Can the Gates Foundation Make Markets Work for the Poor?

Posted by on May 18th, 2016

How the world’s largest philanthropic foundation is using impact investments to steer biotech, edtech and fintech to low-income customers at home and abroad.

Image source: The Bill & Melinda Gates Foundation

Image source: The Bill & Melinda Gates Foundation

By David Bank and Dennis Price

A new kind of strategic investor is sniffing around promising startups and innovative entrepreneurs.

These strategists are not corporate suits seeking a competitive edge. They are officers of private foundations looking for scientific breakthroughs on neglected diseases, technologies that can be steered toward disadvantaged populations and financing models that harness the power of markets for the benefit of the poor.

The biggest of these new suitors is the Bill & Melinda Gates Foundation. At the insistence of Bill himself, the foundation made its first “program-related investment” in 2009. Since then, it has made nearly 50 loans, equity investments, and guarantees to further the foundation’s charitable purpose, totaling more than $1 billion. In the last seven years, the world’s largest foundation has become one of the world’s largest impact investors.

To share what it has learned, the foundation provided unprecedented access to ImpactAlpha and Stanford University’s Paul Brest, a leading thinker and commentator on impact investing.

“Making markets work for the poor” is the strategic intent of the Gates Foundation’s program-related investment portfolio. That goal, lofty as it is, can sometimes create complications for entrepreneurs, co-investors and companies, as our set of narrative profiles shows.

“This is not all that different from what we’ve seen over last 40 years [from strategic investors],” says Larry Mohr, a veteran Silicon Valley venture capitalist who co-invested with the Gates Foundation in a promising edtech company. “The parallel is that they both have objectives that are totally unrelated to the company.”

The project, a 40-page supplement in the Stanford Social Innovation Review, includes narrative articles about eight of the foundation’s noteworthy investments, an explanatory overview and a meaty Q&A with Julie Sunderland, the founding director of the foundation’s in-house investment team.

“How do we create incentives and how do we enable the most overlap between our objectives and the objectives of the company?” asks Sunderland, who recently left the foundation to pursue biotech investing more directly. “If there is a lot of overlap and we can de-risk or we can provide capital in creative ways to enable them to do the things that they want to do, those are our best deals.”

Making Markets Work for the Poor, is a deep dive into how the Gates Foundation leverages its immense balance sheet to make program-related investments. We reviewed hundreds of pages of investment memos, strategic memos, emails and other internal documents and interviewed more than three dozen entrepreneurs, executives, investees, co-investors and foundation staffers.

In the package, we show:

  • How the foundation lost its entire investment in one biotech company – and reaped a 17-fold return on another.
  • How a minor financial misstep earned Root Capital a dose of “tough love” that ultimately helped the agricultural lender grapple with the dangers of rapid growth.
  • How the foundation used its deep pockets and superior market knowledge to steer pharma giants Merck and Bayer toward a low-price, high-volume strategy for contraceptive implants for women in low-income countries.
  • How the foundation saw something more in the off-grid solar revolution in Africa: a way to expand commercial lending for the poor.

 

Image source: M-KOPA

Image source: M-KOPA

Significantly, foundation officials owned up to trials as well as triumphs. In one case, an edtech company veered away from its target customers in order to satisfy the charitable requirements that came with the foundation’s investment. The lesson for entrepreneurs: the social and environmental objectives of strategic impact investors are sometimes at odds with a company’s commercial path.

Strategic program-related investments are not new. The Ford Foundation began making them in 1969. Since, pioneers like the MacArthur, Packard and Annie E. Casey Foundations, and more recently, the Kresge Foundation have expanded their toolset beyond traditional grants.

The Gates Foundation has pushed the boundaries of the new tools. Many of the examples cited by the IRS in its expanded guidance on PRI use could have been pulled from the Gates Foundation playbook, including for loans to smallholder farmer producer groups, equity investments in biotech startups and guarantees on loans to nonprofits.  

“We’re not delusional about the private sector and about capitalism,” continues Sunderland. “We know that markets don’t work well for the poor for very, very good reasons. It’s not theoretical.”

By strategically investing to prove new models, reduce financial risks, increase liquidity and, sometimes even, boost returns, foundations like the Gates Foundations are aiming to close capital caps and fix failures left by a market that all too often doesn’t work for the poor. Sometimes such investments work, other times they don’t. A critical question we sought to answer throughout the report is: why?

