Alchemix 5: Innovating for the Urban Poor
Innovation Alchemy hosted the 5th Alchemix discussion in Mumbai at the Bombay HUB on Thursday, April 26th 2012. The session focused on the need and opportunity for breakthrough innovation designed for and implemented with the Urban Poor, a rapidly growing challenge in urban centers such as Mumbai where 54% of the population (over 10 million people) live in slums.
In the foreword for the Mumbai Human Development Report in 2009, Kumari Selja, the Minister for Housing and Poverty alleviation states: “…Mumbai contributes 33% of income tax collection, 60% of India’s customs duty collection, 20% of India’s central excise collection and 40% of India’s foreign trade…..yet the city’s slums get less than 90 liters per capita of water daily. Studies have indicated that in certain slums of Mumbai there is an average of 81 people to each toilet seat available. And only 31% of Mumbai’s slum dwellers are likely to complete 10 years of schooling..”
In this context the Alchemix discussion sought to find insights on the following questions:
- What are the most critical need areas for social and development impact in this context?
- What does it take to succeed with a market-based model in urban slums?
- What are the funding challenges for social enterprises in this context?
As always, entrepreneurs and team members from two social enterprises presented their models and shared their insights at the session to trigger off the debate and discussion:
Ankur Pegu and Sundeep Kapila, Swasth India – a social enterprise working to provide low-cost/ discounted healthcare services to slum dwellers in Mumbai. They have set up integrated health centers that provide low-cost diagnostics, consultation, testing facilities and a pharmacy all under the same roof.
Soaib Grewal and Jennifer O’Brien, WaterWalla – a social enterprise that sources and introduces clean water technologies into slums, with a strong emphasis on research and data collection to better understand the problem of water contamination and how to solve it.
Some highlights from the discussion:
- Urban poverty is a poverty of infrastructure and access to resources: As the Mumbai MHDR study highlighted, slums are intensely populated, creating huge pressures on limited resources. Even though people can pay, infrastructure and resources are just not within reach. Waterwalla found that individuals living in unregistered slums in Mumbai were paying twice as much for water as 5 star hotels in the city. The water mafia in the region have absolute control over the supply of water, giving them full power to choose when, where and how much to charge for the water they dispense. Swasth India shared similar insights. Doctors prescribe expensive drugs since they are incentivized to do that – while a large number of equally effective, lower cost drugs are available in the market, that have completed their patent lock-in periods, but these are not on the prescription list of any of the local Doctors. Slum communities are paying for these services, but they are paying a lot more and getting a lot less in return.
- Products and solutions exist, however the supply chain is fragmented, expensive, ineffective and exploitative. Building further on the above point, both Soaib Grewal and Sundeep Kapila highlighted the availability of solutions that can be used effectively in the slum context. Over 3000 different low cost water filters that would be useful in this context. Or a large set of low-cost, high quality drugs that could be used effectively. The gap (and the opportunity) is in the absence of an effective, intelligent, socially relevant Supply Chain. And this gap is where many social entrepreneurs can come in, bring down costs, introduce more cost effective solutions and find ways to build market-based models. Both Waterwalla and Swasth India are in this space – integrating the value chain, lowering costs and improving access.
- Slums are ‘Data-poor’ regions and so there is a challenge of visibility, transparency and measurement of social and economic impact. In addition to providing access to products and services a social entrepreneur who chooses to work in slum communities has to adopt data collection techniques, build deep networks within the local communities, find ways to track and monitor data and slowly build a repository of community information which can be used to build insights and intelligence for scale. All patients who come to Swasth Centers become members of Swasth India, their medical records are tracked, every transaction is recorded and maintained. Similarily Waterwalla has invested time in measuring quality of water over periods of time, across the usage patterns to determine insights that can help it scale its program.
- Prototype, prototype, prototype: Both teams who shared insights are at an early stage of development, spending time prototyping, piloting and building insights on the ground. No silver bullets exists and given the immensely challenging conditions within slums, this is not quick development. Trust is a huge factor in the adoption of these services and both teams have learnt that they have to spend time winning that trust, demonstrating that their ideas have a value. The Swasth team set up 3 centres in different areas of the slum before they realized how to cover their operational costs and run a successful health centre. The first center at the corner of a slum, the second near a bus stop with more footfall and the third in a busy market area area adjoining slums. Sundeep joked about how many times they have changed the name board, trying to get the name right for the medical centers.
Experimenting with new ideas and products seems to be an essential aspect of developing a strong, high impact, social business model – in the first few years, social entrepreneurs are probably very much a combination of entrepreneurs and social scientists; constantly prototyping and collecting data to develop deeper insights, building and tweaking their models accordingly.
But being a social scientist does not guarantee cash flows and many social entrepreneurs find funding and working capital to be inadequate. The need for patient capital was a big discussion point at the Alchemix session, also highlighting the need for grant funding and philanthropic capital which can be more innovative, more risky and more empowering in these early stages – while the social scientist/ entrepreneur finds ways to sustain their enterprise models. A recent report by the Monitor group and Acumen reveals that “..the MFI sector received $20 billion in subsidies from philanthropists and aid donors to refine its model over 2 decades” highlighting the critical role of grant capital in filling a void before impact capital can really play a part.
For more details on this session read:
The trigger slides to kick start the discussion (On Scribd)
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