Will large insurance, healthcare, finance, agriculture and technology companies lose out once again when it comes to making the world a better place for millions of refugees and billions in poverty?
Over the past 6 months, a lot has happened globally.
Each day has brought more news of refugees, human suffering, and conflict equaling 65 million refugees worldwide and over 2 billion living in extreme poverty.
After all of the “social entrepreneur”, “impact investor”, and “mobile money” hoopla, the majority of the world sees the poor and refugees as a “CSR” (Corporate Social Responsibility) or “mission trip” opportunity. The bottom-of-the-so-called-pyramid is really not what they are targeting. The real bottom is either forgotten or buried under interest (like in APR) burden. For example, in East Africa (where I have been spending a lot of time lately) the average women farmers (millions of them) still make $300 – $500 in annual income. That is less than $2 a day!
Here are four data points (feel free to fact check them yourself) that are heartbreaking, yet ones that offer an incredible opportunity for the insurance, finance, agriculture, healthcare, and technology industries globally!
– Expensive Micro Lending: a small plot woman farmer in East Africa can only get a micro-finance loan @ 30% – 50% annual interest! No bank will lend to them. Period. I am sure some of you will argue and give me examples of how the big banks are lending to extremely poor and how major payment processors are getting those living in abject poverty access to credit cards. Look hard and you will see that not much has changed and that “financial inclusion” really means giving money to the poor so that they remain poor. Back to the 30% – 50%, that is crazy because here in the USA you can raise capital at less than 10%. Capital that can be in the millions of dollars. Oh, also, there are no meaningful micro-insurance products for the poorest of the poor – to insure crops, land, life, or health!
– Mobile Everywhere But No Information: yep, that is the reality. It may come as shock to many of you that as bad as the Congo or the Somali refugee camps of Dadaab can be for humans, the majority of them have mobile phones! Yet, for some reason they are not connected to the global information economy. I spoke to several women farmers on a recent trip in Africa and while they all had mobile phones and used mobile money, they didn’t know the actual market price that their corn harvest could fetch. Middlemen taking advantage of this bought their crop at 50% less than market price!
– Women Continue To Be Marginalized: yes, for all the “equality” chatter we are long ways away from true gender equality in this world. Especially when it comes to places like Myanmar, Bangladesh, Syria, Congo, Somalia, CAR, Burundi, Colombia, El Salvador, etc. It is because women in many of these countries (which make up most of the refugee and poverty populations) continue to be denied access to basic services like opening a bank account or getting a capital loan for a small plot tractor or higher education for girls.
– Lots of INGOs, same “beneficiary”, no integration / collaboration: Imagine that you are a family that was uprooted last week in the violence in South Sudan and are now a refugee family on the move. Imagine the food packet, cash assistance, medical aid you will receive as a “refugee” yet there is a good chance you will not be seen or treated as a “customer”. Why? Because you lack identity – an identity that treats you as a customer. If you haven’t been following the news, South Sudan is teetering on the verge of a massive humanitarian crisis.
These 4 seemingly easy to address issues are actually very, very tough to resolve and cannot be fixed without a dramatically different and disruptive approach. A disruptive model is sorely needed, otherwise we could be facing 100 million refugees in the near future and with the world’s population inching towards 10 billion we may see 3 billion of us living under $2 a day!! What legacy are we going to leave behind for our kids?
In my humble opinion four disruptive solutions (already in play in the for-profit sector) can start addressing this crisis now and for the long term.
Each will need a higher degree of capital investment and talent investment from the private sector. But therein also lies the opportunity.
And, each can leverage technologies such as the blockchain, mobile, supply chain systems, cloud, etc.
- What if every poor farmer in the world was connected to a digital supply chain? Farming continues to dominate in the poorest parts of the world.
- What if social media was actually an information marketplace for the poor farmer who is now on the digital supply chain? Pokémon Go anybody??
- What if every corporation worldwide gets a tax benefit for connecting (and trading) with one woman entrepreneur in an extreme poverty zone or refugee camp? Everyone has been harnessing carbon credits so why not take it a step further.
- What if your identity restores dignity and makes you bankable? Ask someone who has a Drivers License, Utility Bill, and/or Pay Stub. With these “identifiers”, you are bankable in the developed world!
Sounds crazy? Disruptive?
