Investing Innovation

Entrepreneur Tells How He Is Bringing Success to Africa

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By Edward Pentin

ROME, FEB. 23, 2012 (Zenit.org).- Kim Tan, an entrepreneur and practitioner, likes to take a little test with his fellow business friends. 

He asks them what first comes to their minds when he mentions China. "Investment," they answer. What about Vietnam? "Also investment," they reply. And Africa? "They think aid," he says.

And yet according to Tan the world has given the equivalent of six Marshall Plans to Africa in development aid -- more than enough, in theory, to have made the continent wealthy. He presents a revealing chart, one line showing how aid to Africa has increased since 1970 while the continent's GDP has steadily decreased. 

"There is no direct correlation showing that aid given in a philanthropic way to try to tackle the problem actually solves it," he explains. "The best way to tackle this big societal need is through business, through enterprise."

Tan is a trustee of the Transformational Business Network, a network of over 500 firms that bring community transformation through sustainable business solutions to poverty. On Wednesday he shared what they have achieved in a remarkable talk given to a large group of executives attending a conference at the Pontifical University of the Holy Cross in Rome.

During the symposium, hosted by the university's Culture, Markets and Ethics program on the subject of "Pursuing Shared Value," Tan outlined how small businesses and entrepreneurs can make a significant difference in improving the lives of the world's poorest and most vulnerable through a mixture of creativity, innovation and capital. "It's very intentional," he says, "you have to be present in the locality on the ground, you can't do it by remote." 

In Cambodia, the organization has, for some years, run a program that takes trafficked women and children off the streets by providing the women with counseling, training and gainful employment, and the children with an education so they can catch up on their learning.  

Trafficked women often cannot find normal employment because of the stigma attached to their past lives, so TBN found a solution: "We created businesses they could work in," Tan explains, "because we know how to start businesses, how to build businesses which could then employ these women rather than offering them the classical way of putting them into safe houses and using donor aid to keep them in those safe houses." The program, he adds, has helped them "reintegrate and become productive members and citizens of society."

Currently the women run a catering service for the U.S. embassy and the Ritz Carlton hotel in Phnom Penh. TBN has also started other businesses, each suitable for whichever literary level the women have attained. Tan, a native of Malaysia now living in Britain, points out that the need to find solutions to trafficking is immense, particularly in Asia. "There's more human slavery today than during the time of [William] Wilberforce," he observes. 

Tan himself is responsible for another inspiring TBN project, one helping people living in one of the poorest parts of South Africa. After visiting the country a number of years ago, he witnessed for himself some of the charitable work that his philanthropic organization was supporting but he became "disillusioned." The work was "well intentioned," he recalls. "It had good people, but it was never going to change anything."

What was needed, he felt, were enterprises, so he gathered a team to visit the poorest part of the country, the Eastern Cape -- a province with a 70% unemployment rate and where 30%-35% of the population suffers from HIV/AIDS. Over a period of time he built a safari park there. Today, the Kuzuko Game Reserve has 40,000 acres and brings in thousands of tourists each year. "For every 10 tourists we bring in," Tan says, "we create one new job locally." The project also employs some of the region's AIDS orphans, some of whom have become game rangers or chefs. But Tan stresses that Kuzuko is a business "with a social heart," not a charity. If they don't turn up for work, get drunk or steal, he says, like any other business, they don't keep their job.

Housing has also been drastically improved, restoring the dignity of many local citizens, and the park has also reintroduced species of animals not seen in that part of Africa for 150 years. 

Innovation is a key component of TBN and its creations have helped to both lift the poor out of poverty and directly save lives. Cooking in Africa is just one example. Most Africans cook meals using what Tan calls "three stone technology" -- essentially three stones on which sits a cooking pot that is heated by wood and charcoal. Yet such a method is not only a health risk (the fumes are the equivalent of smoking 40 cigarettes a day) but also a fire hazard. It also causes deforestation, which means women and girls have to walk further to find firewood, putting them at a higher risk of rape. According to Tan, 40 such rape cases occur everyday in the Congo. 

So an innovator from Stanford University has devised a solar cooking stove that saves about 50% in fuel. "It's not a complete solution," Tan says, "but we can subsidize these stoves and make a return for investors." So far, 50,000 units have been sold in Kenya. 

Entrepreneurs have also put solar technology to other good uses in Kenya, Uganda and Tanzania where, remarkably, almost everyone owns a mobile phone. "It's fantastic -- it's one of the great, great gifts for the poor," Tan says. "Unfortunately, the problem is they have nowhere to charge them, so many are not switched on or they have to walk a long distance and pay money to get them charged." A solar panel made in the U.K. and manufactured in China, however, offers mobile phone users the opportunity to charge their phone, or use the panel to power a lamp so they can read at night, or listen to the radio. They cost $30 and, because of the carbon credits they receive, they can be subsidized. 

Schooling is also not outside the realm of enterprise and entrepreneurship. Tan observes that in slums, private schools perform better than government ones. A major reason, he says, is that although teachers receive exactly the same salary as their state-funded counterparts, TBN's private schools pay them on time, giving them greater motivation. TBN entrepreneurs have a vision to create 1,000 such schools, educating 1 million children in East Africa on a fee paying basis and using a revolutionary financial transaction system found mostly in East Africa called "M-pesa." Parents can use the M-Pesa system to pay fees, and TBN can pay teachers, all via mobile phone (though it should be said that M-pesa's pilot project was initially sponsored not by private business but thanks to the U.K. government's aid ministry).

Other innovative TBN projects include providing a self-diagnosis kit for slum dwellers (often a doctor's diagnosis can take weeks in such areas "by which time," Tan says, "you're either dead or already better"); and a project at a large taxi company in Bangalore, India, in which the taxi driver owns his own vehicle after four years. "The great thing is that this [the car] will be the biggest asset he will ever own," Tan says, and so he will then have collateral to buy a house or pay for a child's education and have a four-year credit history. "These drivers then become part of the formal economy," he adds. "They don't need any more help."

What's needed to make a real difference to eliminating poverty, Tan concludes, is "lots and lots of innovation" and a good deal of "patient capital" (long term investing). If they are to have a beneficial social and environmental impact on the future, Tan says, businesses must be "holistic and not just about maximizing profit for shareholders." 

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Edward Pentin is a freelance journalist based in Rome and communications director for the Dignitatis Humanae Institute (Institute for Human Dignity). He can be reached at epentin@zenit.org