Acumen Blog

img_0025-for-web

Update letter from Jacqueline Novogratz

Dear Friend of Acumen Fund -

In the first years of Acumen Fund’s existence, the two most challenging questions we faced were “Can this scale?” and “Will you ever exit?” As I wrote in my last letter to you, we’re seeing significant scale in our investments ranging from maternal health, to public toilets and solar energy. Of course, the more we find answers, the deeper our questions become. Regarding scale, we’re now doing more intense dives into understanding the trade-offs. On one hand, how do our investees avoid corruption in partnering with government; and on the other, how do they avoid being pushed to serve a wealthier clientele by more traditional investors focused more on profitability than on serving the poor?

Regarding exits, the news is good. Indeed, we exited two investments this quarter and hope to exit a third in the coming months. Most exciting is Jamii Bora, the affordable housing development outside Nairobi, Kenya, which has fully repaid its $250,000 loan! Three years ago, we lent this money so that Jamii Bora could build a housing development for low-income slum dwellers who had proven their ability to repay, but would never qualify for a traditional bank mortgage. I remember standing on the open land an hour outside Nairobi’s slums, listening to the inimitable Ingrid Munro, Jamii Bora’s founder, laying out her vision: the organization would build 2,000 houses, each equipped with an indoor kitchen and bathroom, a garden and a place for laundry; they would use solar energy, and create an efficient water system so that the water could be treated and recycled; and they would eventually see a town of 12,000 people flourishing.

Recently, I visited a development with 750 constructed houses along with thriving shops and a full-fledged school. More than 240 families – or about 1,300 individuals – have moved in, and many have painted the trim on their block houses, and planted gardens in backyards. Most thrilling to me was visiting Jane’s home, for I had spent time with her a year ago in her temporary dwelling in the Mathare Valley slum (here’s  my TED talk on her journey). Her house was beautiful: trimmed in orange and green with sunflowers touching the roofline, it seemed a palace compared to the shanty where Jane had spent her life.

The most extraordinary moment occurred as we stood in her new indoor bathroom which contained a toilet, sink and shower. “In Mathare,” she said, “the water is dirty and the children are always sick. The little ones especially are always suffering with diarrhea and it is too far to go to the toilets and too dirty and expensive as well. My only option was flying toilets, but the diarrhea could be so bad that the children would soil the floor. But now, the toilet is right here in your house.”

She then demonstrated the ease of using a toilet and flushing waste away. Nothing has ever reminded me of the indignity of defecating in bags and then throwing the waste on rooftops like the sight of Jane and her new toilet. More than 1.5 billion people have no access to good sanitation. It needn’t be that way.

Never before have I understood in a spiritual sense the potential of patient capital. Capital can be used to draw us close or to distance us from one another. Traditional societies that forbid usury want to ensure the group stays together and supports one another. The sub-prime debt phenomenon, on the other hand, is a powerful example of using capital in a way that distances. Wall Street investors had no stake in whether homeowners repaid their mortgages as they thought they were “safe” up to a certain default rate. Borrowers had no relationship with a traditional banker. The system was bankrupt of values and accountability.

In an increasingly interdependent world, we must think of ourselves as a single tribe. In a world with so much excess wealth on one hand and poverty on the other, we need a new asset class. Patient capital is money invested not for undue profit but to support opportunities for disadvantaged communities. Money earned is used to invest in others and not for personal gain; and investors provide management support for the sake of the others’ success. In return, the investee is accountable to repay as a member of that same community.

Patient capital can be a cornerstone of a new social contract and a more nuanced type of capitalism for our 21st century world. Acumen invested a quarter million dollars in an organization focused on slum dwellers to build an affordable housing development – an investment banks would not make. Today, a hopeful, diverse community exists. Jamii Bora has repaid Acumen, and we can now invest in other organizations focused on bringing life sustaining services to the poor. Finally, Jane’s joy in what she has herself accomplished is a joy shared by every Partner and team member of Acumen. She did it herself, of course, but it was the brilliant vision and execution of Jamii Bora and the patient capital financing from Acumen and others that enabled her to realize her dream.

The week in Kenya was one of the most extraordinary I’ve experienced: I’ve detailed it in a fairly long journal. Ecotact toilets now serve nearly 15,000 people a day; Insta is producing more than 15 million packets of protein-fortified porridge and is on its way to creating a retail market; and we are engaging in an exciting new agricultural investment focused on hybrid seed production and distribution.

Finally, on a personal level, thanks to Acumen Fellow Suraj Sudakhar, over 90 people in the Kenyan slums have joined seven self-organized book clubs to read The Blue Sweater, (which comes out in paperback today)! He and seven young men from the slums organized a gathering for nearly 100 people in Kibera to discuss the ideas in the book while I was there (an event I recount in the Huffington Post.) The quality of the questions was incredible. People asked about balancing family and leadership, about financing existing projects, and about what individuals there could do to help bridge the gap between rich and poor. It was truly one of the most moving evenings of my life and I thank every one of those young men for giving so much of themselves to make it happen.

It has taken me a few weeks to understand what happened that night. First, I was struck by the generosity and organizational efficiency of the young men who encouraged people to come from five different slums, some of them traveling more than 90 minutes on buses. Second, though everyone spoke about the corruption and challenges to those living in the slums, no one put themselves into the category of being “poor.” Rather, they hungered for what they could do to overcome challenges and help others as well. Ultimately, the individuals in that room seemed to transcend a feeling of Us and Them, and moved to a place of We. It is on this shared sense that I feel an ever-deepening commitment to this work and everything that it promises.

