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How Zoona keeps it real

In Nyanja, one of Zambia’s 73 official languages, Zoona means “it’s real!” or “it’s true!”—an exclamation to emphasize fact.

After spending seven days in the field, traveling over 2,800 kilometers, and helping train 18 Zoona tellers, I’m noticing how Zoona is creating real results even in far-flung regions of Zambia, differentiating itself from other MNO-operated competitors. I’ll share three insights gleaned from my fieldwork:

1) Zoona is the only Zambian mobile money company that views its agents and tellers as its main customers. One of the most crucial factors in a mobile money company’s success is the quality of its agent network (source). Through its training program, Zoona seeks to sharpen the acumen of its 500-plus agents, helping agents make informed business decisions. In development speak, we’d term this as “capacity building” and “harnessing human capital.” As an intern, I will be working on this end, designing new entrepreneurship- and management-focused trainings to empower agents in their businesses.

At a teller training session in Mansa, Luapula Province: Mildred, a teller, learns how to perform a Zoona money transfer.

At a teller training session in Mansa, Luapula Province: Mildred, a teller, learns how to perform a Zoona money transfer.

2) Zoona provides unique customer-facing services to its agents. Through Kiva, crowd-sourced loans of up to 35,000 kwacha help agents add to their float (defined nicely here by a former Ambassador) or to cover sunk start-up costs, such as the cost of a branded Zoona booth. Knowing that agents in rural areas face greater liquidity challenges, Zoona is now deploying Zoona Cash, an innovative reconciliation tool that allows agents’ float levels to drop below zero so long as they re-balance within 24 hours. These are services heretofore unseen in other MNO-operated mobile money operations.

So far, Zoona’s results have been amazing: According to CEO Mike Quinn, Zoona’s transactions have grown 739% since February 2012, when Accion and others raised the first round of Series A investment.

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Loan Officer as Mentor

How well do you know yourself? What do you consider yourself talented at? What dreams do you have?

These questions are ones that can easily put people on a thinking spree, but for the loan officers of Fundacion Paraguaya, these are the questions that they ask every day to the women’s committees with whom they work. A typical committee is made of around 12-17 women, and with such a large group, you are bound to see all kinds of personalities and a unique life story for each female member.

During the first few loans, the loan officer is the mentor to the group: she motivates the women to be entrepreneurial, to value their own ideas, and to understand the steps and start thinking about how to start a business, among other things. But as time passes, and the women repay and renew their loans, and start and improve their businesses, a mentor emerges from within the group and takes on the role of the committee president. Usually the president exhibits more security thanks to a higher than average education or income and this helps her lead others in the same route.

 How to get Josefa to smile? Continue reading


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My story with microfinance

While there will be more stories to come, I wanted to first share my own personal story… When I was a teenager I moved from grey, modern London to my mother’s homeland Monteria, the steamy and colorful North-West of Colombia, an area well-known for its music, literature and a tropical love of life. In England we were a small family of four, and in Colombia, once my youngest brother was born, we became part of an extended clan. Sundays now meant family lunches at my grandmother’s house, and sitting outside in the porch for afternoon gossiping with the neighbors.

Having lived in the flesh in both of these very different realities,  I soon became passionate about social and economic development in emerging countries. I wanted to contribute in some way but first I needed to understand the base of the social pyramid. While I lived in Bogotá I volunteered in Techo building houses in the slums and did research with my professors during my undergrad searching for sustainable solutions to overcome poverty in Colombia through access to financial tools and education. That is how I came to learn of Accion… Continue reading


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A Practical Lesson in Microfranchising

Lucia, who runs Fundación Paraguaya’s microfranchise program, agreed to tell me all about it, and how it interfaces with their microfinance program, this afternoon—as long as I joined her in the warehouse and helped her ready some laundry kits for the courier.

Lucia, in her office.

And so I questioned her, as I loaded bleach and other ingredients for detergent and fabric softener into large plastic bags, and she loaded the bags into cardboard boxes.How many microfranchises does Fundación Paraguaya have? Five: eyeglasses, jewelry-making, laundry, grocery, and pharmacy.

