cost-sharing disseminate information to wider groups of small and agreements it enters into. It earns some revenue by charging marginal farmers. It partners with government agencies like farmers for video screenings. It is exploring other revenue the National Rural Livelihoods Mission (NRLM), its nodal streams such as advertisements by local dealers and merchants figure 2 key components of the digital green approach research, evaluation, and learning phase initiation production dissemination Mobilization Content Dissemination identification activities Situational Storyboarding Adaption analysis Capacity Shooting Reporting building and editing quality assurance Process flow Feedback Community involvement corridors for shared prospertity: case studies Credit: Digital Green and a franchisee model. DG intends to support and encourage expansion of dg’s business model organizations interested in its approach through its franchisee in africa model. It will conduct due diligence to select franchisees that have relevant domain expertise and work closely with local Ghana and Ethiopia have very low ratios of farmers to exten- communities. Under this model, DG will provide online and sion workers, 1500:17. This results in low levels of access to in-person training and accreditation on community facilita- relevant and reliable agri-information. Farmers mostly follow tion, video production, data management techniques, and traditional agricultural practices and there is a need for exten- access to DG’s open source technology stack, with technical sion services to improve agricultural productivity. assistance as needed. Franchisees will pay for services provided. In 2011, after working in India for over three years, DG decided Channel innovation to improve access to transfer its operations with help from local partners and implementing agencies in the destination countries. Around DG’s videos are stored at cloud-computing databases main- the same time, the World Cocoa Foundation (WCF) ap- tained by Amazon and Google services to help local mediators proached DG seeking help to promote GAP for cocoa and and extension agents access them. DG also has a technology improve cocoa production. WCF and DG implemented a service named COCO (Connect Online, Connect Offline), a successful pilot project in which cocoa farmers were provided reporting system that shares, monitors, and tracks information access to extension and credit services through community- collected. COCO’s unique proposition is its ability to take based business service centers. By 2013, around 1,800 farmers the application offline in low and limited bandwidth loca- had watched the videos and about 85 percent had adopted at tions with uninterrupted use through a browser. The system least one GAP in Ghana. DG also partnered with commercial is designed in an open-source, customizable framework that trading groups such as the Noble Group and Armajaro Trad- is deployed without need for IT/engineering staff. DG uses ing to expand its outreach in Ghana. low-cost energy-efficient technologies such as pocket video cameras, pico-projectors, and a near real-time open-source data management and analytics framework. This approach lowers costs of operation and helps DG remain sustainable on a donor-funded model. 10 | 11 Management Readiness Financial Readiness Leveraging India team experience to build Africa operations Securing donor funds and building capital reserves for expansion DG initially deployed senior and experienced team members for its Africa expansion. Senior managers from India travelled DG’s expansion move was largely funded by donors keen to to Africa to understand the agriculture extension sector. use technology for development in the destination countries. They garnered insights on the state of agriculture and built DG forged such partnerships to pilot and implement projects relationships with local stakeholders. Once DG established in Ghana, Ethiopia, and Kenya. DG planned operations in partnerships with key implementing agencies and was ready these countries only after funding commitments from donors. to commence operations in Ghana, it appointed a senior manager and recruited a local team for its operations. Strategic Apart from receiving donor funds from individuals and decisions for Africa are still made by senior management in organizations, DG plans to strengthen revenues by charging India. DG, however, intends to transition this role to a locally a small fee for farmers watching GAP videos, advertisements recruited team of senior managers. This will free up senior from local input dealers, and franchisees. management bandwidth and help DG achieve its goal to expand to new geographies in Africa. Operational Readiness Format and Country Selection Leveraging partnerships with large organizations to access new markets Transferring to countries with an enabling regulatory environment DG chose to partner with large organizations that could enable it to scale and transfer its strengths of technological Funding agencies like UKaid’s Department for International know-how, video content development, and ability to involve Development (DFID), World Cocoa Foundation (WCF), and communities in operations. In Ghana, DG initially worked Bill and Melinda Gates Foundation (BMGF) supported DG’s with WCF and partnered with commercial trading groups. Its expansion. They determined entry market choices of Ghana success in Ghana garnered interest from government agencies and Ethiopia. Other critical factors for country selection and existing funders in other African countries. In Ethiopia, included supportive government policies and government it signed up for a seven-year project with the Ministry of Agri- interest in DG’s model. For instance, encouraged by their culture to promote locally relevant agricultural technologies success in Ghana, the government of Ethiopia invited DG to across high impact value chains. Similarly, it aimed to promote implement an efficient agricultural extension system at the locally relevant soil management practices among subsistence national level. DG is now engaged in a seven-year project with farmers in Ethiopia, Tanzania, Mozambique, and Ghana. the Ministry of Agriculture in Ethiopia. 7. mFarmer: Providing Kenya’s farmers with agricultural informa- Scaling impact through country-level branch offices and tion via mobile, CABI, July, 2014; Major Challenges facing partner agencies Kenyan Agricultural sector, Extension Conference. June, 2011. 8. The Indian Trusts Act, 1882. DG’s legal status as a trust8 in India did not permit its ex- pansion to other countries. So it chose to transfer through country-level branch offices started by its U.S.-based not-for- profit affiliate. DG expanded into Ghana, Ethiopia, and Tanzania in partner- ship with local players. These partnerships with local NGOs and other implementing agencies helped it understand local socio-cultural contexts better. By working closely with local partners, DG broke the image of being an ‘outsider’ among the farming community and leveraged complementary partner strengths to improve GAP adoption rates. corridors for shared prospertity: case studies Undertaking extensive planning and due-diligence to gain local insights The DG team conducts extensive due diligence before transfer- impact DG’s operations. DG’s senior management travelled ring the model to new geographies. For instance, it explored to Ghana and Ethiopia to understand local environments. In the state of the agriculture sector, presence of producer/social addition, initial interactions with various governments and groups among farmers, infrastructure, and availability of NGOs helped DG understand the socio-economic situation partner agencies in Ghana. The team also scanned for possible and agricultural extension value chain in Africa. government support and other regulatory directives that could figure 3 transferring digital green from india to africa dependencies dependencies in india in africa presence of presence of farmer groups 2012 2013 farmer groups Farmer groups are more Partnered with AGRA Registered office Farmer groups are less prevalent, and help to for promotion of new in Ethiopia prevalent, hence DG care- facilitate discussions soil management fully selects areas with among farmers during practice in Tanzania, existing farmer groups and after the video- Ghana, Mozambique, and also relies on influen- screening. Ethiopia tial individuals such as model farmers and infrastructure government agriculture extension networks. Fairly good penetration of telecom, internet and infrastructure power; hence low-cost energy efficient devices Weaker penetration of and cloud storage used internet, telecom and for storing and sharing power; hence DG relies videos. on battery operated pico projectors for storing and partnership with sharing videos. external stakeholders partnership with In order to increase 2012 external stakeholders adoption of GAP, DG Partnered with iDE works with implement- on promotion of DG works with local ing agencies that have locally relevant irriga- partners in order to re- 2011 duce perception of being existing relationships tion practices Started pilot project an ‘outsider’ among the with farmers’ group. in Ghana in partner- farming community in building revenue streams ship with WCF Africa, and to build trust for sustainability among farmers. DG is working towards building revenue streams strengthening its rev- for sustainability enues from video screen- ing, advertisement from Videos produced: 3148 | Villages reached:3938 DG plans to explore local input dealers and avenues to become franchisees for improving sustainable in Africa sustainability. Households engaged: 285533 through a franchising model, though current operations are grant- Documented cases of adoption of new practices: 371469 funded. 12 | 13 figure 4 challenges faced by digital green in transfer and strategies adopted to address them challenges impact strategies • Low technology • Non-availability • Approached govern- penetration of spare parts and ment to access devices • Erratic power supply maintenance services at zero-import charges ecosystem causes delays in video • Built in-house tech- screening when equip- nology to overcome ment breaks-down challenge of internet • Sub-optimal utiliza- bandwidth, and intro- tion of cloud based duced battery operated backend results in devices slower dissemination • Limited number of • Absence of aggrega- • Worked in areas which farmer groups tion channels such as had existing social and farmer groups increas- farmer groups es the cost of outreach • Worked with sector to target consumers model farmers and government-appointed agriculture extension workers • Higher cost of human • Increases operational • Ensured that its resources costs and has a nega- consultants travelled tive impact on DG’s to African countries efforts to become when required, as business more sustainable this was more cost- effective than hiring local experts • Hired a team of local staff for supporting operations challenges and key insights for transfer Relying on the technology to increase outreach DG strongly believes in the use of technology for easier mass By using technology to manage core operations, DG made its dissemination. Hence, its business transfer too hinges on the model efficient and strengthened operational readiness. DG’s same premise. DG relies on low-cost open-source technology internal processes are fairly standardized. It has developed to store and disseminate videos, monitor and evaluate progress checks and balances to ensure quality standards are met. It with feedback, and other product refinement support. It lever- adheres to its proprietary standard operating procedures and ages cloud computing databases for video storage, COCO for quality assurance framework in all its operations. Institu- reporting, and other low-cost technology platforms. tionalization of procedures and internal processes improves operational readiness. corridors for shared prospertity: case studies Securing donor support and identifying remunerative services to scale operations sustainably "Our geographic expansion will primarily depend on the investment climate and availability of sufficient financial Inclusive businesses, especially not-for-profits, often require resources to help us remain operational there." infusions of donor funding to pilot and accelerate operations sustainably. However, they must identify products/services Vinay Kumar that can be offered at a small fee to cover operating costs. coo, digital green Securing grants and financial incentives played a key role in DG’s choices of countries and formats for transfer. DG’s senior management believes it is important to identify remunerative services to create long-term sustainability. It charges $0.03 to 0.07 per farmer per screening to cover operating costs and plans to augment revenue through advertisements by input providers. DG also plans to roll out its franchising model targeting government agencies, corporates, and civil society organizations in new geographies. The franchising model is likely to support scale and contribute significantly towards gradually reducing DG’s dependence on grant funding and make it financially sustainable. In addition to funding, local government support helps inclu- sive businesses scale their models cost-effectively. In Ethiopia, building relationships with government agencies resulted in access to existing government extension structures to deliver the program and import duty exemption on hardware devices, which helped reduce program costs. Understanding the local context and identifying the right partners to enter new markets Credit: Digital Green Inclusive businesses that provide knowledge dissemination services must work closely with target customers. They need Continuous monitoring and evaluation of operations to invest in understanding context and economic and socio- cultural dynamics when entering a new geography. Identifying Inclusive businesses benefit from monitoring and evaluating partners, who understand context, have domain expertise, and performance of their products and services among target carry strong credibility with target customers, can contribute customers. Digital Green monitors its operations on a continu- significantly to success. Digital Green’s senior management ous basis, and this helps in iteration of the business delivery spent adequate time on the ground and forged partnerships model and progressively address the needs and interests of the with field agencies to understand the farm sector in Ghana. local community, resulting in greater uptake of GAP. They found that the farming community in Ghana and Ethio- pia is organized by commodity groups, unlike in India where it is organized in SHGs formed by farmers of similar socio- future plans economic backgrounds. This prompted the team to change the way it mobilized the community. It worked with model Digital Green’s future expansion to other Sub-Saharan African farmers and government-appointed agriculture development countries will depend on availability of grant funding and en- agents to reach out to small farmers. Further, field visits helped abling policy environments to minimize cost variation across the team assess relative costs across regions and plan expansion the region. Another important factor is the presence and scale strategies carefully through cost minimization. For instance, at which local organizations work with farmer groups. In the although Ghana has an adequate talent pool, it came at higher next few years, Digital Green aims to reach 20,000 villages in costs. Hence, DG moved staff from India on a short-term basis India and Sub-Saharan Africa. to train local resources and support implementation. 14 | 15 case study 2 global easy water products (gewp) Transfer format: Trade partnership Countries of operation in Africa: India and Kenya Global Easy Water Products (GEWP) manufactures and sells affordable micro-irrigation kits to small and marginal landholder farmers. snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies For Transfer transfer that led to transfer choices Imperative: GEWP aimed to increase Management readiness: GEWP’s senior Distribution networks that interface its revenues and scale its impact, management initially invested time in with farmers: Presence of and was also keen to explore new the Africa expansion. However, this significantly large agro processors and markets that were less competitive and stretched management bandwidth, export houses that work with small fragmented than India. and GEWP finally decided to let its farmers to increase adoption, reduce trade partner lead Africa transfer customization and make the drip Preparation: It conducted in-depth efforts. irrigation kits more affordable market research to find viable for the farmers. distribution channels and understand Financial readiness: It received equity ways in which the drip irrigation funding from Acumen Fund to transfer Access to water and cultivation of systems would need to be customized. in Africa, and also utilized revenues cash crops: Reliance on availability from sales in India to fund expansion. of sufficient water and cultivation Format preference: It transferred of cash crops that are more through a trade partnership with a Operational readiness: It established remunerative and help reduce the local distributor named Impetus Africa. a trade partnership with Impetus Africa payback period for the irrigation kits. This helped to establish an on-ground as its sole distributor, and scaled up presence for GEWP with low risk and manufacturing to be able to supply Consumer education: Reliance on minimal investment. to Impetus. awareness among small farmers about the benefits of drip irrigation Country preference: It selected Kenya Validating need for product/service: systems for uptake and adoption. as market research indicated a lucrative It validated the market potential opportunity for low cost drip irrigation for low cost irrigation kits through systems in the country. a scoping study and insights from Impetus Africa. key challenges in transfer Ecosystem: Low awareness and limited purchasing power among farmers Sector: High variations in crops and agricultural practices that necessitate customization Business: Difficulty in on-boarding export houses and processing companies for access to smallholder farmers key transfer insights ■■ GEWP and Impetus Africa identify and work with mission-aligned distribution partners to improve transparency and reduce supplier switching costs ■■ Impetus works with agro processors and export houses who have buy back agreements with small farmers for specific crops. Since the farmers supplying to them follow a defined package of agricultural practices and crop spacing, it is easy to customize the drip irrigation systems for them ■■ Impetus partners with agro processors and export houses that can extend small loans to farmers to purchase the kits. As these export houses and processors have a buy back agreement with the farmers, they are easily able to recover the loan instalments from the farmers corridors for shared prospertity: case studies Credit: gewp Global Easy Water Products (GEWP) manufactures and Set up in 2004, GEWP customizes affordable micro-drip sells affordable micro-irrigation kits to small and marginal irrigation kits under the brand name Krishak Bandhu (KB). farmers. The kits save between 30 and 50 percent water, It designs irrigation kits based on small-holder needs and improves crop yield between 30 and 70 percent, and reduce establishes a local supply chain to manufacture and distribute electricity consumption by 50 percent. GEWP operates in them. It attracted investor interest from Acumen Fund in 2007 nine Indian states, which include Maharashtra, Madhya and was incorporated as a separate private entity. The funding Pradesh, Gujarat, Rajasthan, Karnataka, Tamil Nadu, and from Acumen helped GEWP develop two new variants of the Andhra Pradesh. It exports its products to Kenya. irrigation kits. It outsourced manufacturing of its products and expanded its portfolio to 50 products such as micro sprinklers, fertilizer tanks. and water storage devices. headquarters: Aurangabad, Maharashtra year of founding: 2007 In 2011, IDEI completely transferred its micro-irrigation-relat- founders: Amitabha Sadangi ed operations to GEWP. This included the license to distribute legal structure: Private limited company all water-related technologies developed by IDEI. At this point business model: Business-to-business (B2B) Acumen Fund owned 30 percent of the company and the sector and sub-sector: Agriculture, Irrigation IDEI Employees Trust owned 70 percent. By 2011, GEWP was selling its micro-irrigation systems in nine states11 in India and had directly impacted the lives of 750,000 farmers. In 2013, More than 80 percent of India’s water is consumed by the GEWP served approximately 21,000 customers and accrued agriculture sector9. Due to high dependency on rainfall and revenues of $2.3 million inefficient use of available water, small farmers are severely affected by water shortage, resulting in poor yields. Amitabha In 2012, GEWP entered Kenya through a trade partnership Sadangi founded International Development Enterprises India with Impetus Africa. Founded by Manoj Mehta in September (IDEI), a not-for-profit organization, to innovate and provide 2011, Impetus Africa aims to create a positive impact on efficient and affordable tools and market access to poor farm- the livelihoods of small farmers. Alignment of mission and ers to lift them out of poverty. His vision to make every small presence of an investor active across two geographies helped household a self-sustaining mini enterprise drove him to start connect GEWP and Impetus, catalyzed transfer of the model two for-profit enterprises, Global Easy Water Products (GEWP) to Kenya. and Blue Wealth International10, to distribute low-cost drip and treadle irrigation pumps respectively to small farmers. 16 | 17 figure 5 gewp’s operating model in india components supplier Compo- Orders/payment nents KB Kits KB Kits KB Kits captive Credits Credits manufacturers GEWP distributors retailers Orders/Payment Payments Payments & Quality Control Semi- Assembled Orders/payment Payments KB Kits Payments KB Kits Kits farmers rural manufacturer gewp’s business model in india Further, small farmers can purchase GEWP’s micro-irrigation kits on an incremental basis, allowing them to experiment GEWP pioneered manufacturing of low-cost drip irrigation first on a small part of their land. This innovative approach to systems in India and is one of the few organized players that customizing the system allows for easy trials and incremental cater to small and marginal farmers. The advantages of drip additions. The KB kit is a fine example of frugal engineering irrigation systems is the cost reduction due to lower diesel with costs being as low as $130 per acre, compared to tradi- use, lesser time taken to control weed growth, and savings on tional systems priced at $325 per acre.12 Farmers can effectively fertilizer costs as measured quantities can be delivered directly recover costs from additional incomes generated from their to the crop. Its micro drip irrigation kits are sold through local farms within a year. Once the systems generate revenue though dealers to small farmers with less than two hectares of land. increased yields and lower production costs, small farmers can expand areas under drip irrigation. Product innovation 9. World Bank Development Indicators database. Accessed in GEWP’s initial research showed that micro–irrigation tech- October 2014. nologies relied on rigid and expensive pipes that were not 10. Blue Wealth International (BWI) was started in 2011 to distribute suitable to operate on small farms. GEWP, with the help of treadle pumps and other potential water-lifting devices among IDEI, developed an irrigation system based on flexible pipes small farmers in areas where the water table is usually less than with varying degree of thickness to suit small farms, which 28 feet deep. primarily cultivate closely-spaced crops such as vegetables and 11. Madhya Pradesh, Uttar Pradesh, Gujarat, Maharashtra, Karnataka, fodder. Orissa, Tamil Nadu, Andhra Pradesh, and Rajasthan 12. The cost could be reduced as recycled polyethylene was used to manufacture the pipes instead of fresh polyethylene. corridors for shared prospertity: case studies Local manufacturing base "The advantage of such a trade partnership model is GEWP trains micro-enterprises in rural areas to manufacture that GEWP gets a market for its products in East Africa. KB products and ensures they maintain required technical Impetus, which understands the local context, is able to standards. Typically, it outsources manufacturing through tap into its network and increase the sale of products. exclusive and non-exclusive contracts. It enters into exclusive Agro-processors and farmers benefit from receiving higher agreements with captive manufacturers in Tamil Nadu, produce and lower production costs." Maharashtra, and Madhya Pradesh to develop drip irrigation systems. It also signs non-exclusive agreements with local rural Manoj Mehta manufacturing units to produce other components. In all, founder, impetus africa production is outsourced to over 30 local manufacturing units. GEWP reduces its cost of distribution due to its network of Management Bandwidth geographically distributed manufacturing vendors, thus reduc- ing the delivery cost of the kits and generating local employ- GEWP’s management team had significant experience work- ment. GEWP channels its cost savings from manufacturing to ing in the agriculture sector across India and Africa. Hence, increase dealer margins, introduce sales promotions schemes, initially the same team was tasked with Africa operations. and offer customers competitive prices. However, the firm soon began to face challenges from splitting management time between the two regions. It lost market Supply-chain management share in the low-cost drip irrigation market in India even as expansion into Kenya was slowly taking off. GEWP realized GEWP identifies and trains local sales teams across states to that growth in Africa would come at the cost of market share reach larger numbers of small farmers. GEWP’s sales officers in India. To address this challenge, GEWP decided to adapt its target about 40 to 50 customers per month. Potential custom- approach and rely completely on support and services provid- ers visit demonstration plots or farms of existing customers. ed by its partner, Impetus Africa, to take its Africa operations Its network includes distributors of agri-inputs, hardware, and forward. exclusive drip irrigation kits. GEWP also trains dealers and provides them with marketing materials and warranty cards. Format and Country Selection It currently distributes through more than 1000 dealers across India. Assessing the market opportunity in the low-cost, drip irrigation sub-sector in Kenya expansion of gewp’s business model in africa Kenya has a sizable market for low-cost drip irrigation solu- tions. It has more than 5 million small farmers15 who mostly The Kenyan agriculture sector contributes nearly 24 percent practice subsistence farming in arid and semi-arid farmland to the country’s GDP and provides employment to over 70 with low and erratic rainfall. Only 20 percent of farms have percent of its population13. However, almost half of Kenya's access to piped water16, while the rest are dependent on springs total agricultural output is from subsistence farming and 80 and rain water. Moreover, only 2 percent of small farmers percent of farmland is classified as arid and semi-arid, with have access to drip-irrigation17 systems. GEWP validated the low and erratic rainfall14. Moreover, food production is low demand through a market research study in 2012, which with frequent crop failures, which impacts livelihoods of small specifically focused on small farmers and established customer and marginal farmers. willingness to pay for KB kits. IDEI had extensive work experience in the African agriculture 13. World Bank Development Indicators database. Accessed in sector and spotted a market opportunity in the low- cost, drip October 2014. irrigation sub-sector in Kenya. GEWP expanded to Kenya in 14. World Bank Development Indicators database. Accessed in 2012 through a trade partnership with Impetus Africa. October 2014. 15. African Development Bank, 2011. 16. Kenya Census, 2011. 17. African Development Bank, 2011. 