Module 2: Innovation at the Base of the Pyramid with Minimal Capital

This module examines some examples of the innovation done by those at the BoP with minimal capital. By examining a number of examples of African entrepreneurship, this module seeks to dispel any false notion that solutions for African problems must come from elsewhere. Instead, Africa possesses a vibrant and dynamic generation of young entrepreneurs, who only oftentimes lack resources and formalized training to reach their potential.  

Anil Gupta, a senior faculty member at the Indian Institute of Management Ahmedabad, founded and helps to run a number of organizations aimed to promote innovation in the developing world. According to him, poverty can be alleviated through decentralized, innovation-led enterprises. These enterprises have the promise of influencing other enterprises and creating nationwide change. The first step is to identify the existing entrepreneurial talent among the poor, and to support networks of these entrepreneurs who favor experimentation. One way to seek and celebrate entrepreneurial talent would involve visiting rural areas as well as attending fairs, exhibitions, and weekly markets.(1)

An especially relevant group for innovation is the agricultural sector. In many ways, the agricultural sector uses outdated techniques, limiting the abundance of farm yields. Dr. Gupta’s organizations have helped to distribute local, pragmatic, and sustainable farming tips among communities. One example is sprinkling sugar on crops to attract ants, which eat the larvae of pests, a useful solution when pesticides fail to work. These tips are disseminated widely in a newsletter published in seven different languages. More recent work involves an Internet telephone system that could help give advice to farmers based on their location and weather conditions.(2)

All of these approaches prioritize the spirit of local innovations in the developing world—those that are frugal, durable, and multi-functional, while being environmentally sustainable and low-cost. One other notable example is a makeshift laundry machine that uses a bicycle pedal system for manual power. This kind of practicality and resourcefulness reflects the dual nature of the developing world entrepreneur as both producer and consumer.(3)

These next few examples delve into more examples of innovation at the BoP.

Brief Case Study: The Central and Western Fishmongers Improvement Association

The millions of poor at the BoP who depend on the whims of Mother Nature are liable to become destitute upon virtually any misfortune. For Ghanaian fishers, their livelihoods are influenced by the supply and demand of their fish. When there is too much of a supply for fish, local fish markets become saturated, causing prices to plummet and profits to vanish. When there is not enough fish, the fishers have nothing to sell. To stabilize their income, 58 Ghanaian women fishers formed the Central and Western Fishmongers Improvement Association (CEWEFIA). CEWEFIA has worked to find novel ways to create income, such as how to smoke and process fish, as well as how to process palm oil. The group makes their own equipment, such as drying racks, and they have an agreement among members to share the profits and the cost of materials.(4)

In the developing world, women have a particularly important role in not only coming up with innovations, but they also have a particularly pertinent influence in sustaining economic growth. They are more likely than men to use profits from their businesses to reinvest in their families, and they spend 70 % of their unpaid time caring for family members, helping to keep members of the labor force fed, clothed, and healthy. In agriculture, women produce more than 80 % of food products, but they only secure 1 % of agricultural loans.(5) Consequently, initiatives such as CEWEFIA that empower women and give them the ability to secure more financial resources play large roles in overall development.

Case Study: William Kamkwamba and Innovation in Malawi

William Kamkwamba used to be a simple farmer in rural Malawi. (6),(7) Like millions of other Africans, he was from a large family, and he did not have access to electricity. In 2002, there was a massive drought in Malawi, which caused many farmers to lose their crops, sparking widespread famine. At this time, William’s parents were no longer able to pay his $80 school fees, and he dropped out of school at the age of 14.

William, however, was not about to give up learning and began making visits to the local library in his spare time. There, he cultivated an interest in science, especially physics. He also observed that the lack of an electrical mechanism to pump water meant that irrigation was not practiced, and farm yields in his community fell short of the ideal targets. Furthermore, when night fell, William’s house was blanketed in darkness—where work, study, and reading were impossible. Not long after William had begun going to the library, he came upon an old textbook called Using Energy, which featured a cover photograph of windmills in a wind farm. Says William:

“I was very interested when I saw the windmill could make electricity and pump water…I thought ‘That could be a defense against hunger. Maybe I should build one for myself.’”

Unfortunately, Using Energy had pictures of windmills, but did not explain how to use the windmills to pump water or to generate electricity. William, undaunted, started collecting spare parts from junkyards to build his windmill. He built a turbine from spare bicycle parts, an old shock absorber, and old tractor parts; plastic pipes shaped by fire served as the windmill blades. He only had two wrenches as tools and could not afford nuts or bolts. Moreover, he was never taught how to do electrical wiring. But after two months of hard work in his spare time, William produced the first windmill his village had ever seen.

