July 16, 2007 – Kenya

People always say it’s impossible to account for social return on investment (SROI). Until today, I probably would have agreed with them. I’ve read Sara Olsen and others’ literature, but I’ve never seen really good SROI in action.

And that is when we met Regina. She works for KickStart, a Kenyan nonprofit that sells income-generating technologies that are affordable to the bottom of the pyramid. Their most successful product line is water pumps, but they also sell hay bailers, oil presses, brick-making machines, and bicycle racks.

Regina is not a city girl. She grew up in the countryside and came to the city for college, to study finance. Now she does social accounting. And…how? you may be wondering…

When KickStart sells a pump, they guarantee a one-year warranty. The buyer must write down his/her name, the name they usually go by, and where they live. Originally, KickStart just asked for a buyer’s name and location. When they went to the village, they would ask to see so-and-so, and the villagers would say, “the one whose sister just married?” or say “the one whose brother just had a baby?” The next question would be, “why do you want to know all this information?” They immediately became suspicious.

On the other hand, if you say, “Please may I speak with Regina, also known as Mama Jaime” they’ll know exactly who you’re talking about and they’ll be impressed, “How do you know Mama Jaime?”. Even Mama Jaime herself has usually forgotten the warranty information she filled out, “Oh that? Lots of products say warranty, but I never thought you’d actually come out here.”

It is a cultural thing. If you ever get lost in the countryside, you never just ask for directions. You greet each other, ask about family, work, life. After 20 minutes you may come around to asking for directions. Getting any more direct than that is considered very rude.

Instead, Regina sets aside a whole day to evaluate just two customers. This gives her time to chitchat and tell stories that help her wean out the information she needs. For example, you can not just ask a Kenyan woman how many children she has. She will usually say two (to avoid looking old-fashioned and uneducated, especially when talking to city folks). If she knows an NGO is coming to give handouts, she will suddenly have ten. Even the neighbors’ kids are all there in a row with dirt rubbed on their faces and looking miserable. She does whatever she can to get the most free bednets, free medication, and free food she can.

When Regina arrives unannounced, the villagers always say, “Hey Regina, my friend, why didn’t you tell me you were coming?” She is able to see right away whether they are using the water pumps or whether the pumps are just sitting in the corner collecting cobwebs.

Regina keeps a separate client database for each of the three water pumps that KickStart sells. Currently, approximately 60% of their 40,000 customers are in the database. The goal is to look at personal growth: how does a farmer’s income with the pump compare to his/her income before the purchase of the pump. After the baseline assessment, subsequent assessments are taken at 18 months and 36 months after purchase. By going at village pace and always striking a two-way conversation, Regina has earned a place that feels like home in every community she’s worked with.

A lot of what Regina does is education. Most of the farmers have never “kept books” before. So, Regina translates important financial terms into village analogies. A pump becomes a daughter: the farmer pays her dowry and has no debt. Regina then asks, “Has the daughter been good? Will KickStart be able to marry off its other daughters?” Regina had to laugh when one woman told her that KickStart’s daughter has been like a whore…the neighbors, family, and friends have used her. They all don’t have enough money to buy one of their own.

Feedback like this led to the creation of the hip pump…a lower end pump that almost anyone can afford. Many villagers buy the hip pump and work their way up to the highest end pump, called the super money maker. Villagers can even trade in their old pump and get a discount on the upgrade.

We visited two families today. I particularly enjoyed visiting the second family. Mr. and Mrs. Habari are an older couple who still need to earn an income now that their children have grown up and moved out. I was amazed by their by their growth…in just one and a half years, they had tripled the size of their land and were producing 650 kilos of French beans for 45 Shillings (about 75 cents) a kilo. Mr. Habari is now looking at different produce buyers to find the best channel for selling his crops. As we left, they said we are welcome to come back any time, but that we probably won’t find them in their house because they prefer the office (their beautiful fields).

Our next stop was a move up the supply chain. We went back into town to visit one of the water pump dealers. Mr. Kimani is the man. He owns Farmwise, a farming supply store in Sabasaba (a subtown of Nairobi). When other store owners refused to take on the risk of buying KickStart’s pumps, he was willing to take the leap. Now he earns 17% profit on each pump and also gets extra business from visitors who are interested in seeing the pump in action. In a year, he sells about 170 pumps. In fact, the pumps make such good business, he does not mind spending his own money to advocate them.

After eating a quick lunch in the parking lot of a large superstore, we went to the water pump manufacturing plant. The pump manufacturing takes place at a car manufacturing plant. Though I’m not sure how the car manufacturer stays afloat with competitors like Numi, the simple facilities were perfect for what KickStart needs. Everyone was on lunch break when we arrived, but a few welders took us through the entire process. It was sheet metal bending and welding galore, not to mention sheet metal rolling (which has a special place in my heart)! As you can imagine, I was quite fascinated.

Phew…this is a marathon blog entry...

In fact, the actual day itself was quite exhausting, but we could hardly say no when another amazing opportunity presented itself and Regina and James wanted to take us to KickStart’s headquarters. As I stepped out of the car, I looked overhead and saw a hose dangling between the 40-foot-tall building beside us and the 100-foot-tall building across the street. On the roof, a team of engineers was busily taking figures, peaking over the edge of the building, and pumping water out of two buckets that stood at the base of the building. Regina quickly explained that the KickStart engineers are working on a new, deep water pump that can extract and pump water that sits 40 or even up to 100 feet underground through simple treadle motion.

We went up and joined the engineers on top of the building to look at their research process. Then we came back down and visited the product showroom, where we saw all the products KickStart has ever produced. One fun product that should be coming out soon is a bicycle add-on seat/storage rack. It’s actually big enough for two people to sit on back! Bike racks have an interesting history in Kenya. Not too long ago, the Kenyan government began enforcing stricter safety rules on the matatus (local buses)—now there can only be one person per seat, and each person must wear a seatbelt. As matatu prices soared, a new market opened up – bicycle taxis, also called Bodabodas. People attached racks to their bicycles and charged a cheaper price for transport. Today, the Bodabodas still exist and are a booming industry.

In the evening, we went back to Palacina Hotel to meet up for dinner with Nick Moon, a co-founder of KickStart. We talked about how KickStart began…how Nick Moon worked in the NGO sector in Kenya for some time and started to see its inefficiencies; how he realized that the work he was doing wasn’t doing much more than making himself feel good; and how little by little, it was failing to do even that. Nick has a fascinating background growing up in India and Singapore and has always had a global outlook. He is a carpenter and craftsman by trade and he had been teaching Kenyan school children how to build tables and other wood work so they might augment their income. By some wonderful fortune, Nick met Martin Fisher. Martin looked at the machines Nick was using to train Kenyans in carpentry and other crafts, thought it was good work, but knew it could be done better. As a mechanical engineer, Martin was able to redesign many of the machines. At the time, Martin was also researching a lot about appropriate design for the developing world and was interested in designing helpful machines that are easy to operate and affordable. Seeing that these products could really become a viable market, Nick and Martin founded KickStart.

We spent the rest of the evening talking about hybrid business models and fincancial sustainability, until Alex and I became too tired to keep our eyes open.

Off to bed...