18 | 19 figure 6 impetus’s operating model in kenya KB Kits distributors retailers KB Kits, Payments Promotion & After-Sales KB Kits KB Kits KB Kits impetus GEWP africa processors farmers Payments Payments Payments export KB Kits houses Taking a trade partnership approach to build market Financial Readiness share in a low-cost manner GEWP received initial funding of $1.03 million from Acumen GEWP initially planned to expand operations by mobilizing to scale up operations in Kenya. It also relied on revenues from local resources to manufacture micro-drip irrigation kits in the sale of KB kits. Africa. Its market scoping study to identify opportunities for low-cost irrigation kits in Kenya indicated that while there was Operational Readiness significant market potential, setting up a manufacturing unit in Kenya’s poorly developed rural areas would be expensive. Adopting a participatory approach to roll out new Moreover, GEWP realized it would need two to three years to technology demonstrate the efficacy of its products to farmers. It therefore decided to pursue expansion through a trade partnership, as Impetus’s go-to-market strategy in Kenya involved understand- this was seen as a low-cost and low-risk operating model (Fig- ing the impact of the irrigation kits on livelihoods of small ure 6). The trade partnership model also ensured on-ground farmers and its usability in the local context. In 2012, it ran a presence through a local partner who would build credibility pilot to demonstrate the efficacy of the KB kits in improving among farmers. To maintain low costs, GEWP decided to ex- farm yields to farmers and potential distribution partners such port KB kits manufactured in India to Kenya and established a as Equator, a well-known agro-processor, and Frigoken, a well- partnership with local firm Impetus Africa, which understood known export house. These distributors have direct interface the local context and could leverage existing relationships and with a large number of contract farmers who supply specific networks to sell the kits. agriculture commodities to them under buy-back agreements. corridors for shared prospertity: case studies Designing a financial product to suit small and marginal farmer capacity to pay The majority of small and marginal farmers have limited kits. With this financial product, agro-processors and export financial capacity to pay up front for kits. Moreover, costs of houses can deduct the costs of the KB kits from payments that micro-loans are very high in Kenya. To address this challenge, they make to farmers when buying their crops. Impetus Africa plans to launch a financial product to enable larger numbers of farmers to gain access to KB drip irrigation figure 7 transferring gewp from india to africa dependencies dependencies in india in africa distribution distribution channels 2007 2013 channels GEWP sells its products Funded by Acumen. GEWP enters into a GEWP sells its products through a network of GEWP spun out of trade partnership to Impetus, which in- local dealers and retail- IDEI, as a private with Impetus Africa turn builds relationships ers, who have a strong entity with agro processors and presence in rural India export houses who act as and work closely with outreach and sales chan- farmers. nels to engage farmers. awareness awareness building building GEWP creates aware- Impetus Africa creates ness by communicating awareness through directly with farmers, model farmers. Large and advertising through progressive farmers buy mass-media channels the irrigation kits and such as billboards, demonstrate the benefits screening short videos, to small farmers. and organizing product access to water and demonstrations. cultivation of cash crops access to water and 2004 GEWP GEWP relies on Impetus cultivation of cash crops incubated Africa, agro-processors, It targets farmers who within IDEI 2011 and export houses for grow commercial crops Impetus Africa insights on cropping pat- such as chilies and setup in Kenya terns and water supply in cotton, and uses its order to identify suitable in-house knowledge on regions for the irrigation cropping and water sup- kits. ply patterns to selectively identify suitable regions for its irrigation kits. Increase in income: $ 400 Increase in crop yields: 30 to 70 percent Water savings: 30 to 50 percent 20 | 21 figure 8 challenges faced by gewp in transfer and strate- gies adopted to address them challenges impact strategies • Low purchasing power • Poor ability of farm- • Planned launch of of farmers ers to pay negatively financial product that impacts sales growth will allow small farm- ecosystem and increases break- ers to purchase GEWP’s even time micro irrigation kits by • It also necessitates paying in installments introduction of finan- • Relied on frugal cial products to enable engineering which installment-based ensures lower cost of purchases production • High variations in • Irrigation kits need • Partnered with crops and agricultural higher customization, agro-processors and practices from region which reduces the export houses who to region, even within ability to sell the kits have buy-back arrange- sector the same country at scale. This results in ments with farmers to higher cost structures minimize customiza- and lower margins tion • It is harder to sell to • Identified other chan- individual farmers. nels that aggregate Without buy-back, farmers they find it hard to pay • Provided after-sales • Difficulty in on-board- for the kits. services to help ing export houses and • As the farmers grow farmers adapt the kits processing companies different crops and to crop spacing on that act as outreach follow different individual farms business and sales channels for agricultural practices, farmer engagement the kits need greater customization Identifying strategic trade partners with similar vision to expand and scale Product-based inclusive businesses opt for trade partnerships GEWP build the market for its drip irrigation kits in Kenya by if unable to efficiently transfer production and marketing to promoting the product, providing after-sales service, identify- new geographies. Trade partners leverage their networks and ing channels, and designing financial products to improve knowledge of local conditions to create brand identity, build uptake. Vision alignment with Impetus ensured that GEWP credibility, and thus, create markets for the products. This form incurred lower supplier switching costs and that its products of partnership model entails more engagement than a typical were affordable to small farmers. export partnership with multiple distributors. Impetus helped corridors for shared prospertity: case studies Credit: gewp Providing financial access and bundling products to "Agro-processors already hold a good relationship with increase uptake farmers. The uptake of products will be faster since farmers trust that they are being sold something useful. Moreover. Inclusive businesses provide affordable goods and services agro-processors can effectively monitor repayment of loans to low-income customers. However, product uptake is often from farmers." low due to their inability to make upfront and lump sum payments. This requires businesses to structure innovative Manoj Mehta financial products and facilitate credit linkages to increase founder, impetus africa product affordability. Impetus works with agro-processors and large export houses that can extend micro-loans to small farmers to purchase kits against payments for their produce. In addition, Impetus plans to build relationships with MFIs and NGOs to bundle similar products for small farmers. Once the irrigation kits demonstrate their efficacy to farmers, Impetus believes that uptake will improve. Targeting agro processors and export houses to reduce customization of products Inclusive businesses in the low-cost irrigation sub-sector must consider key parameters such as size of land holdings, type of cultivated crops, water availability, crop cycles, and average incomes of farmers to ensure successful adoption of their products. In Kenya, seasonal variations in crop cultivation are high. Customization of irrigation kits based on type of crops is a challenge and will involve substantial cost additions. Im- petus, therefore, works with agro-processors and export houses to distribute standard irrigation kits as they decide the crops in advance with the farmers. Since specifications are fixed, this arrangement reduces customization levels of the kits and helps GEWP achieve volumes efficiently. 22 | 23 case study 3 manasa agro Transfer format: Partially-owned subsidiary in Malawi, Public Private Partnership in Ghana Countries of operation: India, Malawi, and Ghana Manasa cultivates lemon grass and processes it to derive oil which it markets in India and in international markets. It carries out cultivation on leased and owned land, as well as through contract farming. snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for transfer transfer that led to transfer choices Imperative: Manasa’s operations in Management readiness: Manasa set Land availability: Manasa has a India faced the twin challenges of up a separate team to focus on Africa high degree of reliance on adequate highly fragmented landholding and operations, and ensured clarity of roles availability of arable land. high cost of land and labor, and it was and responsibilities within the team. keen to find more favorable market Human Resources: It requires access environments in other countries. Financial readiness: It invested to low cost labor for cultivation and revenues from India operations to post harvest processing and Preparation: It restructured the expand to Africa and is completely packaging operations. management team ahead of expansion reliant on its own capital reserves. in order to be able to dedicate full-time Infrastructure: It needs adequate senior personnel to operations in new Operational readiness: It identified road and transportation / logistics markets. the agricultural commodities that it infrastructure in order to move its could grow and market profitably in produce from farm-gate to processing Format preference: It set up a African countries and built internal plants and then to the markets. company named Agritech in capacities to cultivate and process. partnership with a Malawian farmer It established key relations with local Policy: It relies on favorable who owns a 40% stake in it. This stakeholders. government outlook in the form of helped reduce Manasa’s risks and policies that create easier access afforded greater control over its Validating need for product/service: to land and labor, and decreased business in Malawi. It undertook extensive field visits to or no import duties on agricultural understand the agriculture sector in implements and inputs. Country preference: It selected Malawi Africa, and validated the potential since it offered a lucrative business for growing selected agricultural environment for land and labor, and commodities in destination countries. cheap import of equipment and inputs. key challenges in transfer Ecosystem: Inadequacy of infrastructure such as road and transport services, and limited presence of organized logistical fleets Sector: Non-availability of inputs and farm equipment in rural and last mile areas Business: Limited availability of information and lack of local knowledge and context amongst the Manasa team key transfer insights ■■ Manasa established partnerships with government investment agencies and local stakeholders that helped in removing bottlenecks while establishing its operations ■■ It put in place rigorous planning processes to ensure timely delivery of inputs and smooth functioning of its operations ■■ It ensured that local people are hired and trained not only in good agricultural practices but also in management of operations corridors for shared prospertity: case studies manasa group’s business model Set up in 2008, Manasa engages in captive cultivation of in india lemon grass through contract farming and on self-owned land. It processes the lemon grass oil and markets it in India and abroad. In 2009, it expanded to Malawi where Manasa undertakes contract farming with small farmers and it cultivates maize, pigeon pea, and soybean. Manasa also develops crop-specific integrated models that can be emu- entered Ghana in 2013. It will set up integrated agriculture lated by local farming communities. It has a turnover of $1.6 enterprises to help farmers improve paddy production and million, including $600,000 from farming. It has improved build forward market linkages with small and medium rice livelihood and farm incomes of over 500 small farmers in mills. India (Karnataka and Odisha). Manasa’s business is entirely self-financed. It expanded to Malawi in 2009, where its opera- headquarters: Hyderabad, Telangana, India tions are anchored by Agritech. Manasa owns 60 percent stake year of founding: 2008 in Agritech, and 40 percent is owned by its Malawian partner. founder: RSN Raju legal structure: Private limited company Systematic approach to farmer engagement business model: Business-to-business (B2B) sector and sub-sector: Agriculture, integrated Manasa’s strategy entails land procurement and captive services cultivation of crops. It demonstrates its approach through captive cultivation and acquires further land on contract from farmers. Manasa only takes up only 25 percent of small farmer Marginal and small land holdings constituted 85 percent of lands on contract to cultivate lemon grass as the farmers need total operational farmland in India in 201118. The average size to grow food crops to meet their needs. In addition to provid- of these land holdings reduced from 2.28 hectares in 1970-71 ing integrated services such as technology, farm inputs, and to 1.16 hectares in 2010-1119. The declining size of land holding market linkages, it builds capacities of small farmers through impacts agricultural productivity, farm mechanization, and training in sustainable agricultural practices. Manasa’s agricul- sustainability of farm incomes. Manasa Agro, promoted by tural interventions are complementary to the crops cultivated RSN Raju in 2008, aims to improve incomes of small tribal by farmers. Famers benefit as they receive additional income farmers by helping them improve farm productivity and per from lemon grass farming and also gain new and better unit price realization. It does this by helping farmers adopt farming skills. Once planted, the crop is harvested two to four good agricultural practices (GAP) to improve farm productiv- times a year for five years and yields 2-4 metric tons (MT) per ity, providing access to quality inputs, and offering to buy their acre. Manasa signs buy-back agreements at assured prices. produce under a pre-executed buy-back agreement. Farmers earn approximately $32 per MT. Each farmer earns $167 per acre per year. Credit: Moniruzzaman Mohammad 24 | 25 figure 9 manasa’s operating model in india local market Produce at pre-determined price manasa Processed farmers agro products pvt. ltd (Essential Oils) • Training on implementing package of practice for specific crops • Farming inputs : seeds, fertilizers, pesticides Farmers grow • Farm mechanization and Irrigation support • Out-growers program lemon grass and • Credit • Captive farming paddy in India • Market linkages • Processing export market expansion of manasa group’s business model in africa Manasa was keen to explore global expansion to offset risks Africa team and leveraged available management bandwidth and challenges it faced in India, such as the fragmented farm in India to quickly resolve strategic issues. lands and increasing land and labor costs. Malawi, with its low labor costs and availability of land, appeared to be an Format and Country Selection ideal destination for business transfer. Further, the Malawian integrated services industry in agriculture is nascent and grow- Conducting extensive field visits to select the country for ing, with a few small and medium-sized enterprises provid- Manasa’s operations ing food processing services. Manasa realized the immense market potential in providing end-to-end agricultural services, RSN Raju, Manasa’s promoter, travelled to various African particularly in production and processing of maize, pigeon countries like Nigeria, Congo, Tanzania, Kenya, and Malawi pea, and soyabean. It expanded to Malawi in 2009. to assess their suitability for expansion. He selected Malawi as it offered a secure environment, which was a critical factor Management Bandwidth influencing choice of country. Some organizational dependen- cies that led to the decision included affordable resources, Forming a lean team with the right mix of experience for strong demand in local markets, and an enabling regulatory expansion environment. He also found that Manasa could access cheap land and labor in Malawi to run operations. The country had Manasa allocated a senior manager to build relationships and favorable agro-climatic conditions, water, and locally available gather on-ground intelligence on doing business in Africa. It decided to have a separate team to look after its Africa opera- 18. Agriculture land holdings in India. NABARD Rural Pulse. Issue tions. A dedicated senior manager was appointed to lead Ma- 1. Feb 2014. lawian operations and key personnel hired to manage strategic and operational responsibilities. Additionally, experienced 19. Agriculture land holdings in India. NABARD Rural Pulse. Issue 1. Feb 2014. personnel from India were assigned. This strengthened the corridors for shared prospertity: case studies Credit: Mohammad Rakibul Hasan managerial human resources. Crops like maize, pigeon pea, of a Ghanaian government agency, the Savannah Accelerated and soybean were in great demand in the local markets. Labor Development Authority (SADA), which focuses on growth and laws, investment promotion polices and regulations govern- sustainable development to increase incomes of small farmers. ing import of inputs and equipment from South Africa were Manasa signed a memorandum of understanding (MoU) with favorable. SADA in 2013 to set up integrated agriculture enterprises in Ghana to help farmers improve paddy production and build Setting up a partly-owned subsidiary to reduce risks and forward market linkages with small and medium-sized rice exercise greater control over its business in Malawi mills. The regulatory environment in Malawi does not allow Financial Readiness foreign ownership of land. To facilitate faster transfer, Manasa partnered with a Malawian farmer to set up a partly-owned Relying on capital reserves and internal funding to subsidiary, Agritech, through which it could acquire land for expand to Africa cultivation. Manasa owns a majority stake (60 percent) in Agri- tech and therefore has greater control. The minority partner Manasa considered expansion after it strengthened its financial owns 40 percent and shares business risks with Manasa. position in India. Revenues from Manasa’s India operations were invested in transferring to Malawi. This approach paid Manasa’s entry into Ghana was through the public-private off. Africa operations account for around 80 percent of the partnership route. Its success in Malawi drew the attention group’s revenues today, making the expansion a high-return in- vestment. An assured cash flow, positive net-worth, and strong 26 | 27 figure 10 transferring manasa from india to africa dependencies dependencies in india in africa land 2013 land availability Manasa signed a availability MOU with Ghana’s Manasa practices con- Manasa purchases as Savannah Acceler- tract farming with tribal well as leases land as it is ated Development farmers as purchasing or cheaper. Its is also easier Authority to set up leasing land is expensive, 2009 to find large tracts of integrated agriculture and it is challenging to Began preparatory arable land. enterprises find large tracts of arable work to expand land. human operations to resource Africa human Manasa has access to low resource cost labor, but significant Manasa has access training and skill build- to adequate supply ing efforts are needed to of skilled labor as its bridge the skill gaps. operations are carried out on contract farming policy basis, on land owned by farmers; however labor is expensive. The model relies on government policies policy to acquire land at subsidized prices, and The model relies on gov- 2008 to import agricultural ernment policies primar- Manasa 2012 equipment and inputs for ily to support contract commenced Started Agritech Pvt. low or no import duties. farming. operations in Ltd. as a partially Odisha and owned subsidiary in infrastructure Andhra Pradesh infrastructure Malawi to scale its agriculture operations Access to adequate trans- The model requires portation and logistics support for transporta- support from organized tion and logistics, and private sector firms is a Manasa outsources this Farmers engaged: 500 challenge. Manasa incurs function to dependable higher costs due to poor firms. Costs are lower Increase in farmers income: state of roads and trans- since road and transport $ 167 per farmer per annum portation infrastructure. infrastructure is good in its areas of operations. Area Cultivated: 1500 acres capital reserves in India helped Manasa in its expansion. Operational Readiness acquiring farmers for contract farming. It is also marketing the produce in local and international markets. Regulation regard- Manasa realized it could easily transfer its operating model ing land acquisition however had to be addressed carefully. to Malawi with minimal adaptations. It, therefore, continued To become operationally ready in Malawi, Manasa selected a to follow its India strategy of procuring and developing land, format that facilitated easy acquisition of land. It established cultivating crops to demonstrate the model’s effectiveness, and networks with local government agencies to acquire land. It currently cultivates over 1,500 acres of land in Malawi. corridors for shared prospertity: case studies figure 11 challenges faced by manasa group in transfer and strategies adopted to address them challenges impact strategies • Poor infrastructure • Logistics costs • Identified local and limited logistics increases, reducing partners who could support profitability provide end-to-end lo- ecosystem • Market options are gistics management or limited as Manasa is help discover markets only able to operate with existing logistics in areas where some providers external logistical sup- port is available • Non-availability of • Cost of operations in- • Capitalized on the inputs and farm creases as farm inputs favorable terms of equipment in rural and equipment need trade between Malawi and last mile areas, to be imported from and South Africa to sector high import reliance neighboring countries import equipment and for more advanced inputs equipment • Poor understanding of • Set up Agritech in local context results partnership with a in difficulty to acquire Malawian farmer who land and get along owns 40% stakes in • Lack of local knowl- with the local popula- it. This helped reduce edge and context tion Manasa’s risks and among Manasa’s Africa offered greater control team members over its business business Understanding government policies and forging key partnerships Inclusive businesses depend on enabling government policies departments and connected with local farmers to better for land procurement and cultivation, access to inputs and understand local conditions. It entered into a partnership with market, technology transfer, and promotion of training and a local farmer to set up Agritech to acquire land. This partner- capacity-building programs for farmer groups. Before expand- ship helped to connect with local government investment ing to Africa, Manasa evaluated regulations related to land agencies, and thus, helped it acquire land quickly and access procurement and cultivation in various countries. It under- tax benefits through value-added tax regulations. took numerous visits to government agriculture and related 28 | 29 "When compared to India, arable land in Africa is not fragmented and is extremely fertile. Also, government is keen to provide us land if we are able to generate positive impact among small farmers. Thus, a move to Africa was a natural choice for us." RSN Raju founder, manasa group Focusing on core competency In under-developed agricultural markets with poor supply- chain linkages, inclusive businesses need to focus on core competencies and leverage local partners to manage functions such as logistics that need local knowledge. Manasa transports inputs and commodities from Dar-es-Salaam port in Tanzania, which is almost 1600 km away from Malawi. It realized that logistics was best left to local players for speed and efficiency. Hence, while Manasa focused on cultivation of pigeon pea, maize, and soybean, it left the logistics to be handled by the partners. Credit: Mohammad Rakibul Hasan Ensuring inclusion of local people to build trust Inclusive businesses will benefit from adopting business strate- future plans gies that build capacity and integrate local talent in opera- tions. This not only builds trust, but also facilitates smooth operations, particularly when working with large numbers "In the next few years, we plan to cultivate around 2,500 of small farmers. In Malawi, around 80 percent of Manasa’s acres in Malawi. Our Africa operations are highly profitable management team is local. as margins are higher." Inclusive businesses in agriculture also benefit from providing RSN Raju small farmers access to credit to encourage them to take up founder, manasa group sustainable farm practices. In Malawi, a majority of small farm- ers engage in subsistence farming and hesitate to adopt good agricultural practices as they cannot afford it. Loans, when Manasa plans to scale up operations in Africa, especially in available, are expensive, and interest rates can be quite high. Malawi and Ghana, over the next two years. It plans to launch To encourage small farmers adopt good agriculture practices, a monogram by the end of this year to establish a strong brand Manasa offers inputs and farm mechanization technologies for its commodities in India and Africa. It aims to partner through interest-free loans. with international donor agencies and non-governmental organizations that already have huge ground presence and wide network. corridors for shared prospertity: case studies case study 4 shree kamdhenu electronics (skepl) Transfer format: Trade partnership Countries of operation in Asia: India and Nepal SKEPL manufactures and distributes automated milk collection systems (AMCS) under the brand name “Akashganga” that help to automate the milk collection process at the village level. snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for transfer transfer that led to transfer choices Imperative: SKEPL was keen to grow Management readiness: SKELP initially Customer Group: SKEPL requires the its revenues and build global markets assigned senior managers to lead presence of organized and well- for its products, and hence sought expansion to Nepal, and gradually networked dairy cooperatives that international markets with favorable decreased their involvement to can afford and support the adoption competitive landscape for its product. overseeing supply chain management of AMCS, and service-engineer training once Preparation: It identified the right operations stabilized. Community Endorsement: It needs distribution channel and conducted a support from community influencers pilot to assess the need for AMCS Financial readiness: It initially funded who can help to endorse AMCS and in Nepal. expansion through its own capital build credibility for SKEPL within the reserves, and given the higher margin local community, Format preference: It preferred trade for AMCS in Nepal, was soon able partnership as a format for expansion to recover product development and Marketing and after-sales support: since it demanded lesser time and operational expenses from product It relies on presence of private sector attention from senior management sales in the country, firms that it can partner with for based in India. last-mile marketing and after-sales Operational readiness: It forged an support, Country preference: It selected Nepal alliance with the international NGO, owing to an strategic partnership with Winrock International, which helped it Domestic production of milk: Winrock International. The absence of in running a pilot in Nepal, It is more viable in countries with competition and presence of dairy high domestic production of milk, farmer cooperatives also made Nepal which leads to faster break-even for Validating need for product/service: a favorable destination. consumers, A pilot was conducted to test market demand for the product and customer willingness to pay key challenges in transfer Ecosystem: Inadequate market data on the dairy sector in Nepal Sector: Sparse private sector activity in last-mile marketing and after-sales services Business: Pricing of the AMCS makes it unaffordable for small cooperatives, who cannot afford the down-payment to buy AMCS key transfer insights ■■ SKEPL planned its move into the dairy sector in Nepal with the help of Winrock International that already had an existing relationship with dairy cooperatives ■■ It established that the local market met its business dependencies such as domestic milk production capacity and presence of well-developed cooperative system ahead of committing resources to expansion ■■ It invested considerable time to identify and train local staff for maintenance and operations in Nepal 30 | 31 Credit: C. Karuppaiah SKEPL manufactures automated milk collection systems (AMCS) under the brand name Akashganga. The system automates milk collection at the village level. The Akashganga system increases efficiency and transparency of milk collection, improving quality of milk and incomes of dairy farmers. Since its inception in 1996, it has installed over 5,000 automated milk collection systems and impacted the lives of 1.5 million farmer households in India and Nepal. headquarters: Gujarat year of founding: 1996 founders: Sulax Shah, Alpesh Shah, Gaurang Shah, Nilesh Shah, Sachin Shah, Ujval Parghi, and Vipul Shah legal structure: Private limited company business model: Business-to-business (B2B) sector and sub-sector: Agriculture, dairy World milk production has increased sharply from 80 million Sulax Shah founded Shree Kamdhenu Electronics Pvt. Ltd. tons in 2000 to 132 million tons in 2012.20 India is the world's (SKEPL) in 1996 to develop IT-based tools that improve largest milk producer, accounting for more than 16 percent efficiency and productivity of India’s dairy value chain. SKEPL of production worldwide. This success is attributed to India’s designs and manufactures technological solutions such as elec- producer-owned and managed cooperative system. However, tronic weighing scales, electronic hardware, PC assembling, India’s dairy sector faces challenges such as low yields, poor software development, and automated milk collection systems quality milk products, polluted and unclean environment, (AMCS). The low-cost AMCS measures volume of milk, and manual handling delays. As a result, Indian milk does not fat, and SNF. It calculates payment due to the farmer based meet export standards. The dairy value chain is inefficient as on quality and quantity and prints these details for farmer well; village-level milk aggregators pay the same price for all records. By monetizing quality, AMCS incentivizes farmers to types of milk. Better quality milk or milk with a high fat and focus on improving both quality and volume. solid-not-fat (SNF) content21 sells at the same price per unit as poor-quality milk with low fat and SNF. Therefore, farmers SKEPL developed its first product under the brand name do not strive to improve the quality of milk. As payments are Akashganga, which included AMCS and Milk Analyzer, in made on per unit volume basis, farmers tend to increase milk 2003 with a funding of ~$40,000 from Aavishkaar India Micro volumes by adding water. Venture Capital Fund (AIMVCF). It received its first order from the Amul Dairy Cooperative and is currently operational in 10 states in India. In 2007, Winrock International (WI), "We would like to expand into countries where competition an international NGO, sought to introduce the Akashganga is low and we have a ‘first mover’ advantage. " product in the Deodhar Cooperative Society in Nepal. SKEPL formed a strategic alliance with WI and customized the Ujval Parghi product to meet local needs. The successful implementation co-founder, skepl in Deodhar attracted interest from other dairy cooperatives in Nepal. SKEPL has since sold over 300 units in Nepal through trade partnerships with dairy cooperatives. 20. Nepal Dairy Development Board. 