His windmill eventually generated 48 volts of power, enough for all the lights in William’s house, allowing his six siblings and parents to read, study, and work at night for the first time. A second windmill was able to pump water to irrigate the farm fields of his family. These exploits earned William a scholarship to the prestigious African Leadership Academy in Johannesburg, South Africa, a preparatory school. In 2010, William plans to attend college in the United States.

After the completion of college, William plans to return to Malawi with the mission of giving power to the 98 % of Malawians that lack it. He notes: 

“I want to help my country and apply the knowledge I’ve learned…I feel there’s lots of work to be done.”

Lessons Learned

Above all, William’s story illustrates that the entrepreneurial, innovative spirit can be found among even the poorest and youngest members of the BoP. William’s resourcefulness, persistence, and genius are undoubtedly rare, but he is not the only person in Africa to have the desire to solve one’s own problems. Instead, William is part of Africa’s new “cheetah generation,” which is young, energetic, technology-thirsty, and infused with a desire to harness its own destiny rather than wait for governments or NGOs. William’s story can be used as an inspirational beacon for other young entrepreneurs, and should be publicized accordingly.(8)   

Governments also have a role to play to encourage innovation. They must resist pressures from established companies to preserve the existing market and ensure that the business playing field between old and new firms is equal. For example, in the case of OECD countries, governments enforce protection of intellectual property, and use regulation to block monopolies and unfair trade practices.(9) Developing countries also often impose an inordinate amount of bureaucracy that limits the establishment of new companies. Whereas starting a corporation in the United States takes only a single day, it takes 40 days in El Salvador, 151 in Indonesia, and 153 in Mozambique.(10) Developing countries are also saddled with the challenge of having to promote innovation without the arsenal of research-intensive universities, which are primary sources of innovation in the developed world. Nevertheless, in the interim before such academic network can be established, governments ought to employ anti-brain drain policies in order to encourage citizens who study abroad to return home.(11)

Another way to empower these young entrepreneurs is to provide more technology, such as mobile phones, and specifically access to the Internet. The Internet would provide budding entrepreneurs with a hitherto unprecedented bank of knowledge, which would greatly enable them to learn about new innovations and to research new ones.(12) Internet access also has broader benefits for society. One reason for the rapid development of South Korea has been an expansive Internet infrastructure that allows 60 to 70 % of the country to have high-speed broadband access. The Internet helps to allow governments to be more responsive to citizen needs, while serving as a nationwide platform for entrepreneurship, where knowledge and online markets are instantly accessible.(13)   

Rural innovation is a non-linear process that can be difficult to trace because of the complex relationships involved. What is clear is that there needs to be a link between rural innovators and larger organizations, so that the organization can provide the innovator with not only business training and advice, but also with the financial resources required to give a project scale.(14) The power of partnerships between BoP entrepreneurs and large companies are explored in the next module.

Go To Module 3: Innovation at the Base of the Pyramid with Access to Capital >>

Footnotes

(1) Gupta, A. and Kadri, M (Interviewer). “Finding Innovation in Every Corner.” Design Oberver Group. 8 Feb 2010. Accessed July 10, 2010.

(2) Ibid.

(3) Ibid.

(4) Nierenberg, D. “Tapping Local Ingenuity to Raise Fish and Livestock.” 22 June 2010. Nourishing the Planet. Accessed July 23, 2010.

(5) Roy, R. “The Agency of African Girls and Women.” 15 July 2010. Stanford Social Innovation Review. Accessed July 16, 2010.

(6)Sheerin, J. “Malawi Windmill Boy with Big Fans.” 1 October 2009. BBC News. Accessed July 13, 2010.

(7) Rielly, T. (Producer) and Thrift, S. (Director). “Moving Windmills: The William Kamkwamba Story” [video clip]. 2008. Accessed July 13, 2010.

(8) Ibid.

(9) Schramm, C.J., 2008.

(10) Ibid.

(11) Ibid.

(12) Rielly, T. and Thrift, S., , 2008.

(13) Schramm, C.J., 2008.

(14) Hawkins, R., Booth, R., Chitsike, C., Twinamasiko, E., Tenywa, M., Karanja, G., Ngcobo, T. and Vershoor, A.J. “Strengthening Inter-Institutional Capacity for Rural Innovation: Experience from Uganda, Kenya and South Africa.” p.p. 313-325. Sanginga, P.C., Waters-Bayer, A., Kaaria, S., Njuki, J. and Wettasinha, C. (Eds.) Innovation Africa. 2008. London: Earthscan Publications.