Delivering Essential Medicines to the Rural Poor, Sustainably
by Agnes Cho, program associate, Global Partnerships
Recently, Global Partnerships and Linked Foundation held a rural pharmacies workshop and gathered together various organizations that have been providing essential medicines to rural communities through a market-based model. With the support of the Inter-American Development Bank (IDB), we spent two days in Antigua, Guatemala with seven organizations from four countries:
- Fonkoze, Haiti
- Mercy Corps, Guatemala
- CDRO, Guatemala
- FUNDAP, Guatemala
- ASECSA, Guatemala
- FUDEIMFA, Honduras (a current partner in GP's Health Services Initiative and featured in GP's most recent case study)
- Farmacias Similares, Mexico
In Latin America and the Caribbean, BoP (base of the pyramid, i.e. the poorest of the poor) households spend more than $12.9 billion per year on medication (GIZ). But rural communities find themselves with limited access to affordable, quality medicines due to high prices and the challenges presented by the state of local, national and regional infrastructure. All the organizations that participated in the workshop are directly tackling this issue and implementing sustainable business models that provide essential medicines in areas with the greatest need.
In the workshop, it was clear that the organizations were eager to learn from one another. Each had a collection of experiences and insights about the details and challenges they face in running a sustainable social enterprise. Though there was an agenda to discuss central themes, such as sustainability, scale and monitoring & evaluation, the energy from the participants was the most palpable during time set aside for them to discuss amongst themselves. These conversations ranged from legal regulations to employee incentive structures, from incorporating technology for more efficient data collection to finding more efficient transportation routes. Over the course of the two-day workshop, the participants not only discussed what they were doing to more effectively and efficiently sell medicines, but also how they were doing it.
This workshop was also an opportunity for Global Partnerships and Linked Foundation to learn more about the impact investing landscape of rural pharmacies in Latin America and the Caribbean. By sitting back and learning from the rural pharmacy experts—the organizations themselves—we took away the following insights:
- The rural pharmacy space presents a market opportunity for a variety of organizations.
- There are NGOs, MFIs and pharmaceutical companies all working toward the common goal of improving access to essential medicines in rural areas. Each type of organization has its own strengths and challenges. For example, NGOs may have more robust training programs for their community pharmacists, but commercial pharmaceutical chains may have an earlier grasp of the communities and local distributors most likely to achieve sustainability. However, they tend not to work in the smallest, most rural communities where the population truly has no other access to essential medicines.
- Organizations interested in building rural pharmacy models need to have a solid understanding of the unit economics necessary to achieving true sustainability.
- Rural pharmacy programs can benefit from the basic principles involved in running a successful franchise (ICSF is one resource for this) to strategically scale their business models. One learning from social franchising that applies to rural pharmacy programs is the importance of having a clear understanding of the business' real costs and revenue, generated by each point of sale, in order to build out and scale up a network of sustainable pharmacies.
- Once the right "formula" for sustainability is found—and some have found it—these organizations will be investable for mission-focused impact investors like GP.
- For many rural pharmacy programs, donations are sometimes necessary to support innovation and non-financial services for their distributors. However, all organizations attending the workshop recognized the ultimate goal is to reduce dependence on donations. Rural pharmacy models generally have to reach a certain level of scale before they can generate enough revenue to cover their operational and administrative costs. Once they have achieved that level of scale and proven its sustainability, impact investors, like GP, can provide capital to support their expansion.
Ultimately, we hope to help create a flourishing network of rural pharmacy programs that are sustainably working toward improving access to life-saving medicines in poor rural communities. The first step is to forge connections and facilitate communication between the organizations that are already tackling this challenge. Events like this rural pharmacies workshop, where organizations can come together to share learnings and discuss developing best practices, are invaluable to reaching this goal.
Blog Tags: community pharmacies Guatemala Haiti health services Honduras impact last mile distribution Latin America poverty rural health rural pharmacies social impact sustainability sustainable business models sustainable health women's health
Giving Thanks for Strong Partnerships
In our most recent Investors Report, Global Partnerships (GP) was pleased to announce that we've now impacted a cumulative 3.4 million lives since 1994. We're thrilled by this accomplishment in our ongoing work to expand opportunity for people living in poverty, but we didn't get there alone.