2012 21. Milk comprises of water, fat and SNF (i.e. solids that are not fat). The price of the milk will vary based on the percentage of these elements present in the milk. corridors for shared prospertity: case studies skepl’s business model in india SKEPL’s business model hinges on providing technology-based "Unlike traditional quantity and quality measuring products to help milk cooperatives become more efficient. techniques, an AMCS machine can measure crucial Initially, SKEPL installed systems in five villages to study and variables in a matter of seconds in front of the farmer. This monitor operations for two months (Figure 12). However, after ensures he is paid for every drop of milk that he brings to a month, customers were willing to pay to retain machines. the cooperative." Over 90 percent of its customers are dairy cooperatives. Ujval Parghi Technology development co-founder, skepl SKEPL initially supplied microprocessor-based automatic milk collection systems. It later introduced the IT-based AMCS milk analyzers are imported from Belgium and computers are to cooperative societies (Figure 13). The products are devel- bought in India. The company establishes long-term relation- oped and manufactured in-house. Various components for the ships with most of its suppliers. figure 12 key elements of skepl’s business model before amcs use amcs use after amcs use (value proposition) ■■ Inefficient value chain with little SKEPL’s Automatic Milk ■■ Improved efficiencies in value chain problem and solution emphasis on milk quality Collection Systems owing to tying of sales price with ■■ Low procurement volume at (AMCS) are provided quality (SNF and Fat content) the village DCS due to reduced through District Unions ■■ 88 percent increase in the amount competitiveness vis-à-vis milk men to Village Unions of milk sold to DCS owing to its ■■ Low income accruing to farmers increased competitiveness ■■ Nearly 90 minutes spent on milk ■■ Farmers experienced  40 collection percent increase in income ■■ Total time spent on milk collection decreased to 20 minutes village dairy cooperative primary dairy farmers district union state federation society (dcs) Dairy farmers bring their DCS are formed by Federation of village District Unions are milk to the DCS. individual milk producers level dairy cooperative federated at state level. or dairy farmers. societies, District union (DU) buys all its member brief explanation The transaction details It is responsible for are manually recorded Each society has a milk societies' milk. marketing the milk and in paper register and on collection center. milk products of member the farmer’s membership It processes and mar- unions. card; payments are made After AMCS installation, kets the milk and milk accordingly. each member's milk is products. tested for quality and payments are made ac- DU buys and installs cordingly. AMCS at DCS who pay SKEPL through DU. technology development key elements product customization and pricing market development 32 | 33 figure 13 skepl’s operating model in india Aggregation services/ AMCs and after sales Milk payments private companies vendors (glaxo and itc) Orders/payments Orders/higher payments Milk Higher payment AMCs and (sans AMCU after sales AMCs price) SKEPL district village farmers india union dcs Orders/ Payments Better quality payments milk Parts, components, Orders/ semi-assembled payments components component suppliers Product customization and pricing Market development SKEPL customizes AMCS to measure fat, SNF, and water SKEPL offers credit options with payment periods ranging percentages to suit a variety of customers in the dairy sector. from one to three months. It also offers free trials of AMCS The entire process is computerized and accessible in local to demonstrate its value, convenience, and usability. The free languages. The systems cost anywhere from $1,416 to $2,066. trials not only prove effective at installation sites, but also By using simple, low-cost IT-enabled tools, SKEPL maintains a increase visibility in neighboring societies, which also pur- competitive price compared to similar systems available in the chase it. SKEPL provides after sales and maintenance services, market. and trains two or three staff members at each dairy society to operate and maintain its systems. SKEPL advertises in maga- zines and sponsors promotional events at dairy fairs in local communities to build the market for its products. corridors for shared prospertity: case studies expansion of skepl’s business model in nepal Annual milk production in Nepal was about 1.45 million Format and Country Selection tons and per-capita availability of milk was around 52 liters per year in 2013.22 Milk production increased 1.5 times from Evaluating market maturity for country selection 11.7 million tons in 2000 to 17.1 million tons in 2012.23 As in India, the dairy sector in Nepal faces multiple issues of SKEPL planned to expand into countries that had significant subsistence farming, poor quality milk, and insufficient skill milk production capacity. Its expansion also depended on the and knowledge among farmers about dairy production and presence of a well-developed cooperative system, as AMCS management.24 Winrock International (WI) partnered with is designed to operate in a cooperative set-up with organized SKEPL to introduce AMCS in Nepal to improve efficiencies of and centralized milk collection. SKEPL considered these milk-collection cooperatives. factors and selected Nepal, Bangladesh, Sri Lanka, and Bhutan as potential destination countries. Of these, Bangladesh and Management Bandwidth Nepal had fully operational dairy cooperative systems. How- ever, Bangladesh rated lower than Nepal owing to its poor law SKEPL’s senior management team was involved in efforts to and order situation. After commencing operations in Nepal, understand the dairy sector and the AMCS market, as well as SKEPL realized that while there were 1500 milk cooperatives, to choose the right trading partner in Nepal. SKEPL collabo- only 300 to 400 cooperatives were large enough to receive rated with Winrock International when the latter approached government subsidies to buy AMCS. SKEPL is currently trying it as it offered an opportunity to explore a new market with to address this challenge by mobilizing support from banks to limited investment. However, the expansion to Nepal required finance smaller cooperatives. significant amount of travel and senior management time. To address this strain on management bandwidth, SKEPL Forging trade partnership with strategic partners helped explored trade partnerships with large district co-operatives reduce senior management time and effort that could help scale outreach quickly. The senior management team at SKEPL realized that expan- Currently, SKEPL does not have an office in Nepal. MDC, the sion would demand considerable bandwidth. Yet, for suc- trading partner, manages operations (marketing and after-sales cessful expansion, management must invest time in critical service) in Nepal. SKEPL manufactures AMCS and provides decision making. To address this issue, SKEPL’s senior training to service engineers appointed by MDC. This format management spent time understanding the Nepalese dairy of transfer considerably reduces time spent by senior manage- sector and the AMCS market. Given its limited management ment in Nepal. Credit: Srinivas Rao 34 | 35 figure 14 skepl’s operating model in nepal Higher payment AMCs and (sans AMCU makwanpur after sales AMCs price) district SKEPL village cooperative farmers india dcs Orders/ milk producers Payments Better quality payments pvt. ltd milk Parts, components, Orders/ semi-assembled payments components component suppliers bandwidth, SKEPL decided to transfer to Nepal through offers security and certainty of product sales. Cooperatives also the trade partnerships route. It selected Makwanpur District pool resources, and therefore, have a higher financial capacity Cooperative (MDC), one of its early customers, to anchor to buy systems at a premium and make payments in advance. and scale operations in Nepal. MDC was reliable and had This further lowered financial risks for SKEPL and enabled credibility among local stakeholders. It was also competent it to invest capital in product development and operations. in marketing AMCS. MDC undertook entire marketing and Effective identification of target customer segments and smart annual maintenance efforts in Nepal, while SKEPL’s involve- pricing policies enabled SKEPL to break-even within six ment was restricted to manufacturing and providing training months of operations in Nepal. to service-engineers. Leveraging customers to build distribution channel Financial Readiness The successful pilot in Deodhar Cooperative Society in SKEPL's financial reserves had been growing steadily for two 2007 enabled SKEPL to launch AMCS in Nepal. The initial to three years ahead of transfer. It tapped into these to fund systems improved efficiency of milk collection and created a growth in Nepal. It also de-risked revenues from Nepal by visible improvement in incomes of dairy farmers in Deodhar. ensuring that customers pay for AMCS in advance. It charges a Strong product endorsement by satisfied customers substan- premium to cover the higher costs of doing business. Further, tially boosted demand for AMCS. Soon, other cooperatives as a product company expanding through trade partnerships, expressed interest in procuring and installing the systems. SKEPL had a shorter break-even period and is no longer solely SKEPL formed a partnership with MDC to serve this growing reliant on capital reserves for operational expenses in Nepal. market demand. MDC remains a reliable customer and cred- ible trade partner (Figure 14). Operational Readiness Identifying similar markets and customer segment for 22. VetNews. Volume 3, Issue 2. Nepal Veterinary Association. business expansion February 2013. To transfer to a new geographies easily, the SKEPL team 23. FAOSTAT accessed on September 2014. invested in identifying similar markets and suitable customer 24. VetNews. Volume 3, Issue 2. Nepal Veterinary Association. segments for expansion. The dairy sector in Nepal has a February 2013. cooperative and policy structure that is similar to India, which corridors for shared prospertity: case studies figure 15 transferring skepl from india to nepal dependencies dependencies in india in nepal presence of cooperative presence of cooperative societies and institutions 2003 2011 societies and institutions Aavishkaar invested Entered into trade SKEPL sells AMCS to There are a number of US$40,000. partnership agree- dairy cooperatives that smaller dairy coopera- Developed AMCS ment with Makwan- federate a large number tives in Nepal, but they and Milk Analyser pur District Coopera- of primary dairy coopera- are unable to pay upfront and planned tive Milk Producers in tive societies. This is not for AMCS. SKEPL targets expansion into Nepal a challenge as India has only large dairy coopera- other Indian states a strong dairy movement. tives as they can afford AMCS. large scale local milk production large scale local milk production Demand for AMCS is dependent on milk SKEPL selected Nepal as production. SKEPL it is building its dairy operates in high milk sector. Milk production producing regions to in Nepal is growing, in- ensure adequate demand turn leading to a growth for AMCS. in demand for AMCS. 1996 local marketing and Developed a local marketing and after-sales team microprocessor- 2008 after-sales team based application Installed 15 AMCS in SKEPL maintains a Deodhar Cooperative Local talent is needed to local team to market, Society, Nepal handle minor problems in install and maintain the 2007 the system. SKEPL hired systems by providing Formed strategic alliance and trained 2-3 local staff in-house training. with Winrock International; for overseeing AMCS initiated pilot in Nepal maintenance. Members from dairy cooperatives are also trained by SKEPL team members from Sales figure reached: 5300 units India. Increase in farmers income: 40 percent Reduction in time spent for milk collection: 70 minutes Selecting the right formats for partnerships Inclusive businesses planning to expand will benefit from tives in Nepal. This helped boost adoption of SKEPL’s products forging strategic partnerships with organizations that have among customers who could resist adopting new products and significant presence in destination countries. This provides services that alter traditional ways of dairy management. Once them an opportunity to better understand customers and SKEPL understood the market better, it forged a trade partner- pilot initiatives with minimal investments. They also need to ship with Makwanpur District Cooperative (MDC), which be open to multiple formats for these partnerships. SKEPL anchors and scales operations in Nepal. planned its expansion through a strategic alliance with WI, which already had existing relationships with dairy coopera- 36 | 37 figure 16 challenges faced by skepl in transfer and strate- gies adopted to address them challenges impact strategies • Inadequate market • Teams find it difficult • Conducted a pilot data on dairy sector in to create effective to test the product’s Nepal marketing and sales market demand, ecosystem strategies customer’s willingness • Limited visibility of to pay and product growth trends brings popularity. SKEPL de- in a conservative termined its marketing approach to business strategy based on the which impacts revenue pilot’s success growth • Sparse private sector • SKEPL had to work • Invested in training activity in last-mile with an after-sales local staff for mainte- marketing and after- team that was unable nance and operations. sales services to deliver effectively, Experienced staff from sector as a result unfavor- India travel to Nepal to able “word of mouth” support them impacted sales in the early months • The pricing of AMCS • Effective market size • Planned launch of a limits the market as is smaller, which has financial product with small cooperatives in-turn led to slow the help of banks cannot afford the sales growth. Ability to to enable purchase business down payment to buy scale impact to small of AMCS by small AMCS cooperatives is limited cooperatives Leveraging first-mover advantage to get better terms of it receives payments in advance and charges a premium price. trade with potential partners This helped it achieve break-even in six months. Inclusive businesses are often driven by opportunities to Evaluating market maturity for country selection capture first-mover advantage. They typically offer innova- tive products and services in markets that are not served by While planning expansion strategies, inclusive businesses in others. In Nepal, SKEPL offered its products in a market where the dairy sector need to consider key parameters such as pres- competition was non-existent. As a result, it received better ence of cooperatives, import dependence on milk and milk terms of trade in Nepal than in India. For example, SKEPL products, presence of distribution networks, and competitors. needs to sell its machines on credit in India, while in Nepal, SKEPL plans to expand into countries that have sizable milk corridors for shared prospertity: case studies Credit: Ross Huggett production capacities. Its expansion also depends on the invaluable, especially in education and awareness-building presence of well-developed cooperative systems, as AMCS is among target customers. SKEPL invests considerable time to designed to operate in cooperative set-ups with organized and identify and train employees for maintenance and operations centralized milk collection. In Nepal, it soon realized that in India. New hires are trained and shadow older employees while there were 1500 milk cooperatives, only 300 to 400 coop- before taking on independent responsibilities. Selected em- eratives were large enough to receive government subsidies to ployees travel to Nepal and train local people to address minor buy AMCS. SKEPL is addressing this challenge by mobilizing issues in the systems. This train-the-trainer model emerged support from banks to lend to smaller cooperatives. Care- from the understanding that it is necessary to hire local people ful market estimates can lead to lower market development to operate AMCS and ensure smooth functioning. budget spends and reduce time to scale. future plans Investing time in identifying and building local talent "We would like to expand into countries where competition Inclusive businesses selling technology-based products in new is low and providers us the ‘first mover’ advantage." geographies need to hire local talent with knowledge of local dialects, culture, and geography. SKEPL found WI’s support Ujval Parghi co-founder, skepl "Hiring local employees in Nepal enables us to easily establish closer relations with the producer farmers, which SKEPL has a significant market presence in India and Nepal. in turn builds customer confidence and trust." To further scale its operations, it plans to expand into other countries in South Asia such as Bhutan that have similar Ujval Parghi cooperative set-ups. co-founder, skepl 38 | 39 Healthcare Africa is increasingly faced with the specter of a “Double Disease Burden” , i.e. economic and social detriment resulting from widespread communicable diseases such as diarrhea, ma- laria and HIV/AIDS, as well as the rise of non-communicable diseases such as diabetes, cancer, and ischemic heart disease25. This challenge is further compounded by the fact that seven in ten Africans26 often do not have the wherewithal to access expensive private healthcare and that penetration of healthcare Case Studies infrastructure in rural areas is ineffective. 1. Aravind Eye Care The healthcare sector in Africa is characterized by low public sector investments and high out-of-pocket private expenditure. 2. Dimagi Many countries in Africa are witnessing increase in the num- ber of high-end hospitals in larger cities, but the peri-urban 3. Novartis Arogya Parivar and rural markets are still underserved, and affordable health- care is unavailable. Such a scenario presents opportunities for 4. Operation ASHA inclusive business models from more mature markets such as India. IFC estimates that an investment of $25-30 billion will be needed in hospitals, primary clinics, warehouses to store and manage inventory of medical supplies, and low-cost technology innovations in Africa. 25. The Global Burden of Disease. World Bank. 2013. 26. Poverty headcount at $2 per day (PPP), World Bank Development Indicators Database. Accessed in November 2014. corridors for shared prospertity: case studies case study 5 aravind eye care system Transfer format: Knowledge sharing Countries of operation: Own operations in India but transferred knowledge to organizations in 30 countries Aravind Eye Care System is the largest eye care provider in the world. It provides standard quality of service to patients from across the economic spectrum. It aims to eliminate needless blindness and provide quality eye care. snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for transfer transfer that led to transfer choices Imperative: In alignment with its Management readiness: Aravind set Reliance on donor support: Aravind broader mission of avoiding needless up LAICO to implement knowledge is partially dependent on donor blindness, Aravind sought expansion transfer activities. It staffed LAICO support for capacity building of the to scale impact andreach out to a with consultants; doctors from Aravind identified organizations. wider audience, beyond India. also contributed time. Recipient capacities: Recipients Preparation: It formed a dedicated Financial readiness: Aravind Hospital of knowledge transfer need to have team for knowledge sharing, which contributed 25 percent of the funds capacity and capability in terms of included LAICO consultants and required for LAICO’s operations. Donor committed leadership and necessary ophthalmologists from Aravind agencies and international NGOs healthcare infrastructure for the long Hospital. contributed the rest term success of knowledge transfer. Format preference: It chose knowledge Operational readiness: The model was Reliance on skilled manpower: transfer and joint venture as transfer established, business and clinical Transfer of the model is dependent formats to scale impact and build local orocesses were documented, and on skilled human resources in the capacity in the new geographies. training curriculum was developed healthcare sector in Africa. before expansion. Country preference: Knowledge sharing assignments are most often Validating need for product/service: funded by donors who drive the Short term consulting assignments country selection. Donors’ selection of provided Aravind with insights about countries is generally driven by the the target countries. Donor agencies disease burden and demand for who supported the knowledge transfer eye care services. validated the need for specialized eye care services in these markets. key challenges in transfer Ecosystem: Inadequate and high cost of infrastructure such as internet and electricity impacts the cost of running a business Sector: Poor availability of basic eyecare infrastructure and eye care professionals Business: Reliance on donor support to sustain knowledge sharing activities and to identify partner hospitals; Aravind also faced challenges in monitoring of results after the knowledge transfer period key transfer insights ■■ Aravind chose to transfer through knowledge sharing in order to scale impact rapidly ■■ It secured donor support for scaling affordable eye care, and worked with donors who could identify and support potential partners that lack the capacity to pay for the knowledge transfer services ■■ It developed an online monitoring system for tracking the impact of the consulting and capacity building engagement ■■ It standardized its systems and processes, and developed curriculum for knowledge transfer before embarking on business transfer 40 | 41 Established in 1976, Aravind Eye Care System is the largest "One can easily replicate the model but it is hard to eye-care provider network in the world. Its model functions imbibe the values and culture of Aravind Eye Care System. on the principles of efficiency and scale. Aravind provides Commitment of the leadership and passion are the two standardized quality of service to patients from across the most important things for successful transfer of our model." economic spectrum. It is driven by the mission to eliminate needless blindness and provide quality eye care to all. Ms. R. Dhivya faculty associate, laico headquarters: Madurai, India year of founding: 1976 founders: Dr. G. Venkataswamy Grameen) and Congo (for a mining company). The efficient legal structure: Non-profit assembly-line model for eye surgeries allows an eye surgeon at business model: Business-to-consumer (B2C) Aravind to perform over 2000 surgeries annually as against the sector and sub-sector: Health, specialized eye- national average of 350. care Driven by the larger mission to eradicate preventable blind- According to WHO (2014) estimates, 285 million people are vi- ness globally, Aravind disseminates its model to inclusive sually impaired worldwide. Of these, 39 million are blind and businesses in other countries. It established a training institute, 246 million suffer from low vision. About 90 percent of the Lions Aravind Institute of Community Ophthalmology (LAI- world’s visually impaired live in low-income settings. Uncor- CO), to implement the knowledge transfer. The institute has rected refractive errors and cataract remains the leading causes shared best practices from the Aravind model and provided of blindness in middle and low-income countries, and 80 support to over 300 eye hospitals in 30 countries. In addition, percent of these could be prevented or treated27. The Madurai- Aravind plans to set up an eye hospital in Nigeria in partner- based Aravind Eye Care System is driven by the mission to ship with the Chanrai Group. Aravind hospital will provide its eradicate preventable blindness in the developing world. eye-care expertise, while investments and local facilitation will come from the local partner, Tulsi Chanrai Foundation (TCF). Founded in 1976 by Dr. Venkataswamy, Aravind Hospital The initiative will help build local capacity and scale impact in provides innovative high-quality eye care to all. From merely a new geography. 11 beds in Madurai four decades ago, the hospital now has more than 4000 beds across 10 locations in Tamil Nadu, India. 27. Visual impairness and blindness factsheet. WHO. Accessed in It also helped establish eye hospitals in Lucknow, Amethi, November 2014. and Kolkata, as well as in Bangladesh (two eye hospitals for figure 17 aravind eye care system's business model patient screening support and primary care mission HUMAN RESOURCES ON THE FIELD • Training Eliminate needless • Eye camps blindness by providing SUPPLIES • Specialised camps compassionate and • Eye centers • Medical equipment quality eye care to all • Pharmaceuticals IN HOSPITALS outreach • Outpatients INNOVATION LAICO • Research economies of scale vertical integration cross subsidization corridors for shared prospertity: case studies Credit: Jayanta Das Gupta aravind eye care’s business model in india "We are not doing this for revenue or ownership, but with an intention to make eye care happen." India accounts for 12 million blind people, over 30 percent of the world’s 39 million28. 70 percent of this population lives Thulasiraj Ravilla in rural areas while 70 percent of eye-care professionals are executive director, laico based in urban areas. Although 80 percent of this blindness aravind eye care systems is preventable and curable if timely treatment is provided, eye-care delivery in rural India is a huge challenge. Aravind Eye Care addresses this need with its innovative model and deliver 6-8 surgeries every hour. Surgeons at Aravind perform affordable services. 25–40 procedures daily while maintaining unit costs at a very low level of about $10 per cataract operation. Aravind Eye Care System is the largest provider of ophthal- mological services in the world with 10 hospitals, 6 outpatient Vertical Integration centers, and 49 primary care centers in Tamil Nadu. It has on board 457 doctors and 2,647 nurses, research, and administra- Aravind vertically integrated from manufacturing to research tive staff. Aravind conducts over 2,200 screening camps and and delivery to keep operational costs low. Aurolab, estab- performs 380,000 eye operations a year, with over 50 percent lished in 1992, is the manufacturing division of Aravind Eye of the surgeries delivered at low or no cost. Aravind’s business Hospital. It supplies high-quality ophthalmic consumables and operational model is inspired by the success of fast-food such as intraocular lenses (IOLs), suture needles, and spectacle giant McDonald’s strategy to deliver high-quality and low-cost lenses at affordable prices to developing countries. Aravind services consistently across geographies. obtained technology to manufacture intraocular lenses at a fraction of its cost from the U.S.-based Seva Foundation and Economies of scale Combat Blindness Foundation. The lenses are priced at as low as $2 per lens, which is one-tenth of the international price. At Aravind, efficient hospital management with high patient volume enables high productivity. For instance, operating 28. Infinite Visions -The Aravind Eye Care Experience. August 2012. rooms are utilized optimally by equipping them with two operating tables and nursing teams so that one surgeon can 42 | 43 figure 18 roadmap for knowledge transfer determine build team for fund source document the approach for knowledge knowledge transfer model knowledge transfer transfer recipients transfer Aurolab’s manufacturing activity scaled up exponentially from core team consisting of 10 consultants with management and 35,000 lenses annually in 1992–1993 to nearly 2 million lenses operational expertise for knowledge transfer activities. Aravind today. It markets its products to more than 130 countries, with Eye Hospital supports LAICO on clinical matters by providing exports accounting for half its Indian revenues ($13.33 mil- 500 person-days of technical support and 100 person-days of lion) in 2012-13. Knowledge transfer plays a role in catalyzing doctors each year for knowledge transfer. sales for Aurolab’s ophthalmic consumables. Format and Country Selection Cross-subsidization Leveraging experience and brand to build a consulting Aravind provides free or affordable care to approximately 66 practice percent of its patients with revenue derived from 34 percent of patients who pay for services. The hospital ensures the same The consulting and knowledge transfer route to expansion quality of treatment for all its patients. The free and paid facili- is aligned with Aravind’s long-term goals. The team found ties differ only in terms of amenities such as air conditioning there were many eye-care institutions across African countries in the recovery rooms. that require guidance and support to refine their operations. Aravind leveraged its positive brand image, years of experi- ence, and widely-recognized model to establish a consulting Expanding Aravind Eye Care System and knowledge-transfer practice. to Africa Apart from quickly scaling impact, this format presented In alignment with its mission, Aravind Eye Care System minimal operational hurdles to expansion as it did not involve intended to reach out to a wider population and scale the any legal, political, and business constraints in destination outcome that its hospitals were generating in India. It founded countries. LAICO in 1992 through the Sightfirst program supported by the Lions Club International Foundation and the Seva Expansion decisions are made in consultation with fund- Foundation. LAICO aimed to provide technical and manage- ing institutions ment assistance to hospitals keen to implement the Aravind Eye Care model. Knowledge-transfer activities in the healthcare space are usually funded by donor agencies. Hence, donors often initiate The senior management at Aravind found that eye-care deliv- discussions and recommend countries and healthcare orga- ery in Africa faced similar challenges as in India and could be nizations they wish to support. Aravind provides consulting significantly improved. It therefore started its Africa journey support and knowledge-transfer services to these organizations intending to streamline the eye-care delivery process and en- and in these regions. able institutions to deliver high-quality eye care at scale. Financial Readiness Management Bandwidth Obtaining external donor support to fund expansion Building a focused team with strategic responsibilities Aravind’s knowledge-sharing engagements are largely driven LAICO led the global expansion efforts with guidance from by external donor funding. The monetary support provided by the founding team at Aravind Eye Care System. It created a these donor organizations covers operational expenses of corridors for shared prospertity: case studies assignments executed by LAICO. LAICO’s annual running costs are around $400,000. Aravind Eye Hospital provides around $100,000. International organizations such as the World Health Organization (WHO) and international NGOs such as Seva Foundation, Sight Savers, ORBIS, and CBM, fund technical assistance provided by LAICO through project grants in Africa and worldwide. "Monitoring the progress of the participating organizations post knowledge transfer is difficult. We are trying to overcome this challenge by enabling data collection through an online platform." Ms. R. Dhivya faculty associate, laico Operational Readiness Credit: Jayanta Das Gupta Standardizing processes for efficient knowledge transfer Online platform for progress monitoring Before entering Africa, Aravind standardized and tested its The Aravind team found it difficult to monitor progress made processes and model in India to ensure operational efficiency, by partner hospitals beyond project periods. To overcome cost-effectiveness, and high service quality. It identified this, it recently developed an online platform for data best practices and documented them in a training manual. collection and monitoring, where participants share data Aravind also developed a specialized training program for its on footfalls, number of surgeries, and complications during knowledge transfer partners. Aravind’s knowledge-transfer surgery. This helps Aravind map the impact of the initiative. program includes needs assessment of participating hospitals, a week-long capacity-building program for key hospital staff at Diversifying to newer customer segments through Aravind hospital in Madurai, and on-site implementation sup- e-learning platform port, including off-site monitoring and advice for two years. Skilled manpower and continuous training is the key busi- The immersion program is a capacity-building tool as partici- ness dependency for any healthcare business. LAICO recently pants observe Aravind’s model first hand. It is customized to launched Aurosiksha, an e-learning platform, to enhance suit the participating organization after the needs assessment and facilitate continuous learning, skill up-gradation and visit (1-2 weeks). During this visit, the core team gains primary knowledge transfer among eye-care professionals worldwide. insights on issues faced by the participating organization. The platform provides a repository of online learning tools in Subsequent workshops help participants develop a vision for multiple languages, helping cost-effective knowledge transfer their hospital. LAICO supports participants in developing of best practices. The platform also helps train resources in strategies for demand generation, resource training and utiliza- geographies where training facilities are limited or missing tion, quality assurance, and financial viability. and staff is semi-skilled or inadequately skilled. figure 19 technical assistance provided by LAICO need capacity- follow up offsite identification/ monitoring assessment building on strategy selection of and advice visit by workshop at implementation hospitals for two years aravind's team laico, madurai by the hospital 44 | 45 figure 20 transferring aravind eye care from india to africa dependencies dependencies in india 2010 in africa skilled Hilton Humanitarian skilled manpower prize for work in Africa manpower Aravind provides training Africa faces an acute for doctors, nurses and shortage of skilled 1996 support staff. The model healthcare profession- Aurolabs and relies on availability of als. As donors identify LAICO skilled manpower, which transfer recipients, there is available in India. are challenges in ad- equate availability of capability of transfer skilled manpower, which recipients is bridged by training. Capacity and capability of transfer recipients capability of transfer in terms of leadership, recipients and skills impacts the success of knowledge Transfer recipients often transfer. Aravind intends face challenges in capac- to proactively identify ity and capability. Finan- 1976 recipients of transfer to cial capacity is low in the Aravind Eye meet its standards. absence of an external Hospital, 2007 Aurolabs new donor. Leadership in securing donor support Madurai facility replicating hospital must for knowledge transfer be committed to the long Majority of funding sup- term goalof providing port is received through affordable, quality eye donors or participant care. hospitals seeking Hospitals: 10 securing donor support knowledge transfer. Health camps: 2,841 Patients reached: 554,413 for knowledge transfer Aravind supports LAICO by providing technical Surgeries conducted: 90,547 Aravind contributes to expertise and monetary the knowledge transfer support. Knowledge transfer and initiative, however it is consulting to over 300 hospitals dependent on donors in 30 countries. for scaling activities and identifying transfer recipients and geogra- LAICO provides two years of phies. post consulting hand holding to the organizations. challenges and key insights for transfer Knowledge transfer is a suitable transfer format for development challenges and intend to scale impact inclusive businesses intending to scale impact rapidly rapidly. The belief at Aravind is that it alone cannot address the challenge of preventable blindness. It Knowledge transfer is an ideal transfer format for inclusive must