Yes, but this is very doable. It is doable by taking a very systematic / realistic approach to human dignity and economic resilience.
Let us tackle each one with a blockchain lens:
- We all know SCM (supply chain management) systems are mature, secure and on the cloud. There are quite a few global platforms like NetSuite, Odoo, com, Open Bravo, etc. already being used by global 1000 companies as well as smaller companies. So, it is not a giant leap to give small plot farmers access to a similar digital supply chain. One that provides an instant forecast which is directly connected to a buyer – aka Purchase Order / Sales Order! More and more of those living in extreme poverty and in refugee camps have mobile phones (feature phones work just fine) that have SMS. So why not notify the mama farmer of her land forecast and purchase price and yield? Now, one could argue that there are at least 50 micro-entrepreneur / social-enterprises who are doing this for millions of farmers in Africa and elsewhere and that financial inclusion is the top priority of the big payment processors and “social” banks. I would respectfully disagree. In my experience, financial inclusion means getting poor people money but keeping them poor. The micro-finance industry is proof of that shortcoming. Instead, I would propose a supply chain system where funding micro-economies connected to macro-economies takes center stage.
A blockchain enabled SCM creates not only transparency but also leverage due to the distributed ledger aspect. In addition, it creates a “low-cost” lending opportunity. How? A distributed ledger eliminates the bureaucracy around settlement and “risk-profile”. Enough said. You get it.
- Marketplace! Mobile Phone! Yes, if a poor farmer or refugee in transition is connected to digital supply chain, then leveraging a global marketplace becomes not only easy but also very productive and profitable for the farmer. Yes, one can argue that we have 50 models that allow you to buy online from rural parts of the world and from poor people. Taking a deeper look you will see firsthand that they only get a fraction of the proceeds due to heavy overhead of the social venture and / or shipping costs, production costs, etc. We have an opportunity here to take out the “middle layer” by creating full transparency. Fully mobile, a blockchain enabled marketplace will breakdown silos and connect refugees and poor populations to the world economy. Uber and Lyft are great examples for getting rid of the middleman “friction”! Farmers have mobile phones! So let’s SMS them into the global supply chain. Why not?
Tied back to a blockchain-distributed ledger, makes buying-selling not only transparent but also traceable, while meeting Dodd-Frank compliance issues. Enough said. You get it.
- The Blockchain is gender agnostic, unless someone disagrees. Given a logical / practical solution to SCM and Finance (see above) using the blockchain + mobile we can now focus on trade and not gender-bias. Women entrepreneurs (refugees, those in extreme poverty zones, or anywhere in the world!) tend to be ahead of men on many fronts including decision-making, fiscal responsibility, teamwork, customer focus etc. With an open ledger trust-network, global corporations can “strategically source” and increase the overall percentage of women entrepreneurs they support.
Thinking a little further, we can make it easier to get a tax benefit because the blockchain would offer proof of work engagement directly tied to economic empowerment for women. Enough said. You get it.
- Economic Identity should be owned by the individual – Period. More the reason if you are a refugee or living in extreme poverty. Why would you depend on some agency or enterprise having access and control over your personal identity data to then provide basic necessities back to you? Makes no sense! Economic Identity is more than a plastic card or a 9-digit number. It is a collection of elements such as birth certificate, land rights, health record, education certificates, mobile phone usage, trust relationships, etc. that make up true bankable identity.
Until the blockchain came along these disparate elements were yours but owned by someone else.
The blockchain completely changes that!
Without a blockchain-based identity, one can get “Cash Assistance” via mobile phones in refugee camps yet none of the spend history belongs to the refugee. The phone carrier and payment company will make money but you are going to stay poor and a refugee for the next 20 years! Financial inclusion, yes – economic empowerment, NO. Therein lies the difference as a refugee or someone living on less than $2 a day! That is why many such programs continue to fail or cost millions of dollars with little to no benefit to the refugees or people living in extreme poverty.
With a blockchain-based identity, these programs can be leveraged for the direct economic empowerment of those that need it most because (1) the refugee owns his / her own history and data making him / her bankable and (2) someone living under $2 day is now treated with dignity and can move to $10 or $20 or $100 a day! Why not?
Enough said. You get it.
In conclusion, if you are an industry leader in agriculture, finance, healthcare, insurance and technology this could be your ticket to a massive business opportunity.