Mobile Microfranchising in Indonesia
- Employment
- Economic development
- Income generation
- Information & communication technology
- Poverty alleviation
- Microfinance
- Social enterprise
Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.
Sean
DeWitt
Grameen Foundation USA
More than 5 years
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Operating for 1‐5 years
Grameen Foundation was founded by Alex Counts in 1997 after having worked in microfinance and poverty alleviation efforts for 10 years. A Cornell University graduate, Counts’ commitment to poverty eradication deepened as a Fulbright scholar in Bangladesh, where he witnessed innovative poverty solutions being developed by Grameen Bank. He trained under Dr. Muhammad Yunus, the founder of Grameen Bank, and co-recipient of the 2006 Nobel Peace Prize.
The Application Laboratory is an initiative of the Grameen Foundation that seeks to promote innovation in the provision of information and services using mobile phones to alleviate poverty in the developing world. Poor and rural populations often lack access to important information and knowledge that would enable them to start businesses, find jobs, improve their crop yields, make better decisions, live healthier lives - improve their lives and livelihoods. By leveraging the power of mobile phones, AppLab seeks to overcome the barriers to accessing information that contribute to the poverty cycle.
Our applications can also be used for collecting information. For example, surveys conducted by mobile phones can be used to collect information on access to health services or the types of crops being grown in a specific region, expected yields, or disease outbreaks. This information can provide a detailed understanding of the challenges poor communities face and equip service providers with the knowledge they need to better serve the poor.
We measure success by our ability to recruit and retain women entrepreneurs, and those who are in the “Poor” and “Poorest’ categories. In addition, we measure the degree to which poor entrepreneurs can increase their incomes after participating in our program.
As of May 2011:
* We have recruited over 7,600 micro-entrepreneurs.
* The entrepreneur network serves more than 775,000 unique customers.
* More than 85 percent of the businesses are owned by women and over 63% were earning less than $2.50/day before launching their business.
* An estimated 47 percent of the micro-entrepreneurs who stay in the portfolio for more than four months are able to nearly double their incomes, effectively moving them over the World Bank poverty line of $2.50/day income.
* 100% of the Village Phone Operators are profitable.
1,001- 10,000
More than 10,000
We will continue development of additional applications provided through the mobile-enabled microfranchise model, creating the ability to ensure income increases for poor entrepreneurs, and to ensure financial viability of the overall franchise model. These activities will prove the mobile franchisor business concept can work in Indonesia with our social business partner Ruma by ensuring sufficient return on investment.
Based on the successful completion of the above we will begin to identify strategic geographies and partners for replicating and scaling the business model, while further scaling across Indonesia, and rolling out new lines of business for entrepreneurs, and new socially impactful mobile services that they can deliver in their communities.
Securing sufficient patient capital is one of the largest barriers to success for our program. We currently do not have multi-year philanthropic funding to finance the development of applications, and support the growth of the franchisor network, which, until it reaches a certain scale is not sustainable due to the low margins involved in the mobile microfranchise lines of business and the cost of providing additional capacity building and direct support required by entrepreneurs.
Additional risks include the inability of poor entrepreneurs to secure working capital - micro-loans that allow them to grow their businesses or sustain a variety of income shocks that the poor and poorest frequently face. We have a program targeting the development of specific financial products that can help overcome these barriers, but the proposed activities to develop these financial services is currently unfunded.
Long-term success demands that we build products and services with sustainable business models and support local institutions providing these services. To achieve these outcomes, Grameen Foundation will continue to focus on developing sustainable business models (either individually for each application or as a suite, involving some cross-subsidization for high impact mobile services). Once the mobile services are created and the business model is validated, it will both increase the income of the micro-entrepreneurs themselves, as well as support the earned revenue targets of Grameen Foundation’s AppLab program, as well as those of its partner, Ruma.