build local capacity to solve the problem in a businesses that have developed innovative models to address sustainable manner and ensure long-term impact. corridors for shared prospertity: case studies Credit: Fahad Yunus Mohammed figure 21 challenges faced by aravind eye care in transfer and strategies adopted to address them challenges impact strategies • Inadequate and high • Poor connectivity • Adopted third party cost of supporting increases the cost of funded knowledge ecosystem infrastructure such as running a business, transfer route to over- internet and electricity and often makes come challenge of high in both Asia and Africa affordable healthcare cost of operations solutions unviable • Poor availability of • Aravind has limited • Worked with donors basic eye care hos- choice of replicators who identify transfer pitals and eye care providing eye care in recipients. Aravind professionals remote areas. This included onsite and sector adversely impacts offsite training of per- the momentum and sonnel in the knowl- quality of knowledge edge transfer model to transfer benefits ensure quality • Reliance on donor • Scale is limited to • Started to proactively support to sustain geographies and identify hospitals for knowledge sharing recipients identified knowledge transfer activities and identify by donors. It is also • Approached donors in replicator hospitals difficult to guage if cases where recipients business • Difficulty in monitor- knowledge transfer has require monetary ing progress after been successful in the support knowledge transfer long term • Developed an online e-moitoring system, which helps Aravind track progress after the knowledge transfer 46 | 47 Securing donor support for knowledge transfer activities "For Aravind Eye Care the objective of the initiative is Knowledge transfer can scale impact quickly, but comes with to help build local capacity and scale impact in a new costs that cannot always be borne completely by inclusive geography." businesses offering these services. Offering consulting services is a sustainable way to conduct knowledge transfer activities. Thulasiraj Ravilla Potential recipients of such transfer can pay for technical executive director, laico assistance provided by disseminators. However, if potential aravind eye care systems disseminators or recipients lack capacity to fund knowledge transfer activities they might need donor support. Aravind invested time and resources in developing and setting up FUTURE PLANS knowledge transfer facilities. Donors support potential recipients by funding the knowledge transfer fees. Actors LAICO is working proactively with donor agencies and in the ecosystem such as donor agencies and international international NGOs to identify hospitals to support in Africa. NGOs are important stakeholders in facilitating and funding This, they hope, will help overcome some existing challenges knowledge transfer activities. Donors and foundations can in knowledge transfer. The hospital in Nigeria in partnership also help successful inclusive businesses understand the value with the Chanrai Group is another focus area. The hospital is of opening their business models and developing knowledge expected to be the largest eye care facility in Africa and is set transfer programs. to start operations in December 2015. Credit: Aravind Eye Care corridors for shared prospertity: case studies case study 6 dimagi Transfer format: Wholly-owned subsidiary Countries of operation: USA, India, South Africa, Mozambique, Senegal Dimagi is an award-winning social enterprise providing mobile applications for healthcare. It has developed products in the mobile technology space to aid frontline health workers in efficient case management, data collection, information broadcast, and supply chain management. snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for transfer transfer that led to transfer choices Imperative: Dimagi aimed to provide Management readiness: Dimagi’s Mobile Penetration: As Dimagi’s technology support for capacity diverse team has defined roles for technology operates on mobile building of frontline healthcare technology, operations and strategy. phones, the destination country must workers. This freed senior management have reasonable mobile penetration. bandwidth for expansion as they Preparation: Dimagi implemented spent less than 20 percent of their time Presence of frontline workers: projects in South East Asia and Africa on the India operations. Dimagi’s model empowers frontline through teams based in India. This health workers. Presence of NGOs and helped it estimate the market Financial readiness: Dimagi received government programs that employ opportunity and business environment grant funding to expand to India, but frontline heathcare workers is a in these countries. it self-funded the expansion to South requirement. Africa, Mozambique and Senegal. Format preference: Since the product Availability of technical talent: required customization involving core Operational readiness: It developed Project managerial staff and technical knowledge, Dimagi selected and tested the model by implementing implementation staff in partner the wholly-owned subsidiary route multiple projects in new geographies agencies are required to support for expansion in Africa. with India as the hub. customization, implemetation, supervision, and handholding to Country preference: It established effectively leverage Dimagi’s products Validating need for product/service: hubs in South Africa, Mozambique, and and services. Exposure through projects Senegal to cover the vast untapped indicated that there was a growing market in Africa. Presence of a good healthcare services sector coupled with mobile network and presence of NGOs low density of population in Africa. and government programs were key This presented a vast untapped market selection criteria. for technology products in healthcare. key challenges in transfer Ecosystem: Low technical capacity of workforce in Africa Sector: Linguistic barriers and lack of educated healthcare workforce in target countries constrains uptake of its mobile application-led products Business: Lack of awareness about new technologies for outreach and data management among potential customers; lack of capacity to adopt technology and data management processes key transfer insights ■■ Dimagi used a hub-and-spoke model to increase outreach and create a pipeline of projects in new countries while keeping the operational costs low ■■ Dimagi's expansion was supported by its second-line leadership, and it benefited from employing a mix of experienced staff and local team 48 | 49 Established in 2002, Dimagi is an award-winning social play an important role in improving last-mile health-care enterprise that has developed multiple products in the service delivery processes by aiding communication between mobile technology space to aid frontline health workers healthcare providers and patients. Dimagi is a for-profit, social in efficient case management, data collection, broadcast enterprise that has developed multiple products in the mobile messages, and supply-chain management. It has offices in technology space to aid frontline health workers in efficient the U.S., India, South Africa, Mozambique, and Senegal. Its case management, data collection, and supply-chain manage- products are currently deployed in over 40 countries across ment, thus improving last-mile health-care service delivery. Asia and Africa. Incorporated in 2002 in Cambridge in the U.S. by Jonathan headquarters: Cambridge, Massachusetts, U.S. Jackson and Vikram Kumar, Dimagi undertook health year of founding: 2002 informatics projects with government agencies, NGOs, social founders: Jonathan Jackson and Dr. Vikram Sheel enterprises, and corporate enterprises in the U.S. and Asia and Kumar Africa from its U.S. office. It received $100,000 grant fund- legal structure: For-profit ing from USAID to pilot its flagship product, CommCare, business model: Business-to-business (B2B) and expanded to India in 2010. CommCare is a multilingual sector: Health, health informatics mobile phone-based health-care application that allows health workers to store and access patient information and Inaccurate and inadequate information hampers global monitor at-risk patients, while also enabling program staff to aid efforts to improve healthcare systems in the developing world. According to a WHO analysis, there is a need to build streamlined health information systems capable of generating 29. World Health Organisation. Health Metrics Library report. data on a range of health-related issues29. Technology can April 2005. figure 22 transferring dimagi from india to africa ++ + + Mobile phone Health education Communication Forms, checklists, Data collection, Efficient field staff application/ and training with clients and clinical decision monitoring and and improved software to support activities health facilities support management delivery health worker Improved data Provides case management, data collection, and CommCare management and data management to frontline workers monitoring SMS applications allowing for two-way messaging, Improved CommTrack conditional reminders, surveys and broadcast messages communication Improved vaccine CommConnect Tool for mobile logistics and supply chain management and drug delivery Introduction advantages of using the technology improved of Mobile applications by the field workers delivery Technology corridors for shared prospertity: case studies Credit: Dimagi monitor health worker performances through online reports. funding from USAID. It implemented its flagship product, Dimagi’s other products are CommTrack and CommConnect. CommCare, in 11 organizations as a proof-of-concept deploy- CommConnect is a turnkey platform to build messaging ment model. Dimagi provided ten phones to each organization, applications. For instance, it can send medication reminders and allowed the organizations to test the CommCare platform to patients enrolled in clinical trials and enable community before committing to it. With the project’s success in India, health workers conduct large-scale surveys. CommTrack is a Dimagi won a $1 million DIV stage 2 funding to engage with mobile application that enables efficient logistics and supply- more than 40 organizations through the same model. chain management for essential vaccines and medications. Since its launch in 2010, Dimagi has expanded its products Dimagi’s biggest success in India is its work with Accredited to over 40 new frontline worker programs in India, reaching Social Health Activists (ASHA) workers under the National over 7 million people in rural India. Motivated by its success Rural Health Mission (NRHM).31 The ASHA program needed in India, Dimagi has expanded to South Africa (2011), Mozam- an innovative approach to overcome challenges in training, bique (2012), and Senegal (2014). Since inception, Dimagi has motivating, and monitoring health workers and enabling collaborated with over 100 partners to implement projects in better service to local communities. After four months of using over 40 countries in Asia and Africa. 30. Community health workers are an important part of the govern- ment’s program to increase access to primary health care in dimagi’s business model in india remote geographies as they are responsible for last mile delivery of health care services. Over 70 percent of India’s population lives in villages with 31. India’s National Rural Health Mission (NRHM) has trained and limited access to healthcare services. These remote areas face an deployed more than 750,000 Accredited Social Health Activists acute shortage of doctors and well-trained community health (ASHAs) – NRHM’s name for community health care workers workers.30 Dimagi expanded to India in 2010 with the help (CHWs).The program assigns one ASHA for every village to of a $100,000 Development Innovation Ventures (DIV) grant ensure life-saving interventions for their communities. 50 | 51 figure 23 flow of key operational activities at Dimagi understand the needs customize roll- out monitor client's business assessment product Dimagi's Operating Support the client Visit client's field Monitor field Process Flow Understand the Design a for on-ground worker's business and site to understand customized implementation performance and operational the key challenges application and seamless make necessary elements of faced by frontline catering to the adoption of modifications to client's business worker identified needs technology technology CommCare, community health worker knowledge retention expanding dimagi to africa of danger signs in all major health categories increased by 22 percent. India has the largest number of CommCare projects Dimagi had been engaged in projects in the African continent, in the world. Donor agencies and international NGOs fund which it managed through satellite offices at project locations. Dimagi’s research and product development efforts, while its It developed regional hubs within Africa as it saw significant key clients are government agencies, NGOs, social enterprises, opportunities for growth in the region. In 2012, Dimagi and corporate enterprises that employ frontline workers to expanded to South Africa and Mozambique, and subsequently deliver essential services. to Senegal in 2014, to increase outreach in Sub-Saharan Africa. Enabling efficient product delivery through customiza- tion and implementation support "Dimagi has adopted a tiered pricing structure with a view to make technology accessible to all. The standardized The Dimagi team works with clients to understand frontline product is offered free of cost to organizations with less worker roles and activities in the operational model. It than 50 frontline workers." identifies specific issues faced by frontline workers and designs customized applications that help overcome these challenges. Devika Sarin Dimagi supports on-ground implementation of the technol- director of partnerships, ogy, particularly to align it with the existing field operation asia, dimagi processes, and offers training to frontline health workers to ensure effective use of the product. Once the technology is deployed, Dimagi monitors its performance over a period of Management Bandwidth three to six months to assess its use and address challenges, if any. Necessary product modifications are made based on learn- Building the leadership for expansion from existing ing from these pilot implementations. management team Differential pricing structure to ensure wider outreach Dimagi’s founders encouraged and supported its second-line leadership in leading expansion efforts. In 2012, Dimagi Dimagi charges a fee of $1 per month per health worker for supported the initiative of a team member from its U.S. office the product, and a hosting fee to use its cloud service to store to expand to South Africa. He moved to South Africa as the patient data. In addition, Dimagi offers product customization country lead and set up an office in Cape Town. Similarly, and training for which it charges a consulting fee. It employs a Dimagi identified and encouraged other team members who tiered pricing model for the technology that aligns with client were interested in taking up similar responsibilities. Once healthcare program sizes and development requirements. The existing team members establish operations in the new geogra- standardized product is also offered free of cost for programs phy, they hire and groom local talent. Dimagi thus has country that employ less than 50 frontline workers. teams that are a mix of expatriate and local staff. corridors for shared prospertity: case studies Format and Country Selection "Dimagi has adopted a hub and spoke model of expansion. We have 1-2 senior resources in satellite offices in Expanding through a hub-and-spoke approach countries such as Myanmar, Zambia, Kenya to support business development effort." Dimagi wanted to retain control of field operations as the product involved a high level of customization and client Stella Luk, interaction. Success depended on in-depth knowledge of the country director, technology as well as strong engagement to customize, refine, dimagi, india and stabilize the application to meet high quality standards. Dimagi set up a wholly-owned subsidiary in Africa to ensure this. Financial Readiness Dimagi adopted a lean approach to expansion by setting up Expansion through company reserves regional hubs instead of separate country offices. It selected South Africa for its strong regional presence and high growth Dimagi had a successful business model, and was sustained by potential. Mozambique and Senegal were other countries that revenues earned from its consulting projects and products. The made the shortlist as they offered Dimagi a sizable number expansion to Africa with regional hubs in multiple countries of prospective projects and relatively lower operational costs. was completely funded by internal reserves. South Africa and Mozambique acted as hubs for the southern African region and Senegal became a hub for West Africa. Operational Readiness Teams based in these offices were also responsible for business development and project implementation in neighboring Understanding the market opportunity and business countries. For instance, the Senegal office is responsible for environment in a new geography projects in Burkina Faso and Niger. In addition to the hubs, Dimagi also has satellite offices in Myanmar, Zambia, Kenya, Dimagi utilized its India office as a hub, and undertook and Guatemala, where small one to two-member teams are projects in South-East Asia and Africa. This approach helped it responsible for business development. This facilitates increased understand market opportunities and business environments outreach and helps Dimagi build a pipeline of projects in new in new geographies. The team met potential clients in different countries while keeping the operational costs low. countries, understood their needs and challenges, and Credit: Dimagi educated them on the benefits of shifting from paper-based newborn, and postpartum module for community health systems to electronic systems for case management and data workers in Afghanistan while working with World Vision.32 collection. Insights from these conversations were fed back This project presented unique challenges of working in a post- into plans for expansion, product development and customiza- conflict zone and meeting unique requirements, given literacy tion, and marketing strategies. levels and genders of health workers. Most health workers in Afghanistan never attended school and were at a disadvantage Customizing products to suit the local context having to learn and recall health information that needed to be conveyed to women in the villages they serve. To overcome Dimagi customized its products to overcome local challenges these challenges, Dimagi extended the CommCare platform faced in last-mile health-care delivery by health workers. It to support audio-visual prompts, which made it possible for developed multi-lingual collateral to enable efficient uptake of illiterate and semi-literate health workers to learn, share, and the technology. For instance, Dimagi developed a pregnancy, collect information with ease. figure 24 dimagi's expansion to africa dependencies dependencies 2014 in india in africa Expanded to mobile Senegal mobile penetration penetration 2012 Dimagi's products are Expanded to Overall, Africa has a mainly mobile applica- Mozambique good mobile penetra- tions, therefore, avail- tion. However, Dimagi ability of mobile network 2011 selected destination is critical for it's opera- Expanded to countries that specifically tions. With 70 percent South Africa had the required level of mobile penetration in mobile penetration. India, Dimagi was able to presence of frontline reach its audience. health workers presence of frontline In Africa, in order to en- health workers sure a strong network of Dimagi works extensively health workers, Dimagi with ASHA workers in 2002 expanded to countries 2010 that have extensive India, in addition to Founded in Mas- Established office in India; government programs NGOs and social en- sachusetts, U.S. began full-fledged operations or NGDs working in the terproses working in from 2010. India office acts as a healthcare space. healthcare space. These hub for outreach to South and networks were critical for South-East Asia availability its outreach programs' of talent success. Dimagi established re- availability gional hubs in countries of talent CommCare is being used by over 100 organizations which could ensure local across 40 countries to support projects availability of skilled Dimagi relies on local technical and mangerial staff with technical staff. This staff was then expertise for successful 5000 frontline workers are currently using Dimagi able to serve markets in customization and imple- technology to provide frontline services neighboring countries as mentation. Therefore, in well. India, it works in regions that have sufficient Cost-effectiveness in training program: technical talent. CommCare - $100/worker/year figure 25 key challenges in transfer challenges impact strategies • Lack of trained soft- • This increases the • Optimized human ware developers and human resources costs resource utilization ecosystem managerial workforce due to additional by setting up regional availability in Africa efforts in training hubs to serve neigh- local staff and hiring boring countries rather expatriates than setting up offices in each country • Linguistic barriers • It is difficult to • Developed audio and lack of educated transition healthcare visual and multilingual healthcare workforce workforce with low collateral to enable in target countries, literacy levels on efficient uptake of the sector which is essential to technology-based work technology operate its mobile ap- platforms plication led products • Lack of awareness • Demand creation • Invested heavily in about new technolo- requires investment awareness building gies for outreach and in awareness-building efforts data management efforts. This increases • Plans to focus on among potential cost of business knowledge transfer business customers development and capacity building • Lack of internal capac- • Capacity building activities to enhance ity to adopt technol- results in increased market demand ogy and data manage- cost of training and ment processes handholding challenges and key insights for Guatemala support business development. This model has transfer also allowed Dimagi to test markets for its products and cre- ate pipelines of projects in new countries before embarking on full-fledged expansion. Adopting a hub-and-spoke model of expansion Employing a blended team Technology-driven inclusive businesses can potentially adopt a hub-and-spoke model for expansion by establishing full- Leveraging existing second-line leadership and providing it fledged operations in the country with the biggest market with opportunities for growth can help inclusive businesses (hub) and reaching out to markets in neighboring countries not only find champions for the cause within their organiza- through this and other satellite offices. The hub-and-spoke tions, but also much-needed alignment when gradually build- model increases business outreach and creates a pipeline of projects in new countries while keeping operational costs low. In the case of Dimagi, its offices in India, South Africa, 32. World Vision, an international NGO, is a relief, development, Mozambique, and Senegal act as hubs for its Asia and Africa and advocacy organization dedicated to working with children, foray, while satellite offices in Myanmar, Zambia, Kenya, and families, and communities to overcome poverty and injustice. 54 | 55 Credit: Dimagi ing local teams. The experienced teams bring in knowledge of business operations and local teams help gain understanding "We have recently launched "Coded in Country" initiative of local business environments and cultural contexts. This to build capacity of local developers. Developing capacity serves as an effective mechanism to transfer knowledge and helps create solutions that are more suited to adress local catalyze operations. Also, the presence of second-line leader- challenges and brings down cost of product development" ship and experienced staff ensures that initial glitches on technical and business fronts are handled efficiently while the Dr. Neal Lesh local team is still learning different aspects of the business. chief strategy officer, At Dimagi, this model helped in effectively managing initial dimagi teething problems. FUTURE PLANS play a significant role in creating awareness and improving Dimagi plans to further increase its outreach in Asia and development outcomes. Dimagi plans to conduct knowledge Africa, and is focusing on Kenya, Myanmar, and Zambia. transfer and capacity-building activities to help build local Dimagi also plans to diversify its product portfolio to sectors capacity for product development, scale impact at a faster pace, such as agriculture and education where technology can and build brand equity. corridors for shared prospertity: case studies case study 7 novartis arogya parivar Transfer format: Wholly-owned subsidiary Countries of operation: India, Kenya, Vietnam, and Indonesia Novartis is a global pharmaceutical giant and world leader in the research and development of products to protect and improve health and well-being. Arogya Parivar is a Novartis initiative launched in 2007 to improve healthcare access and reach for remote rural communities. snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for transfer transfer that led to transfer choices Imperative: Novartis aimed to improve Management readiness: Novartis Availability of primary healthcare access to medicines in remote rural dedicated a senior team to focus on workers: Novartis’s social business markets and expand its consumer base. expansion activities. The senior team model is largely dependent on in each country came with significant primary health workers. The country Preparation: It established distribution public health and management selection was largely influenced by networks in remote areas by experience in that geography. the presence of private or government connecting with local distributors. It health workers. also entered into strategic partnerships Financial readiness: It expanded with local NGOs in Kenya and the operations to Kenya, Vietnam, and Basic health infrastructure: The Government in Vietnam. Indonesia after breaking even in India. Arogya Parivar model works with Novartis is committed to funding the existing systems for diagnosis and Format preference: It opted to retain program and is willing to invest patient treatment. Hence, presence of control over its operations to ensure capital. doctors, basic pharmaceutical quality of services, model’s distribution channels and hospitals is sustainability and social impact. Operational readiness: It had a stable necessary. and proven model in India before Country preference: It selected Kenya, expanding to Africa. It mandated local Local Partnerships: Local Indonesia and Vietnam after analyzing partners to run the commercial partnerships are necessary to better conditions in several countries. It found operations and health camps to understand the communities as well Kenya the most suitable for expansion overcome legal hurdles in Africa. as build trust. Arogya Parivar works in in Africa. It selected Vietnam to refine collaboration with local pharmacies, and develop its model in a country Validating need for product in Africa: doctors, NGOs, and the government. that had a public sector-led It had an established distribution healthcare system. system in Kenya. It identified demand for its services in rural areas through research conducted by the local team. key challenges in transfer Ecosystem: Inadequate infrastructure in Africa and Asia, particularly roads and established distribution channels created challenges for outreach Sector: Poor basic health infrastructure and limited presence of healthcare workers can restrict the model’s success Business: Novartis depends on local partnerships (NGOs or Government) to establish connection and trust within the community, and the low population density in the focus areas in Kenya and Vietnam increases the distribution cost key transfer insights ■■ Novartis took a strategic approach to country selection. It carried out analysis of over 67 countries based on five broad parameters - social need, commercial viability, investment climate, internal capability and group’s strategic inclination ■■ It forged partnerships with the Government and local NGOs for better outreach ■■ It invested in the destination country and hired local talent. It also created an enabling environment for the country teams by giving them the independence to innovate and customize the model for transfer as required 56 | 57 Established in 1996 with the merger of Swiss companies Around the world, 1.7 billion people lack access to the most Ciba-Geigy and Sandoz, Novartis is a world leader in basic medicines. Limited healthcare infrastructure, poor health-care solutions. It has a diversified portfolio of doctor-patient ratio, and low awareness and presence of coun- innovative medicines, cost-saving generic pharmaceuticals, terfeit drugs further worsen the situation in the rural areas of consumer health products and vaccines. Novartis believes developing countries. Arogya Parivar is a for-profit healthcare pharmaceutical companies can play an impactful role in initiative that seeks to increase access to quality and afford- improving health care access for the underserved poor. It set able healthcare services in rural India. The program has an up a for-profit rural health-care initiative, Arogya Parivar integrated network of stakeholders ranging from community- (healthy family), in India in 2007. Arogya Parivar aims based health educators, sales professionals, doctors, hospitals, to improve health-care access and reach to remote rural and pharmacies. Together, they contribute towards health communities. awareness, disease prevention, timely treatment, and access to low-cost drugs. Since its launch in 2007, Arogya Parivar has headquarters: Novartis Group Social Business, trained more than 500 health educators and supervisors, and Singapore improved access to healthcare in rural areas of ten states across year of founding: 2007 India, home to more than 70 million people. founders: Novartis legal structure: For-profit Motivated by Arogya Parivar’s success in sustainably improv- business model: Business-to-consumer (B2C) ing health outcomes in India, Novartis’s Group Social Business sector and sub-sector: Health transferred the program to 25 wards in nine counties in Kenya (Familia Nawiri) and four provinces in Vietnam (Cung Song Credit: Dipika Prasad corridors for shared prospertity: case studies figure 26 arogya parivar's value chain activities Mission create heath build a health improve access to To improve healthcare awareness network healthcare services access and reach to rural communitites improved diagnosis and uptake of Health education treatment Focus on solving challenges to healthcare access Making medicines affordable and accessible Khoe). It is about to start social activities with healthcare pro- Addressing the need for health education fessionals in the Kelauarga Sehat regency in Indonesia (see figure 30). The programs are named in the national languages The health educators provide health information to the com- of respective countries to develop local connects. munity with the aid of vernacular and multi-lingual collateral. They raise awareness on local diseases, preventive health mea- arogya parivar's business model sures, hygiene, and nutrition. They focus on important health in india challenges such as tuberculosis, malaria, rabies, iron deficiency in women/children, and diabetes. They also inform patients of Over 65 percent of Indians lack access to essential medicines. the importance of completing prescribed dosages of medica- Medicines account for a sizable share of overall health expen- tion and the danger from counterfeit drugs. The program diture; around 77 percent of health expenses in rural India reaches around 2.5 million people annually (2013) through are for medicines alone. Low-income communities in India particularly suffer due to the poor public-health system and "While expanding to new states in India, we focus on low penetration of health insurance. Out-of-pocket medical reaching out to areas which do not have an existing costs alone push 2.2 percent of the population below the pov- Novartis supply channel." erty line33. Arogya Parivar, launched by Novartis, addresses the challenge of access and affordability of medicines. After Mr. Meghdoot Deherkar breaking even in India in 2011, the program was expanded to head operations, Kenya, Vietnam, and Indonesia. arogya parivar Launched on a small scale with three pilots in 2006-07, Arogya Parivar expanded to 250 Arogya cells across 10 Indian health education meetings (HEMs). The impact is tracked states. Each Arogya cell has one educator and one cell super- through referral cards collected from doctors. Between 2010 visor. They collaborate to generate awareness and improve and 2013, more than 300,000 health education meetings on accessibility of health-care services and medicines. Field 11 disease areas were conducted for more than 10 million vil- operations are structured into cells (a cell is a market of 25 lagers. Another 450,000 people directly benefited through to 35 km radius, that serves about 80 to 100 villages). Arogya health camps by qualified doctors. Parivar also works with nearby city-based distributors to sup- ply essential medicines to over 28,000 rural pharmacies. To reach deeper more efficiently, Arogya Parivar appoints direct distributors in villages, who are supplied medicines directly 33. Many Indians lack access to essential medicines. June, 2010. from the company warehouse. Times of India. 