The foundation’s PRI portfolio includes 20 equity investments totaling more than $200 million, 11 loans combining for more than $100 million and 12 guarantees reaching nearly $600 million.

The foundation has made 14 investments, more than $167 million in sum, directly into biotech companies in hopes of a hit on vaccines and drugs for a range of neglected diseases such as malaria, HIV and typhoid fever. Most of the capital has been deployed for global development, including expanded access to finance and health services for the poor, and to agricultural development, primarily in sub-Saharan Africa.

The occasional home-run aside, the foundation anticipates an approximate 10 percent loss of capital on its PRI portfolio as a whole. “The reality is that the poor don’t have much money and therefore profit margins are slim,” Sunderland says. “The only way that you can create good business models to serve the poor is to get to high volume and large scale with small margins.”

About ImpactAlpha

Impactalpha creates editorial and data products that serve the growing number of people who believe social and environmental solutions are the biggest business opportunities of the 21st century. We’re on the impact beat, telling the stories, calling the trends, tracking the deals, and watchdogging the impact.

David Bank is editor and CEO of ImpactAlpha: Investment News for a Sustainable Edge. He was previously a reporter for The Wall Street Journal and a vice president at Encore.org.

Dennis Price is a writer and project director at ImpactAlpha. He has more than a decade of experience at the intersection of markets and development.
 

Here’s a full list of the package contents:

Making Markets Work for the Poor

How the Bill & Melinda Gates Foundation Uses Program-Related Investments

Philanthropy’s New Tools for Innovation and Impact by Susan Desmond-Hellmann

Investing in smart strategies and passionate people.

Leveraging the Balance Sheet

A conversation with Julie Sunderland, founding director of Program Related Investments at the Bill & Melinda Gates Foundation.

Neglected No More

Nudging biotech startups to tackle diseases of the developing world.

Unintended Consequences

How a strategic investment steered an educational- technology startup into trouble.

Banking on the Poor

Using the off-grid solar revolution to unlock credit for low-income customers in Africa.

Guaranteed Impact

Increasing supplies and cutting prices for contraceptives without spending a dime.

Investing for Impact with Program-Related Investments

A report on strategic investing at the Bill & Melinda Gates Foundation.

Tough Love

How a dose of banking discipline strengthened financing for smallholder farmers.

Eyes Wide Open

Good reasons for a bad investment in a low-cost HIV test.

Returns on Investment

How a broad bet on a biotech company paid off in promising drugs for neglected diseases.

Private Financing for Public Education

Investing in collaboration between public school districts and charter school networks.

SOCAP Voices: Ed Dugger Reflects on Lost Opportunity

Posted by on May 6th, 2016

By Edward Dugger III

Edward Dugger III is the President of Reinventure Capital and an impact investing pioneer. The reflections below were originally shared through the Reinventure “Ed Talks” series.
 

ed-duggar-at-socap15

 

What happens to a dream deferred?

I could not have been more excited. It was September 1988, and I was on a flight from Boston to Los Angeles to meet with Michael Milken. Several months earlier I had received a call from his representative asking for a meeting in Boston. “Ed, you are a venture capitalist who has pioneered in providing entrepreneurs of color with equity investments, and we think you can help us,” he said. Our conversation confirmed what I already knew. Milken and his firm, Drexel Burnham, had concluded that there was a huge, untapped investment opportunity in the form of founders of color, who were essentially invisible to the rest of the investment banking market.

More importantly, they had declared their intention to capture that overlooked market opportunity. To do so, they would bring billions of dollars to market. Now they were undertaking a methodical process of aligning existing sources of equity capital for founders of color, and partnering to create new ones. The first of these was Georgetown Partners, a $100 million fund. Other partnerships were under discussion. Mine was one of them.

Heading for LA, was I actually seeing the dawn of a new era in America? One for which generation after generation of people of color, aspiring to the American Dream, had been waiting?

Does it dry up like a raisin in the sun?

As an African American, it was hard not to think about how far we had come. The civil rights battles for human dignity and justice under our Constitution had already been fought in Montgomery, Selma, Birmingham and countless schools, public facilities and places of worship across the country. The first generation of people of color whose lives the movement had changed were emerging as seasoned educators, scientists, politicians and corporate executives. Blacks were beginning to appear on the boards of major corporations and Ken Chenault was on his way to becoming CEO of American Express. Surely now at last black entrepreneurs would begin to emerge and move into the mainstream of American business in ever increasing numbers as well.