The relationship between Grameen Foundation and our collaborators is a shining example of how organizations can work together to generate positive economic and social returns that can bolster an entire community.
Ruma, an Indonesian social enterprise that launched with Grameen Foundation assistance in August 2009, is the local operating entity that works directly to recruit, train and mentor entrepreneurs. It is the franchisor for the businesses AppLab creates. Grameen Foundation provides Ruma capacity building and financial support to ensure it meets business growth and poverty outreach targets.
Qualcomm, a global leader in developing innovative digital wireless communication products and services, through its Wireless Reach™ initiative has provided critical project funding since 2007. A key aspect of its projects involves building partnerships with nongovernmental organizations, universities, government institutions, development agencies and other private sector companies. In additional to financial support, Qualcomm has also provides engineering, business development, and marketing resources.
Bakrie Telecom, a fixed wireless access service provider in Indonesia using both CDMA and EVDO technology, holds 12% market share with 14 million subscribers. Bakrie Telecom provides in-kind support to entrepreneurs by providing branding, marketing materials and other business tools; use of its network to test applications; and is supporting the release of mobile phones pre-loaded with applications on the commercial market
Grameen Foundation receives philanthropic funding from diversified sources and in-kind donations of products and services.
We have developed a project to study the barriers to the poorest, and especially women, becoming entrepreneurs and staying in the project. We will design a series of products and services to increase adoption and retention rates of the poor in the Ruma managed channel by: identifying effective ways to recruit the very poor; designing working capital loan products to increase retention and smooth cash flows; and designing savings products to encourage them to mitigate risk effectively through mobile or MFI-based savings.
In addition to our traditional focus on the Ruma managed channel where all entrepreneurs are recruited one by one, we will launch a series of applications in the mass market channel as well. AppLab livelihood applications will be pre-loaded on a large number of handsets sold on the market by our mobile operator partner, Bakrie Telecom. This allows the benefits to reach more people and generates revenue from application use that contributes to Ruma’s ability to scale and better target the poorest in its managed channel
Adding to our livelihood services that aim to increase the incomes of poor entrepreneurs, with sufficient funding we plan to develop mobile information services that build on our success launching similar services in Uganda and Ghana. The services will be developed with content experts & be simplified and packaged into timely, relevant, localized, actionable tips on health, agriculture, financial services, etc. Entrepreneurs will be trained as "infomediaries" and be able to earn from delivering valuable information to their peers.
Please select up to three in order of relevancy to your project.
PRIMARY
Lack of skills/training
Underemployment
Lack of access to information and networks
Our business-in-a-box provides entrepreneurs a business opportunity that is easy to operate. Micro-entrepreneurs do not need to be educated in order to use them and be successful in operating their business. GF is currently seeking funding to develop a mobile mentoring service to improve poor women entrepreneurs’ ability to own and manage their own small business.
In order to increase adoption and retention rates of the poor in the Ruma managed channel, we have projects that are structured to:
* identify the most effective ways to recruit the very poor;
* design working capital loan products to increase retention and smooth cash flows for the very poor; and
* design savings products to encourage the very poor to mitigate risk more effectively through mobile or MFI-based savings.
If yes, please check up to three potential pathways in order of relevancy to you.
PRIMARY
Enhanced existing impact through addition of complementary services
Grown geographic reach: Multi-country
Our immediate plans are to increase the size of the micro-franchisee network within Indonesia. We are also planning to increase the income potential of our “business-in-a-box” this year by adding additional services, in addition to airtime top-up, that micro-franchisees can offer their customers.
Technology providers, NGOs/Nonprofits, For profit companies.
Our collaboration with Qualcomm, through its Wireless Reach initiative, has helped us succeed not only through their direct financial support but also through engineering, business development, and marketing support for our collaboration in Indonesia. Additionally, we have benefited from our collaboration with Bakrie Telecom in the access they have given us to their network by pre-loading our micro-franchise apps onto their feature phones and marketing the products.