2014-02-18

Co.Exist

Hip Gadgets For The Developing World Won't Solve Global Poverty: Stop Making Them

The poor don’t need another solar-powered nasal hair remover.

Every time I see a gimmicky product hailed as the "next big thing" to make a dent in world poverty I want to pull my hair out. There are already enough products in the market to change the lives of every single poor consumer on the planet. Poor consumers don’t need another slick product developed in the U.S., they simply need a product that reaches them in their village. Let me explain.

Many entrepreneurs (incorrectly) think the biggest challenge is actually making the product. They are so pleased they have invented a widget that is more efficient or lower cost or fancier than the other widgets on the market. Since there are 1 bazillion people whose life would be immeasurably improved by getting access to their widget, and their widget is the best, success is a sure thing.

Wrong! Actually, virtually none of these widgets ever get to their intended customers because of supply chain and logistics challenges. It is incredibly difficult to cost-effectively reach and then service customers who are are sparsely populated, many hours from a city, and on dirt roads with no electricity, Internet or water. A 2011 U.K. government report noted that transport and supply chain costs can represent as much as 75% of the value of goods in Africa. I personally think this is a little high, but my own experience running businesses in Ghana shows that a $10 product manufactured in China almost certainly ends up being sold for $25 to $30 or more in the village in Africa.

The focus on products is almost certainly because investors and the public flock to product companies like bees to honey. Maybe this a byproduct of Silicon Valley’s obsession with gadgets and apps, where we take our developed distribution channels for granted. And while very little is sexy about running a supply chain and distribution company, there is plenty sexy about building an interesting product, even if it doesn’t actually reach the intended customer or give them what they need and want.

An extreme example is Playpump (now defunct) which was a $14,000 to $20,000 merry-go-round that pumped water when children played on it. In 2010, Laura Bush and Bill Clinton announced a $16.4 million grant to build hundreds of Playpumps in Africa, but the organization struggled to come close to the initial hype because, as a Mozambique government report noted: children are not playing as expected on the merry-go-rounds and adults find it difficult to operate; pumps are out of commission for up to 17 months at a time; and maintenance is a real disaster.

A more recent example of our love of products is Soccket, a company that has made a soccer ball that harnesses kinetic energy to generate light. Cool right? This company has received loads of press (including here at Co.Exist), and has raised nearly $600,000 from crowdfunding sites. Even Obama and Bill Clinton love it. It is undoubtedly a nifty piece of technology.

Is this soccer ball that generates energy for a lamp really a good product for the developing world?

The problem? At a cost of $60 per Soccket, it is the most expensive six-watt light on the market. D.Light, for example, produces a high-quality study light with a two-year warranty and similar functionality that retails for $10. The Soccket is also certainly the most expensive soccer ball the customer, presumably kids with no access to electricity, is ever going to see. (A more in-depth analysis of the concerns with Soccket’s approach can be found here.)

Thankfully, there are an increasing number of companies focused on the bigger, yet far less glamorous task, of delivering mundane but useful stuff to poor consumers. Honey Care Africa, for example, is building an integrated honey production value chain in East Africa. It does everything from educating smallholder beekeepers, to acting as their buying agent for inputs, to providing financing, distribution, and sales support for the honey. There are now 15,000 beekeepers in Honey Care’s network who are experiencing an increase in household income of up to 50%.

One Acre Fund is another great example of a business model that is built around an unglamorous idea--improving the supply chain. The organization provides financing, training and sales support to a rapidly growing network of farmers in East Africa. It currently reach 163,000 farmers, and their revenues have increased from $1.6 million in 2010 to $14 million in 2012. Farmers in their network make twice as much money from each acre of land as farmers out of their network.

When I search the term "solar lantern" on Alibaba, a site that connects buyers with factories in China, I come up with 70,000 products from over 1,700 suppliers. Do you know how many of these products I see in the villages I visit in Africa? Typically none.

It just seems too easy to transpose our obsession for the latest gadget or app on poor consumers in the developing world. Inventing a sexy, new product is not enough. It needs to also be something poor people would buy with their hard earned money. It needs to actually get to them. It needs to get repaired when it inevitably breaks. Unless you hit all of these criteria, your highly efficient solar powered nasal hair remover is not going to make a dent in anything--let alone global poverty.

[Image: Abstract via Shutterstock]

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18 Comments

  • You are quite right distribution and local after-sale service is critical. Why buy even the best product - assuming you can get it locally, if you have no access to after-sales service. First world consumers won't why would anyone else? We have spent 20% of our time developing a solar light that can be assembled and serviced in Africa (its modular) and 80% of our time on building our distribution and local workshop - we use technology like mobile payment systems and mobile data collection as an enabler to give us scalability. It's not as sexy as product development but it works! Mike Sherry - www.mwezi.org

  • Well written post, and good point. I also found the comments insightful (except for the honey guy).

