Leveraging ICT Business Models to Help Reduce Poverty

Webinar IEEE Humanitarian Technology

Marc van den Homberg

26 Jan 2012

2

� Our methodology: classifying solutions to learn fro m what works

� Rhetoric trumps reality in ICT4D

� Financially sustainable models exist in finance and agro-services, to a lesser extent in health, and not yet in education

� Entrepreneurship is key to starting successful services, while collaboration is key to scaling

Agenda

280 140 15

4Sources: Ashoka; AMG; TNO; Hystra analysis; UN; Experts Interviews, mobithinking.com; mobileactive.org

Initial scan

~280projects

15 case studies~140 projects

1st selection

Elimination of

• fully grant based approaches

• pre-pilots

•“dead” post pilots(older than 2008)

(a) Mapping of projects based on clients’ needs

(b) Clustering based on mapping and 40 experts’ interviews

(c) Within each market-based cluster, selection of representative:

•Best practices (largest scale)

•Innovative solutions (high potential to scale and at least completed successful pilot)

(a) Elimination when further study shows over stated success

(b) Five field visits, representative of business models analyzed

1 2 3

Key types of projects

� Africa: 117

� Asia: 93

� Lat. Am: 31

� Global: 14

We select both “best practices” and “innovative approaches”,

representative of market-based solutions that work

Note: No implied hierarchy of projects, but good examples representative of best models

We studied 15 cases in 4 clusters reflecting business models across sectors

1-way directly from technology

platform

1-way via

intermediaries

2-way on 2 sides

of technology platform �CKW

�txteagle

Education Health Financial services

Agriculture and support to economic

activities

�Insurance via mobile

�M-PESA

�MYC4

2) Local agent: Value added services through local agent

�mPedigree�HealthLine

�BBC Janala �Reuters RML�Esoko

�Drishtee (education)

1) Direct access: Value added information directly accessed by end-user

3) Crowd-sourcing or crowd-funding: Information or funds collected from

multiple sources, aggregated via ICT

4) Financial services

�eChoupal�eKutir�Drishtee (FMCG)

Business model

Sectors

�Narayana Hrudayalaya Hospital

Data flow

�FINO�Bradesco

The projects analyzed in our case studies span 3 continents

India - Bangalore

• Narayana Hospital

Nigeria

• mPedigree

Uganda

• CKW

Kenya

• Txteagle

• Mpesa

Bangladesh

• Healthline

• BBC Janala

East India

• Drishtee

• Ekutir

Ghana

• mPedigree

•

• Esoko

MYC4

Brazil

• Bradesco

India - Mumbai

• FINO

• Reuters Mobile Light

India - Nagpur

• Echoupal

Business models

Technology front-end

Technology back-end: source of information and service

Direct access Crowdsourcing

Client /end-user

Local Agent

The “direct access” model: simple information accessible directly on cheapest ICT device – eg, mobile phones

Technology backend –source of

information and service

Informal sharing of benefits of technology to with others

End-users benefiting from service directly

Technology front end owned by end users

=

Technology front end at local agent’s

Technology front end at local agent

Technology front end at local agent

The “local agent” model: specialized services delivered by trusted intermediaries

End-user benefiting from the service: no need for ownership of technology

Technology backend –source of information and service

The “crowd” models: 2 way-services through direct or indirect ICT use, linking two worlds for mutual benefits

Technology front end owned by end users

Technology backend –source and recipient of information

Indirect crowd-sourcing through intermediaries for information (CKW) …

…or for investment (MYC4)

Direct crowd-sourcing by techno-users (txteagle)

Client organization gathering data

(txteagle, CKW)

Crowd-funders funding projects directly through technology (MYC4)

2-way service1-way service

10

=

11

� Our methodology: learning from what works

� Rhetoric trumps reality in ICT4D

� Financially sustainable models exist in finance and agro-services, to a lesser extent in health, and not yet in education

� Entrepreneurship is key to starting successful services, while collaboration is key to scaling

Agenda

Source: ITU World Telecommunication /ICT Indicators databaseNote: The developing country classification is based on the UN M49: http://www.itu.int/ITU-D/ict/definitions/regions/index.html

100%

5.5 7.9 10.3 13.517.5

22.930

38.5

48.2

57.7

67.6

The rise of mobile phone and internet usage makes it possible today to reach the BoP via market based approaches…

Number of projects in database:

Note: this database does not include « technology project » such as data collection softwares, that were listed separetely as out of scope

… and yet most projects using ICT for development are yet to find sustainable business models

With market-based mechanisms(not fully grant-based) and proven viability on the ground (no feasibility study or “dead pilots”)

Fully grant-based, “dead pilots” older than 2 yearsor feasibility studies

14

� Our methodology: learning from what works

� Rhetoric trumps reality in ICT4D

� Financially sustainable models exist in finance and agro-services, to a lesser extent in health, and not yet in education

� Entrepreneurship is key to starting successful services, while collaboration is key to scaling

Agenda

15

Financial services: case studies

FINO: some business aspects…(local agent model)

FinancialsDistribution

Service Customers

Savings, loans, access to credit,

remittances, insurance and

pension payouts

28 million BoP

23 banks, 10 MFIs, 15 government

entities and 5 insurance agencies

15k field agents employed

(Customer Service Points)

Deposits, remittances; free

Remittance $ 0,5 per transaction

Loan 24% interest rate

Revenue US $ 52 million 2011

Profit margin 10-15%

Largest

project seen!