It will take each and every one of us, rich and poor alike, to build the world we dare to imagine. But that night in the Kibera slum, for one powerful moment, I got a glimpse of what is truly possible.

I wish all of you everything that the world has to offer,

Jacqueline

P.S. As I wrote above, the paperback version of The Blue Sweater comes out today! You can help get the word out by buying books for your friends, writing reviews on Amazon or Barnes and Noble, and checking www.thebluesweater.com for promotions and supplementary materials. I’m giving all profits to Acumen and other social issues and so appreciate your support.

Comments

Imagining the world as it could be

Christine Gitau is an East Africa Fellow and an enterprise coach at Craft Afrika, which provides business support services to craft entrepreneurs, enabling them build viable and thriving businesses in Kenya. At Acumen we often use the term “Moral Imagination” when talking about leadership. Christine wrote a reflection on how this concept has shifted her thinking. We could not be more proud of what she is building! [Read More]

How two Acumen Fellows are disrupting the education model in India

Whether its running youth soccer programs, providing vocational training services, or transforming the education system in India, Acumen India Fellows are driving real change in their communities.  Abbas Dadla and Abhilasha Sinha are India Fellows who are addressing the teacher shortage in India through the use of technology and peer collaboration. Find out what they are building below.  If you have grit, resilience and a commitment to creating change in your community in India, East Africa or Pakistan, we encourage you to apply for the Regional Fellowship Program! [Read More]

Meet Manjushree Patil, Founder of Aatman Academy

This month saw violent tragedies in Pakistan and Kenya, regions where Acumen works and which five classes of Acumen regional fellows call home. Among them there are dedicated teachers like Acumen India Fellow Manjushree Patil, crusaders against sex trafficking, builders of government, creators of liberating mobile medical technologies, and curators of slum sports programs. The need for strengthening the connections between those who are working for positive change against seemingly impossible odds has never been greater. We at Acumen have never been prouder to be the thread tying together these courageous individuals. Read more about Manjushree and how she is changing her community in India below! [Read More]

No, not silence again!

The Acumen Fellowship’s Cambridge Leadership Associates (CLA) training is notorious for digging deep, breaking Fellows down to reveal their deepest fears, identifying the sources of resilience that will fuel them with the tenacity to continue along the path to social change. Kahabi G. Isangula is an East Africa Regional Fellow living in Tanzania and recently participated in our CLA training. Get an idea of what it is like, below!  [Read More]

Announcing the Class of 2015 Acumen Global Fellows

Acumen Global Fellows are architects for the impact sector. They are innovators, game changers, visionaries, with various professional experiences looking to make substantial change in the world. They have thrived in companies such as Google; they have started their own companies in Sri Lanka, Canada and Malaysia.  They are choosing the challenge of working alongside our portfolio companies and immersing themselves in a rigorous leadership training. [Read More]

Welcoming Ajit Mahadevan as Acumen India Country Director

We are pleased to announce that Ajit Mahadevan will be joining Acumen as India Country Director. Ajit joins Acumen from Ernst & Young, where he has served as Advisory Partner & Leader (Life Sciences) for the past six years.  At EY, he was a strategic advisor to the leadership of some of the leading Indian and global life science and healthcare players with the focus being business transformation and growth.  Prior to his time at E&Y, Ajit was President of Piramal Healthcare, one of the leading pharmaceuticals companies in India, where he built the international business from inception in 2002 to $300M by the end of 2008. Ajit held multiple leadership roles across strategy, M&A and business leadership. During his tenure at Accenture’s Strategic Services practice in UK and India, he led the development of one of the firm’s largest and most successful internal projects – the Offshore Development Centre in 2001, which has now grown to about 100,000 people across multiple cities in India. Ajit has worked in an advisory capacity to Acumen in the past, most recently participating in Regional Fellows selection panels in Mumbai. [Read More]

Why We All Need A ‘Rikki’

Caren Wakoli is an emerging leader in East Africa who has launched a foundation to support the next generation of female leaders for Africa. Caren applied twice for the fellowship and was not accepted, but she did not give up. Her resilience and grit allowed her to persevere, and this year we are proud to have her as an East Africa Fellow. Below she shares her story on why everyone needs a ‘Rikki,’ and failure is never final.  [Read More]

Acumen Joins Beyond the Grid as Founding Partner

Acumen is proud to be a founding partner of Beyond the Grid, an innovative framework under President Obama’s Power Africa initiative to increase energy access for underserved populations across sub-Saharan Africa. Beyond the Grid will leverage partnerships with investors and practitioners committing to invest over $1 billion into off-grid and small scale solutions for this underserved market. [Read More]

Life after Lean

In May 2013, Sabrina Natasha Premji & Afzal Habib participated in +Acumen’s inaugural Lean for Social Change course based on Lean Start-Up principles. Enrollment for the next session of the Lean for Social Change course is open now. If you are working on a social issue in your community, are interested in pursuing your own social venture, or are just interested in creating an impact in this world…Register today! Sabrina & Afzal joined the course with a simple idea and the passion to transform the childcare crisis in East Africa’s informal settlements. Seven weeks later, they had developed a customer-tested business model ready to pilot in Kenya’s densest slums. Read their story below. [Read More]