Helping Small Shops Make A Big Difference

Transcription

1 Helping Small Shops Make A Big Difference How to Drive Economic Development through Youth Mom and Pop Shops Dorothy Stuehmke - Program Officer, Citi Foundation Adrian Ackeret - Project Leader, elea Foundation for Ethics in Globalization Alice Waweru - Program Manager, TechnoServe

2 2016 Global Youth Economic Opportunities Summit Dorothy Stuehmke, Program Officer Citi Foundation September

3 Importance of Youth Entrepreneurship in Africa In Africa, there is a critical need to mobilize and channel the energies and talents of young people to productive use. Pathways to Progress: Citi Foundation s flagship initiative focused on advancing youth economic opportunities was launched in 2014 with a threeyear, $50MM commitment focused on 10 U.S. cities. The effort went global in November 2015 with the release of Accelerating Pathways, research conducted by The Economist Intelligence Unit that studies the connectivity between youth empowerment and the economic competitiveness of 35 cities. Accelerating Pathways: Africa and High-Level Takeaways In Africa, 78% of low-income respondents say they would be interested in self-employment or starting a business versus 69% of their regional peers who note the same interest in higher income households. Correlation between interest in self-employment or entrepreneurial ventures and levels of optimism Needed inputs: Capital, Technology, Mentoring, Entrepreneurship Education, Legal/Regulatory Assistance Sub-Saharan Africa currently has the highest youth growth rate of any region in the world; by 2025 it will be home to 25% of the global youth population. 3

4 Accelerating Pathways: Global Youth Survey Entrepreneurship was a major theme that emerged in an increasingly urbanized, globalized and digitized world. Survey polled more than 5,000 young people aged in 35 global cities about what they hope to accomplish and the support they hope to receive as they pursue their dreams. Millennial Mindset: Young people the world over express interest in working for themselves, and this entrepreneurial spirit is consistently high from the world's richest cities to the poorest. Self-employment or founding a business broadly appeals to survey respondents. Opportunity Seekers: The promise of a better life motivates young people to move to cities. Roughly half of respondents (47%) have migrated to current cities of residence in the last five years for work, education or a better life 90% from within the same country. 4

5 Accelerating Pathways: Youth Economic Strategy (YES) Index One of the most pressing needs for youth in Africa is employment. The Index provides an in-depth look at how 35 cities around the globe are creating economic opportunity for young people. It scored cities on 31 city-based Indicators grouped under four categories that contribute to young people s economic prospects. Four Domains: Government Support & Institutional Framework for Youth Employment & Entrepreneurship Education & Training Human & Social Capital African Cities: Casablanca, Morocco: 24 th overall Lagos, Nigeria: 35 th overall Johannesburg, South Africa: 21 st overall All of the three cities in the African region scored in the Progressing or Emerging groupings in the Employment and Entrepreneurship Indicator. Youth have identified entrepreneurship as one key enabler of economic self-reliance. In addition, employment in Africa is a serious issue. How prepared are cities to respond in Africa? 5

6 Mom & Pop Shop Improvement Program 2016 Global Youth Economic Opportunities Summit Adrian Ackeret, Project Leader elea Foundation for Ethics in Globalization September 2016

7 elea Foundation for Ethics in Globalization Purpose and model elea Foundation exists to fight absolute poverty with entrepreneurial means, capitalizing on the benefits and opportunities of globalization elea Philanthropic Investment Management Identifying, evaluating, managing, and exiting entrepreneurial assets for poverty alleviation elea Philanthropic Investors Circle Engaging philanthropic capital from individuals, institutions, companies elea Professional Development Program Building and developing a professional team with market-oriented job profiles elea Impact Measurement Methodology (eimm) Measuring success Strategic focus areas of elea Foundation s investments: Global value chains New technologies Professional skill building: Demand-driven vocational skill training and capacity building initiatives 7

8 elea Foundation s project in La Paz The idea: dramatic increase of mom&pop shop competitiveness Provision of basic goods in poor neighborhoods Challenged by supermarket chains Important sales channel for FMCG multinationals Secure and increase income of poor shop owners through training, consulting and pooling of purchasing power In La Paz, Bolivia, elea Foundation has successfully established a shop improvement program in collaboration with Fundes and the Inter-American Development Bank 8

9 Project design: consulting and group training Strong focus on consulting Issues of mom & pop shops in La Paz: (Internal issues) - Poor cash management - Poor layouts / product placement - Poor inventory control (External issues) - mom & pop shops tended to view each other as competition - There was minimal collaboration or socialization among different shops elea Foundation mom & pop shop project CONSULTING GROUP TRAINING IMPROVED M&P SHOPS hrs per shop - Improved control over finances and purchasing - Awareness of value of products - Articulated long term ambition for a shop - Approx. 20 hrs per shop - Awareness of management practices and theory (e.g. merchandising, accounting) - Forums for socializing and exchanging experiences with other shops - Improved organization, layout of products and façade - Sense of ownership, empowerment (branded signage; control over finances) - Sense of collaboration and support with other shops 9