58 | 59 figure 27 arogya parivar's operational model novartis program manager supervises the operations contracted third-party supervisor supervises field operations operating model of an arogya cell (cluster of 80-100 villages in 25-30 km radius) referral cards distribution collection health educator cell supervisor network network partners partners community leaders ngos pharmacy doctor awareness accessibilty community access to health camps training health education quality medicine making medicines training accessible and health education in local language for doctors affordable drug compliance awareness, accessibility, affordability, and adaptability corridors for shared prospertity: case studies Credit: Arielle Molino brings qualified medical practitioners closer to the villages "Arogya Parivar's business and operational model is based through health camps. The team conducts around 600 to 700 on the four pillars of awareness, adaptability, availability, health camps every month, which directly benefit 450,000 and affordability. The belief is that of these principles work people annually. in an integrated way, they can ensure long term impact." Mr. Anuj Pasricha Making medicines affordable and accessible for the head, group social business underserved novartis Arogya Parivar makes medicines affordable and accessible by expanding its product portfolio to cater to diseases prevalent Building a health care network to reach underserved in target areas. By 2015, the product portfolio is expected to communities expand to around 100 medicines and 160 individual pharma- ceutical, generic, and over-the-counter products to treat con- Cell supervisors focus on strengthening local pharmaceutical ditions ranging from tuberculosis and diabetes to pain and distribution networks to ensure availability of medicines. The cold relief and dietary supplements. The portfolio expansion program targets tier 4 and tier 5 towns and adjoining rural aims to cover 80 to 90 percent of the relevant disease burden. areas. The team develops relationships with pharmacies and The generic molecules from Sandoz will make medicines physicians working in these areas. This now includes 33,000 more affordable as up to 70 percent of the portfolio will be doctors and 28,000 pharmacies. They help the program deliver priced at rural market levels. quality products to target geographies. Arogya Parivar also 60 | 61 EXPANDING AROGYA PARIVAR TO AFRICA In Kenya, essential medicines are available in only 65 percent prising 25 wards in nine counties, namely, Embu, Kirinyaga, of hospitals and in less than 50 percent of primary health-care Muranga, Nakuru, Kericho, Siaya, Migori, Bomet, and Meru. facilities. With multiple intermediaries in the distribution The counties were selected to ensure that the model was tested channel, medicines are unaffordable34 for a majority of across diverse regions in Kenya and provide early understand- Kenyans. Poor availability of medicines in public hospitals also ing of the business environment in the country. makes Kenyans, especially rural and low-income communities, vulnerable to counterfeit drugs.35,36 Given the need and market Since 2012, over 96,000 villagers have attended over 2,500 opportunity, the Arogya Parivar team found Kenya ideal for health education meetings. Besides valuable health education, expansion. It was also seen as a gateway to East Africa. beneficiaries also avail affordable comprehensive health care services. At the monthly health camps, patients access health Novartis launched the program in Kenya in March 2012 and check-ups for just $2.23 as against the 10 times higher fee named it Familia Nawiri (prosperous family in Swahili) to charged for similar services in hospitals37. Novartis made this resonate with the local community. Since its launch in March happen by optimizing resources to streamline health camp 2012, Familia Nawiri operations have scaled to ten cells com- operations. This is depicted in the info-graphic below. figure 28 operations flow in familia nawiri health camps room 3.1 room 3.2 room 1 room 2 registration lab testing cervical cancer triage general consultation pharmacy desk for seven screening for health check up with doctor common ailments women Credit: Arielle Molino corridors for shared prospertity: case studies figure 29 expansion roadmap for arogya parivar pilot the model streamline and identify identify find decide expansion in different standardize the expansion expansion implementation strategy contexts process markets partners support Management Bandwidth and local government. It partnered with PSI Kenya to promote hygiene education, leveraging PSI’s household water-treatment Building a lean team with strategic responsibilities products network. It worked with the Ministry of Social Welfare to identify registered social groups to target for health The Novartis Group Social Business global team, led by Anuj education. Novartis continues to build similar partnerships to Pasrija, conducted research before transferring the Arogya connect with the community and reinforce positive behavior Parivar program to other developing countries. In Kenya, a change. For instance, Familia Nawiri identified high out-of- 26-member program team was locally hired. This included the pocket spending for health as the key barrier to appropriate head of operations, administrative staff, and three area manag- health-seeking behavior. To address this, it is finalizing ers to manage 19 field staff of territory supervisors and health partnerships with channel partners such as Changamka for educators. While strategic decisions such as country and trans- micro-insurance and Mobile Medical savings card. These fer format selection were taken by the core team in Singapore, partnerships will improve access to allied health-care services decisions related to on-ground implementation were made by and products. the local team, which also identified multiple field partners (NGOs) to communicate and build strong relationships with the community. Format and Country Selection Employing a strategic approach and selecting Kenya as an entry for African expansion Novartis took a strategic and systematic approach to country selection to further expand the program. This included an analysis of market size, customer demand, investment climate, political risks, and regulatory environment. It analyzed over 67 countries to assess social needs, commercial viability, and investment climates. Kenya was selected as the gateway to the African market. Credit: Arielle Molino Working with partners to overcome legal hurdles Novartis prefers setting up its own operations as it allows 34. A typical wage-earning Kenyan would need a month’s salary to complete control over quality of service offerings and op- purchase a seven-day course of ciprofloxacin for adult respiratory erational costs. It also helps Novartis align brand values and infection. mission across geographies. However, it has to work closely with partners to overcome legal challenges. 35. Fact Sheet: The essential medicines crisis in Kenya. Stopstockouts. 36. According to Pharmacy and Poisons Board of Kenya (PPBK), Leveraging channel partners’ networks for outreach an estimated 30 percent of drugs sold in Kenya last year were counterfeit, accounting for an annual loss of more than Kenyan Novartis reaches out to remote communities through partner- shillings 10 billion ($117 million). ships with local organizations working in target areas. The 37. Intellecap analysis from field study in Mwea and Embu, Kenya, program team also builds strategic partnerships with NGOs November 2014. 62 | 63 Financial Readiness "The keu success factor is the independence provided to country offices to innovate around and customize Building group reserves by planning towards timely the prorgam. Another critical factor is the capital breakeven committment from the company as these types of initiatives require patient capital." Novartis Group Social Business provided initial funding for Arogya Parivar India and its Africa and Asia expansion. Anthony Gitau While Arogya Parivar India has achieved financial sustain- Country head, Kenya, ability, the Africa initiative is yet to do so. On-ground group social business research and insights from the local sales team indicate that novartis the African pharmaceutical market faces constraints such as counterfeit drugs, low population density, poor state of healthcare infrastructure, and high cost of operations, which Operational Readiness result in a longer break-even period. Around 30 percent of the clinics have reached break-even, and the team is focused Drawing from the India experience and customizing the on increasing footfalls as well as sales of drugs to expedite program to suit the local context break even for all the units. To cover its higher cost of opera- tions, Familia Nawiri expanded revenue sources by charging The Indian operations achieved break-even after a successful a fee at health camps, which are conducted free of cost in three-year run and were streamlined to suit rural market India. Novartis has estimated that it will take it around five requirements. The team identified key business dependen- years to break-even in Africa. The group social business will cies for the program’s success. It explored new markets for fund operations till then. expansion by assessing the presence of: (i) drug distribution networks, (ii) health-care professionals, and (iii) suitable partner organizations. The Indian experience underscored the importance of customizing the program to suit local cultural and demo- graphic contexts. For instance, population density in rural Kenya is low, and villagers have to travel long distances to attend meetings. The Familia Nawiri team realized it was not viable to conduct meetings in every village and customized the model to suit local conditions. Health educators now target organized groups such as self-help groups (SHGs) and church groups for health-education activities. EXPANDING AROGYA PARIVAR TO ASIA In the last decade, Vietnam has made significant progress in building health-care infrastructure. Medicine production, supply, and use have increased consistently, with per capita expenditure on medicine rising from $6 to $19.80. Nearly 49 percent of the demand for essential and generic medicines is met through domestic production. However, Vietnam still faces challenges in access to essential medicines, especially in rural and mountainous areas. As pharmaceutical distribu- tion is weak in rural areas, prices of medicines are higher Credit: Novartis Arogya Parivar than international reference prices and patients continue to bear the cost.38 corridors for shared prospertity: case studies figure 30 transferring arogya parivar from india to south east asia and africa dependencies dependencies in india in africa/asia presence of basic health presence of basic health infrastructure infrastructure March 2012 In India, the Arogya Expanded to In Indonesia and Viet- Parivar model works Kenya nam, Novartis leverages with hospitals, pharma- existing networks to cies and pharmaceutical improve drug supply. distribution channels. Presence of local net- Rural market penetration works was critical in was easier in India as No- these geographies as vartis already had a good November 2012 novartis did not have its distribution network. Expanded to own rural distribution Vietnam channels. availability of primary availability of primary healthcare workers healthcare workers Arogya Parivar recruits and also engages with Novartis locally appoints external local health health workers and sales November 2013 supervisors. It provides educators and sales Expanded to training to ensure consis- supervisors to ensure Indonesia tency in implementation. better health awareness and increase sales. local local partnerships partnerships Familia Nawiri, Kenya In Kenya, Familia Nawiri Outreach: 10 cells works with local NGOs Local partnerships help Health education: 100,000 villagers in 2500 meetings for outreach to overcome Arogya Parivar under- legal hurdles. In Vietnam, stand the communities Cung Song Khoe, Vietnam Kaluarga Sehat worked and build trust. Arogya Outreach: 4 provinces with the government Parivar works in col- Health education: 100,000 villagers in 3500 meetings as healthcare is public laboration with local sector driven. pharmacies and doctors Kelauarga Sehat, Indonesia to connect with the com- Outreach: 4 regencies munity and disemminate Plans to target: 12,000 people in 20 puskemas (public health information. health centres) Novartis’s Group Social Business team launched the Arogya Management Bandwidth Parivar program in Vietnam in November 2012, and named it Cung Song Khoe. Since its launch, Cung Song Khoe has Building a local team to develop cultural connect scaled to four provinces: Nghe An, Thanh Hoa, Nam Dinh, and Tien Giang. The program works with over 160 commu- A local team, as Novartis’ experience in India and Africa nity health workers, 30 hospitals, and 320 medical students. showed, would understand country dynamics better and It conducted over 3,400 health education meetings and 1,100 more suited to connect with government and local target trainings for health-care professionals. communities. Therefore, similar to the approach it took in Kenya, Novartis recruited a nine-member lean local team to run the program in Vietnam. This team leads local strategy, 38. WHO and Vietnam Access to essential medicines. International collaborates with pharmacies and hospitals, and streamlines Pharmaceutical Federation. drug delivery. 64 | 65 Format and Country Selection Strengthening the model in a country with a different Strategic approach to country and transfer format operating context selection Healthcare is led by the public sector in Vietnam. Novartis Successful expansion warrants a strategic and systematic made a conscious decision to expand to Vietnam as it was approach to country selection. This includes an analysis of keen to test and develop its social business model in a market opportunity, investment climate, political risks, and market where government plays a significant role in health regulatory environments. Novartis conducted detailed analysis care. As the model is highly dependent on field operations of over 67 countries based on similar parameters, social need, to be successful, Novartis continues to retain control over commercial viability, investment climate, internal capability, operations. However, in Vietnam, the team functions in and the group’s strategic inclination. Arogya Parivar prefers close coordination with government officials. setting up its own operations as it allows complete control over the quality of service offerings and operational costs. It Financial Readiness also helps Novartis to align brand values and mission across geographies. As in Kenya, the Novartis Group Social Business provided initial investment to run the program. Vietnam faces similar Flexibility in forging partnerships for better outreach health care delivery challenges as Kenya, such as poor infrastructure, poor health indicators, cultural barriers, and Geographic expansion implies navigating unfamiliar ter- low population density. Taking these factors into consider- ritory, and requires in-depth understanding of prospective ation, the team expects to achieve operational break-even by customer bases, local culture and beliefs, market dynamics, December 2016. Novartis Group Social Business will fund and potential risks. Forging good partnerships can help build the Vietnam operations till then. quick understanding of some of these factors while ensuring maximum outreach. Partnerships provide access to ready-made Operational Readiness teams for initiatives like Arogya Parivar, which require signifi- cant field force for outreach. Building and leveraging strategic Strategic partnership with the government for better partnerships with NGOs, governments, distributors, and other outreach and overcoming local challenges stakeholders has been a key success factor in Novartis’s transfer to Africa and Asia. Even as Novartis seeks to develop its own Engaging with the government remains an essential sales network in these countries, it continues to work closely condition to operate in Vietnam, given the public sector- with its outreach, distribution, and product partners. led healthcare model and government control over mass communication channels. Novartis, therefore, partners with Investing in the destination country the government to implement its program in Vietnam. Government doctors and medical students double up as Inclusive businesses intending to transfer their models should health educators, while Novartis’s staff provides training invest in the destination countries and build local workforces. and supervises delivery of health-education programs. It This can help businesses build trust and brand equity in new also builds partnerships with pharmacies and hospitals to countries. Apart from an understanding of local culture and streamline drug delivery. business environments, local talent brings local experience and connections to develop customer relationships and In Vietnam, awareness programs such as Cung Song Khoe relevant partnerships on the ground. Novartis sought to require approvals by the government. The government hire and train locally in Africa and Asia to ensure long-term also monitors all content that is disseminated. To address sustainability. In non-English speaking regions, local teams this challenge, the Novartis team conducts dissemination with regional language skills are invaluable in communicating activities through government doctors. This not only helps with beneficiaries. Local staff also plays an important role in the team gain the trust of the government, but it also gets customizing health information in vernacular languages and faster approvals. Also, Novartis keeps costs of operation low audio-collateral. by leveraging the government health care workforce. corridors for shared prospertity: case studies figure 31 challenges and key insights for transfer challenges impact strategies • Poor transport and • Drug distribution • Leveraged partners distribution infrastruc- suffers in the absence (government and ture in African/Asian of transportation and NGOs) to ensure ecosystem countries distribution infra- availability of drugs structure. There are and rationalize costs multiple intermediar- instead of setting up ies and cost of drug its own distribution delivery to remote, network rural area increases • Inadequate availabil- • Target customers have • Trained locals as ity of field healthcare low levels of aware- health educators and workers and physi- ness about healthcare sales supervisors sector cians • Customers face • Conducted intensive • Prevalence of counter- challenges of lower door-to-door meetings feit drugs access and higher cost with beneficiaries to of healthcare in rural generate awareness areas • Dependence on • Reliance on local • Identified local part- local partnerships partners in last mile ners that aligned with business to connect with implementation could Novartis' philosophy potential consumers dilute Novartis' model and would engage for and overcoming legal the long term challenges Creating an enabling environment for the country teams FUTURE PLANS Another critical success factor for the Novartis initiative is the Novartis seeks to continue its global expansion across Asia flexibility given to country teams to innovate and customize and Africa. In India, the plan is to expand to around 16 states the model while maintaining common elements. Novartis by 2017. In Kenya, it plans to strengthen the model and build believes local teams understand the nuances of doing business more partnerships to increase coverage. Break-even is expected in the region and are best placed to innovate and customize by December 2016. In Vietnam, Novartis plans to expand to the model. Local teams, therefore, function independently and 10 to 15 provinces in the next three or four years. The program plan their expansion strategy as per regional dynamics. That in Indonesia is in its early stages, but the target is to pilot the said, they also work closely with the head office and leadership program in one regency and then take it forward based on the in other countries to learn from their experiences. experience with the pilot. Novartis envisions expanding to 20 to 22 countries in Africa and South East Asia in the next five to ten years. 66 | 67 case study 8 operation asha Transfer format: Wholly-owned subsidiary and knowledge sharing Countries of operation: India, Cambodia, Kenya, Uganda, and Dominican Republic Operation ASHA is dedicated to bringing tuberculosis treatment and health services to the poorest of the poor globally. It is the world’s largest NGO engaged in tuberculosis treatment and prevention, providing these services to over 6.1 million people. snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for transfer transfer that led to transfer choices Imperative: Operation ASHA aimed to Management readiness: Operation Presence of Healthcare scale its efforts, in alignment with its ASHA has a strong second level of Infrastructure: The business model mission to provide services for the management including a country head relies on availability of basic health prevention and treatment of and operations director. The founders infrastructure such as hospitals and tuberculosis globally. spend less than 15 percent of their time diagnostic labs. on operations. Preparation: It examined TB prevalence Government and donor support: in Cambodia and customized its Financial readiness: It received Aligning the model with government model to align it with the National TB government and donor funding for TB programs helps gain access to program. It also modified its approach transferring the model in Cambodia. government healthcare networks of to suit the low population density in in In Africa, it chose knowledge transfer doctors and healthcare workers. It the country, format, which did not require also depends on donors to support significant investment. other program activities. Format preference: It expanded to Cambodia to strengthen business and Operational readiness: It ensured the Local Workforce: Operations rely on operating model. Operation ASHA model was well established at scale in the presence of a local workforce, shared best practices with interested India before testing and strengthening which can be trained for patient recipients so that the model could be it in multiple settings and geographies. drug monitoring, creating health customized to local context. In awareness and improving detection Africa, it chose knowledge transfer as it Validating need for product/service in is a faster route to scaling impact. Africa: Preliminary research established that running costs of treatment Country preference: It selected is very high in many developing countries with high TB prevalence for countries. There was a need for a expansion. leaner, technology-driven, cost-effective model to fight tuberculosis. key challenges in transfer Ecosystem: Limited infrastructure to connect sparsely populated rural areas and bridge large distances between residential areas, necessitating additional efforts for delivering and sustaining TB care Sector: Poor availability of basic health infrastructure such as diagnostic facilities, impacts early diagnosis and delays treatment Business: Model relies extensively on Government and external funding support to establish and expand the model key transfer insights ■■ Operation ASHA adopted a systematic approach to transfer by validating the model in a different settings and geographies before embarking on knowledge transfer activities ■■ Aligning with national TB programs helped Operation Asha gain access to government healthcare infrastructure, and helped it establish quick connect and acceptance within the community corridors for shared prospertity: case studies Operation ASHA is dedicated to bringing tuberculosis treatment and health services to the poor globally. It is the world’s third largest NGO in tuberculosis treatment and prevention (in terms of number of patients), providing services to 6.1 million people. Operation ASHA operates 194 centres across nine Indian states. It has transferred its India model to Cambodia, Kenya, Uganda, and the Dominican Republic. headquarters: New Delhi year of founding: 2006 founders: Dr. Shelly Batra and Sandeep Ahuja legal structure: Non-profit business model: Business-to-consumer (B2C) sector: Health According to WHO (2012) estimates, 8.6 million39 people are diagnosed with tuberculosis (TB) annually across the world. In 2012, about 80 percent of reported TB cases were concentrated in 22 countries, most of which are low-income economies.40 There is also a significant rise in the number of patients with multi-drug resistant TB (MDR-TB). Globally, over 450,000 people have developed MDR-TB. Treatable TB develops into MDR-TB when the course of antibiotics is interrupted or missed or taken in wrong dosage. Founded in 2006 by Dr. Shelly Batra and Sandeep Ahuja, Credit: Operation ASHA Operation ASHA provides door-step delivery of TB medica- tion for the under-served. It scaled to over 194 centers across Since its launch, the program has scaled to over 51 centers nine Indian states. In 2013, Operation ASHA enrolled 7597 TB in two provinces, Phnom Penh and Takeo. The model was patients across India. The Indian operations are mostly urban- also transferred to Uganda in 2012 by Millennium Villages, focused with 80 percent of program activities concentrated in a program by Columbia University’s Earth Institute. Clínica urban slums where patient populations are significantly high. de Familia, a local non-profit organization adapted it for the In addition, Operation ASHA also works in tribal areas in Dominican Republic in November, 2013. Millennium Villages Jharkhand and Madhya Pradesh and a few rural areas to test also implemented the model in Kenya in 2014. Operation and strengthen the model based on learnings from different ASHA acted as a knowledge and technology partner for these settings. transfers. Having experimented with both full expansion and knowledge transfer, the leadership team at Operation ASHA The organization works in close collaboration with the govern- decided to adopt the knowledge-transfer route for future ment, aligning itself with the Revised National Tuberculosis expansion. Control Program (RNTCP). The model ensures supervised medicine delivery to patients with the help of electronic compliance tracking, a self-developed patented technology for electronic monitoring and record keeping. Driven by its 39. WHO fact sheet. March, World Health Organization. 2014. mission to eradicate TB, Operation ASHA aims to make its Low-income groups are more vulnerable to MDR-TB, given the 40. technology and model available to organizations with the lack of awareness, timely treatment, sufficient nutrition, and same mission globally, making TB treatment more widely recuperation time. TB is also highly communicable. A patient accessible, especially for underserved communities. left untreated can infect over 12 other people. Operation ASHA is driven by the mission to expand high-quality TB treatment at Operation ASHA launched its Cambodia operations in 2010. affordable prices to low-income communities globally. 68 | 69 operation asha’s business model in patient treatment cost to $82, which is 19 times lower than the india nearest other provider.43 India accounts for 2.8 million TB patients, around 31 percent Enabling low-cost delivery through technology and a lean of the world’s TB population.41 TB is a leading cause of operation model death, with over 750 deaths per day resulting in a loss of $300 million per year due to loss of wages. While the target of TB In urban locations, Operation ASHA sets up TB treatment elimination by 2035 looks difficult, RNTCP42 has been rela- facilities in co-rental or frequently visited places such as a tively successful in improving TB control. However, it faces local clinics or temples. Also every health worker manages two multiple challenges such as low awareness, low outreach, and centers, operating each on alternate days in accordance with high cost structures of implementation partners (NGOs). RNTCP’s prescribed schedule of TB dosage. Health workers are Operation ASHA has developed a low-cost operational recruited from a pool of local unskilled labor. This is done to model, an electronic compliance tracking technology, and a optimize resources and bring down operational costs. detection application that ensures early diagnosis and super- vised treatment. It is funded primarily by government and Patients visit the center and are given a supervised dose in the donors. The government supports its activities by providing presence of the health worker. If the patient misses a dose, doctors, medicines, free diagnostic services, and cash grants. the electronic compliance tracking system alerts the health Donor agencies and international NGOs also fund program worker, who follows up with the patient within 48 hours. The activities. The lean operational model helps bring down per compliance system is the backbone of the operating model figure 32 operational model for operation asha E-COMPLIANCE TERMINAL COUNSELLOR / PROGRAM MANAGER • Finger print is scanned at bio- • At the end of each day the metric terminal once a patient terminal will send SMS record registers for TB treatment via SMS to a central server • Each time patient receives • This information form is the medicine from the center, downloaded in the the visit is confirmed by the main office terminal ONLINE SMS SERVER • Program Manager performs data analysis and gener- ates reports ELECTRONIC MEDICAL SQL DATABASE RECORD corridors for shared prospertity: case studies and tracks the process to minimize dropouts. Health workers counsel patients on the importance of completing the course of medication and precautions to avoid spread of the infection. In rural locations, they follow a door-to-door delivery model as it is unviable to set up a center in every village or expect villagers to travel long distances for medication. EXPANSION OF OPERATION ASHA"S BUSI- NESS MODEL IN ASIA AND AFRICA Cambodia is one of the 22 high TB-burden nations worldwide, with an incidence of 442 cases per 100,000 people.44 Cambo- dia’s national TB program is well-positioned to meet and sus- tain its goals. However, it faces inherent challenges, especially in delivering treatment in rural areas. Having established the model in India, Operation ASHA expanded the program to Cambodia in 2010. Since its launch, the program has scaled to over 51 centers in two provinces, Phnom Penh and Takeo. The current patient outreach is around 280 to 300 patients per Credit: Operation ASHA month. As in India, Operation ASHA works in collaboration with the national TB program in Cambodia. The government "The move to Cambodia was aimed at testing and supports operations by providing doctors, medicines, and free strengthening the model and technology in a different diagnostic services. geography. We do not intend to hire our own staff and scale further. Instead, we want to increase our impact Management Bandwidth through knowledge transfer." Building a lean team with strategic responsibilities Sandeep Ahuja founder, Operation ASHA’s expansion efforts were led by the co- operation asha founder, Sandeep Arora. It hired a lean senior management team consisting of a country head and operations director to provide local leadership and manage field operations in support and government backing to transfer the program to Cambodia. The team took the lead in recruiting the field-level that country. personnel and training them to streamline workflows. Since the model was stable and well documented, the founders Operation ASHA wanted to retain control over field opera- needed to spend less than 15 percent of their time on opera- tions and the independence to make changes as required in tions related to expansion. This left them with greater band- its e-compliance system. This was to be able to improve the width to deliberate on strategy and business building. model and the software application. Hence, the founders decided to set up a wholly-owned subsidiary in Cambodia. Format And Country Selection Setting up a wholly-owned subsidiary in Cambodia 41. Global Tuberculosis Report. World Health Organization.2013. Operation ASHA intended to make its operating model robust 42. The prescribed course for TB is an intense six-month dose. A and suitable in all demographic contexts. For this, it needed digital treatment compliance and counselor performance tracking to implement its model in a new country and adapt it to local system (eDOTS) can significantly improve treatment quality. conditions. It looked at setting up operations in a country with high TB prevalence and a supportive government run- 43. Based on results of LGT Venture Philanthropy, a Swiss organiza- tion’s due diligence of Operation ASHA’s work on TB in India. ning a national TB program. As a result, it selected Cambodia for expansion. The team was able to access external funding 44. Global TB control. 