By David South, Development Challenges, South-South Solutions
SOUTH-SOUTH CASE STUDY
An international group of graduate-social entrepreneurs from the London School of Economics (LSE) is pioneering a way to reduce food prices in Kenya using mobile phones.
Answering a call to action to address global food insecurity by the Hult Prize (hultprize.org), the team members looked at how they could make food cheaper for urban slum dwellers.
The Hult Prize, funded by Swedish educational entrepreneur and billionaire, Bertil Hult, is a start-up accelerator for budding young social entrepreneurs emerging from the world’s universities. The winner receives US $1 million and mentorship to make their idea become real.
SokoText (sokotext.com) (soko means market in Swahili) uses SMS (short message service) messages from mobile phones to empower vegetable sellers and kiosk owners in slums when it comes to bargaining the price for wholesale fresh produce. SokoText makes it possible for them to benefit from bulk prices by pooling their orders together every day. Usually vendors lack the funds to buy in bulk and have to make numerous time-consuming trips to the centre of Nairobi to buy stock.
SokoText reduces the price of fresh produce by 20 per cent for kiosk owners by buying the produce earlier in the supply chain. SokoText then delivers the food to a wholesale outlet at the entrance to the slum.
This approach makes available a wider range of produce and reduces the price. And best of all, it will knock down prices for the poorest people and enable them to buy more food and better quality food.
The team behind SokoText come from a variety of countries – Colombia, Canada, Kenya, Britain and Germany.
Hatched at the LSE, the enterprise prototyped its service in Mathare Valley, Nairobi, Kenya for four weeks during the summer of 2013 with 27 users and began the second phase of testing in November 2013, working with a local NGO, Community Transformers (https://www.facebook.com/pages/Community-Transformers-kenya/119937408165671).
According to SokoText, slum dwellers spend on average 60 per cent of their daily budget on food.
Mobile phones can be transformative since they are now a common communications tool, even in slums.
On the SokoText website, respected blogger and commentator on technology in Africa, Erik Hersman (http://whiteafrican.com/about/), calls it “a fantastic low-tech approach that could really scale for decreasing the inefficiencies in urban slum markets.”
SokoText’s 21-year-old co-founder and chief executive, Suraj Gudka, explained the genesis of the project to news and technology in Africa website, 140Friday.com.
“From our research, the Mama Mboga (small-scale vegetable retailers) spend between 150 and 200 Kenyan shillings (US $1.70 and US $2.3) daily, about 25 per cent of her revenue, to buy her stock, and since they do not buy in bulk they [she] get their goods at a higher price.”
Getting the market traders to cooperate is very difficult, Gudka found, because competition is fierce and trust is low. SokoText sees itself as a solution to this situation. By encouraging bulk buying by way of the SMS text service, there is no need to build trust between the traders before the produce is purchased.
“To use our service, the interested retailers would be required to send us an SMS every evening detailing what they need,” said Gudka, “and then we will source the produce and they come pick it up from us the next morning. In this way they do not have to incur the additional costs of transporting their goods and it also saves them time.”
SokoText is being incubated at the Nailab (nailab.co.ke) in Nairobi, a startup accelerator that offers a three to 12 month entrepreneurship program, with a focus on growing innovative technology-driven ideas.
SokoText’s summer pilot test confirmed taking the orders can work but found getting the product to the market in time was difficult.
The next step will be to set up a presence in the Mathare slum.
“We will be selling about seven to 10 different kinds of produce, and from our calculations, according to our projections for how much the Mama Mbogas buy every day, we hope to get 40-50 customers within three months,” Gudka said.
1) SokoText: The website explains further how the service works. Website: sokotext.com
2) Hult Prize: The Hult Prize Foundation is a not-for-profit organization dedicated to launching the world’s next wave of social entrepreneurs. It encourages the world’s brightest business minds to compete in teams to solve the planet’s biggest challenges with innovative ideas for sustainable start-up enterprises. Annual Hult Prize winners can make their ideas reality with the help of US $1 million in seed funding. Website: hultprize.org
3) White African: Where Africa and Technology Collide! Website: http://whiteafrican.com/about/
4) Nailab: Nailab (Nairobi Incubation Lab) is a startup accelerator that offers an entrepreneurship program focusing on growing innovative technology driven ideas. This is done through providing business advice, technical training and support, professional mentoring and coaching, giving access to market and fostering strategic partnerships as well as linking them to investors. Website: nailab.co.ke
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