October 8, 2009 1 Comment
A recently published blog post by David Roodman titled “Kiva is not quite what it seems” has been causing quite a stir in cyber space. Not so much because of the provocative title mentioning Kiva – a pioneer and probably the best known Person to Person (P2P) micro-credit organisation; Roodman’s post also questions the real intentions why people choose to fund a micro entrepreneur from Cambodia, Kenya or Guatemala for that matter.
Roodman posits that a reason for the success of Kiva and similar internet based lending portals is because for as little as US$ 25, more people can become benefactors. Helping others has become a cheap commodity and not only the super-rich Bill Gates and Warren Buffett’s can now claim the title “philanthropist”.
Similar to the P2P lending model, goods from developing countries that sell on western supermarket shelves bear stories – some of them wild. This has been largely propagated by fair trade products. However, nowadays even a pesticide sprayed beetroot from Bulawayo must carry a story. A honey product from Kenya cannot just simply be labelled “Kenyan honey”. What’s required is a long tale weaving in a tapestry of sensory words probably going along the lines of “…this honey comes from the honey bee whose hives are in Africa’s savannah plains … The scents from the eucalyptus ensure a wild …”.
Indeed, the more evocative the story about the terrain or about how poor the farmers who produced it are, the better.
This is what consumers want – a feeling that when they put a spoon of honey in their morning tea, they feel part of that savannah so alluringly described on the product label. And it is these stories that add a couple of dollars or Euro’s onto the unit retail price. On some e-commerce websites selling African “ethnic” products, 2 kgs of maize flour which is the staple food for most East and Central African countries goes for US$ 10. The same product in an upmarket supermarket in Nairobi costs less than a quarter of that price. The point is that with good marketing, consumers pay more for the “story” than the product itself.
With rampant corruption constantly being reported in Africa, an ennui among citizens of western nations has emerged. Commonly people question why donor aid is poured into large infrastructure projects such as roads and geothermal plants yet there are numerous instances of money being siphoned off by corrupt public officials in Africa. Just last week it emerged that World Bank money earmarked for free primary education in Kenya had been stolen; thus begging the question why fund such a project when if you gave an entrepreneur a bit of money they could then be empowered enough to send their children to a fee paying school?
Media stories on Africa which in most instances focus on crises’ or the potential for crisis have made people who would otherwise dip into their pockets to alleviate hunger on the Continent averse. Thus when one sees a picture of Mary from a village just outside Kampala who has a banana kiosk, the need to assist Mary overrides the need to assist Fatma in a refugee camp in Eastern Congo.
In an age where people are sponsoring small businesses’, children and even guerrillas in Rwanda, what does this all mean for entrepreneurs either seeking funding or wanting to sell their products on the export market?
In a nutshell there is a palpable and growing demand for “virtual tourism” – a state where one can experience a lifestyle from the comfort of their seat in front of a computer monitor, or perhaps when they hold the honey jar from somewhere in Africa, gently open the lid, and smell the scent of the wild.
Read “Kiva is not quite what it seems” here