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Struggling to implement the business model

Benson Rioba

The Mulika Pesa app helps farmers to record all kind of their data, such as stocking and transactions. Robert Gichuru is the founder of the app. He explains how difficult it is to operationalise an ICT business.

Small and medium scale businesses in agriculture are a direct source of income to many Kenyan farmers as they are the link between the farmers and markets. However, farmers find it hard to transact business effectively. For instance, a chicken farmer in the rural areas of Kenya is likely to get half of the price for his or her produce due to the number of middlemen involved to get the products to the final consumers. ICT entrepreneur Robert Gichuru, therefore, has created Mulika Pesa software, which helps farmers link directly with buyers. The software also helps farmers and business people to record transactions, simple book keeping, stocking, supply chain integration, customer rewards and marketing. 

Gichuru says his business has taken off, but after thoroughly training the users on how to handle the technology, on the importance of book keeping, and on the interpretation of data. For the pilot project he identified a group of women representatives from the Njabini, Nyakio, and Magumu wards in Nyanadarua County. He also worked with elected women representatives for the Social Reform Center (SOREC is an NGO that is based in Kenya and deals with governance and capacity building in grassroots organisation) from the same wards. The entrepreneur provided browser enabled feature phones, data bundles, and ten chickens for each group. ‘I had not planned for training, assuming that they would be able to get by with little help,’ says Gichuru. ‘I was completely wrong. I found out that they were not comfortable with the internet.’

Making use of an agent

According to the Africa 2016 population and internet users’ statistics for 2016 report Kenya has 31,985,048 internet users representing a 69.6 percent penetration of the total population. But Gichuru says that these statistics only represent people who have basic knowledge about the internet, but not the deep understanding about the internet operations. ‘Kenyans are adept and comfortable with interactive technology such as SMS, WhatsApp and Facebook. But the concept of business technology tools is very limited. Users comfortably create a username and password, but going beyond that to complete an online form does not seem to come as intuitively as I had expected,’ the entrepreneur explains. He adds that the use of technology for business such as banking, booking appointments, applying for government services, online buying is not as widespread as the technology itself.

Gichuru settled on access by smartphone, tablet and computer. Farmers can add their information themselves or can make use of an agent. Mulika Pesa charges a standard fee, which is shared with the agent. The agent can also charge extra, depending on factors such as distance of travel to the farmer and paper based reports. The agent is an individual, private company, or NGO (SOREC is not an agent in this sense). By including the agent option, farmers keep proper paper records of their produce. The agent visits on a regularly, weekly base to enter the data into the customer’s account. Until now the majority of the customers prefer the agent option.

Building networks

Financing such activities and keeping the enterprise running can be quite exhausting both financially and physically. Gichuru says that he was forced to finance the whole venture by himself; partly paid with loans that are secured by his own house. ‘I have spent between 3.5 to 4.0 million Kenyan Shilling (US$36,000) for the development, launch, marketing and staff’.’ He explains further that establishing a good running enterprise needs a partnership with organisations that add knowledge, networks, and capital, such as banks, incubators and accelerators.

’My family does not go on vacation and my house is missing on important repairs. The gas furnace inspector has recommended that we replace it the last two years, but we have not been able repair it with the risk that it could breakdown in mid-winter. The air conditioner broke down and we have not been able to replace it. Our house right now is very uncomfortable.’ It is not only lack of money, but also a lack of time to invest in the private circumstances. ‘I have been busy developing the software with no time to fix the house and no money to hire someone to do it for me.’

Gichuru has participated in various contests funded by organisations such as The Bill and Melinda Gates Foundation, and partnered with an international NGO to apply for funding from the Master Card Foundation. ‘I tried to partner with different organisations including Nokia, a leading bank, and some microfinance lenders in Kenya among many others. I also tried crowd funding.’ His most successful attempt so far has been a competition organised by Verizon Wireless from the US where his solution made it to the second round of the 2015 Verizon Powerful Answers competition.

Women inclusion

All the application procedures are very time consuming and they never give you any substantial feedback so you never know what you can do better next time. Furthermore, most funders want to see partnerships with research institutions, non-profit organisations, the private sector, local governments and community groups. This in itself is not easy to get. However, Gichuru learned from answering the questions in the application forms. For example, from the Verizon competition he learned of the enormous potential that exists in the area of Internet of Things and was encouraged to investigate how it can play a role in Mulika Pesa and in improving the lives of our customers.

To succeed in establishing an ICT venture Gichuru now understands how important it is to partner with the local government officials in order to work along the established laws and policies besides knowing the important data information regarding the economic and social terrain of the area. He adds that women are major players in the agriculture sector and they constitute largest labour force in the sector and therefore any entrepreneur interested in venturing into agricultural activity must bear into mind the role of women in agriculture. Gichuru argues that the digital divide in rural areas can only be bridged if local and international network providers invest in rural areas adequately as there is still an untapped market. ‘There are a lot of dead and 2G zones in the rural areas, the agent option works well there. However, our initial concept that data is captured in real time does not work in such cases,’ he says.


Relevant links

Facebook page of Melika Pesa.

Twitter account of Melika Pesa.

 

Copyright © 2016, CTA. Technical Centre for Rural and Agricultural Cooperation

CTA is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.