At GP, "partnership" is more than just part of our name—everything we do depends on strong partnerships with like-minded people and organizations. We'd like to take the time this Thanksgiving to share some of the many partnerships we're thankful for:
Dedicated partner organizations. GP doesn't carry out our work in a vacuum; when we expand opportunity for people living in poverty, it's our partner organizations that deliver that opportunity to their clients. Microfinance institutions providing access to credit, agricultural outgrowers offering flexible financing, crop assistance and access to markets, mobile health clinics providing preventive health care in indigenous languages, solar light distributors bringing clean, affordable solar solutions to off-grid communities—every one of our 50 current partners plays an essential role in delivering products and services that help change their clients' lives for the better.
Remarkable clients. Our partners' clients are amazing people. They work extremely hard to provide for their families and create a better future for their children. They embrace the opportunity to improve their lives by building businesses, diversifying crops or developing their financial literacy.
Enthusiastic donors, investors, grantors, volunteers and supporters. We at GP are incredibly grateful to our network of supporters. Our donors are informed, thoughtful and dedicated to making a difference. Our investors have chosen to invest their funds for a positive social return and a number of them are also among our grantors, who are generous with their knowledge and their networks, in addition to their funding. Our volunteers share their expertise, from our committed board members to supporters who offer their services as interpreters, event planners and more.
The success of Global Partnerships' mission to expand opportunity for people living in poverty depends on the strength of each of these partnerships, and we couldn't be more grateful for the people and organizations who make our work possible and help us bring market-sustained opportunity to millions.
World of Opportunity — GP’s 13th Annual Luncheon
Almost 700 of our friends and supporters attended World of Opportunity, our 13th annual luncheon on Thursday, October 29, 2015! Thanks to their generosity, we were able to reach our $150,000 matching challenge and raise over $554,000! This will directly support our research into promising new solutions that can change the lives of millions of people living in poverty.
At the luncheon, GP President and CEO Rick Beckett spoke about three promising initiatives that Global Partnerships is currently researching:
- Outgrower business models that provide economic opportunity to tens of thousands of smallholder farmers;
- Efficient charcoal cookstoves that save families money on fuel costs and improve health and safety for women and children; and
- An innovative and affordable sanitation solution that also generates jobs for microentrepreneurs.
Next, Desh Mallik, VP of Business Development at Greenlight Planet, a GP partner, took guests on a journey to a rural, off-grid community with an immersive solar light demonstration. He shared how, with Global Partnerships' support, Greenlight Planet's solar technology is eradicating kerosene usage and transforming people's lives.
Real People, Real Impact:
There were also two video presentations which showed GP's impact in action.
Abner is a 15-year-old who dreams of making his mom proud of him one day. His mother, Ana, is the client of Friendship Bridge, a GP partner in Guatemala. The loans, education and training that Ana received through Friendship Bridge have helped her provide better opportunities for Abner. Her success shows how access to opportunity creates impact for multiple generations.
Maritza, a client of GP partner MiCredito, also shared how her life has changed since purchasing solar lights. She lives in a remote community in Nicaragua, where there is no electricity.
Global Partnerships Named to ImpactAssets 50 for Fifth Consecutive Year
Global Partnerships (GP) is honored to share that we have been selected for the ImpactAssets 50 (IA 50) for a fifth consecutive year in 2015.
Established in 2010, the Impact Assets 50 is the only free, public, searchable database of outstanding impact investing fund managers. It includes a range of funds spanning diverse issue areas and investment, with demonstrated and compelling social and environmental impact. Impact investing fund managers included in the IA 50 2015 manage a combined $13.6 billion in assets dedicated to creating measurable, positive impact.
Since its inception in 1994, Global Partnerships has deployed $168.4 million in impact investments to 83 partner organizations delivering sustainable solutions that help their clients increase their incomes and improve their lives. Through these partnerships, GP has positively impacted more than 3.2 million lives in our work to expand opportunity for people living in poverty.