The key to progress was moving into the mainstream, which had proven elusive. Few entrepreneurs of color had been able to navigate on their own. I understood why. As I grew up, I had witnessed up close the barriers to entrepreneurship for black folks. I watched my uncle search for opportunities to launch a significant business. A chemist at the MIT Lincoln Laboratory, a US Dept. of Defense research center, my uncle did advanced research on materials. Later he filed for and received several material patents. His dream for decades was to use his patents to build a global family business. When his first patents had nearly run their course, he used his savings to file for more. But his dream was never fulfilled. There were no investors or banks interested in backing his business proposition. All the “friends and family” money he could ever expect to raise would fall far short of the amount needed to commercialize his inventions. As his patents expired, his dream — the American Dream of turning hard work, innovation and determination into family financial security for generations to come — slowly faded as well.

There were sources of capital my uncle could have turned to. The numbers dealer, the loan shark or maybe the benevolent wealthy white guy. And many black entrepreneurs, facing no alternative, went to these sources of capital.  But, like my uncle, most decided not to, firm in the belief that the stakes were too high and the rewards would most likely accrue to someone else.

Maybe it just sags like a heavy load.

Langston Hughes, American. Poet, 1902 – 1967; Painting by Winold Reiss

Langston Hughes, American. Poet, 1902 – 1967; Painting by Winold Reiss

The wealthy white guy I was on my way to see was clearly cut from a different cloth. Milken had set his brethren in the investment banking world on their heels by being extraordinarily contrary. He didn’t buy the entrenched belief that a relatively small group of companies rated as “investment grade” deserved exclusive access to Wall Street’s capital. Pouring billions of dollars into hundreds of small, private and previously “un-bankable” companies, he had launched the likes of Ted Turner’s Cable News Network (CNN), Craig McCaw’s McCaw Cellular (now AT&T Wireless) and Steve Wynn’s Mirage Resorts (now Wynn Resorts) and put into motion a structural shift in global finance. He had also unleashed a wave of entrepreneurial activity changing the landscape of American business.

Then he crossed the tracks: he backed Reginald Lewis, a black lawyer and entrepreneur, whose business success beforehand was limited to the acquisition and operation of the $50 million McCall Pattern Company. Where prevailing Wall Street wisdom saw Lewis as modestly accomplished at best, Milken saw something else. He saw someone like Ted Turner, Craig McCaw and Steve Wynn, whose business acumen went far beyond the small platform he had masterfully built. Just black and overlooked.

So he helped Reginald Lewis leverage his success in the pattern business into the acquisition of the $1 billion Beatrice International Foods, a business consisting of 64 companies operating in 31 countries. At one fell swoop, this icon of Wall St. partnered with Lewis to create the first $1 billion company controlled by a black entrepreneur.

Milken and Drexel’s decision to back Lewis was strategic, not philanthropic. They had taken a cold, dispassionate look at their business opportunities.Their research and understanding of the changing demographics of America led them to a sharply contrarian conclusion: entrepreneurs of color, historically deprived of capital to grow their businesses, were a large untapped market representing a significant source of future growth for Drexel Burnham. Reginald Lewis’ test case had proven them right. Recent breakthrough successes by black entrepreneurs, such as Oprah Winfrey (Harpo), and Bob Johnson (Black Entertainment Television) building significant business in the media industry backed by white benefactors, were likely just the tip of the iceberg. A serious institutional infusion of capital into communities of color would unleash a much larger wave of entrepreneurial energy — and commensurate returns.

I intended to play an active role in unleashing that wave, and I was thrilled to contemplate the possibilities.

When my flight landed, I received a message stating flatly that my meeting was cancelled. Drexel Burnham was imploding*. The initiative died before it even started.

Or fester like a sore—

Nearly 30 years has passed. Drexel is gone. The architects of its visionary plan to invest behind entrepreneurs of color have dispersed. A new generation of investment bankers and private equity managers has emerged, but rather than seizing on Drexel’s insight, they are satisfied to provide financial services to a narrow network of clients just like them. They are apparently unaware of the vast missed opportunity, and blind to their contributions to our nation’s simmering social and economic inequities.