2010. World Health Organization. 70 | 71 Credit: Operation ASHA Transferring the model through knowledge-sharing Financial Readiness format Leveraging Government and external funding support After refining and perfecting its operating model in India and Cambodia, the team focused on financial sustainability and Operation ASHA’s model was developed to work in alignment scale. Since it sought quick and cost-efficient approaches to with national TB programs. Field operations and work flow scale, Operation ASHA experimented with transfer through are modified to suit existing program requirements. Operation knowledge-sharing in Kenya, Uganda, and the Dominican ASHA, being a non-profit organization, is fully dependent on Republic. government and external donor support to successfully run the program. Millennium Villages, an initiative by Columbia University’s Earth Institute, transferred the model to Uganda in 2012 The Cambodian government provided support to the orga- and Kenya in 2014. Clínica de Familia adapted it for the nization in the form of regular drug supplies, infrastructure Dominican Republic in 2013. Operation ASHA shared best for diagnostic services, and monetary aid for operating costs. practices in TB treatment delivery, operational model, and Funds provided by external donor agencies are utilized to e-compliance technology with these transfer partners. It also make the model robust and fulfil operational costs. provided assistance in customizing the model and technology to suit local conditions. Operational Readiness Operation ASHA plans to continue taking its model to new Understanding the Cambodian operating model markets through the knowledge-transfer route. It set up mA- SHA Technologies, a private limited company that provides Operation ASHA analyzed and compared the government TB consulting services and on-going support to partners for a program in Cambodia with that In India. The team also recog- one-time fee. As several potential partners are not-for-profit nized the need to address demographic and cultural variations entities, they will need donor support. in Cambodia to manage the program accordingly. corridors for shared prospertity: case studies The management team responsible for Cambodia identified hospitals and diagnostic facilities exacerbates the situa- the districts for initial implementation in consultation with tion. Operation ASHA adopted the door-to-door treatment the government. It recruited local primary health workers for delivery model where health workers travel on bikes and on-ground implementation. It also revised the compensation provide supervised treatment at patient doorsteps. This keeps structure for staff to align with Cambodian market conditions. operational costs low and overcomes the challenge of set- ting up physical centers in a new country. The e-compliance Customizing the operational model to suit local condi- technology and delivery model are customized according to tions the dosage prescribed by Cambodia’s national TB program. While medication is delivered every alternate day in India, it Cambodia is an agrarian economy with a 77 percent rural is delivered daily in Cambodia, as per the treatment practice population. Villages are geographically dispersed and sparsely approved by government. populated. Inadequate healthcare infrastructure such as figure 33 transferring operation asha from india to africa dependencies dependencies in india in africa/asia presence of healthcare presence of healthcare 2010 infrastructure infrastructure Expansion The business model relies to Cambodia As there are few diag- on availability of basic nostic laboratories in health infrastructure Cambodia, Operation such as doctors and ASHA modified its opera- diagnostic facilities. tions to include a sample India has comparitively carrier for collecting and better basic healthcare delivering samples to infrastructure than other diagnostic facilities. target countries. 2012 collaborating with the Third party government collaborating with the Replication in government Public sector driven Uganda Operation ASHA is healthcare in Cambodia aligned with the govern- 2013 necessitated that Opera- ment's RNTCP for the Third party tion ASHA align its ac- treatment procedure. It Replication in tivities with the National requires government sup- Dominican TB Program. Government port in drug supply and Republic support enables it to ac- availability of diagnostic cess doctors, medicines services. 2013 and diagnostic facilities. Third party local Replication in workforce local Kenya workforce Local partnerships help to engage and train local Engages local un- INDIA workforce for patient employed people for Centers: 194 drug monitoring, improv- outreach. In Vietnam, Presence: 16 Districts, 8 states ing health awareness due to higher minimum and disease detection. wages, it hires part time CAMBODIA workforce for 5-6 hours In india, it can access Centers: 51 a day to optimize cost of suitable workforce at Presence: 5 Districts, 2 provinces operations. reasonable wages. 72 | 73 figure 34 key challenges faced in transfer challenges impact strategies • Limited infrastructure • Patients find it dif- • Adopted a mobile drug to connect sparsely ficult to travel to the delivery approach as ecosystem populated rural areas nearest drug center static centres would and bridge the large resulting in low not have been feasible distances between penetration levels of in local conditions communities TB treatment services • Limited presence • Health workers have • Introduced sample of healthcare and to manage multiple carriers in the business diagnostic services in critical tasks such as model, who are re- sector Cambodia ensuring adequate sponsible for collecting sample supply for early and delivering samples diagnosis and sustain- to the diagnostic ing the daily drug laboratories monitoring activity • Dependence on sup- • High reliance on align- • Made the model leaner port from Government ment to government and technology driven and other funding program slows the to increase efficiency business agencies to sustain the expansion process and compliance, which program motivated the gov- ernment and donors agencies to support the cause CHALLENGES AND KEY TRANSFER experimented with two formats, Operation ASHA selected INSIGHTS knowledge-sharing as the transfer format going forward. Knowledge transfer is a suitable format for non-profits Strategic approach to transfer keen to scale their impact Successful knowledge transfer warrants a systematic approach Not-for-profit organizations are usually very mission driven, to developing the business and operational model. It is criti- and would like to reach target populations worldwide. How- cal that the organization intending to disseminate the model ever, achieving global reach is difficult. Knowledge transfer tests the model in different settings and experiments with is an ideal transfer format for such organizations, especially customization before sharing it with other partners. It is also those that develop innovative models to address development critical to standardize processes and develop a knowledge- challenges and intend to scale impact rapidly. transfer program with a focus on best practices. Despite its considerable scale, Operation ASHA’s TB patient Operation ASHA first tested its model in diverse settings, outreach is barely 1 percent in India and 10 percent in in urban, rural, and tribal India. Once it strengthened and Cambodia. The team strongly believes that it cannot address established the model in India, it tested it in a new country, the huge global challenge of tuberculosis by itself. Having Cambodia. The team used insights from the field in India and corridors for shared prospertity: case studies Cambodia to further refine the delivery model. Operation "In a decade, Operation ASHA's technology will change the ASHA also experimented with knowledge-sharing as transfer way public health is delivered across the world, thus going format in Kenya, Uganda, and the Dominican Republic and beyond TB." standardized processes for knowledge transfer. Sandeep Ahuja founder, FUTURE PLANS operation asha Operation ASHA intends to continue reaching out to around 5,000 to 10,000 patients annually in India and similar num- bers in Cambodia. The plan is to continue to scale at a certain space in Africa, Asia, Latin America, and Central Europe with rate so that the operational model and technology can be similar missions interest in transferring the model. It plans to improved based on insights from the field over time. Opera- develop technologies such as active case filing for diabetes and tion ASHA also intends to experiment with the model in other chronic diseases and health education tools under the diverse settings such as tribal areas or most-affected areas to banner of mASHA technologies. The overarching goal is to develop the model more holistically. Globally too, it intends improve public health through development and implementa- to proactively identify partner organizations in the healthcare tion of innovative technologies. Credit: Operation ASHA 74 | 75 Renewable Energy Two out of three people in Africa lack access to energy for lighting and cooking purposes;45 while businesses report annual revenue losses of up to 6.7 percent46 as a result of fre- quent power failures. Energy demand in the region may grow as much as 80 percent by 2040, and each dollar invested in power infrastructure could lead to economic growth of $15.47 With over 589 million people in the continent lacking access Case Studies to electricity48 and a $1 billion/year market for expensive and pollution-causing paraffin lamps49 – the region presents a 1. Astonfield Solesa significant market opportunity for Indian renewable energy innovations in off-grid decentralized energy production and 2. Greenlight Planet distribution – particularly in pico-solar devices and decentral- ized mini-grids. There is also a significant opportunity in 3. SKG Sangha making power affordable for SMEs that are growth engines of most economies in Africa. Inadequate power production coupled with huge distribution losses result in several days of power outages for African SMEs in a month, leading to loss of four to five percent of annual sales. As a result, nearly half of the SMEs in the region own or share diesel-powered genera- tors.50 45. Africa Energy Outlook. International Energy Agency. 2014. 46. World Bank Enterprise Surveys. Accessed in November 2014. 47. Africa Energy Outlook. International Energy Agency. 2014. 48. Lighting Africa Market Trends Report, International Finance Corporation, 2012. 49. Lighting Africa Market Trends Report, International Finance Corporation, 2012. World Bank Enterprise Surveys Database. Accessed in September 50. corridors for shared prospertity: case studies 2014. case study 9 astonfield solesa Transfer format: Joint venture with Solesa Group Countries of operation: India, Kenya, Uganda, Tanzania, Egypt, and Mauritius Astonfield Solesa designs and constructs decentralized solar mini-grid power systems for the Small and Medium Enterprise (SME) segment in India and East Africa. The firm is a joint venture between India-based Astonfield Renewables and Italy-based Solesa Solar Group snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for transfer transfer that led to transfer choices Imperative: Astonfield sought to Management readiness: Astonfield’s Customers needing industrial-scale expand to new international markets Co-Chairman took up Africa expansion grid-backup: Grid-connected that offered better operating margins in a full-time strategic role, and some customers that face power shortage, and a less competitive environment in of the firm’s 2nd line leadership was and require 100kW to 10MW order to improve profitability. assigned to support him. Also merged of power. operations with Solesa Solar to bring in Preparation: It refined its business a local team. Regulation: Facilitative power tariff model to decrease reliance on public policies to support solar mini grids, sector and focus on the private sector; Financial readiness: It secured funding instead of public-sector driven and hence shifted from large-scale ahead of Africa expansion, and built a subsidies. centralized grid projects to small-scale working capital base to last 2-3 years in decentralized mini-grids and captive Africa in a pre-revenue/profit scenario. Import Reliance: Cost of importing solar power plants targeted at SMEs. and transporting solar PV panels from Operational readiness: It identified other countries. Format preference: It entered into a strategic partner with technical a strategic partnership with a like- expertise needed to serve private sector Channel partners: Reliance on minded firm that could bring in clients, and entered into a joint venture in-country channel partners to complimentary strengths and share the with Solesa Solar. support customer acquisition and risk of expanding to Africa. servicing. Validating need for product in Africa: Country preference: Astonfield Astonfield Solesa, the joint venture, Cost-benefit dynamics: Dependence selected Kenya as it wanted a regional carried out market research which on favorable comparison to price of headquarters and saw Kenya as a identified the need for solar-hybrid grid/grid backup (for instance, diesel gateway to Eastern and Southern power system for SMEs in India and generators). Africa. East Africa. key challenges in transfer Ecosystem: Sparse SME segment in Africa; insufficient bank financing for SMEs Sector: Cost of power production four to five times higher than India; scale of decentralized solar mini-grid projects much smaller than India as well. These combine to cause margin pressures Business: Few existing relationships with the potential customer segment, necessitating investment in building market share for first few years taking into account a pre-revenue/profit scenario key transfer insights ■■ Astonfield analyzed African countries based on business dependencies to find the right markets for expansion ■■ It invested in building market share and relationships with banks for project financing for the first few years, reducing its margins for this purpose ■■ It refined business model for the African context from being margin-focused to volume-focused ■■ It took a lean approach to building management capacity for expansion ■■ It built a local identity and invested time in building customer trust 76 | 77 Astonfield Solesa designs and constructs solar-hybrid mini- Nine of ten companies in developing countries are small or grid power systems for the small and medium enterprise medium enterprises (SMEs), 51 and they are widely acknowl- (SME) segment in India and East Africa. Its decentralized edged as economic growth engines in these markets. Develop- mini-grids are targeted at SMEs that operate in areas with ing countries in Asia and Africa are home to over 30 million inadequate power supply from public grids and therefore SMEs52 that contribute significantly to economic progress rely on expensive and environmentally harmful diesel in these regions. These SMEs operate in difficult business generators. The firm is a joint venture between Astonfield environments with inadequate infrastructure like roads, power, Renewables in India and Solesa Solar in Italy. and telecom networks. Lack of power infrastructure is espe- cially crippling; SMEs often face several days of power outages headquarters: Mumbai in India and Nairobi in in a month, leading to losses of four to five percent of annual East Africa sales. Approximately 40 to 45 percent of SMEs own or share year of founding: 2013 diesel-powered generators53. This presents an opportunity for promoters: Astonfield Renewables and Solesa Solar legal structure: Joint venture, incorporated as 51. Promoting SMEs for Development. 2004. OECD. Astonfield Solesa Solar Private Limited in India and Astonfield Solesa Solar Kenya Limited in Kenya 52. Enterprise Finance Gap Database.2014. IFC and Intellecap Analysis. 2014. business model: Business-to-consumer (B2C) sector and sub-sector: Renewable energy, solar- 53. World Bank Enterprise Surveys Database. Accessed in September hybrid 2014. Credit: Astonfield Solesa corridors for shared prospertity: case studies private-sector actors to develop cheaper and cleaner alterna- installation was for a Tamil Nadu-based manufacturing SME. tives to diesel generators for on-site power back-up. In 2014, the firm launched a subsidiary company in Kenya and its first African installation in Nairobi will start power produc- Astonfield Solesa was set up in 2013. It designs and constructs tion in early 2015. solar hybrid power systems to help SMEs decrease reliance on diesel. The firm‘s hybrid power system draws electricity from ASTONFIELD'S BUSINESS MODEL IN INDIA the centralized public grid when power supply is available. During power failures, the system draws power from the Astonfield Solesa’s journey began with the founding of solar grid. If solar power is inadequate or exhausted, it shifts Astonfield Renewables in India by Ameet Shah and Sourabh to diesel generators as a third-level back-up. The company Sen. It entered the Indian market just as the solar power sector predicts annual savings of 30 to 40 percent in diesel costs, not was gathering momentum; its operations grew rapidly with to mention reducing the carbon footprint. the launch of the Jawaharlal Nehru National Solar Mission (JNNSM) in early 2010, which introduced facilitative policies The firm is a joint venture between Astonfield Renewables and attractive power tariffs for independent power producers in India, and Solesa Solar of Italy. Astonfield was founded in (iPP) in the solar sector (Figure 35). Shah, an Indian-origin 2005, and has installed 20 MW of centralized grid-connected U.S. and Kenya dual citizen, led operations and strategy, while power projects to date, with another 17 MW under construc- Sen focused on government relations and macro-level over- tion and 270 MW in the pipeline across Oman, Mauritius, sight. Egypt, Kenya, Uganda, and Tanzania. Solesa Solar was set up in Italy in 2007 and has managed 150 MW of centralized and de- Slowdown of solar market in India encouraged firm to centralized solar power projects across Italy, India, the Middle look at new and growing overseas markets East, and East Africa. Astonfield has expertise in business development, designing business models to suit regulatory From 2012 onwards, Astonfield slowed down its investment infrastructure, and project financing. Solesa brings expertise in India due to an unfavorable macro-level climate, which in solar engineering and project management, especially in made it increasingly difficult for the firm to operate as an decentralized power grids. iPP. The regulatory environment had turned volatile and the Indian rupee was depreciating with downward trends in the Astonfield Solesa launched operations in India in 2013. Its first global economy. The power tariff for government projects figure 35 astonfield's business growth in india JNNSM policy an- Receive a US$700,000 Win 303kW solar PV Astonfield founded nounced, and firms grant from USTDA for project in Oman in in India start to see rapid projects in Karnataka partnership with growth and West Bengal Solesa Solar 2005 2009 2010 2010 2011 2012 2013 2013 Wins solar pilot con- Solar market begins Wins Global Green Enter into joint ven- tracts from govern- to slow down in Award, nominated by ture with Solesa Solar ment in Rajasthan, India, firm starts the U.S. Department to create Astonfield- Gujarat and Uttar to look at overseas of Commerce Solesa Pradesh markets 78 | 79 Credit: Astonfield Solesa fell from ~ $0.20 per kWh in 2010 to ~ $0.10 to $0.12 per kWh The firm also felt the need to work with partners for global in 201354 and continued on a downward trend, impacting expansion. In 2013, it entered into a joint venture with Solesa operating margins. The firm acted early to meet this chal- Solar, an Italian firm that it had worked with in the past. The lenge and began to explore other avenues of growth. Shah’s two companies created a new entity that combines the unique past experience in Kenya and the firm’s first international strengths of both institutions and gives them the flexibility success in Oman and Mauritius in competitively-bid projects to focus on the niche SME segment in developing countries in 2013 encouraged it to explore other international markets while the parent entities - Astonfield and Solesa - continue to such as the Middle East and East Africa where its expertise in focus on the larger centralized grid market. Astonfield took a cost-efficient solar mini-grid projects could be transferred to majority stake in the company and Shah decided to focus full more friendly business environments. time on leading the new entity, incorporating it as a holding company in Mauritius for easy expansion into other countries. Pivoting the Astonfield model and entering into a joint venture partnership with Solesa Developing the Astonfield Solesa business model to focus on the SME segment Astonfield’s biggest strengths are business development, adapting project models to different regulatory environ- Astonfield Solesa saw that SMEs in India and East Africa are ments, and project financing. It decided to focus on these looking for alternatives to the public grid that could work core competencies and outsource engineering, procurement, seamlessly whenever the grid fails. Most SMEs own or share and construction to partner companies. Further, reliance on diesel-powered generators and spend substantial amounts on public utility companies as primary buyers had increased business risks. Astonfield, therefore, decided to shift its focus to the private sector. Research on the private sector in India and East Africa revealed an untapped opportunity in catering 54. Astonfield Renewables. to the SME segment. corridors for shared prospertity: case studies fuel. Not to forget the inconvenience of shifting back and "As we started to study the East Africa market in detail forth from grid to generator each time there is an outage. I realized that it was possible to see much faster growth Astonfield Solesa helps address this need through small- in this region than in India. I don't think it is riskier to scale decentralized solar grids of 100 kW to 10 MW capacity, do business in East Africa than it is in India. If you look coupled with a hybrid power controller (HPC) that intel- at macro-economic indicators carefully you realize that ligently switches between power sources. The firm provides the market risk is the same. The actual threat to success after-sales services by identifying and training client person- comes from not understanding how to do business in a nel for day-to-day power system management and setting up particular context - but that is true for any country." local service centers for technical support. As it scales, the firm plans to partner with equipment vendors to start service Ameet Shah centers. co-chairman, astonfield solesa EXPANDING ASTONFIELD-SOLESA TO AFRICA Kenya. Astonfield also created a strong network of partners As East Africa was a new market, Astonfield-Solesa invested that could contribute management bandwidth. These included resources in preparing to enter it. The team worked for nearly the Solesa Group, which contributes manpower for engineer- a year-and-a-half to evaluate market opportunities and build a ing, project management, and construction, and channel pipeline of potential customers. In retrospect, the firm found partners in Uganda and Tanzania who support in-country this critical as it was selling a capital-intensive solution to a customer acquisition. very specific type of client with industrial-scale demand for power back-up. Format And Country Selection Choosing Kenya as base of operations based on a careful mapping of business dependencies Astonfield Solesa undertook an in-depth study to understand the Africa market. The study validated the business potential in the SME sector and established that the regulatory environ- ment was conducive. It also found that SMEs were sparse in individual East African countries. Hence, the team took a regional approach and covered several countries. It based its headquarters in Kenya and worked in Uganda and Tanzania through a regional office in Nairobi. Credit: Astonfield Solesa The team leveraged Astonfield’s holding company structure in Mauritius to set up a new legal entity for the joint venture Management Bandwidth in Kenya. The firm registered as a private limited company in Kenya, just as it had in India, and hired local tax advisors for Appointing a business lead with strong relationships in support with compliance-related issues. the East Africa market and building a lean team with strategic responsibilities Capitalizing on a joint venture with Solesa Group and strategic alliances with several in-country partners to Astonfield’s co-chairman Ameet Shah took a lead role in the build market share expansion efforts. Shah had grown up in Kenya and worked in East Africa for several years before moving to the U.S. and Astonfield saw greater merit in transferring to East Africa in then to India. He had built relationships and networks in the partnership with well-established local firms instead of on region, which he activated to support hiring and marketing its own steam. It entered into a joint venture with the Solesa for Astonfield Solesa. Additionally, a lean team of five junior Group to access the latter’s technical resources and expertise to mid-level resources were appointed, partly drawn from and share the financial risks of operating in a new market. Its Astonfield India’s second-line leadership and partly hired in past experience of working with Solesa and internal decision 80 | 81 to outsource technical elements played a key role in this instance, in Tanzania the current set of channel partners decision. includes a family-run business as well as a German multi-na- tional corporation with several country offices in East Africa. It also entered into strategic alliances with channel partners in Uganda and Tanzania for customer acquisition. Shah spent Financial Readiness time meeting potential partners and evaluating them based on their entrepreneurial drive, industry network, and cultural Building reserves to shift from a margins business to a alignment with Astonfield Solesa. He realized the need for volumes business flexibility in working with different types of partners. For The Astonfield Solesa team knew that installations in Africa would be smaller in capacity than in India. While this pre- sented a challenge, it also presented a unique opportunity for "We did not get into Africa thinking that we will do the the firm to conceptualize and raise financing for cost-effective same thing there that we do in India. We wanted to decentralized mini-grids. To focus on its core expertise, it discover what was possible and that mindset helped us needed a local partner that could assist in business develop- identify several opportunities that we might have missed ment, engineering, project management, and construction of had we taken a lift-and-shift approach." projects. The Solesa Group fit the bill perfectly, and together Ameet Shah the two firms developed a business model that enabled co-chairman, them to deliver cost-effective mini-grid solutions to the new astonfield solesa market; solutions that were designed originally for the hyper-competitive Indian market. Credit: Astonfield Solesa corridors for shared prospertity: case studies The firm also realized that at four to five times higher per capital reserves from its India profits to help tide over low/ kWh costs for design, construction, and maintenance, smaller- no-profit years in Africa. scale projects in Africa would not provide high-margin sales. It therefore made a conscious decision to shift to a volumes Operational Readiness business in Africa, a departure from its margins business in India. The shift meant decreasing project-level profit margins. Researching the East Africa market for solar micro-grid Increased import and transportation costs were countered systems by placing bulk orders for solar PV panel machinery and equipment. To make this proposition viable, it also decided Astonfield Solesa conducted an in-depth study to assess three to prioritize acquisition of a significant number of clients in key business dependencies: (i) regulatory environment for the first two or three years. To support this shift, the firm built decentralized solar mini-grids, (ii) market figure 36 transferring astonfield from india to africa dependencies 2013: dependencies in india 2012: First Astonfield- in africa/asia facilitative regulatory Indian solar mar- Solesa installa- 2013: facilitative regulatory environment ket starts to slow tion commis- Incorporate environment down, decide to sioned in Tamil Astonfield-Solesa Environment is unfavor- expand globally Nadu, India in Kenya Environment is favorable able and non-uniform across East African coun- across states. In some tries of Kenya, Tanzania states like Maharashtra, and Uganda, and uniform the power pricing tariffs across countries/states for grid supply are higher within each country. for firms that shift to demand for industrial- decentralized grids. scale power back-up demand for industrial- solutions scale power back-up As manufacturing SMEs solutions are fewer in Africa, it Focus is largely on manu- has widened focus to facturing sector SMEs 2013: 2013: 2014: include commercial and with demand for larger Pivot business Begin research- First installation real estate enterprises, capacity power solutions. model and enter ing East Africa to become opera- government ans social into JV with market tional in Nairobi sector projects. viable cost of power Solesa by 2015; 270 MW production viable cost of power of installations in production Cost of power production pipeline is comparitively low, so Cost of power produc- it can take a margins tion is four to five times Earned India’s first CRISIL “A” rating based approach and work higher than in India, and for a solar plant with a few large projects loading high margins on rather than several small top of this would make projects. the product unafford- Electricity generated annually: able. Hence it focuses on 31,983,960 kWh "volumes-approach" and has to work with many smaller-scale projects Equivalent homes powered: rather than a few large- 50,180 scale projects. 