Simple ICT banking replaces more expensive practices -complex ones need consumer education to elicit payment

Legend�Service provided by ICT⇒Corresponding Impact on the BoP

�Secured money platform⇒Avoided safety risk from

carrying cash⇒Avoided loss or theft risk

from entrusting cash to informal intermediaries⇒Lower cost compared to

money transfers through traditional institutions

�Remote access from ICT device⇒Access to bank or other

financial institutions offering savings, for previously unbanked populations⇒Safer money deposits⇒Build-up of income history,

allowing to access loans

�Remote customers’ evaluationand remote payments of premium or installments

⇒Cost savings on transportation both for clients and providers

⇒Lower price from lower cost of services, making it affordable to more clients

Money transfers, remittances,

paymentsSavings Loans Insurance

�New sources of funds from crowdfunding⇒Access to loans for more

borrowers, including the “missing middle”⇒Lower interest rates⇒New investment

opportunities

�Simpler advertising and registration process⇒Access to insurance for

more customers⇒Enlarged customer base

allowing lower premium⇒Safety net against

adverse events

Agriculture: case studies

18

Agriculture– Reuters Market Light

RML: some business aspects…(direct access model)

FinancialsDistribution

Service Customers

Customized, localized and

personalized weather

forecasts, local crop prices,

agricultural news via SMS, 4-5

times a day

Several 100k subscribers in 15k

villages

Trade partners such as mobile

service providers, Indian post

office, co-op credit society,

agri-product companies: 1.5k

distributors and 20k retailers

Free subscription

Service packs at $7 per quarter

Revenue $ 1 million 2009

Farmers are ready to pay for agro-services as they get financial benefits from it all along the value chain

Monitoring of farmers’ data

Sourcing of inputs

CultivationSales of outputs

Decision on crop to plant

� Info on demand for crops⇒Cultivation of higher

value crops⇒Better supply-

demand match

� Info on prices and availability of input

�Aggregation of farmers for purchase⇒Purchase at lower

costs

�Direct order for inputs⇒Guaranteed

authenticity of inputs

� Info on best practices and expert advice

⇒Better choice of inputs

⇒Better agro-practices

⇒Higher productivity⇒Higher crop quality

� Info on market prices and demand⇒Choice of place to

sell⇒Lower transaction

costs and overall better price obtained for outputs

�Aggregation of farmers for grouped sale⇒Access to larger

buyer, guaranteeing purchase

�Data on farmers’ income⇒Construction of

credit history, allowing farmersto access loans

�Data on farmers’ harvests⇒Better linkage

between research/NGOs/governments and farmers

�Weather forecast

Legend�Service provided by ICT⇒Corresponding Impact on the BoP

Health care: case studies

22

mPedigree: some business aspects… (direct access model)

FinancialsDistribution

Service Customers

Consumers: verify authenticity

medicines

Pharmaceutical/distribution

companies increase consumer trust

and counterfeit tracking

2 million consumers and 6m

products protected in 3 countries

In pilot phase 10-20% of tagged

packs generated a verification SMS

Direct access in pharmacies

Partnerships with HP, mobile

operators,

Free service for user

Revenue: sales of codes to pharmacies

minus costs SMS, printing, overhead

Profit margin: not known

Monitoring (patient cases, regional

health data, drug authenticity)

Local delivery of basic care

Advanced/specialized care

Follow up care and long-term

Awareness/ Decision to seek care/desire

for primary/preventive

care

�Awareness on disease⇒Overcoming cultural

taboos⇒Avoiding epidemics

spread� Information on

patient condition⇒Awareness of basic

remedial action⇒Savings on

(unnecessary) trip to doctors⇒Best practice to

manage general health (chronic conditions, pregnancies, etc)

�Efficient remote follow-up⇒Better results post

sickness/operation⇒Quicker return to

work, family, productive life

�Aggregation of patients for group purchasing⇒Access to cheaper

supplies, more and more affordable insurance, more investment in local infrastructure