An entire generation has come and gone, but the new era has yet to arrive.

Or does it explode?

Like the Legend of Wall Street did so many years ago, Reinventure Capital has taken a cold hard look at its investment opportunities. The conclusion is the same, but even more compelling: entrepreneurs of color, still deprived of capital to grow their businesses, are a vibrant untapped resource pool representing a significant investment opportunity.

Today, that opportunity is further enhanced by the emergence of a new generation of entrepreneurs of color who are creating scalable businesses that deliver much-needed solutions to pressing social and environmental issues, and they are also creating life-changing jobs.

We want to tap into this pool and be a prime mover for rethinking the potential it holds. We believe that by creating opportunities within this pool, we will reap a wealth of opportunities with it. Please join us in reinventing investing. It’s time for a new era to begin.


 
Parts of Langston Hughes’ poem Harlem, often referred to as A Dream Deferred, are used in this blog.

*In Sept 1988, Drexel Burnham was sued by the SEC for insider trading and other unlawful acts, all of which involved Milken’s corporate finance department. The case was settled in 1989. In 1990, Drexel filed for bankruptcy.

Edward Dugger III is the President of Reinventure Capital and an impact investing pioneer. He previously managed The UNC Venture Funds as President of UNC Partners, Inc. As a prominent business and civic leader, Ed served as a director and member of the Executive Committee of the Federal Reserve Bank of Boston and is currently a Director and Member of the Executive Committee of Boston Community Capital, one of the largest regulated Community Development Finance Institutions (CDFIs) in the United States. He is the Chair of the Board of Boston Community Ventures and serves on the Executive Committee of the Massachusetts Business Roundtable. Based in Boston, Ed is a graduate of Harvard College and Princeton University (MPA-UP, Woodrow Wilson School of Public and International Affairs).

This article was originally published as Ed Talk #2 on ReinventureCapital.com.  It was reposted with express permission from the author, Edward Dugger III.

Watch Ed Dugger, along with Nikki Silvestri, Co-Founder and CEO of Silvestri Strategies, Decker Ngongang, Senior Fellow at Frontline Solutions, and Ben Jealous, Partner at Kapor Capital, on the Equity and Opportunity panel at SOCAP15.
 

Missing Infrastructure for African-American Wealth Creation

Posted by on May 2nd, 2016

#SOCAP365 at Impact Hub NYC

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The U.S. is battling systemic problems in terms of both wealth inequality and racism. Recent research from the Pew Center reveals some hard data connecting these two injustices: the average white individual has $144,000 in assets while black individuals, on average, have $11,000.  This has major implications for African-American wealth creation; it highlights the opportunity gap faced by black entrepreneurs trying to “bootstrap” or raise a “friends and family” round of funding, which then also raises the question for how wealth can be generated and sustained in black communities for the long haul.
 
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Jessica Norwood and Kevin Jones are tackling this problem head on, and presented some of their latest work at a SOCAP 365 event at Impact Hub NYC on Friday, April 15. Jessica is the Executive Director of Emerging Changemakers Network and a BALLE fellow; Kevin is the founder of SOCAP and the Neighborhood Economics platform. They are forming a unique partnership to begin building necessary infrastructure to increase the flow of capital to black communities in culturally appropriate ways with important core stakeholders along the way.
 
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The discussion ranged from blind spots within impact investing (Why does early-stage funding seem to flow more easily to start-ups in Africa rather than African-American communities?” “We recognize people through our dollars — we’re missing the opportunity to tell black entrepreneurs I see and value you”) to a much broader scope addressing issues of cultural exclusion, trust building, and ways market dynamics reveal and can potentially start to shift systemic racism.

@Kevindoylejones: “There are huge opportunities for financial inclusion to lead on issues of cultural exclusion. How can social capital shift the paradigm?”

@EmergeChange: “There’s a need to create trust and rebuild culture by deep listening & understanding of structural inequity dynamics — it’s the only true way to shift wealth.”

@EmergeChange: “We don’t have an airplane problem or a pilot problem — we have a runway problem.”

For more on this conversation, check out the #SOCAP365 buzz on Twitter and see additional resources below. We’ll continue exploring these themes as part of the Neighborhood Economics and Inclusive Entrepreneurship tracks at SOCAP16 and throughout the year at SOCAP 365 → sign-up for the SOCAP newsletter to stay updated on what’s happening next near you.

