Impact Investing at the Bottom of the Pyramid, Chinese Style

Last week, I found myself sitting in a conference room among a majority of suit-clad business executives listening to a panel of state commerce officials and legal experts discuss the current international trade in Arizona. A lot of numbers were thrown around about import and export goals met and jobs created, but my attention was most jolted when the discussion centered in on China and more so, China in Africa. What is China doing in the African marketplace, one of growing opportunities and that has recently appeared on investors’ radars? The discussion inevitably shifted from international trade to trade with China [read: why haven’t the Americans sought out Africa and how can we compete with China to capture the lion’s share of investment?]

It seems to me that Chinese investors are taking more risks these days and more of these risks appear in the form of privately held businesses across Accra, Dar es Salaam, Lusaka, and even in Juba. But much to the big dogs of media’s surprise, some Chinese entrepreneurs have not followed in the footsteps of what many Chinese companies have rampantly invested in the past decade across developing regions of the world–everything in between Presidential mansions, shaky buildings, and hoards of Chinese labour that is. Instead, on the minds of a new wave of Chinese investors are heralding the way for increased social entrepreneurship where wealth and charitableness are starting to go hand-in-hand as opposed to the common belief “为富不仁” -wéi fù bù rén.

In a recent Q&A session with Tao Zhang, Chief Operating Officer of New Ventures, WRI’s center for environmental entrepreneurship, the key message emphasized that the Chinese are certainly commercially motivated but it does not mean their commercial returns cannot also create social and environmental benefits. Unprepared to make an impact in the social sense of the word, the  way the Chinese see fit (for now) is to team up with interested partners, investors, and thinkers across different developing and emerging economies, such as in India and Africa. Investors are now collaborating with centers like New Ventures of the World Resources Institute, where its Chinese office helps entrepreneurs to better conceptualize and quantify the social and environment impacts of their new start-up.

So rather than trying to push more American companies to invest in Africa, I think it’s high time to push for a renewed type of investing..from the bottom-up that is, and more awareness on the social and environmental impacts. And this is as much a priority for entrepreneurs as it is for policy-makers to foster the kinds of environments to best accommodate impact investing.

An example of a Chinese firm working with impact investment in Asia: Avantage Ventures seeks to create a marketplace for social capital by advising social entrepreneurs and investors on strategic impact investing!


100 Most Influential People in Business Ethics-2011

The list is out! Ethisphere has just published its newest list for the 100 most influential people in business ethics: HERE

Among the 2011 list include those from various sectors both public and private, academic and corporate, government and Non-government.

Excited to see a professor from my alma mater–Arizona State University–on the list!

#89 Marianne Jennings – Professor, Arizona State University’s W.P. Carey School of Business

Some other notable business ethics extraordinaires include:

#1 Anna Hazare – Indian Anti-Corruption Activist, Independent
Category: Thought Leadership

#17 Ai Weiwei – Chinese artist and activist, Independent
Category: Media and Whistle-blower

#37 Panthep Klanarongran – President, National Anti-Corruption Commission of Thailand
Category: Government and Regulatory

#49 John Githongo – Activist, Kenya
Category: Media and Whistleblower

#54 Azim Premji – Chairman, Wipro
Category: Business Leadership

#58 Michelle Obama – First Lady, United States
Category: Government and Regulatory

Ethisphere Institute is a leading international think-tank dedicated to the creation, advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability. The Ethisphere Council and Business Ethics Leadership Alliance are forums for business ethics that includes the membership of over 200 leading corporations, universities and institutions

Social Inventions require audacity, vision, and everything else in between

I recently sent an article to a few of my dear Lumid alumni and previous project management team members (you lucky souls know who you are) reminding them of the great times we had devising a mock organization and project on Ugandan women’s development and feminine hygiene. And it’s true as one of my team members commented that I just cannot get of the subject…of the Period that is…because this story is simply too innovative to resist.  It helps me to reflect on some simple rules about social entrepreneurship, filling a need in society while simultaneously creating a business model.

Where 70% of women in India simply are not able to afford sanitary napkins a study by AC Nielsen highlighted the poor sanitation and hygiene conditions of women, especially in rural India. On top of the taboo of speaking about menstrual health, often the opportunity cost of buying sanitary napkins could mean daily necessities such as milk. And the other methods used by women for their periods involve rags, newspapers, leaves that may be unhygienic and ascend to infections such as RTIs or potentially cervical cancer (Sinha, 2011)

The Audacity:

In 2006, an Indian man and high school drop-out took a risk and made a disruption in order to transform lives and improve women’s access to more affordable sanitary napkins. He began to investigate the composition of sanitary pads. Arunachalam Muruganantham (i’ll call him Murug for short) began to wear women’s panties and created a “menstruating uterus by filling a bladder with goat’s blood…occasionally squeezing the contraption to test out his latest iteration.” Deemed a pervert by his wife, mother, and ostracized by others in his community, he continued his research and even created his own millionaire’s alter ego (one that Donald Trump would be proud of) in an attempt to obtain testing materials from U.S. firms to support his investigation.

Finally, murug was able to fashion an electricity generated sanitary napkin machine that de-fibers cellulose (from tree bark), compresses and seals it into a napkin and sterilized by ultraviolet light (the kind only a Starwars hero could appreciate). Each machine under the control of four woman can produce about 1,000 napkins sold at retail price for about $.25 per package (8 per package).

What’s the gain? Well, according to Murug’s research, U.S. consumer giants like P&G and J&J burn their corporate pockets (think P&G commercial, “in a small village in Africa” Nia has a happy period because she has tampax) of half a million dollars(!) on a machine that does the same as Murug’s machine which costs $2,500. Although the number of napkins produced are not comparable to the numbers produced by P&G, a unique business model was born out of his invention that will assist in reaching his vision of a “100% napkin-using country”.

The Vision:

Rather than becoming a commercial enterprise, Murug spreads an idea and tries to fill a need. His company, Jayaashree Industries, helps rural Indian women and self-help groups buy a machine (via govt loans, NGO), teach them how to operate it (about three hours of instruction), and ultimately creates jobs that allow the women themselves to make an income. Although currently there are only 600 machines in use by women across 23 states in India and abroad, Murug envisions 1 million jobs to be created as his invention and the business model becomes more viral and expands in other developing countries.

Everything in between:

What’s equally important as access to affordable sanitary health is creating an awareness, and in this case an awareness especially relevant among half the population of India. Although I cannot begin to say I understand the lifestyles of Indian women in some parts of the country, the immediacy  of one woman’s response to a cautioning against reproductive infections: ‘So what? How long are we going to live anyway?’ really hits home the need for more social innovators like Murug and responsible businesses like Jayasshree Industries to jump start development and raise awareness.

So Team Papy, B, S, I, and E, don’t be too bummed about not getting our mythical funding for the project, there are social entrepreneurs and changemakers out there who are!

Interested in Jayasshree Industries and How’s the de-fibering done? You can watch a series of short videos here, the first without voices complemented with Chinese elevator style music in the background