Key Recommendations for Social Entrepreneurs

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Here we present a few recommendations for a prospective social entrepreneur who is interested in doing business in sub-Saharan Africa (SSA).

  • Be prepared to deal with a heterogeneous customer base with different needs – SSA is a region with a huge diversity of different ethnic groups that speak a number of different languages.  Local customs, practices, and dialects vary greatly from region to region.  As a result, product marketing and distribution will be challenging due to language and cultural barriers if an enterprise is seeking to impact a large number of people rather than a few select communities.

  • Be ready to navigate difficult political landscapes – Despite the improving regulatory and taxation practices, the situation is still difficult in many countries.  Enterprises should consider workarounds including leveraging tax exemptions, manufacturing domestically, and seeking partnerships with local and national governments as well as international entities.

  • Consider manufacturing domestically – This is something an enterprise that sells a product that does not require technology-intensive.  If the infrastructure exists to carry out manufacturing locally, tariffs, shipping costs, and some transaction costs associated with distribution to rural areas can be reduced or eliminated.

  • Quality is usually better than quantity – It’s important that social enterprises learn from the mistakes of other enterprises and NGOs that tried to increase their impact by selling inexpensive, cheaply made products.  Even though a more robust cookstove or solar light may be less affordable, in the long run selling such a product would increase customer satisfaction and loyalty as well as prevent market spoilage.

  • Branding is important – Branding is an extremely important part of marketing in SSA because satisfied customers tend to have very high levels of brand loyalty to the company that sold them a life-changing product.  This brand loyalty can be increased even more if a company creates a good and marketable image for itself.

  • Leverage below-the-line marketing – Research by Lighting Africa has shown that direct marketing techniques such as ad placement are often ineffective.  However, below-the-line marketing techniques have been proven to work, particularly in rural communities.  Word-of-mouth is an extremely effective means of promoting a product, as is gaining an endorsement from well-respected members of a community such as a village elder.

  • Utilize mobile technology – Mobile technology and payment is an excellent means of reducing transaction costs and maintaining contact with customers.  Fenix International, for example, has utilized a partnership with MTN Uganda’s mobile payment system with incredible results.

  • Form strong partnerships with local businesses – This is absolutely critical if an enterprise is seeking to distribute their product through local retailers or have partners provide financing capabilities.  Because of logistical difficulties and high transaction costs, financing, distribution, and marketing is oftentimes too hard for an enterprise to take on itself.  Forming strong partnerships can make doing business and scaling a lot less logistically difficult and costly for an enterprise.

  • Conduct business ethically and transparently – Caving to the demands of corrupt officials is to be avoided at all costs. The consequences of engaging in unethical business practices can be absolutely devastating for a social enterprise.  It could destroy a company’s reputation.  If an enterprise is found to be paying bribes to increase the ease of doing business, key sources of financing such as impact investors and venture capitalists may refuse to invest in an enterprise.  Businesses that operate transparently are much more likely to attract impact investors.

 

References

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