82 | 83 figure 37 key challenges that astonfield faced in transfer and strategies used to address them challenges impact strategies • Sparse SME segment in • Critical mass of • Adopted a regional African countries potential customers instead of country- • Insufficient bank (SMEs) for business specific approach ecosystem financing for SMEs viability not found at • Met DFIs, commercial the country level banks and public • Customers cannot sector banks to attract afford products in project financing for absence of project potential customers financing • Cost of power produc- • Higher cost structure • Modified business tion 4-5 times higher increases price for model for the African than India customer and slices context from being • Scale of de-centralized into margins margin-focused to sector solar mini-grid • Small-scale projects volume-focused projects much smaller cannot bring in • Controlled costs than India efficiencies of scale by creating a lean team and partnering with other firms for customer outreach • Few existing rela- • Increased investment • Invested in building tionships with the in customer education market share for the potential customer and acquisition which first few years, reduc- business segment is time-consuming - ing its margins for this delays revenue realiza- purose tion timelines • Built a local identity and invested time in building customer trust characteristics of the SME segment in these regions, and (iii) Diversifying to newer customer segments cost-benefit analysis of Astonfield-Solesa’s solution when compared to existing alternatives like diesel generators. Astonfield Solesa’s target customer group in India is primar- ily SMEs in the manufacturing sector. Since East Africa has Further, the new Africa team, led by Shah and supported fewer manufacturing SMEs, the firm expanded its target to by legal, financial, and administrative resources in India, include agribusiness SMEs such as cold chains and ware- met over 60 potential clients, understood their needs and houses, commercial and residential real estate developments, challenges, and educated them on the benefits of shifting to and socially impactful projects. solar-hybrid power systems. Insights from these conversations were fed back into product development, customization, and Early wins in the region include a small-scale installation for marketing strategies. Shah leveraged his prior experience and an SME in Greater Nairobi that is scheduled to be com- existing relationships in Kenya to forge new connections with missioned in early 2015. The firm is in the early stages of banks, SMEs, and government bodies. designing a mini-grid project for the Kenyan Government for corridors for shared prospertity: case studies Credit: Astonfield Solesa a refugee settlement in Kakuma in north-western Kenya. It is Investing time and effort in educating SME financiers also bringing new solar-based products to help Kenya’s 17,000 about Astonfield Solesa products schools become energy independent. This will promote adult learning by providing electricity at night. Shah and his team met with several government bodies and financial institutions to build awareness about Astonfield Taking a regional approach to expansion Solesa’s systems and find out their willingness to fund SMEs to install them. These included renewable energy authorities Inclusive businesses can avoid potentially catastrophic across East Africa, NIC Bank, Bank of Africa, Imperial Bank, mistakes by selecting markets for expansion based on business Victoria Bank, and several development finance institutions dependencies. For this, they can analyze markets using public (DFIs) such as AfD, EIB, and DEG. data, consulting other business practitioners, and country visits. Adapting the business model for the East Africa market context Astonfield Solesa carried out market research based on its business dependencies. It found that East African countries Small and medium inclusive businesses, especially those that had the most supportive regulatory environments for their are still early stage, are more likely to have multiple value business. Further, they realized that they would need to take propositions catering to different client segments. Refining a regional approach to find viable business volumes, and yet and pivoting the business model to become “expansion- keep expenditure low. ready” is critical. Astonfield invested time identifying its 84 | 85 core strengths and value propositions and specific customer "Don't plan for revenue or profit contribution from Africa segments that presented opportunities with lesser risks and operations for the first 2-3 years. Of course, if you do well higher returns. This identified market opportunities in shifting and see money come in that is an advantage but you from large-scale centralized projects to small-scale and decen- should not be tying your survival to making money right tralized private-sector projects. It also emphasized the need away. Build a working capital base and give yourself a 2-3 for partners with technical strengths to cater to such projects, year runway so you build the business in a systemmatic resulting in the joint venture with Solesa Group. instead of opportunistic way." Controlling costs by creating a lean team for expansion Ameet Shah and relying on partner resources co-chairman, astonfield solesa Inclusive businesses are unlikely to have senior leadership bandwidth readily available to deploy for expansion. Firms need to take different approaches to develop this bandwidth can adopt are to ensure robust India operations to support based on internal contexts. These include identifying specific Africa expansion, find like-minded partners to share financial leaders for expansion, decreasing operational workload of risks, and run lean expansion operations. senior management, and developing a strong second line of leadership. At Astonfield, the firm’s co-chairman helmed the Astonfield identified early on that it would need to shift from Africa expansion and roped in second-line leaders to support its margins-based approach to a volumes-based approach in him. The firm adopted a lean approach, hiring only business Africa. It would need to invest heavily in capturing market development personnel in Africa, relying on a shared pool of share in its initial years, without necessarily showing high legal, financial, and administrative resources in India for back- profitability during this period. To support this strategy, the office work. It decided to rely on channel partners for outreach company built capital reserves from Indian operations and beyond Kenya, decreasing the need to hire talent at each new decreased operational expenses by creating a lean team and location. working in partnership with local firms. Its joint venture with Solesa Solar mitigated the financial risks of entering a new Investing in building market share for the first two to market. three years Building a local identity and investing time in building Inclusive businesses with products or services that have longer customer trust sales cycles require high capital expenditure, significant customer education, and market creation. In Africa, businesses Inclusive businesses, particularly those with B2B models that will need to invest two to three years in pre-revenue or pre- frequently interface with customers, will benefit from build- profit operations to build market share. One way to address ing local identities, hiring senior local talent, and aligning this challenge is to build adequate capital reserves to finance branding and messaging to suit new markets. Astonfield up-front investments and working capital needs. Early-stage Solesa benefited from having a Kenyan as its co-founder, who inclusive businesses can find this difficult. Other strategies they understood the market and was seen as a “local” by target customers. The firm built customer trust by investing time and effort to educate SMEs on decentralized solar mini-grids and guiding them through project financing challenges. Future Plans Astonfield’s first installation in Kenya will be commissioned in early 2015, about a year-and-a-half after the firm started operations in East Africa. It expects to grow rapidly over the next two or three years. It has nearly 270 MW of projects in pipeline across Africa and the Middle East, and expects that these regions will constitute nearly 50 percent of its project Credit: Astonfield Solesa portfolio by 2017. The firm continues to build its India opera- tions in parallel. corridors for shared prospertity: case studies case study 10 greenlight planet Transfer format: Trade partnerships and wholly-owned subsidiaries Countries of operation: Offices in India, China, U.S., Kenya and Uganda; distributes across 35+ countries Greenlight Planet designs, manufactures and distributes affordable solar lamps targeted at low income off-grid households. It has a manufacturing plant in China, and offices in India, Kenya and Uganda that focus on distribution. Its products are distributed to 35+ countries around the world snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for transfer transfer that led to transfer choices Imperative: Greenlight sought to grow Management readiness: Greenlight Sizable target consumer segment: its revenue base and create a global allocated a senior leader, who was Reliance on an off-grid and low footprint. experienced in overseeing the African income consumer segment with trade partnerships, to focus on global purchasing power to buy Greenlight’s Preparation: It studied the East Africa expansion full-time. products. market through in-person country visits. Financial readiness: It had a growing Districution Support: Existing revenue stream from trade in Africa distribution channels for consumer Format preference: It preferred to set which it reinvested in setting up an acquisition, financing, and post sales up fully owned subsidiaries with African entity. It also raised venture servicing as creating a direct sales complete control over R&D and capital funding once on-ground traction agent channel is time-consuming. manufacturing, but was open to in Africa was evident. partnering with others for outreach Import Reliance: Nascent and distribution. Operational readiness: It ensured manufacturing sector in Africa product manufacturing capacities necessitates reliance on imports Country preference: It selected Kenya through its Chinese subsidiary, from China. since it wanted a regional headquarters documented all standard operating and saw Kenya as a gateway to Eastern processes and readied curriculum for Regulations: Facilitative policies and Southern Africa. training employees. in solar and off-grid energy market such as low import duties on solar, no subsidies for alternates to solar Validating need for product in Africa: lighting such as kerosene. Employed a phased approach to validate need and expand simultaneously, from trade partnerships to establishing its own distribution channels. key challenges in transfer Ecosystem: High costs of last mile distribution constrains product uptake Sector: Limited awareness of alternative lighting products among consumers Business: Lack of deep market intelligence at the country level; limited finances to dedicate to Africa expansion key transfer insights ■■ Greenlight validated demand for its products in Africa periodically before committing financial and human resources ■■ It took a lean approach to expansion by keeping overheads very low in Africa and hiring only business development staff until it had built enough knowledge and insights around the local market to determine how to invest in a longer-term organizational structure ■■ It forged successful partnerships with distributors and retailers for reaching last mile rural households, and in the process, learnt about the opportunities and challenges in the off-grid solar lighting market through these partners ■■ It invested in hiring and training local talent for long term sustainability 86 | 87 Greenlight Planet manufactures and distributes affordable solar lamps for low-income off-grid households. The firm was set up in 2009 and, since its launch, has scaled up to nine offices and 700 employees in four countries. It has sold more than 3 million solar lamps in 35+ countries. headquarters: Mumbai year of founding: 2009 promoters: Patrick Walsh, Anish Thakkar and Mayank Sekhsaria legal structure: Private Limited business model: Business-to-business (B2B) and Business-to-consumer (B2C) sector and sub-sector: Renewable energy, solar Sunset brings all economic and social activity to a near stand- still in over 75 million households in India55. Cut off from the grid, and too poor to afford diesel-powered generators, kerosene lamps are used for housework, studying, and running micro-businesses. These households represent a cumulative market of $2.2 billion in energy expenditure (for lighting),56 but are difficult to serve due to the twin challenges of access and affordability. Greenlight Planet was set up by Patrick Walsh, Anish Thakkar, and Mayank Sekhsaria in 2009 to address this market oppor- tunity and serve a social need. Walsh designed a high-quality, Credit: Greenlight Planet affordable off-grid solar lamp, while Thakkar and Sekhsaria focused on commercializing it. Their range of affordable solar lamps, branded Sun KingTM, is now sold across India through a light’s overall business and were significant enough to warrant network of 6000 direct sales agents (called Sun King Business the launch of a subsidiary firm in Kenya (established in 2012). Associates) and in over 35 countries through a network of over The firm also launched a second Africa office in Uganda in 150 distribution partners for last-mile outreach. August 2014. In 2010, Greenlight expanded its business to Africa through Greenlight Planet’s Business Model in trade partnerships. With over 589 million people in the conti- India nent lacking access to electricity57 and a $1 billion/year market for paraffin lamps,58 Africa represents an attractive market for Greenlight Planet’s business model in India hinges on the firm. By 2011, sales from Africa represented half of Green- distribution and sale of affordable solar lamps targeted at low-income off-grid households. It is primarily business-to- consumer (B2C) driven. Its key strengths are high quality and affordability, and an effective last-mile distribution system. 55. Lighting Asia: Solar Off-Grid Lighting. 2012. International Finance Corporation. High quality and affordable products 56. Lighting Asia: Solar Off-Grid Lighting. 2012. International Finance Corporation. Greenlight’s solar lamps have daily run-times of 24 to 36 hours and use batteries with five-year lifespans. They are competi- 57. Lighting Africa Market Trends Report. 2012. International Finance tively priced (ranging from $11 to $38) when compared to Corporation. kerosene lamps, which are the most common substitutes 58. Media Kit. 2014. Greenlight Planet. in rural off-grid markets. A low-income household spends corridors for shared prospertity: case studies $120 to $600 to purchase kerosene for lighting needs over a sults in higher logistical and post-sales servicing costs. Further, five-year period. In contrast, Sun King solar lamps represent many businesses need to create access to consumer financing only 6 to 9 percent of the cost of kerosene used over the same to facilitate sales. Greenlight tackled this challenge by taking duration. Sun King lights are higher quality and more durable a multi-pronged approach to distribution, which includes than competing unbranded solar lamps. For instance, while working with distribution partners as well as developing its the battery technology used in Sun King lights is designed own distribution channel (Figure 38). to last five years, cheaper solar lamps often use lead acid and lithium-ion batteries, which last only two to three years. Sun The firm’s distribution partners include a variety of organiza- King lights are designed specifically for rural use, unlike many tions such as microfinance institutions (MFIs), multinational unbranded solar lamps, and have features like water-sealed corporations, traditional FMCG59 distributors, and last-mile- electrical ports and plastic enclosures that enhance durability focused social enterprises. Partners are selected for their reach, in rural environments. network, and track record of working with rural off-grid populations. Greenlight supports each distribution partner To deliver high quality, yet affordable products, Greenlight with training on product marketing and outreach. In addi- manufactures its products in China, where it has a wholly- tion to partnering with other organizations for distribution, owned subsidiary to oversee design, research and development, Greenlight also developed its own network of direct sales and bulk manufacturing. The firm’s decision to manufacture agents. Instead of hiring a large full-time sales force, the firm Sun King lights in China was driven by two key criteria: firstly, took a lean approach and created its proprietary ‘Direct to Vil- production in China turned out to be more cost effective lage’ distribution channel where it recruits Sun King Business than in India, even after taking into account transportation Associates (SBAs) who distribute Sun King lights in their local and import duties. Secondly, manufacturing in China allowed communities and earn commissions on sales. SBAs typically Greenlight to source raw materials and organize its supply have existing primary sources of income, for instance most are chain more efficiently. farmers, teachers, and small business owners. The direct sales agent model creates income in communities that Greenlight Effective last-mile distribution and post-sales servicing operates in, with each agent increasing typical earnings by 30 to 50 percent from selling Sun King lights. Greenlight aims to Last-mile delivery of products and services is challenging for increase its network of 6000 agents substantially in the next most inclusive businesses. Serving underserved populations re- few years. figure 38 greenlight planet's operational model b2b distribution channel - adopted across all 35+ countries where Sun King lights are distributed master small distribution distribution partners partners product rural 150+ partners across 35+ countries manufacture off-grid in china households Over 3 million greenlight greenlight households sales manag- sba's reached since 2009 b2c distribution channel - ers adopted only in India and Kenya where Greenlight 600+ 6000+ has sales teams and sales managers sales agents direct sales agents 88 | 89 Distribution partners and SBAs support after-sales servicing "We studied the African market in detail to pick the right by acting as intermediaries that accept service requests from country to start an office. We ended up picking Kenya customers and pass them on to Greenlight. In most cases because it is truly a gateway to East and South Africa...all such requests involve repairs or product replacement under major decisions are made here and most large MNCs have warranty. Products are picked up by these intermediaries, offices here," conveyed to the nearest Greenlight sales hub, and repaired products are duly conveyed back to customers. Greenlight’s Radhika Thakkar higher upfront investment in product quality and durabil- vp-global expansion, ity in rural conditions pays off by decreasing the need for greenlight planet product repairs and replacements, thus controlling costs of after-sales servicing. Greenlight addresses financing challenges by keeping its Financial Readiness products simple and affordable. For instance, the Sun King Eco is the most affordable in the product range and costs Channeling further capital and resources into Africa approximately $11. The firm also works with last-mile-focused financial institutions like Fullerton India for product distri- In 2012, the firm raised $4 million in equity funding from bution and financing for higher-end Sun King products. Bamboo Finance and Greenlight’s first angel investor, Prabha Sinha, for further expansion into Africa and India. Since then, as operations in Africa grew, the business development office Expanding Greenlight Planet has expanded into a full-scale corporate office with staff for to Africa other functions such as human resource management, finance and accounting, and administration. The Nairobi office has Greenlight Planet’s founding team had a clear vision to build also taken on the additional responsibility of managing a global organization. Africa, with 50 percent of its popula- further global expansion. It is currently rolling out the first tion off the grid and a $1 billion/year market for paraffin African direct sales agent network in Kenya. Greenlight also set lamps60, was a natural choice for expansion. up an office in Uganda in August 2014. Today, sales revenues from Africa continue to contribute nearly half the firm’s global Management Bandwidth annual revenues. Identifying leadership for the Africa expansion and Format and Country Selection building a team in Kenya Adopting a phased approach to expansion, from trade In 2012, Greenlight Planet relocated its Vice-President, partnerships to on-ground presence in Africa Global Business Development, Radhika Thakkar to Nairobi to set up a business development office. Thakkar had initially By 2010, Greenlight successfully generated high demand for its managed Greenlight’s Africa business from the India office products from distributors and retailers in Africa, particularly and had championed early expansion into Africa to gain a from east African countries such as Kenya, Rwanda, and Ugan- comparative first-mover advantage. Subsequently, she spent a da. Initially, it served this demand through a trade partnership significant amount of time on the ground in Africa, working model, but it scaled up Africa trade significantly to earn nearly with distribution partners across Sub-Saharan Africa to study half its annual revenues from the region. Encouraged by this their approach and understand the end consumer. These early early success, Greenlight saw the benefit of locating closer to lessons guided Greenlight in its Africa strategy and planning. the market and opened a Nairobi office in mid-2012. The company set up a private limited subsidiary in Kenya, which focused on distribution through partners such as One Acre Fund, Total, and SunnyMoney. In 2012, Greenlight hired 59. Fast-moving consumer goods. and trained five local business development executives; as a result of the team’s efforts, it expanded product distribution Media Kit. 2014. Greenlight Planet. 60. to 17 African countries. corridors for shared prospertity: case studies Choosing a regional hub for operational efficiency Operational Readiness The firm decided to take a regional instead of country-specific Shifting from a price-sensitive to a product-sensitive business view when deciding on the location for its Africa consumer segment base. From its research and conversations with distribution partners, Greenlight concluded that Nairobi was a major Af- Since most African markets do not have kerosene subsidies, rican hub and a gateway to markets in east, central and south consumers do not have lower price expectations for solar Africa. As the Nairobi office was rolled out, Greenlight found lights as in India. Further, given how expensive kerosene is, a its decision validated by easier access to talent and operational household’s break-even period when investing in a Sun King efficiencies created by frequent and well-connected flights light is much shorter than that in India. This leads to a prefer- from Nairobi to India and the rest of Africa. ence for advanced and more expensive Sun King models. figure 39 transferring greenlight planet from india to africa dependencies dependencies in india in africa off grid and low income 2014: off grid and low income 2009: 2011: 2012: Direct sales net- consumer segment consumer segment Start exporting Africa office Wins Lighting work and Uganda • Consumers are to Africa in place Africa Award office launched • Consumers are both predominantly in rural again rural and urban areas • Higher value products • Price sensitive seg- sell better - since they ment due to subsi- have a shorter break- dized kerosene; hence even in the absence of lower value products kerosene subsidy (in sell better most African markets) • Cash-driven op- • East African markets erations, hence more such as Kenya and expensive and less Uganda offer improved efficient compared transaction efficien- to some East African cies resulting from markets 2010: 2012: 2013: mobile money Full-time re- Venture capital Nairobi offices last mile distribution source allocated raised for scaled up with last mile distribution channels to Africa, wins expansion additional support channels Lighting Africa staff • Largely done through a • Largely done through award network of direct sales a network of distribu- agents tion partners • Some sales is also • Started piloting direct done through distribu- 2 million solar lamps sold to consumers sales agents network tion partners in 30 countries in Kenya in 2014 regulatory regulatory environment $1.3 mn income generated environment for direct sales agents • Inhibiting, due to high • Facilitative due to no/ import duties on solar low import duties on lights and subsidy on solar lights, no subsidy kerosene over 290,000 tonnes of CO2 offset on kerosene in most by replacing kerosene lamps African markets, and the flexibility to have differential pricing in last-mile markets 90 | 91 Credit: Greenlight Planet Adapting distribution strategies to a comparatively un- "In many ways, East Africa is a more attractive market known market for solar off-grid products than India. The regulatory environment is more friendly, and we don't compete with One of Greenlight’s key strengths in India is its ’Direct to Vil- subsidized kerosene" lage‘ sales model through SBAs, who enable last-mile outreach Anish Thakkar to remote rural areas. As the firm readied to expand into Africa, ceo, it realized that building a network of direct sales agents in a greenlight planet new geography may not be initially feasible. Instead, it focused on building strategic relationships with distributors and retailers across the continent. The distribution partners helped Understanding this trend early on benefited Greenlight, to grow Greenlight’s Africa revenue-base and helped the firm which adapted its product manufacturing capacity in China learn specific nuances of operating in different African coun- and marketing strategy to attract a product-sensitive consumer tries. While the firm recently began to pilot the SBA model in segment in Africa that demanded a best-in-class solutions Kenya after nearly three years of operating in Africa, it still sees from Greenlight’s product range. A related benefit that the these distributors as strategic long-term partners and continues firm saw specifically in east African markets, which have high to invest in growing the distribution partner network. penetration of mobile money, such as Kenya and Uganda, was that customers made purchases without needing to carry large Forging successful partnerships with distributors and amounts of cash in person. This creates a better testing ground retailers to overcome ecosystem and sector-level challenges for Greenlight’s ’Direct to Village‘ sales model through SBAs since it decreases the need for expensive and inefficient cash Inclusive businesses, particularly product companies, will transactions. benefit by building strategic partnerships with distributors and retailers to reach to low-income communities. Building own outreach channels takes time and considerable investments corridors for shared prospertity: case studies figure 40 challenges faced by greenlight in transfer and strategies adopted to address them challenges impact strategies • High costs of last mile • Increase in costs, • Bulk manufacture distribution when passed on to products in China to • Financial risks from customers, lowers the reduce costs ecosystem high inflation rates affordability of the • Limit direct exposure in markets such as product for the rural of Greenlight to Zimbabwe and Zambia poor markets that are more • Countries with high favorable vis-a-via dis- inflation rates result tribution and inflation; in currency risk to work with distributors business in others • Limited awareness of • Lowers product adop- • Partnered with alternative lighting tion rate distributors who had sector products established distribu- tion channels and provided them with marketing support • Lack of deep market • Teams find it difficult • Employed a phased ap- intelligence at the to create effective proach to expansion, country level marketing and sales starting with trade • Limited finances to strategies partnership. This re- business dedicate to Africa • Impacts ability to quired low investment expansion start a full-scale office, and led to developing and build direct sales market knowledge agents network through trade partner association and needs innate local market knowledge to be successful. Validating demand at each stage before committing Greenlight relied on its distribution partners for customer financial and human resources outreach to more than 20 countries and to understand regional and country-specific nuances of doing business Early-stage inclusive businesses are less likely to have deep in Africa. At the same time, the firm supplied dependable pockets while expanding to Africa, and as a result, have lower high-quality products to partners and helped them serve their capacity to absorb losses from expansion. In such a situation, it customers better. By specifically partnering with companies may be better to take a phased approach to expansion, starting and organizations with a strong impact orientation, such as with lower-risk formats like trade partnerships and strategic Total and One Acre Fund, Greenlight aligned with partners alliances, and using these to understand the market ahead of and built long-term relationships. Even as it seeks to evolve investing in full-scale expansion. Greenlight Planet also took its own direct sales network in parts of Africa, it continues a phased approach to expanding into Africa, beginning with to work closely with distribution and retail partners for the market exploration through trade partnerships, to setting up majority of the continent. a sales office catering to distributors, and finally building its own distribution channels. Each step of this journey entailed 92 | 93 greater commitment of financial and human resources, and "As long as a product is addressing the consumer's hence a greater degree of risk. However, by phasing and pacing developing needs, helping usher them into modern living, its growth and establishing periodic proof of concept, the firm we will consider using our distribution platform to deliver considerably reduced its risk. it to the last mile." Lean approach to expansion Anish Thakkar ceo, Inclusive businesses will benefit from taking a lean approach greenlight planet to expansion and keeping overheads low in the first few years, until operations in Africa become profitable. Greenlight initially chose to invest only in areas that gave it immediate team members are introduced to Greenlight’s operations and returns, such as trade partnerships with distributors and creat- philosophy and exposed to field operations. Some senior team ing a team focused only on business development. Greenlight members frequently travel (quarterly) between the two offices. reinvested returns earned by these investments to expand the Although this does create a strain on management bandwidth, team to include support personnel and build a direct sales the firm sees significant benefits in the offices being closer in network. Thus, the African expansion did not add to the cost terms of collaboration and closer cultural ties. burden. On the contrary, it was a significant contributor right from inception. Future Plans Investing in hiring and training local talent Greenlight Planet will continue its global expansion, not only in Africa but also in parts of south and south-east Asia, Inclusive businesses must also build talent strategies around and Latin America. The firm envisions selling 20 million Sun hiring and training local talent for long-term sustainability. KingTM lights in the next two years, and creating an addi- Greenlight Planet did just that. With the exception of Thakkar, tional source of income for over 25,000 direct sales agents. The who relocated from India, the entire Africa team was hired firm is also keen to continue designing innovative products in locally. New employees go through a short induction program the energy space and other life-enhancing sectors. The Africa and team members assigned to business development roles are offices in Kenya and Uganda will continue to play a key role in exposed to the market in India for training. During induction, these plans. Credit: