**Ever wondered how a business with a social purpose actually works?
Think that you vaguely understand the idea, but don’t know how it
functions in practice?** This was the position I found myself in as the
end of the Warwick International Development Summit (WIDS) approached.
Step in Steve Andrews, CEO of Sunny Money, who delivered an excellent
and impassioned case for his enterprise, and for business-based
solutions to poverty.
Just as every business sets out to exploit a gap in the market, every
social enterprise sets out to solve a problem. For Sunny Money, the
problem is electricity in Africa. Over 500 million Africans are not on
the electricity grid. This has all sorts of implications: children
cannot study at night, making difficult their education. Families buy
Kerosene lanterns that are not safe and emit harmful fumes. Sunny
Money sell solar-powered lights to solve this problem. Personal solar
lights start from $10, rising for bigger appliances, but can
ultimately save a family a very significant amount of money due to not
having to buy new kerosene lamps. Thus cleaner and safer light is
provided and poor families save money. Voila, everyone wins.
Problems: how do African families come up with the lump sum of money
with which to buy the appliances? Second problem: even if they do have
money, why should they trust Sunny Money with it? Would you risk a
significant proportion of your savings on an unknown company?
Steve says that when families do scrape together the money, they can
afford to buy a $10 personal light, and if there is one thing with
which African families will take a risk for, it’s their child’s
education. Once the family see that the appliance works and that they
can trust the company, an environment for long-term business is
created. Families can use the savings they generate to invest in
long-term investments, which can improve their welfare and provide a
steady future income.
Why not get rich Western donors to pay for the lights, and give them
to families for free, then? Steve argues fervently that this is not a
preferable solution for anyone. When Sunny Money sells the products
for local businesses to sell on, it creates a supply chain around
which to start a self-sustaining economic cycle. It employs local
people, and those who buy have a sense of empowerment and truly value
their purchase. On the supply side it ensures that Sunny Money are not
reliant on Western donors, and the profit and loss motives focus the
attention of Sunny Money and drive them to lower costs.
The enterprise believe that their results speak for themselves; Steve
reported that they had sold 205,000 lights in the past three years, and
nearly half of these units were sold in the past seven months. Steve’s
message for Warwick students was that if they want to help people in
developing countries and get involved in an exciting sector, social
enterprise is the way to go.