    The holy grail for those of us practicing the useful but 'boring' development (distribution, etc.) is to be able to frame our efforts in an easy to picture, attractive way.

    I'm still struggling with that, but I found these helpful:

    • the book 'Made to Stick'
    • behavioral economics (Dan Ariely and his peers..)

    Keep up the good work everyone! We'll get there. Yotam (y.ariel@bennu-solar.com)

  • Salvatore Chester

    Great article! Thank you.

    Slowly but surely, the "big guys" are getting involved in this market too. Like: Philips, Schneider Electric, Panasonic etc... So it won't be long before most of these stupid gadgets, with promoters and their uncles, will disappear. Including a good number of LA certified products too. It already happened also in Africa with the mobile phones' business, where 5 or 6 competent multinationals control most of it. Local customers stand ready to benefit from it. Best wishes. https://www.facebook.com/groups/TEA.ethiopia/

  • My name is Diana Jue, and my team and I work on Essmart, a distribution company for life-improving technologies in rural India that works through rural retail shops (www.essmart-global.com).

    Inventors and implementers definitely receive different levels of attention and investment. It’s more difficult to explain how a process is “innovative” compared with a new technology (“innovative” is in quotation marks because sometimes the best processes aren’t new — they’re just time and resource-intensive, so many people stay away from them). Running a supply chain and distribution company isn’t sexy.

    It’s also not easy. For tech to make real impact, an entire ecosystem for marketing, distribution, and after-sales service needs to be built. Successful implementation requires long-term commitment, local presence, and building trust with end customers/users — things that many inventors don’t spend time or energy on. (Too busy with PR activities, perhaps?)

    Delivering the goods, Diana

  • As Joel has noted "development does not photograph well" - there are examples throughout all aspects of international development efforts that money flows to the "bright shiny objects" not the most practical needs. (Just like our love of responding to disasters rather than helping to prevent them or prepare for them.) Marketing in the development sector has made this problem worse by countering its own hugely negative stories designed to elicit quick donations with some bright lights of hope along the way to get people re-excited - and to keep the developed world thinking it has the solutions. More effort is needed to get some of the real, local success stories out and to encourage those interested in helping to support those instead.

  • Yes, agreed! The solution is for poor people to make products and sell them to rich people. Software comes to mind since it requires almost no resources to produce and can be distributed globally at the click of a mouse. That's what we have been doing here at Meltwater Entrepreneurial School of Technology for the past 5 years. www.meltwater.org

  • Dan Ball

    The points you make are spot on. Technology will not save the world nor is it the panacea for development. The whole social enterprise movement n development suffers from the same "technology will save the world" mentality. Most social enterprises that I have seen are not sustainable and reliant on serious doses of donor aid subsidies. Your examples of good development - livelihood development - need some work. HoneyCare belongs in the same group of Playpump. It has never been self sustaining nor will it ever be and your claims on impact are grossly overstated . Surely you can find better examples of good livelihood improvement than one that is totally dependent on donors and always will be?!
    Don't undermine your good arguments by weak research.

  • Thanks for the note Dan. Can you post some evidence of HoneyCare's issues. I haven't come across any (doesn't mean they don't exist) and I'd like to take a look.

  • Hey Dan, I see you have a 'horse in the race' as you run a similar honey supply chain company marketing in Zambia.

    Having said that, I believe your comments about HoneyCare are dated. HoneyCare had a turnaround in 2010, which is when their current CEO joined. Since then, they have raised capital from a number of investors. You can see a short case study that covers this here:

    http://www.aspeninstitute.org/sites/default/files/content/docs/pubs/HoneyCareCaseStudy_3.pdf

  • Simple technology can change lives if it finds the delicate balance between quality, affordability and utility - something which d.light does very well. Check out Kopernik for their online catalogue of simple technology designed for the developing world - complete with user feedback to help technology producers to continue to innovate and improve their products.

  • Keith McNeill

    One possible way to help the poorest of the poor would be to have a worldwide Basic Income Grant (BIG). Everyone over age 18 would get about $180 per year. Such a BIG would be relatively simple to administer as there would be no humiliating means test.

    Where would the money come from? Climate scientist James Hansen has proposed a global carbon tax with the proceeds to be distributed to everyone (he calls it fee-and-dividend).

    I have posted a petition on Care2 that calls for a global fossil fuel fee/carbon dividend based on Hansen's proposal. The URL is www.thepetitionsite.com/286/384/042/petition-for-a-referendum-on-a-global-carbon-tax/