Letter from Jacqueline Novogratz – May 2014
Springtime. A day trip to speak in Washington, D.C. coincided with the peak of the city’s prized cherry blossoms, a gift from Japan to the United States in 1912. I walked at dawn, mesmerized by those venerable trees, their gnarled trunks and knotted branches adorned with fragile blushing flowers, promises of a renewal at once beautiful and fleeting. Life is so short: if not of purpose, then of what?
Purpose. I think of two of our latest investments and the entrepreneurs who drive them. David Ellis arrived in Ethiopia from the U.S. four years ago and was offered to take over a failed government chicken farm in the north of the country, near the border of Eritrea, an economically depressed area due to many years of war. It is not the easiest place to live but he and his business partner Joseph Shields are determined to build an industry that will change at least a corner of the world.
Having the courage to start, experiment, sometimes fail and start again for four years, Mekelle Farms is now on track to sell more than 2 million day-old chicks to “growers” who typically buy them in batches of 1,000. The growers care for the chicks for 35-40 days before selling them to small-holder farmers who raise them to lay eggs for home consumption and sale at local markets. At scale, Mekelle has the potential not only to re-establish a broken poultry and egg industry but provide income and livelihoods to tens of thousands.
Shamrawit, 24-years old, a college graduate with a degree in journalism, is one of Mekelle Farms’ growers. Articulate and thoughtful, Shamrawit describes how she cares for her chickens in their vulnerable first month. On the floor is a folded mat: her bed to ensure she’s there for nighttime emergencies. I ask about her dreams. Her eyes well up. “One day, I hope to raise 10,000 chicks at a time.” I cannot tell whether her tears come from a sense of hopeful pride or a dream deferred. Still, she is now making her way in the world. Her sense of purpose inspires.
I cannot help but think of Shamrawit’s story as well in terms of the world’s challenges around the future of work. This is especially urgent on a continent like Africa where in several countries, 50% of the population is less than 25 years old.
In Nairobi, I meet Dr. Ernest Mureithi, founder of Miliki Afya, an affordable healthcare model bringing care to low-income communities in Kenya. A trained doctor and survivor of the 1998 U.S. Embassy bombings, Ernest’s purpose is to build a sustainable health company offering affordable healthcare to all. Rather than start with the goal of maximizing profits, Miliki Afya considers the price point their patients can afford, based on what a typical patient pays all-in (medicines included) at government hospitals. The company then re-engineers its cost structures to offer efficient, quality care.
The Kawangware clinic, newly opening just behind a bustling street market filled with crowded matatus, sturdy women roasting corn, vegetable sellers and second-hand clothes hawkers, is well-organized, clean and ready to serve. The operation reflects a culture of efficiency and focus on the patient as customer, with services that include diagnostics, x-rays, primary care and dental treatment. The doctors share their sense of pride in the company, shining as they speak. The dignity we seek is not simply for the poor.
In our enthusiasm, we issued a press release announcing that this new investment would specifically serve low-income communities. In response, Miliki’s new customers felt insulted. Their feedback was clear: they are seeking quality services that happen also to be affordable. They do not want the care poor people usually receive. This is a critical nuance.
Pioneering the creation of markets to reach low-income communities is neither easy nor quick. Both companies have tough rows to hoe as they modify their business models, understand their customers, and help build ecosystems needed to thrive. Mekelle Farms has had to import its breeders from Europe, train an entire work force, and build a new system of growers. Miliki Afya must build trust in areas where both government and private clinics have failed local communities time and again. Success will take time, requiring technical support as well as patient capital.
As an early stage impact investor, we increasingly understand the need for nuance in building a vibrant, effective investment ecosystem. Time is required – often 10 years or more – to build those ecosystems. We also see afresh how different pools of capital are required to enable different stages of organizational growth.
The challenge for impact investing as a sector is to integrate this nuance into how we structure funds, build needed ecosystems and measure impact as well as financial sustainability. What worries me is too often impact investors see this work only through traditional private equity lenses, rather than putting impact front and center. I was recently asked whether, when the chips were down, we would make decisions for the poor or on behalf of our financial investors.
This is the wrong question.
It is possible to stand with the poor and invest in solutions that in the long-term, not only become profitable but will provide a fair return to investors. This will take a mix of capital, ranging from grants to patient, pioneering investments to growth-oriented impact investments. If the world is serious about ending poverty – and it must be in our increasingly unequal world – then we must be willing to combine significant amounts of philanthropy and technical support with long-term investments to build sustainable solutions.
Happily, this understanding is growing. We see this at Acumen through our work in providing technical assistance with corporate partners like Dow, Unilever, Barclays and Bain. We see it in the government partnerships like a loan guarantee facility supported by USAID. We consistently see it through the Acumen Fellows, now numbering almost 200 around the world. And we see it through more than 47,000 unique participants in the +Acumen courses.
Part of putting impact first also means getting serious about understanding who we are serving. Just last month, in partnership with Grameen India, we completed a study at Ziqitza Health Care Limited (ZHL), our ambulance company in India. The study used the Progress out of Poverty Index developed by Grameen Foundation to see who ZHL is serving, and it showed that more than 75% of their customers are living below $2.50 a day. ZHL is succeeding in building a scaled, profitable company that truly is reaching the poor, and we seek more such data as we invest for change.
Finally, we cannot invest enough in leadership for the long-term. Benje Williams, a Global Fellow, class of 2011 returned to Lahore, Pakistan this year to start a vocational training company Amal Academy. Abbas Akhtar, Global Fellow, Class of 2013, has remained in Pakistan to create an alternative to YouTube in the country, VidPk.com. Together, these two leaders are committed to raising funds and creating 100 videos of Pakistani leaders for Amal’s courses, starting with interviews of Acumen advisors, team members, entrepreneurs and fellows. On many Saturdays, Benje and Abbas meet with a number of others from different Fellows classes, sharing ideas, collaborating on possibilities.
In 15 years, Acumen Fellows, whether in South Asia, Africa or across the world, will be not only learning but leading at the edge of innovation, bound to one another across lines of nationality, race, ethnicity, class and religion. They will learn from our companies teaching one another and the world what is possible. With 200 Fellows today, this vision is just getting started.
Everywhere I sense a shift in the seasons, a yearning for greater purpose, for moving with empathy as well as pragmatism, a growing understanding that we are all in this together. This, more than the fleeting cherry blossoms, is a harbinger of renewal.