The IA 50 selection committee is chaired by ImpactAssets' Chief Impact Strategist, Jed Emerson, and includes experts from The CAPROCK Group, Toniic, UBS and Blue Haven Initiative.
Delivering Sustainable Health Services through Microfinance
by Agnes Cho, program associate, Global Partnerships
With the support of the Inter-American Development Bank (IDB), Linked Foundation, FMO (the Dutch development bank) and other generous funders, Global Partnerships has worked with five of our partners in five countries since 2011 to design, implement and scale sustainable business models. In August, GP traveled with three of our health partners to La Paz, Bolivia to present these learnings at the 7th Annual Latin American Village Bank Forum. The presentation represented more than three years of learnings from piloting and scaling these programs, including case studies on four separate business models.
Latin American microfinance has its roots in the high-impact village bank methodology, which was developed to extend financial inclusion and complementary products and services to the world’s poorest people. Since the origin of village banking, this methodology has been used to deliver microloans, savings and business education to improve the lives of people, mostly women, living in poverty and build up their economic resilience.
At the heart of village banking is the recognition by mission-driven MFIs that credit is just one of many tools to help people living in poverty. As part of GP’s Health Services initiative, we work with partners confronting the constant challenges of poor health and limited access to quality health services that their clients face. These challenges are often significant contributing factors to persistent poverty, and the group lending platform provides our partners with a touch point through which they can efficiently and effectively respond to the health needs of their clients.
There are numerous ways in which MFIs can deliver a health program shaped by client need, market demand and regulatory context. The Global Partnerships moderated panel at this year’s Forum featured the business models used to provide health services to clients by three of our MFI partners: Friendship Bridge in Guatemala, Fundación ESPOIR in Ecuador and Pro Mujer in Nicaragua.
All three organizations leverage their clients’ monthly repayment meetings to provide tailored education sessions about common health needs. Pro Mujer and Fundación ESPOIR* also run their own health clinics, where they provide basic preventive screenings and primary care consults. Pro Mujer markets an optional package with coupons that can be redeemed for specialized medical attention and Fundación ESPOIR offers clients access to a national network of dentists, clinics and pharmacies through a micro-insurance package. Friendship Bridge has created a strategic alliance with a third-party health provider for consults focused on women’s health via mobile clinics that travel to client communities.
As MFIs and other social enterprises redouble their commitment to addressing clients’ holistic development needs beyond access to credit, knowledge sharing is critical. With this in mind, as well as the goal of helping organizations throughout the global development sector further develop, refine and scale sustainable business models that provide high-impact, non-financial services, Global Partnerships is working to disseminate the lessons we and our partners have learned. The panel at this year’s Latin American Village Bank Forum was an ideal setting in which to present these key learnings. GP will continue to share and discuss these learnings at other industry events, including the ANDE (Aspen Network of Development Entrepreneurs) Annual Conference the week of Oct 1, 2015. These discussions focus on some of the key questions raised by GP’s work with our health services partners:
- Should MFIs build their own clinic infrastructure or create alliances with third-party providers?
- Should MFIs opt for a prepaid or insurance model? A voluntary or mandatory health package?
- How can critical health services be delivered sustainably by MFIs and other organizations working in global development?
We delve into these questions in greater detail and present the full scope of Global Partnerships’ Health Services Initiative to date in our recently published case study, Sustainable Health Solutions for People Living in Poverty in Latin America.
Blog Tags: Ecuador Espoir Friendship Bridge Guatemala health health services Health Services Fund Latin America microfinance Nicaragua Pro Mujer in Nicaragua sustainable health village bank women's health
Behind the scenes: Stories from the field
by Evonne Liew, marketing and communications officer, Global Partnerships
Global Partnerships' marketing and communications team recently traveled to Central America to capture interviews, photos and videos. This is the first of several "behind the scenes" stories from the trip. In this post, the team visits an off-grid community to interview a client whose life has been improved through obtaining access to solar lights.
