UN banks on Kenyan inventions to lift living standards

The United Nations is reviewing a number of Kenyan innovations in a bid to develop instruments for financing ventures that can cut poverty in sub-Saharan Africa.

Through the African Facility for Inclusive Market (AFIM), a regional anti-poverty project, the United Nations Development Programme (UNDP) has zeroed in on several business models and innovations to guide its policies.

The Peepo toilets, Safaricom’s M-Pesa, Kenya Tea Development Agency Ltd (KTDA), and the iHub in Nairobi are among businesses whose pro-poor models have caught the eye of the global agency.

“This study will contribute to advancing a key recommendation made in the report Realising Africa’s Wealth – Building Inclusive Businesses for Shared Prosperity i.e. to support the development of finance vehicles for inclusive businesses entrepreneurs,” the UNDP said on Friday.

The AFIM programme seeks to expand regional value chains of job-creating sectors such as agribusiness, tourism, renewable energy, retailing and mining.

In a report discussed during a special parallel session of the African Union private sector forum held in Nairobi between December 3 and December 5, the agency cited the high number of low-income earners who have benefited from the Kenyan initiatives.

M-Pesa, for example, has revolutionised nearly every segment of the economy, enabling more than 15 million people mostly from the poor segment of the economy to enjoy modern banking services.

“Following its success, it has become a flagship of the opportunities in developing services for low-income communities, and it is one of the most cited and referenced examples in Africa”, the AFIM says in its report titled Impact Investing in Africa.

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The report estimates that about 364 million low-income, unbanked Africans were using mobile banking in 2012, generating over $7.8 billion in revenues for the mobile phone industry via transaction fees.

Also under review is the Bridge International Academies (BIA), an initiative that increases access to basic education through low-cost private school fees of Sh585 ($6.5) per month, the cheapest in East Africa.

The BIA started in Kenya in 2009 and has become the world’s largest chain of primary and pre-primary schools with 359 academies and over 100,000 students in four countries in the region.

It developed an innovative “academy-in-a-box” franchise model that can be easily replicated and scaled up, enabling it to open a new school every two-and-a-half days.

Leveraging technology and data, BIA creates efficiencies both in terms of costs and quality, the report says.

The KTDA, established in 2000 and owned by 54 tea companies with 550,000 small-scale tea farmers as individual shareholders, is also seen as a pro-poor venture of global significance.

The tea companies which collectively own 66 tea processing factories offer economies of scale that cuts across the entire tea value chain – including inputs, transportation, warehousing, processing, marketing, and financing.

“KTDA farmers receive 75-80 per cent of the final tea price, a higher payout than farmers in neighboring countries,” the report says.

The Peepo, a single-use, self-sanitising and biodegradable bag used as an alternative to a toilet, has benefitted hundreds of slum dwellers, refugee camps, schools and emergency operations.

“After use, the Peepoo bag can be placed in the ground where it turns into fertiliser without requiring water. The urea inside Peepoo inactivates harmful bacteria, viruses and parasites within four weeks,” the report says.

The UNDP is also reviewing the iHub which was founded in 2010 as an open space for technologists, investors, tech companies and hackers in the area.