Syndicate content

Reaching the Last Mile: Social Enterprise Strategies

Niharika Hanglem's picture
A recent Thomson Reuters poll found that the United States is the country most conducive to the growth of social enterprises. This is not surprising since it's easier for U.S.-based entrepreneurs to access funding, attract talent, and benefit from changing government policies that support its growth.

An article referencing this poll stated that “people do not know what social entrepreneurs do, which makes raising funds difficult and selling to governments is an uphill struggle.” This is especially true in developing countries where social enterprises not only face the inherent challenges of growing their business, but also the unique challenge of delivering social returns to the last mile.

Across sectors like healthcare, education, energy, water and sanitation, financial inclusion and agriculture, social enterprises are supporting last-mile communities by using market-based service delivery solutions to tackle challenges that impact people socially, economically, and environmentally. The World Bank Social Enterprises team, within the Trade & Competitiveness Global Practice, curated a series of studies from Ashley Insight and Endeva to examine the crosscutting tools and strategies that social enterprises have applied successfully.

Creating Consumer Awareness

Social enterprises often work in environments where the end user is not familiar with the novel product or service offering. Clean energy cook stoves, solar lamps, and mobile money have proven their potential to enhance the quality of life for millions of people. However, the learning curve to understand, accept and adopt these concepts still poses a significant challenge.

Successful social enterprises have used a range of solutions to make low-income last-mile consumers aware of the benefits of their products. Educating consumers about a product or service, increasing trust via recommendations from community leaders, branding products as aspirational, “bundling” with familiar products, and entering the market through free use and subsidization are strategies that have led to successful results. For example, Pakistan’s Naya Jeevan offers a health insurance program at subsidized rates under a national health insurance model. The health plan targets previously uninsured workers affiliated with corporations that choose to pay all or a portion of the insurance premium for their workers. Once insured, beneficiaries participate in workshops that educate them on the health care program, hospitals, and services offered.

Distribution Channels for the Last Mile

One of the biggest challenges facing social enterprises in developing countries is identifying an appropriate logistics and supply chain model to reach low-income customers. Solar appliances, consumer goods, and health services all must be provided to the end user in a cost-effective and timely manner.

Last-mile markets are often times fragmented, and traditional distribution options are not optimal for social entrepreneurs to reach consumers. However, there are examples of successful distribution models adopted by social enterprises.
  1. Micro-entrepreneurs/franchisees: Identifying community leaders and entrepreneurs to play the role of distributors. Example: Husk Power Systems uses a “micro-franchising model” to supply equipment and training to local entrepreneurs in villages to set up and operate power systems in India.
  2. Proprietary distribution: Allowing a given manufacturer to own all or most intermediary levels of distribution to the consumer. Products are displayed and sold in fixed retail locations. Example: Acumen investee Solar Now‘s distribution of solar products is via their own network of sales employees.
  3. Leverage pre-existing networks: Creating partnerships with government networks, co-ops, NGOs etc. that are well established in the local communities. Example: Hindustan-Lever partnered with microfinance institutions to distribute water filters in India.
  4. Enter and upgrade retail networks: Leveraging existing channels and upgrading value chains by integrating new products into the production and sale cycles. Example: The “Selling Sanitation” initiative works with manufacturers in Kenya to develop and distribute affordable sanitation products.
ICT and Mobile Connectivity

Social entrepreneurs across sectors have used information and communications technology (ICT) to find innovative solutions that benefit not just low-income consumers, but also a larger audience that may open up pathways to scale the business model. ICT integration allows social enterprises to expand their reach, reduce costs and improve efficiency.

ICT empowers entrepreneurs, improves access to information, increases efficacy by providing the ability to track throughout the supply chain, enables payment mechanisms, provides analytics and reporting to improve the quality of services. For example, MeraDoctor, a healthcare social enterprise from India, connects patients in remote areas to qualified doctors through an app that provides them health advice on-demand.

Social enterprises are among the first to reach the last mile, as they are able to innovate and find more efficient solutions to empower low-income communities. These crosscutting strategies are just some of the enabling factors that help social enterprises solve the world’s greatest development challenges. But for them to succeed, we need to ensure that government policies are conducive to their growth, they have access to capital, there is buy-in from all stakeholders, and their business models are financially viable. There is a tremendous opportunity to support the growth of the social enterprise sector and, ultimately, help us achieve the Sustainable Development Goals.

Find this and other blogs on social enterprises at The Practitioner’s Hub for Inclusive Business.
 

Add new comment