Greenlight Planet corridors for shared prospertity: case studies case study 11 skg sangha Transfer format: Strategic Alliances in each country of operation Countries of operation: India, U.K., Kenya, Egypt, and Mali SKG Sangha is a non-profit organization that designs, constructs and maintains household level biogas digester plants in rural areas to provide clean fuel for cooking. It has offices in India, Egypt, Kenya and Mali, and has installed biogas plants across eight countries. snapshot of expansion drivers intent capacity dependencies objectives and preferences building readiness for organizational dependencies for transfer transfer that led to transfer choices Imperative: SKG Sangha aimed to Management readiness: SKG Skilled field staff: Skilled local maximize social impact by expanding Sangha identified experienced Indian masons for constructing biogas provision of clean cooking fuels to supervisors within the team to support plants. Reliance on locally employed rural households in countries outside implementation of overseas projects. technicians for monitoring and India. maintaining biogas plants. Financial readiness: It created Preparation: It raised funds from management bandwidth to focus on Import Reliance: Supply and quality private organizations and governments raising capital for African expansion. of raw materials for construction. in Europe and Africa to initiate It also forged a relationship with a operations in Africa. philanthropic organization to raise Biomass Reliance: Availability of funds for expansion. It ensured regular animal waste as feed-in material for Format preference: It entered into source of revenue through carbon biogas generation. strategic alliances with local finance for the Indian operations. governments and organizations that Channel Partners: Presence of local could bring in on-ground expertise Operational readiness: It documented NGOs for conducting field surveys, and help establish operations in standard operating processes and mobilizing community and increasing different African geographies. designed training manuals to train field product awareness; reliance on staff that were hired for construction donors for funding. Country preference: Its country and maintenance of biogas plants. selection for expansion was driven by Multi-lingual staff: Language the choices of funding partners. Validating need for product in Africa: proficiency in staff (English and native It carried out extensive market research speakers) to assist English-speaking and identified the need for biogas supervisors transfer operations to plants as an alternative to wood fuels local communities. in rural Africa. key challenges in transfer Ecosystem: Ability to pay among rural African households is very low; high construction and labor costs in Africa Sector: Lack of skilled field staff; limited availability of raw material Business: Limited access to external capital; limited access to feed-in biomass in rural Africa key transfer insights ■■ SKG Sangha diversified its funding strategies to include sustainable sources of funding for the Indian operations. Thus, it could create management bandwidth for raising capital specifically for its African expansion ■■ It employed a mix of Indian staff and a local team in Africa to serve as an effective mechanism for operational knowledge transfer and for accelerating expansion ■■ It developed its technical prowess to address the need for long-term after-sales service, which most biogas companies struggle to address. As a result, it developed a strong value proposition in international markets 94 | 95 SKG Sangha is a non-profit organization that designs, The market for biogas plants in India is estimated at 12 million constructs, and maintains household and community-level households61, yet only 4.25 million household-level plants biogas digester plants in rural areas to provide clean fuel for were installed as of 2011. SKG Sangha (SKGS), an NGO set up cooking and vermicompost fertilizer. SKG Sangha has offices in 1993 by D. Vidya Sagar, seeks to bridge this gap by build- in India, Egypt, Kenya, and Mali; and has installed biogas ing and supplying biogas digester plants. SKGS generates 60 plants across eight countries. percent of its funding from carbon finance, while the remain- ing is sourced from donors, individuals, corporate social headquarters: Kolar, Karnataka responsibility funds, and foundations. As of 2014, SKGS has year of founding: 1993 expanded to four other Indian states, Andhra Pradesh, Tamil founder: D. Vidya Sagar Nadu, Kerala, and West Bengal. legal structure: Non Profit society business model: Business-to-consumer (B2C) Even as SKGS was expanding its India footprint, Church sector and sub-sector: Renewable energy, Missionary Society (CMS), Africa, approached it for a biogas biomass project in Kenya. During discussions, the team at SKGS realized that 80 percent of the population in Africa used solid fuels for cooking. Further research indicated that the market potential for biogas plants was high in Africa, estimated at 18.5 million households.62 Around the same time, UNDP invited SKGS to bid for a biogas plant project in Egypt. Encouraged by these developments, SKGS expanded to Africa in 2009, and is now present in six African countries: Kenya, Egypt, Ghana, Uganda, Madagascar, and Mali. Since its inception, SKGS has installed more than 135,000 plants and 250,000 fuel-efficient wood fuel stoves with a customer base of 1 million. It has projected an outreach rate of 40,000 families each year. SKGS’s activities create significant positive impact on the environment; savings each year amount to 1.95 million liters of kerosene, 284,550 tons of firewood, and 800,000 tons of carbon dioxide. SKG Sangha’s Business Model in India SKGS’s operational expenditure is funded primarily by carbon finance. Grant funding and a portion of carbon finance fund plant installations. When entering a new geography, SKGS employs local NGOs as partners to conduct baseline stud- ies to test availability of raw materials, understand cultural preferences, build product awareness, and assess customiza- tion needs. SKGS constructs biogas digester plants for fuel generation based on insights from the studies. It also provides vermicompost units that generate fertilizer from the residue of the digester plants. 61. Cracks & Gaps: Our Biogas Story. January 2013. SELCO Founda- tion. 62. Domestic Biogas in Africa – A First Assessment of the Potential Credit: SKG Sangha and Need. 2007. Biogas for Better Life. corridors for shared prospertity: case studies Adapting the community participation approach for "We believe that customers' equity contribution and sustainability participation enhance their ownership and in better maintenance of plants. This is reflected in our post Poor maintenance and lack of community ownership result in implementation success rates at 95%, when compared to high failure rates of biogas plants in India.63 To address these other similar projects that have an average success rate of challenges, SKGS ensures community engagement in design 42% after 5 years of installation." and construction of its plants. SKGS makes it mandatory for selected households to provide sweat equity through in-kind D. Vidya Sagar contributions (construction materials, construction support, president, and food for masons and supervisors) of 20 to 30 percent of skg sangha the plant’s construction value. Enhancing livelihood through on-the-job training SKGS also developed in-house capacity for carbon credit documentation, significantly reducing the cost (by about SKGS’s project costing includes salaries of project volunteers, 75 percent) it incurred hiring external consultants for job. who are trained and employed to oversee maintenance and Further, borrowing from banks to finance projects enables repairs of the biogas plants over a ten-year period. Women SKGS to begin implementation even before it finds carbon manage the vermicompost units that come along with the credit buyers. biogas unit and sell the fertilizer to farmers to earn approxi- mately $240 a year. This represents a 50 to 100 percent increase 63. A look at India’s biogas energy development program – after in household incomes. The fertilizer results in up to 30 percent three decades, is it useful (doing what it should) and should it be increased yields of crops like coffee, ginger, and flowers. continued? 2011. Kaniyamparambi, J.S. 64. The Kyoto Protocol, which came into effect in 2005, set caps on Financing scale through carbon credits country GHG emissions. Countries set quotas on emissions by local businesses, leading to buying and selling of credits between From 2008, SKGS started financing its projects primarily (up businesses depending on their quota use. As SKGS's plants lead to 60 percent) from sale of carbon credits64 leading to a 275 to reduction in GHG emissions, it sells these credits in the market percent increase in the number of units installed per year. and finances its projects through revenue generated. figure 41 SKG Sangha's operational model selecting analysing mobilizing constructing focus project training monitoring refinancing community plant geography scope • Conducting • Partnering • Mobilizing • Installing • Training • Monitoring • Tradable need based with local community biogas di- project the project certificates research NGOs for to provide gester plants volunteers as annually and are sold in • Conforming village level in-kind and vermi- maintenance calculating the futures with Donor community support composting technicians, GHG emis- market to interest survey for project units by who then sions offset generate • Identifying implementa- employing provide 10 • Validating revenue project house- tion masons and year main- emissions to finance holds supervisors tenance offset ny a projects support for third-party further the plants to obtain carbon cred- its (tradable certificates) 96 | 97 figure 42 Funding Sources 1993 2000 2007 2014 • 60 percent - Govern- • 100 percent - Govern- • 60 percent - Carbon • 60 percent - Carbon ment subsidies ment subsidies + finance finance • 40 percent - Bank Donor funding • 40 percent - Govern- • >37 percent - Donor loans ment subsidies + funding Donor funding • <3 percent - Govern- ment subsidies Expanding SKG Sangha to Africa Management Bandwidth More than 80 percent of Africa’s rural population depends Relying on senior team members based in India for on highly polluting solid fuels such as firewood, dung cakes, directing Africa expansion and crop residues. Around 75 percent of rural Africa is un- electrified, indicating significant market potential for biogas SKGS’s business model relies on fund raising and project plants in the region. implementation, which is managed by middle and senior management. To control operational expenses, SKGS tasked SKGS’s Africa operations commenced in 2009 in collaboration senior management in India with additional Africa expan- with the Church Missionary Society (CMS). It set up an office sion responsibilities. Around the same time, SKGS shifted to in Kenya in 2011, and drew support from other donors for its less resource-intensive carbon credit financing for its India Africa expansion. It established strategic alliances with local operations, which freed up senior management bandwidth to governments and NGOs to set up wholly-owned subsidiaries focus on raising funds for Africa. While effective, this has cre- in Egypt (2012) and Mali (2010) with small in-country local ated a heavy reliance on a few key team members who have teams. As of 2014, it operates in Kenya, Uganda, Mali, Ghana, relationships with donors, and is creating constraints to scale. Madagascar, and Egypt. SKGS is exploring the possibility of To overcome this, SKGS plans to consolidate existing opera- expansion to Sudan. This section describes some of the key tions in Africa over the next few years instead of expanding to elements of their expansion. newer countries. It also plans to build a dedicated senior-level team to focus on Africa. Overcoming the language barrier through strategic deployment of field personnel Communication plays a vital role in community-engagement reliant inclusive businesses. In India, SKGS leveraged its home ground advantage in language and abundant semi- skilled labor, which are critical for its operations. When expanding to Africa, it initially identified experienced Indian supervisors and deployed them in Africa to train local field staff. While this was effective in English-speaking regions, lan- guage posed a challenge in non-English speaking countries such as Mali. In such regions, SKGS hired a mix of Indian and multi-lingual (English and native language speakers) staff. Indian workers commenced operations and the staff assisted English-speaking supervisors to gradually hand over opera- tions to locals. Credit: SKG Sangha corridors for shared prospertity: case studies All Images Credit: SKG Sangha Financial Readiness Format and Country Selection Raising capital for the Africa projects Identifying an appropriate legal structure for expansion SKGS raised capital for its Indian projects from multiple Legal structures65 prevent Indian NGOs such as SKGS from sources such as foundations, donors, and corporate social establishing overseas offices. If it was to expand, SKGS would responsibility funds. However, since 2007, it ensured a regular need to consider other legal formats. It explored the business source of revenue through carbon finance, thus reducing suitability of a for-profit model but it was inefficient to set up dependence on multiple sources and releasing management for-profit entities in every country it entered. The organization bandwidth for other activities. For instance, senior manage- then examined the feasibility of setting up a charity in the ment could now focus on raising capital specifically for United Kingdom through which it could expand to Africa. SKGS’s African operations. The team forged a relationship This was more efficient as it reduced duplication of registra- with a philanthropic organization, CMS, which provided tion, met donor requirements as they are more inclined to funding for the Africa expansion. fund non-profits, and gave SKGS the added benefit of reduced taxes by being a UK-registered charity. Hence, SKGS set up a Adapting to higher project costs charitable foundation in the United Kingdom in November 2011. Through this foundation, SKGS set up registered offices SKGS uses materials such as concrete, sand, bricks, valves, in Kenya and Mali. It initiated cross-border expansion by rubber hoses and high density polyethylene (HDPE) pipes building 21 biogas plants in Machakos district in Kenya in in the construction of biogas plants. While these are easily partnership with CMS. In Mali, it provided technical advisory available in India, SKGS found it difficult to procure these in support for the construction of 100 biogas plants for rural some countries in Africa. The team addressed this challenge farm families. by exploring locally available alternative building materials. It also leveraged its connections with material manufacturers Adopting a wholly-owned subsidiary model and partner- in India for materials that could not be procured locally and ing with local organizations established import channels to project destinations in Africa. However, these imports added to the already high construc- SKGS works with local companies, NGOs, communities, tion and labor costs, leading to a final plant cost of $495 to government departments, and other organizations to install $660, about 1.5 to two times higher than the average cost of biogas digester plants. It experimented with a decentralized constructing a plant in India ($380). SKGS met this challenge model where the local partner shared control over certain by raising additional capital from large organizations such as aspects such as material procurement, but discontinued the UNDP and CMS and by exercising control over budgets. model due to governance and accountability-related challenges arising from remote partner engagement. Instead SKGS opted to set up a wholly-owned subsidiary. The entities in each target country were incorporated as subsidiaries of 98 | 99 All Images Credit: SKG Sangha the holding entity in the United Kingdom. SKGS continues operations and ensured they undertook periodic maintenance to engage with partners for market surveys and community for the long life of the plants. SKGS also designed training interactions,66 but retains control over core design, construc- manuals to train field staff and as reference material for them tion, and financing aspects of biogas plants. in the future. Conducting intensive on-the-ground market research for Customizing the product to complement availability of country selection biomass SKGS’s decision to expand into Africa through Kenya was Biogas digester plants need to be fed with biomass at regular driven by its funding partner’s (CMS) choice. When expand- intervals for gas generation. At the household level, SKGS de- ing to other countries in Africa, it invests considerable time in fines its plant size and operational process based on the type of preparatory efforts. The team meets with relevant government animal waste and quantity generated at regular intervals. Dif- departments and understands legal requirements to set up ferent animal wastes have different emission factors,67 which businesses. SKGS also spends significant time understand- require customized processes. SKGS’s plants in India typically ing cultural preferences and contexts. For example, in India, rely on cow dung as feed-in material, given the abundance of a majority of households do not accept biogas plants that cattle in rural India. However, in Africa, farm households have use human excreta to generate gas owing to cultural taboos. a mix of cows and donkeys, with donkey dung having a lesser However, in Ghana, consumers find human excreta-based emission factor than cow dung. SKGS, therefore, customizes biogas plants acceptable. So, SKGS constructed biogas plants plant sizes and processes to use both cow and donkey dung as coupled to toilets/latrines. These blended systems provide gas feed-in biomass. for lighting and cooking, and also provide clean toilets that improve health and quality of life. 65. Indian Societies Registration Act, 1860. 66. SKG Sangha’s local NGO partners assist in conducting baseline Operational Readiness surveys and organizing village community meetings. They also assist in conducting product-awareness programs among local Documenting operational know-how communities to increase plant adoption rates. The awareness programs include radio broadcasts and field visits to enhance Poor maintenance of plants by service providers and lack understanding of biogas technology and its benefits. of user know-how are key causes of biogas plant failure. To 67. An emission factor is a representative value for the amount of mitigate this challenge in Africa, SKGS documented standard GHG gases (methane, carbon dioxide, nitrous oxide, etc.) released. operating processes (SOPs) based on its extensive experience Depending on the type of animal waste, it is mixed in a certain in India. The SOPs can be customized for different regions, proportion with water and fed into the biogas plant. This slurry depending on plant size and design, and type of feed-in then breaks down anaerobically to produce biogas. biomass. As it began project implementation in Africa, this documentation served to assist users in performing day-to-day corridors for shared prospertity: case studies figure 43 transferring skg sangha from india to africa dependencies dependencies in india in africa financing financing 2011: Projects are primar- Signed an agree- 2012: Projects are funded ily funded by carbon ment with UNDP Set up a for-profit through multiple finance. Egypt for providing company in sources (donors, gov- technical Egypt ernments etc.). assistance hiring of skilled hiring of skilled technical staff technical staff SKG is able to hire Semi-skilled labor skilled masons and (masons and techni- technicians easily as cians) is not easily India has abundant available, and SKG has supply of semi-skilled to hire unskilled labor labor. SKG also has and train them using deep relationships with technical experts from the local community. India. construction material construction material availability 2011: 2011: 2013: availability Set up a char- Set up an Set up an office Availability of raw ity in the UK office in in Mali through materials is limited. All materials are easily - Foundation SKG Kenya through Foundation SKG Some materials such available across geogra- Sangha Foundation Sangha as cement and HDPE phies and are procured SKG Sangha pipes are imported locally. from India to ensure quality. biomass availability Plants installed: > 135,000 biomass availability Only single source of biomass (cow dung) is available for fuel At the household level, generation at the multiple sources of household level. biomass (cow and don- customer base: one million key dung) are available access to on-ground for fuel generation. local partners access to on-ground Local NGOs assist in local partners conducting field survey, mobilizing community projected outreach rate: Local NGOs help in and increasing product 40,000 families each year identifying suitable awareness. locations for construc- tion, mobilizing com- munity, and increasing project uptake. 100 | 101 figure 44 challenges faced by skgs in transfer and strategies adopted to address them challenges impact strategies • Low ability to pay of • Negative impact on • Directed efforts to rural African house- ability to take up raise funds from holds projects since 20-30 philanthropies, ecosystem • High construction and percent of all projects governments and labor costs in Africa are generally funded by private organizations households and enforced a higher • Construction of each cotrol over budget plant costs upto two times than that in India • Lack of skilled field • Lead time for plant • Hired a mix of ex- staff installation increases perienced Indian • Limited availability of workers and locals to sector raw material initiate operations and gradually transferred operations to locals • Established channels to import raw materi- als from India • Limited access to • Negative impact on • Created management business external capital ability to take up proj- bandwidth to raise • Limited access to ects since all projects funds from organiza- feed-in biomass due to are grant funded tions in Europe and fewer head of cattle in • Limits the qualntum Africa rural Africa of biogas plants that • Customized plant can be built due to the size and processes critical requirement of to use cow dung and feed-in biomass abundantly available donkey dung Adopting efficient fund-raising approaches Adoption of carbon finance in 2007 consolidated SKGS’s funding for its Indian projects. This helped free up manage- Senior leadership of non-profit businesses spends a significant ment bandwidth and the leadership team could focus on amount of its time in fund-raising. Businesses could create fund-raising for its African projects. management bandwidth for expansion by diversifying funding strategies to include more sustainable sources such as develop- Employing a blended team for project implementation ing business models around their products or services, raising trust funds, or entering into multi-year partnerships with Inclusive businesses seeking to expand will benefit from donors. employing a mix of experienced Indian personnel and locals corridors for shared prospertity: case studies Credit: SKG Sangha to start operations. This will serve as an effective mechanism future plans for operational knowledge transfer and accelerate commence- ment and stabilizing of operations. SKGS’s adoption of this SKGS plans to consolidate its operations in Africa. It also model ensured efficient quality checks and consistent and plans to conduct research to improve its biogas plant design well-planned project financing. It also helped resolve local and understand how best different organic wastes (such as language barriers. poultry, sericulture, sea weed, spoilt grain, food waste, and organic waste from industries like tobacco, tea, and coffee) Developing technical prowess for a strong value proposi- can be used as feed-in organic matter for gas generation.69 tion in international markets SKGS also plans to expand to the agriculture sector to provide affordable solutions and better practices, particularly Inclusive businesses will benefit from developing their techni- in the pre-harvest phase, for poor communities. Other focus cal prowess and offer strong value propositions in interna- areas for SKGS include improved drinking water and higher tional markets. They can do this by building strong R&D milk-yielding cattle. capabilities and processes and knowledge to succeed in base of the pyramid (BoP) markets globally. SKGS constantly improves 68. SKG Sangha. its technology and explores different sources of biomass. It also includes regular maintenance services in its budget for 69. SKGS’s research concluded that 5 kg of sericulture waste provides ten years, thus addressing a major reason for product failure in as much gas as 100 kg of cow dung does. the market. These efforts yield positive results, SKGS has a 95 percent success rate after five years of installation, while aver- age success rates in the sector is 42 percent.68 These strengths help SKGS attract donor funding, adapt its product to varying local contexts, and operate as a wholly-owned subsidiary. 102 | 103 Figures 1. Digital Green’s operating model 09 2. Key components of the Digital Green approach 10 3. Transferring Digital Green from India to Africa 13 4. Challenges faced by Digital Green in transfer and strategies adopted to address them 14 5. GEWP’s operating model in India 18 6. Impetus’s operating model in Kenya 20 7. Transferring GEWP from India to Africa 21 8. Challenges faced by GEWP in transfer and strategies adopted to address them 22 9. Manasa’s operating model in India 26 10. Transferring Manasa Group from India to Africa 28 11. Challenges faced by Manasa Group in transfer and strategies adopted to address them 29 12. Key elements of SKEPL’s business model 33 13. SKEPL’s operating model in India 34 14. SKEPL’s operating model in Nepal 35 15. Transferring SKEPL from India to Nepal 37 16. Challenges faced by SKEPL in transfer and strategies adopted to address them 38 17. Aravind Eye Care System’s business model 42 18. Roadmap for knowledge transfer 44 19. Technical assistance provided by LAICO 45 20. Transferring Aravind Eye Care from India to Africa 46 21. Challenges faced by Aravind Eye Care in transfer and strategies adopted to address them 47 22. Transferring Dimagi from India to Africa 50 23. Flow of key operational activities at Dimagi 52 24. Dimagi’s expansion to Africa 54 25. Key challenges in transfer 55 26. Arogya Parivar's value chain activities 59 27. Arogya Parivar’s operational model 60 28. Operations flow in Familia Nawiri Health Camps 62 29. Expansion roadmap for Arogya Parivar 63 30. Transferring Arogya Parivar from India to South-East Asia and Africa 65 31. Challenges and key insights for transfer 67 32. Operational model for operation ASHA 70 33. Transferring Operation ASHA from India to Africa 73 34. Key challenges faced in transfer 74 35. Astonfields business growth in India 79 36. Transferring Astonfield from India to Africa 83 37. Key challenges that astonfield faced in transfer and strategies used to address them 84 38. Greenlight Planets operational model 89 39. Transferring Greenlight Planet from India to Africa 91 40. Challenges faced by Greenlight in Transfer and strategies adopted to address them 93 41. SKG Sanghas Operation Model 97 42. Funding Sources 98 43. Transferring SKG Sangha from India to Africa 101 44. Challenges faced by SKG Sangha and strategies adopted to address them 102 corridors for shared prospertity: case studies Abbreviations AIMVCF Aavishkaar India Micro Venture Capital AMCS Automated Milk Collection Systems ASHA Accredited Social Health Activists B2B Business-to-Business B2C Business-to-Consumer BMGF Bill and Melinda Gates Foundation BoP Base of the Economic Pyramid CHW Community Health Worker CMS Church Missionary Society COCO Connect Online, Connect Offline DFI Development Finance Institution DFID UKaid’s Department for International Development DG Digital Green DIV Development Innovation Ventures FMCG Fast Moving Consumer Goods GAP Good Agriculture Practices GEWP Global Easy Water Products HDPE High Density Polyethylene HPC Hybrid Power Controller IDEI International Development Enterprises India IOLs Intraocular Lenses iPP Independent Power Producer JNNSM Jawaharlal Nehru National Solar Mission KB Krishak Bandhu LAICO Lions Aravind Institute of Community Ophthalmology MDC Makwanpur District Cooperative MFI Microfinance Institution MoU Memorandum of Understanding MT Metric Tons NGO Non-Governmental Organization NRHM National Rural Health Mission NRLM National Rural Livelihoods Mission PPBK Pharmacy and Poisons Board of Kenya R&D Research and Development SADA Savannah Agriculture Development Authority SBA Sun King Business Associate SKEPL Shree Kamdhenu Electronics Pvt. Ltd. SKGS SKG Sangha SME Small and Medium Enterprise SNF Solid-Not-Fat SOP Standard Operating Procedure TB Tuberculosis TCF Tulsi Chanrai Foundation USAID United States Agency for International Development WCF World Cocoa Foundation WHO World Health Organization WI Winrock International 104 | 105 List of interviewees organization person designation Aravind Eye Care Dr Aravind S Director, Projects Aravind Eye Care Thulasiraj Executive Director, LAICO Aravind Eye Care Dhivya Ophthalmic Associate, LAICO Astonfield Solesa Ameet Shah Co-Chairman Digital Green Vinay Kumar Chief Operating Officer Dimagi Stella Luk Country Director, India Global Easy Water Systems Mr. Amitabha Sadangi Head, GEWP Greenlight Planet Anish Thakkar CEO and Co-founder Greenlight Planet Radhika Thakkar Vice President - Global Business Development Impetus Africa Manoj Mehta Head, Impetus Africa(Sole authorized distributor of GEWP instruments) Manasa Agro Pvt. Ltd RSN Raju Founder MD & CEO Novartis Group Social Business Anuj Pasrija Head, Group Social Business Novartis Group Social Business Forotan Bahare Corporate Communications, Group Social Business, Novartis Novartis Group Social Business Meghdoot Deherkar Head of Operations, India Programme Novartis Group Social Business Anthony Gitau Country Head, Kenya programme Olive Medicare Services Grace Mwangi General Manager Operation ASHA Sandeep Ahuja Founder and CEO Shree Kamdhenu Electronics Pvt. Ltd Ujvul Parghi Founder (SKEPL) SKG Sangha D. Vidya Sagar Chairman corridors for shared prospertity: case studies 106 | 107 World Bank Group The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Devel- opment (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development. International Finance Corporation IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries, a group that collectively determines our policies. Our work allows companies and financial institutions in emerging mar- kets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. IFC’s vision is that people should have the opportunity to escape poverty and improve their lives. Intellecap Intellecap is a pioneer in providing innovative business solutions that help build and scale profitable and sustainable enterprises dedicated to social and environmental change. Our unique positioning at the intersec- tion of social and commercial business sectors allows us to attract and nurture intellectual capital that combines the business training of the commercial world with the passion and commitment of the social world to shape distinctive solutions. We seek to build institutional capacity and channel investments in the development sector through consulting services, investment banking services, and knowledge and information services. Examples include innovative and focused initiatives such as capital advisory services, intermediating impact investment capital, innovation management, strategy design, market research, stakeholder engagement and policy advocacy. Founded in 2002, Intellecap has grown into a Group with more than 600 employees and 300 engagements across 23 countries around the world. International Finance Corporation Intellecap Maruti Suzuki Building, 3rd Floor, 13A, Techniplex II IT Park, 6th Floor Nelson Mandela Road, Off Veer Savarkar Flyover, Goregaon West, New Delhi - 110070, India Mumbai - 400062, India Phone: +91 11 4111 1000 Phone: +91 22 6195 2700 Website: www.ifc.org Website: www.intellecap.com