Which one is the most successful? The laundry, definitely. And most of them sell better in the towns and rural areas than in Asunción.

How do clients find out about the microfranchises? I go to the women’s committees’ meetings and promote the kits. The loan officers already have too much work to do to add this on.

How do the women use the kits? They sell the things, or make things to sell, usually in their own stores or wherever they sell.

How do the microfranchises interface with the microfinance program? Only members of Fundación Paraguaya’s women’s committees can use these kits.

Don Omar says that the Fundación is looking for new microfranchise opportunities. Have you heard any good ideas from the women? The most requested is ice cream.

Wouldn’t that be a logistical nightmare? I can barely think about it. You see, the program is just me. I do what I can, but it’s enough work for four or five people. The meetings and promotion; reviewing providers and costs; the shipping and receiving; the billing; developing new microfranchises… And after I leave here for the day, I go to my other job, teaching. Continue reading


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Microfranchising – What is the key to success?

As I mentioned in my previous post, I am currently presenting some changes to Fundación Paraguaya to improve their reading glasses sales and to help them recruit more franchisees (despite their vast network of clients, the current number of franchisees is quite small). After interviewing successful vendors (like Elida Sosa) and their asesoras, speaking to VisionSpring representatives, and studying other successful microfranchises, I have come up with a number of proposals.

Vision entrepreneurs in South Africa use posters to draw attention to their promotions. This photo is credited to VisionSpring.

First, I am suggesting that the organization provide more marketing support to the franchisees and help them develop professional materials. Most of the successful vision entrepreneurs that my colleague, James, and I spoke to had business cards which they designed and printed themselves. Others had posters. The posters enabled them to advertise promotions and generate interest within their communities. In my opinion, marketing is key, especially when one is promoting a specialty product such as reading glasses.  Providing the vendors with business cards and nametags will enable them to present themselves as professionals, stay in touch with their clients, and compete in a very distinct market space.Second, I am suggesting a microconsignment model to recruit new vendors. Just like a consignment store, microconsignment shifts the risk away from the seller, enabling him or her to repay the cost of inventory after successful sales are made. With microloans, which have been used thus far by the Fundación to pay upfront for the cost of materials, the vision entrepreneurs assume all of the risk of the new venture. As Tina Rosenberg wrote in a New York Times article in 2011:

Microcredit puts all the burdens on the borrowers.  Debt, of course — but also initiative.  Borrowers invent, plan and run their own businesses.  Some people will jump at this, but many who lack confidence and business know-how will be terrified….”

Community Enterprise Solutions, a non-profit run by co-founders Greg Van Kirk and George Glickley, is another proponent of microconsignment. The organization was founded with the intention of testing, developing, implementing and expanding what Kirk and Glickley refer to as the MicroConsignment Model (MCM). According to their website, which provides an in-depth look at the genesis, functioning, and advantages of this model, “The MCM delivers essential products and services at affordable prices to the rural poor in the developing world…Through the MCM individuals who lack opportunity and experience, primarily young women and homemakers, can start their own ventures through ‘sweat equity’ and earn profits within the first month.”

This flowchart is credited to Community Enterprise Solutions http://www.cesolutions.org/themicroconsignmentmodel.html.

Kirk and Glickley actually worked with VisionSpring in 2004 to implement a microconsignment system. According to their narrative, VisionSpring was trying to use microcredit to cover vendors’ start-up costs, but the model was not working. They concluded that a different approach was necessary, one that would address the time needed to train entrepreneurs, create awareness with regard to vision problems, and which would serve to mitigate vision entrepreneurs’ real and perceived financial risk. Kirk and Glickley proposed the MicroConsignment Model, and VisionSpring implemented it. As of August 2012, Fundación Paraguaya is the only partner that is continuing to use a microcredit system.

My third suggestion is to provide additional training and support to the vendedoras, who often have no experience in sales and could benefit from event planning techniques, basic book-keeping skills, and a well-thought-out sales pitch. Although the Fundación does provide an initial capacitación, other microfranchises (and other VisionSpring partners) generally offer a series of trainings as well as ongoing support for their franchisees. This serves to increase vendors’ confidence, helps them confront initial challenges, and teaches them effective selling methods.