�Data to follow patient care in the by patient and in the aggregate⇒Creation of dynamic

patient records⇒Improvements in

health budgeting and improved spending of scarce resources⇒More patients under

better care�Verification of drug

authenticity⇒Savings from

spending on fakes⇒Improved patient

health

�Best practice info and advice on locally available remediation measures⇒Triage care⇒Understanding of

where more advanced care might be needed⇒Savings on

(unnecessary) trip to doctors⇒Info on options for

more advanced care⇒Info on payment/cost

options

�Advanced care delivered remotely (e.g. via telemedicine) and/or more efficiently at non-local venues ⇒Treatment of more

serious conditions⇒Cost savings from

more efficient care for patients, doctors, insurance companies, governments, donors⇒Ability for scarce

resources – doctors, sophisticated equipment – to be used on more patients, improving health outcomesLegend

�Service provided by ICT⇒Corresponding Impact on the BoPNot market based

Health: Market-based models provide remote consultationor verify drug authenticity

Education: case studies

25

Learning British English – for the

cost of a cup of Bangladesh tea

Michael Trucano

BBC Janala: some business aspects (direct access model)

FinancialsDistribution

Service Customers

Combination of mobile, internet, TV

and newspaper based language

lessons

3.8 million customers in Bangladesh

with 6 million paying courses

Direct access

Partners with mobile

operators, Bangladesh TV

$0.02 for 3 min. lesson or cost of

access to internet

Cost efficiency: now at $4 per person

across all platforms

Profit: not yet

ICT can play a role before school, at school and after school, with paying models only for adult education or private schools

Monitoring of perfor-

mance

Designing content

Training teachers

LearningDesigning curriculum

Practi-cing

�Classes via video-conferences⇒Enrollment of

new students

�Mobile phone based courses⇒Affordable

courses⇒Reaching

remote areas

�Pedagogytraining ⇒ Better

teachers⇒Multipli-

fying effect on students

�Finding class content⇒ Improved

curriculum

�Sharing class content⇒Teachers

networking

�Using ICT as learning tools⇒More

enjoyable classes⇒Better

understanding� Interactions

with teachers through ICT⇒ Teachers

closer to the students’ needs⇒Empowered

students� ICT classes⇒ More job

opportunities

� Quizzes on mobile⇒Out-of-school

practicing⇒Higher grades

�Accessing classes archives⇒Better

understanding

�Online forums⇒Student

networking

�Reporting grades⇒ Real-time

access to grades for students

Reaching students

Attending classes

�Reporting attendance⇒ Higher

attendance of teachers and pupils⇒Better

statistics on education

�Classes on ICT⇒More job

opportunities

�Classes via video-conferences⇒Development

of the course portfolio

Before school At school After school

Legend�Service provided by ICT⇒Corresponding Impact on the BoPNot market-based

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� Our methodology: learning from what works

� Rhetoric trumps reality in ICT4D

� Financially sustainable models exist in finance and agro-services, to a lesser extent in health, and not yet in education

� Entrepreneurship is key to starting successful serv ices, while collaboration is key to scaling

Agenda

Conclusions

�Successes had an entrepreneurial debut:•Focus on ability and willingness to pay of targeted clients, not on needs assessed top-down

•Built from the ground-up

�and systemic approach (cross-actor, cross-sector) to reach scale:•Capture a sufficiently large share of customer mind and wallet through a related set of services

•Multiple income streams over time, maximizing revenues

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In education, health, agriculture and financial services,

ICT4D leaders face similar issues to scale

Policy: 1. Enabling policy (10)2. Support from government (5)

Internal capacity: 1. Recruiting agents (7)2. Recruiting internal staff (5)3. Training workforce (4)

Partnerships: 1. Partnering with MNOs (4)2. Deepening existing partnerships (3)

Funding: 1. Equity investments (6) (2 for patient capital)2. Investment in advertising from third parties (2)

Technology: 1. Robustness (5)2. Usability (3)

Connectivity: 1. Broadband (5)2. Increased mobile penetration (3)

Other requirements mentioned: trust (6), literacy (4), demographic density (2)

Challenges mentioned by the 15 project leaders interviewed for this study

*CKW, Drishtee, eKutir, esoko, mPedigree, MyC4, Narayana Hrudayalaya Hospital, txteagle considered as social entrepreneurs

*

Recommendations

�Focus on problem driven approach

�Support existing entrepreneurs, promoting cross-sector synergies

�Create a systemic environment for cross-border replication

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Public report presents project findings

Report structure:

Sponsor’s Foreword

Hystra Introduction

Acknowledgements

1. About this project: Methodology

2. Executive summary

3. The basis for ICT4D: Connectivity

4. The “Direct access” model

5. The “Local agent” model

6. The “Crowd” model

7. ICT4Financial services

8. ICT4Agriculture

9. ICT4Health

10.ICT4Education

11.Socio-economic impact of ICT4D projects

12.Environmental impact of ICT4D projects

13.Conclusion on findings and recommendations

Appendix

A joint report by Sponsored by

In collaboration with

Leveraging ICT for the BOP

Innovative business models in education, health,

agriculture and financial services

Thank you for your attention!

Any questions?

For any questions/topics to discuss, arising after

the webinar, do not hesitate to contact me at:

marc.vandenhomberg@tno.nl