Don Roberto, our driver, stomps down on the accelerator but our car continues to roll downhill. We've lost traction on the steep road to El Aguacate, a remote village perched on top of a mountain in Boaco, Nicaragua. We need to get there to interview Maritza, a client of Global Partnerships' partner, MiCrédito. I begin to worry that we won't make it.
Thankfully, Don Roberto manages to get the car going again. It whines the whole way up, filling the interior with burnt rubber fumes. When we arrive, Maritza welcomes us to her modest home, which consists of two main wooden buildings with dirt floors. We learn that the community has no running water, electricity or a sewage system. But through Global Partnerships' partner MiCrédito, Maritza and her family now have access to solar lights, fulfilling a crucial basic need for her family.
Despite living in difficult conditions, Maritza, 62, is extremely upbeat. Without hesitation, she latches on to my wrist and pulls me around, proudly introducing me to family members. I learn that Maritza has been married to her husband Diego for 44 years. Together, they have 13 children, 27 grandchildren and four great-grandchildren. The men work on the family farm, which is a two-hour walk down the road.
They cultivate beans, corn and other crops on 40 manzanas of land (approximately 138 acres). They also own about 60 cattle. While this may sound like a lot of resources, they have an enormous family to provide for.
After the introductions, our team splits up to film and photograph what daily life looks like for Maritza and her family. At one point, Maritza takes me to see the stunning view behind her home: a sea of green hills in every direction. It's here that I meet some of her neighbors. I explain that we're capturing the story of Maritza and her family's use of solar lights. Then I ask if they use solar lights too. One neighbor says he does. Another says she would like a solar light but thinks they are too expensive. She and her family still use candiles—modified tin cans filled with kerosene. Candiles emit dim light and toxic fumes. They are also expensive; the neighbor explains that she spends about 400 córdobas (about 14 USD) per month on kerosene. She's unaware that the small solar lights offered through our partner MiCrédito cost about 1,500 córdobas (about 55 USD) each. Four months of kerosene costs could pay for a solar light with a lifespan of five years. That is five years of bright, smoke-free light that enables families to be productive at night and save hundreds of dollars in kerosene costs.
Maritza tells me that about one year ago, she took out a loan from MiCrédito to purchase three Sun King Pro solar lights (manufactured by GP partner Greenlight Planet). Fully charged, they provide between six and 30 hours of light, depending on which of three brightness settings is used. The lights can also charge cellphones, enabling Maritza and her family to save money on cellphone charging costs too.
To film the solar lights in action, we stay until after dark. Soon after 6:00 p.m., the sun sets and it quickly becomes pitch black. It's easy to understand why Maritza and her family used to go to bed shortly after sunset. The crew and I turn on our headlamps, while Maritza proudly uses one of her three Sun King Pros to light her kitchen to cook dinner for the family.
After dinner, one of Maritza's daughters shows us how the Sun King Pro provides ample illumination for her to sew at night. While she works, she explains that she makes all kinds of designs—from table cloths to clothes—whatever her customers ask for. Her sewing has brought in vital additional income for the family.
Some of the children show us how they use the Sun King Pro to do their homework. It used to be difficult to study because the wind would blow out the candiles. Now, sometimes even the neighbors' kids come over to Maritza's house to study.
At one point I walk to the car to get something and place my hand on a rock wall to find my way. Someone tells me to stop doing that. They tell me that several weeks ago a man was bitten by a poisonous snake after doing the exact same thing. I retract my hand immediately and think about the toilet that I used earlier—an open-air rock field behind Maritza's home. I imagine using it in the dark with snakes slithering around and gain an even greater appreciation for the solar lights.
After we finish our visit, I reflect on the day during the drive back to our hotel. It's clear that a solar light by itself is not going to lift Maritza and her family out of poverty. But they now have opportunities to work and study at night if they choose to, and they save money. Additionally, Maritza and her family can stay up until 9:00 or 10:00 p.m. chatting with one another. After all, spending quality time together after the work day is over is important too.