Although VisionSpring’s other partners use asesoras to provide this additional training, Fundación Paraguaya’s assessors already have a lot on their plate. Each manages a large number of committees, and all are constantly traveling. It may be too much to add microfranchisee-support to their to-do list (i.e. helping to organize events, introducing microfranchisees to other communities, making sure that they have sufficient inventory and marketing material, etc.), but perhaps with the right incentive scheme, FP’s asesoras would make more of an effort to provide initial assistance as vendors adjust to a new enterprise.

Of course, in designing an incentive scheme, the Fundación would have to offer a bonus large enough to incentivize the asesoras but not so large as to impede the profitability of the microfranchise. Obviously, more research would be necessary to identify the right amount. Perhaps I can pass this off to another Ambassador…


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Adventures in Microfranchising

During the remainder of my Accion Ambassadorship at Fundación Paraguaya, I will be focusing on their microfranchise initiative.  So, why not dedicate my next few posts on this theme – the advantages, the challenges, and the evolving popularity of this model.

So, what even is Microfranchising?

“Microfranchising is built on the concept of franchising – the development of a turn-key business model, designed for replication, that is inherently less-risky than a standalone start-up enterprise.”  The above statement, which I found in a discussion on socialedge.org, successfully summarizes the key elements of this bottom of the pyramid business concept (or the BOP, as it is known within the industry)

This image is credited to Jason Fairbourne, director of the MicroFranchise Development Initiative at Brigham Young University and one of the thought leaders in the microfranchise space.

In other words, microfranchises have an established business model that enables their franchisees to hit the ground running. In the typical microfranchise, microentrepreneurs receive intensive training, pre-conceived  operational guides, and marketing and promotional materials. They are often provided with credit and/or customized funding, ongoing business support, and an incentive scheme to meet sales targets, ensuring long-term sustainability.

The assumption that microfranchises, as opposed to general microenterprises, are inherently less-risky stems from the replication of a successful business model. As a franchise, the product design has already been fine -tuned, the operating procedures adjusted to maximize efficiency, and supplier relationships established using the bargaining power of the larger-scale franchise. Additionally, as the microfranchise expands, microentrepreneurs benefit from growing brand awareness, product innovation, and increasing scale.*

Fundación Paraguaya and VisionSpring

Fundación Paraguaya’s first microfranchise experiment was the kit de lentes (or glasses kit). In 2007, the Fundación began a partnership with VisionSpring (http://www.visionspring.org), a non-profit social enterprise focused on distributing reading glasses to low-income communities. Following VisionSpring’s model, the Fundación has provided local vendors (mostly members of the women’s committees) with “a business in a box,” each containing 12 pairs of glasses of varying magnification, as well as cases, strings, booklets, and a briefcase. The vendors must raise enough capital (or take out a loan) to purchase the kit, which costs about 200,000 Gs, or about $44. They are then trained to perform vision tests and instructed in sales strategies.

The women earn about 20,000 Gs, or about $4.44 per sale.

One of the kits from Vision Spring.

Other microfranchises that the Fundación is currently trying to jump-start include jewelry-making kits, clothing kits,  anti-dengue kits (these contain a variety of mosquito repellents), as well as alimentos (food), such as bread filled with cheese, barbecued meat, empanadas, and others. Last Friday, I accompanied two other interns to Encarnación to see how they were conducting their market surveys. In the next few weeks, I will be designing my own survey and exploring new strategies to increase the sales of current “kits.

Why Franchise?

Ultimately, Fundación Paraguaya aims to use microfranchising to both diversify and amplify the earnings of its clients, providing them with an opportunity to stabilize their income and better provide for themselves and their families. Furthermore, microfranchising presents an efficient distribution method for needed goods (such as reading glasses and mosquito repellent), selling at affordable prices to those without access.

Microfranchising, however, also has specific challenges. It is essential to maintain low costs and low risk (since the potential franchisees have little extra income to invest) as well as cater to BOP consumers, who are extremely price sensitive.

