Microfranchising the Next Big Thing

Ever since Mohammed Yunus of Bangladesh’s Grameen Bank won the Nobel peace prize, microcredit has hogged the headlines. However, although microfinance has proven its ability to empower the poor, in most cases it has failed to move them out of poverty. Something extra is needed to take people to the next level. Microfranchising has already been described as ‘the Next Big Thing’. Several Dutch NGOs and companies explored the potential of this innovative concept at a seminar organised by NCDO / Business in Development.

 

Microfranchising is the copying of successful small-scale entrepreneurship in developing countries. The concept has been taken up by NGO, Young Africa, which is training young people in Zimbabwe and Mozambique. So too the company Econcern has joined with the Energy4All Foundation to explore the potential of a chain of ICT shops in The Gambia using the NICE project. Elsewhere, NGO IntEnt is supporting migrants that want to start a business in their home country. ‘Many migrants have tried to support their relatives to start a business to improve their income situation’, says Nienke Stam of the organisation, ‘but a lot of these initiatives have failed. We think that franchises improve the chance of success.’ IntEnt has developed an all-inclusive professional business package for starting small businesses in Ghana and Ethiopia. There are boxes for starting up a solar phone charging business, nail stylist shops and beekeeping.

At a seminar yesterday in Amsterdam (organised by Business in Development, NCDO and the ING Bank), franchise specialists from India, the US and the Netherlands discussed the potential of microfranchising. The battle for the millions of poor consumers in developing countries has begun, and the retail sector is booming. ‘Franchising provides people with excellent opportunities to own and operate a proven business’, argued Jason Fairbourne, director of the Microfranchise Development Initiative, and author of Microfranchising: Creating Wealth at the Bottom of the Pyramid, in which he presents 60 successful cases.

The Acumen Fund in India is one of these. The fund finances innovative business concepts, providing investment in companies such as Drishtee, a franchise with over 500 outlets in the Indian countryside, that operates commercial rural internet kiosks. The Acumen Fund also supports Scojo Vision, an American company that is using microfranchising to sell spectacles to poor people in developing countries. Scojo provides a ‘business in a box’, along with training for rural vendors who learn to use simple testing charts for vision and then make appropriate spectacles. Priced at 3 dollar each, these are affordable for Indian villagers, but still provide a decent profit for both Scojo and the vendors. Hence, the scheme is viable, and can be scaled up to cover thousands, possibly millions of vendors across developing countries.

P+ webtip: Bid Network

A report by Hans van de Veen

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