By investing in social enterprises like MiCrédito, Global Partnerships expands opportunity for millions of people who deserve the opportunity to succeed. Maritza's story is just one of hundreds we have heard over the past two decades. Stories like hers keep us inspired to continue finding market-based ways of delivering opportunity to those who need it most.
Finding Inspiration in Peru
by Peter Solar, donor relations officer, Global Partnerships
As Global Partnerships' Donor Relations Officer, I have the unique opportunity to plan our twice-yearly Impact Journeys. It was just a few months ago that I returned from Guatemala, where I took a group of GP donors and investors to witness the work of GP's partners firsthand. We ventured across rough roads, traveled in small ferry boats and rode in the backs of pick-up trucks to meet microentrepreneurs, visit their businesses and attend spirited village bank meetings. Now, I'm on the road again, this time with a new group of travelers, headed to Peru. I am excited to venture off the beaten path again to show our travelers firsthand how Global Partnerships' and our partners' work has real, meaningful impact at the household level.
Our first stop is the dusty Cayma neighborhood on the outskirts of Arequipa, Peru's second largest city wedged between towering volcanoes in the Andean desert. We are about to meet Gerarda and her husband Clemente, a couple who have been making and selling ice cream for more than 40 years.
Gerarda, who owns the ice cream business, is a member of ADRA Microfinance, a GP partner organization that serves primarily women in peri-urban areas who experience high levels of income inequality. ADRA provides women like Gerarda with access to working capital and brings them together in village bank settings that promote solidarity and serve as a channel to deliver additional services like access to savings, business and financial literacy education.
When we first meet Gerarda, she greets us with a gracious smile. She seems laid-back and relaxed, but when she speaks, her voice is firm and business-like. Clemente arrives moments later, pedaling a cream-colored bike cart, his smile widening as he approaches us. He is more soft-spoken than Gerarda, but he is clearly excited about our visit, rubbing his palms together as soon as he gets off his bike cart and waving us toward the couple's home.
They lead us down a steep road and into a tight, shaded alley that shields us from the searing heat of the Peruvian sun. We enter their brick house from the back and walk into the cool, dark room where the ice cream is made. We gather around the ice cream machine, a rectangular box the size of a chest freezer, its vivid blue paint peeling off around the corners.
"The machine is for the most part a freezer," explains Clemente. The freezer unit is attached to a spinning pot where the couple pours a homemade liquid ice cream mix. "Chocolate and lemon are the most popular flavors," laughs Gerarda. Once the pot starts spinning, the machine blasts it with freezing air, while the couple makes sure the layers of ice forming on the sides of the pot are returned to the mixture as it thickens and turns into ice cream.
Clemente explains that the ice cream machine was a big investment, but one that has paid off: They sell a cup of ice cream for two soles, or about $0.70 USD, and take home about 100-120 soles, roughly $30-$40, every day.
Selling ice cream has become more than just a business; with ADRA's guidance, it has helped the couple improve their lives. They have been able to set aside money for an emergency fund to cover existing loans, save a bit for retirement and consider expanding their business. "[ADRA] encourages us, they offer good advice on managing profits, and they bring people together in village banks to think about new ideas and discuss business challenges," says Gerarda.
Gerarda tells us that one of the couple's business challenges is distribution. Although both she and Clemente are in good health, selling ice cream from the bike cart limits them to only a few surrounding neighborhoods and Gerarda is thinking of purchasing a used car. She already has a model picked out and she is optimistic that she can make it happen with her village bank's guidance.
When we ask about family, Gerarda and Clemente talk about their six children with pride. They were able to send all of them to school with money made from selling ice cream. One of their daughters is a nurse; others are working professionals. But the conversation turns somber when the couple tells us about one of their sons who passed away not too long ago. "He used to come along every day and help us make ice cream," says Clemente as he firmly grips the side of the ice cream machine. "Our business and community is our source of strength and it keeps us going," he adds.