10 La Paz: Impressive commercial and social impact 3-7% Average Buying Discount Gained 23 regional associations created 720 Shops Completed the Program in La Paz 33% Recognised brand Average profit increase 10

11 Vision: create a self-sustainable global initiative Timeline for global roll-out Phase I Phase II Phase III Phase IV ~2017 Mexico Preliminary local project by FUNDES La Paz (Bolivia) Methodology focus Proof of global replication (Africa, Asia) Regional scaling Innovative inclusive value creation Global initiative Multi-stakeholder Recognized flagship approach for entrepreneurial poverty alleviation Predominantly financed by the private sector catalytic role of elea Foundation: Pilot co-financing Stakeholder management 11

12 Three-level analysis in two regions for next rollout locations 17 cities with particular potential identified 1 st level: Safety & Security Quantitative: Informality of economy, # of shops, density of population, 2 nd level: Target regions of absolute poverty 3 rd level: Implementation criteria Qualitative: potential execution partners, potential funding partners, Focus region 1: Sub-Saharan Africa Focus region 2: South Asia South Africa Cape Town, Durban Johannesburg, Port Elizabeth Kenya Nairobi, Mobasa Tanzania Dar Es Salaam Bangladesh Dhaka, Khulna, Rajshahi India New Delhi, Mumbai, Kolkota, Chennai, Bangalore, Hyderabad Nepal Kathmandu 12 Source: IMD MBA Consulting Project with elea Foundation, 2014

13 13 Replicating the program in Kenya

14 Smart Duka Program KENYA

15 Small shops ("Dukas") are key to alleviating poverty in Nairobi slums Dukas are key to job and wealth creation in Kenya 70-80% of FMCG go through dukas 95% of population frequents dukas ( kadogo economy) But dukas face significant financial and operational challenges, including: Lack of shop owner skills (e.g., accounting, book keeping, product layout) Poor supply chain management (e.g., no bargaining power) Improper financial resources (e.g., virtually no access to credit) Duka owners are an important entry point for poverty alleviation Focus on youth - average age is 32 57% of owners are women Only 3% have university education, only 10% have received business training

16 The program aims to increase the shops growth and financial returns THE SMART DUKA PROGRAM USES 6 LEVERS TO TRANSFORM 840 DUKAS IN THE NAIROBI SLUMS Suppliers and inventory management Business management skills Shop layout improvement (Merchandising) and marketing Increase profit margin +6%/year; revenues +30%/year Assist 30% of dukas in obtaining loans Business Associations Digital Technology (Payment/ inventory mgt) Create 120 new jobs Financial skills and linkages

17 Technology will play a key role in duka optimization Most shop owners have access to basic digital solutions 43% of Kenya s GDP flowed through M-Pesa (2013) ~70% of targeted duka owners have smart phones Expanding the toolset can help, e.g., Pilot smart Dukas that will run on a mobile phone and store duka financial records in the cloud! Use mobile money as main mode of transactions STOCK PROFITS SALES BOOKS

18 Improved shop layout translates into a better buying experience with more product visibility, price visibility, stock visibility & information about products 18

19 First results after 5 months are overwhelmingly positive Before After I am a single mom of two. The best thing that happened to me was to join this program Lydia Wambui Lydia s unattractive, disorganized, crowded shop Welcoming layout, good product displays, organized and good shop hygiene 50% increase in sales 30% increase in profit margin 19

20 Njoroge s shop before & after intervention My profits increased by 35% after six months in the program Njoroge Before After Good product categorization and displays 34% increase in sales 35% increase in profit margin 20

21 Dunkam Enterprises before & after intervention Before After I have learnt new skills of speaking to my customers Dunkam Enterprises Caged products, no categorization and crowded arrangement Good product layout, attractive displays, product categorization 30% increase in sales 37% increase in profit margin 21

22 With proven success, we hope to scale up the program to the rest of Africa Phase 1: Pilot Smart Duka methods with 840 shop owners in Nairobi Phase 2: Expand Smart Duka to ~10K duka owners in Nairobi and adjacent cities Phase 3: If successful, further expand to adjacent countries (e.g., Uganda, Tanzania) Adjust elea foundation methods to Nairobi context Document lessons learned in a playbook Closely monitor impact and adjust approach where needed Prepare a detailed baseline of dukas in the region (e.g., survey to identify number of shops per region) Define approach to regional scaling in waves Prioritize cities / regions for roll-out Attract additional funding (esp., private sector) and define go-to-market approach (e.g., leveraging partners) Train additional consultants using Smart Duka playbook

23 Thank You! Any Questions? Alice Waweru Program Manager