How Mobile Networks Empower Low-Income Entrepreneurs
By Jason Kohn, Contributing Columnist
I’ve been intrigued by the amazing ways that people are using mobile phones in the developing world. From agriculture to banking to education, mobile connectivity is providing all sorts of services that would otherwise be out of reach, and helping to lift thousands of people out of poverty.
But one of the most interesting things about these mobile efforts is how many of them are aiming not just to provide direct services, but to help entrepreneurs help themselves – and thereby build stronger economies.
One recent example is among this year’s winners of the Vodafone Americas Foundation Wireless Innovation Project competition. Since 2009, the annual competition has awarded millions of dollars in grant money to people and organizations developing promising wireless solutions for users in the developing world.
Last Monday, the foundation awarded the micro-investment company InVenture a $100,000 grant for its InSight SMS money management tool. InVenture hosts a micro-investment platform that connects small businesses in under-served communities in India, Mali, and Mexico with potential micro-investors – ordinary people around the world. The company notes that small and medium-size businesses in the developing world account for just 17 percent of GDP and 30 percent of the working population on average (a fraction of the role SMBs play in developed economies):
“We have seen and heard firsthand from micro-business owners about how they are unable to expand their businesses and feel trapped in a cycle of debt and poverty…. InVenture wants to change this. We want to solve the problem of the under-served “missing middle” in developing economies by giving developing entrepreneurs the chance to expand, to employ more of their neighbors, and to lift their communities out of poverty.”
InVenture’s InSight SMS tool is designed to further that goal by providing money management services to help entrepreneurs track their finances and improve their business skills. Entrepreneurs can enter their daily revenue and expenses, and track the growth of their business, all via text message. The platform also serves as a global credit rating system for small business owners to help them access more capital at lower interest rates. (Learn more, view a video outline of their mission.)
Connecting Entrepreneurs with Micro-Investors
This isn’t the first time the Vodafone Americas Foundation has awarded a grant for a mobile micro-finance application. Two years ago, FrontlineSMS: Credit received a grant for a different SMS application, which links the growing number of mobile payment systems in developing countries with micro-finance institutions.
For entrepreneurs at the base of the economic pyramid who use mobile payments as their primary form of banking, FrontlineSMS can help them obtain funding they otherwise couldn’t access from remote micro-financiers. For micro-investment institutions, the SMS application offers a way to invest in thousands of new businesses that would otherwise require too much time, resources, and manual effort to reach. (Learn more, view a video presentation.)
Planting the Seeds of Micro-Businesses
Another fascinating (and award-winning) start-up aimed at entrepreneurs in developing countries is Ruma in Indonesia, sponsored by the Grameen Foundation and the Qualcomm Wireless Reach Initiative. An acronym that translates to “Your Micro Business Partner,” Ruma provides “business in a box” startup kits and training to help individuals start their own micro-businesses around mobile phones and services.
Micro-entrepreneurs can sell prepaid cell phone minutes, bill payment services, perform market research by conducting mobile surveys, and more. Ruma specifically targets its businesses to individuals and families in poverty. According to Qualcomm, “As of March 2012, there were more than 12,000 Ruma Entrepreneurs – 82 percent of them women – serving more than 1.2 million people across the country”
Most interestingly, Ruma doesn’t just talk about lifting people out of poverty, the organization has developed detailed metrics to qualify entrepreneurs and track their progress. The company’s analysis indicates that nearly half of entrepreneurs who participate in the program are able to move out of poverty within four months.
A Meaningful Commitment
Obviously, there are several wonderful programs working right now to help entrepreneurs develop and expand their businesses, and bring families and communities out of poverty. For an outside observer, the most exciting aspect is the number of smart, dedicated people devoting themselves to this important mission.
It’s a credit to the mobile industry that so many service providers are making it a priority to ensure that the developing world can reap the benefits of the mobile technology revolution.