Both Gerarda and Clemente repeatedly tell us they feel proud and grateful for a visit from so far away. "We are encouraged to know there are so many people standing beside us in solidarity and we are humbled that you will be sharing our story with your friends and families," says Clemente and invites us outside for a cup of ice cream with a warm smile curling below his mustache.
We go back up the steep hill to where we met the couple earlier and gather around the ice cream cart. Clemente opens up the refrigerator lid and starts serving ice cream—the raspberry sorbet with swirls of mango ice cream I had was truly refreshing in the scorching desert heat. A small hatchback zips by and Gerarda points at it, "This is it! This is the car I want." The entire group erupts in cheers, everyone feeling uplifted by her entrepreneurial spirit.
A local stops by to purchase ice cream and we say our goodbyes, wishing Gerarda and Clemente strength and luck as we board the bus to continue our journey.
This is Peru as few visitors know it and these are the kinds of remarkable people we have the privilege to meet on our Impact Journeys, learning about their successes, challenges and dreams. We make friends along the way and return home with a deeper understanding of the promise market-sustained solutions hold for communities living in poverty.
To learn more about Global Partnerships' Impact Journey program, or to sign up for our next trip, click here!
Why Careful Microfinance Works
by Mark Coffey, chief investment & operating officer, Global Partnerships
Within the impact investing industry, microfinance has historically been viewed as a fine example of an investable, market-sustained solution to poverty. Hundreds of millions of dollars have flowed to microfinance institutions (MFIs) and microfinance investment vehicles—across asset classes—generating social impact alongside consistent and stable financial returns.
Yet despite the popularity of microfinance as an investment sector, recent press has questioned its social impact in the lives of the people being served. For example, a recent article in The Guardian argues that most microfinance loans are used for consumption—not income generation—and therefore "end up making poverty worse."
While Global Partnerships invests into many types of channels, such as agricultural organizations and solar businesses, our roots are in microfinance institutions (MFIs), and we continue to selectively invest through this channel. Over our 20+ year history, we have learned many lessons, and one guiding principle has been "it takes more than a loan to lift someone out of poverty." We observed, for example, that extending credit to someone living in poverty that led to over-indebtedness clearly had a negative social impact, and providing a loan for consumption or non-productive purposes at unnecessarily high costs did not lift people out of poverty, and might make their situation worse.
On the other hand, certain models can be highly effective. For example, the combination of women-centered credit and tailored education—especially when delivered through the group lending platform at a reasonable cost—can have a meaningful impact at the household level. Clients become empowered and informed decision makers and are able to smooth their incomes and consumption, build assets and increase their capacity to anticipate and deal with major expenses.
So, the question should not be whether microfinance as a whole results in positive or negative outcomes, but rather "what MFI models are most effective at the household level?" As with any product or service, we believe that the most positive impact occurs when the provider has the best interests of the household in mind. We work with a relatively select portfolio of MFIs, but have examined hundreds with which we have chosen not to work. We begin our process by understanding whether the institution is more focused on the household or on their own growth and financial returns, and to what extent their model delivers value in a sustainable and scalable way. We are wary of institutions that cannot provide meaningful metrics of how they evaluate impact, or that serve the interests of the owners and managers more than their clients.
Noting that many MFIs exclusively provide financial services and have moved up-market to better-off clients to enhance growth and returns, GP primarily seeks out small and mid-size MFIs that have a combination of solid financial performance and positive impact at the household level. We look for business models that have carefully been built to leverage and integrate various services that a person in poverty needs. Alternativa Peru, a GP partner since early 2014 and the featured partner in our most recent Investors Report, represents this type of model where we seek to invest, for highest impact and a well-managed fund investment.
Are there microfinance lenders interested primarily in maximizing profit? As in most industries, yes. However, there are also many dynamic social enterprises that recognize that microcredit is just one small piece of what people living in poverty need in order to improve their lives. These organizations are client-centered and understand their needs far better than anyone looking on from abroad. At GP, we work to identify and partner with the best of these organizations and learn from them what combination of goods and services has true impact at the household level. We then seek positive social returns at the household level by carefully directing our capital to these types of organizations.