A potential ice cream microfranchise considered by the Fundación, for example, was just too pricy. It seemed like a great idea to me – the climate in Paraguay is usually very hot, there is a cultural love for ice cream, and the foundation was planning to partner with a well-known brand. However, after exploring the actual costs, it became apparent that the high overhead and steep price structure would hinder the business’s success.

I am now investigating other opportunities, including a retail business for local artisans, and looking into strategies to improve the sales of reading glasses. Stay tuned!

And let me know what you think!  In your opinion, is microfranchising an effective way to create sustainable and scalable opportunities for microentrepreneurs?

* The information on microfranchising in this blog post was sourced from the book: Microfranchising: How Social Entrepreneurs are Building a New Road to Development, edited by Nicolas Sireau. I highly recommend it!


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“Mi Pequeña Farmacia” Microfranchise project

Mi Pequeña Farmacia (My Little Pharmacy) is one of the projects currently being developed at the Fundación Paraguaya. Microfranchise is a tool that is being used to reach the goal the Fundación Paraguaya has set to itself: eradicate poverty, in its multiple aspects.

This project consists in the selling of a kit containing basic pharmaceutical products to clients of the entrepreneurial women’s committee program. The kit will contain first-need products such as disinfectant, Band-Aid, antifebrile, headache medications etc. Fundación Paraguaya is trying to supply those women with quality products at a low price, by getting pharmaceutical companies involved in the project. The women that will decide to participate in the program (called Promotoras de Salud – Health Promoters) will receive a loan to buy the products and a training on how to use the kit from the Fundación Paraguaya’s loan officers. The women can then resell the kits to their peers in the committee or in their local community at a higher, yet still competitive, price and make a profit out of it.

First Aid Kit

The project serves a dual goal: give a new source of income to the members of women’s committees and increase their health level as well as the health level of the people to which they will re sell the kits.

Healthcare is still a big issue in Paraguay, where 81.6% of the population doesn’t have a health insurance and only 31% of the population in the lower income quintile seeks medical advice when ill. This project will not only provide drugs and other pharmaceutical products, but also a first aid training on how to use them properly and how to heal wounds. This is expected to have a strong impact in areas where health services are scarce or not affordable.

The intensive training that “Health Promoters” will receive will stress the importance of seeking medical advice in the event of sickness.


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Microfranchise and eyesight problems

 

Part of the glasses kit

 

Fundación Paraguaya’s microfranchise in eye-glasses is a unique attempt to reduce sight-related issues among lower-income populations in Paraguay. A kit containing bifocals, regular prescription glasses, sunglasses, accessories, an eye test sheet and a mirror is sold to entrepreneurs from women’s committees, providing them with an innovative business strategy in their area. The Fundación gives these women basic training in oculism needed for the prescription of these glasses.

This microfranchise in glasses enables women to start an original venture that is generally absent and out of reach for the people in these women’s communities. The dual target of this programme is therefore exceptional as women are given diverse business strategies while people with flawed vision in the involved communities are finally being provided with an affordable way to live with their sight problems comfortably.

Fundación Paraguaya is also aiming to reduce sight related issues through the Leapfrog Fund, a partnership with the Aravind Eye Hospital in Madurai, India, and Fundación Visión (Paraguay). The partnership involves exporting technology from the Indian hospital to Fundación Visión, a leader in eye care provision to the poor in Paraguay, targeting issues such as cataracts and Pterigion (carnosity). Fundación Paraguaya’s role is to find the clientele among lower income communities across Paraguay and provide them with micro loans enabling them to access surgeries that could significantly reduce blindness.

The Leapfrog Fund

 

The outreach of the programme is being spread through the training of Fundación Paraguaya’s loan officers in detecting vision problems. Using the most advanced Philip’s flashlights, 91 officers have now received theoretical and practical training and are able to conduct consultations among their clients. Throughout the next year, members from the women’s committees will also be trained to detect eye difficulties. To date, 2,138 Paraguayans have been submitted to these eye exams, of which 45 deemed in need of surgery. Micro loans were given to nine clients so far, including four for cataracts surgery, one for a cornea transplant, two for myopia and two for pterygium surgery.

As the programme matures, Fundación Paraguaya is developing a model that will be replicable across Latin America through the production of an informative procedural manual on eliminating preventable blindness.

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