Learn more:

 

SOCAPtv: More than Motorcycles – Small Asset Ownership & Bottom Up Economic Revolution

Posted by on May 2nd, 2016

 

Tugende means “let’s go!” in Luganda, the main local language in Kampala, the capital city of Uganda. Tugende is also the name of Michael Wilkerson’s company, a financial inclusion startup in Uganda that provides motorcycles to recommended drivers in a lease-to-own arrangement. If paid on time, the drivers own the bike after 19 months or less.

From the stage of SOCAP15, Michael asks the audience to consider a different take on funding, thinking more about what can happen when people at the bottom of the pyramid can make investments in their own community.

Motorcycle taxis (bodas) are an enormous industry in East Africa, especially in countries like Uganda where 70% of the population is under 25 and unemployment is high.

 

Motorcycle Taxis

 

In Uganda, Michael explains, motorcycles help people move through traffic in cities, they help people in rural areas get where they need to go when there is no public transport, and they literally drive the economy.

However, driving a motorcycle taxi is difficult for many drivers because they can’t afford the upfront cost to buy their own bike. Instead, they end up renting from landlords indefinitely with no fixed contract, no end in sight, and no ability to build assets or stability.

 
 

TrafficwithMotoTaxis

“At Tugende we call this the rental poverty trap. Drivers earn enough to pay their rent and stay in the business but not enough to accumulate savings or move up in life.”

Tugende, he says, solves this problem with a fair, transparent, lease-to-own model. (Watch a 40 second video on how they do it.)

“We know that a driver who owns his own motorcycle goes from taking home about $5 a day to $10 a day. We also think about impact at the household level — the average household size in Uganda is five people, and if you can double the income of one of the primary breadwinners in that household from $5 a day to $10 a day, you’re literally lifting the entire household above the $2 a day poverty line.”

“Our customers are already moving themselves forward in life, we just provide an opportunity for them to do it faster,” Michael notes.

Watch Michael’s SOCAPtv talk to see how this business model goes beyond motorcycles, and how it can help people become micro investors in their own communities.

SOCAP Voices: A Conversation with Megan Mukuria on ZanaAfrica’s Latest Grand Challenges Grant and New Impact Study on Women and Girls in Kenya

Posted by on April 11th, 2016

In Kenya, one million girls miss school every year because they lack access to sanitary pads and reproductive health education. This lack of access leads to unnecessary shame, preventable illnesses, and unplanned pregnancies that keep women and girls home from school and work, and consequently from achieving their full potential in life. ZanaAfrica Group is a Nairobi based hybrid social enterprise working to solve this challenge by manufacturing, selling, and donating sanitary pads and underwear, while offering easy access to critical health information.

Megan_Mukuria_ZanaAfrica

ZanaAfrica Group Founder and CEO Megan White Mukuria first presented her solution to the SOCAP audience last year as a SOCAP15 Scholarship Entrepreneur. In March of 2016, ZanaAfrica Group was awarded a $2.6M Grand Challenges Grant from the Bill & Melinda Gates Foundation. This four-year grant, given under the Putting Women and Girls at the Center of Development (WGCD) initiative, will fund a groundbreaking new impact study. I recently spoke with Megan about the award and other exciting developments in her enterprise and her field of impact.

You had been living and working in Kenya for several years before you founded ZanaAfrica. What opened your eyes to this challenge?

Megan White Mukuria: Back in 2002, when I was working with street children, I put together a cost-per-child budget, and then I further segmented it out by gender. I found that sanitary pads were girls’ second biggest cost, after bread, which was just stunning. I came to understand this expense competes with food. Women and girls often have to choose between buying pads and having dinner. Families are already reducing from three meals to two or two meals to one. Poverty means that you are hungry. When I asked girls what they did when they didn’t have pads, they said time and again “I stay home from school.” I found this unacceptable.

“I found that sanitary pads were girls’ second biggest cost, after bread, which was just stunning. I came to understand this expense competes with food.”

I was like a mom to those 200 girls, and they would talk to me. I couldn’t allow these girls who are like my daughters to go through this. So it was really responsive compassion and love. I had already started a village bakery and several other businesses, and it just made sense to try to start selling sanitary pads. That turned out to be a much bigger undertaking, but one that had the potential to help eradicate poverty.

Meanwhile, I also witnessed how so many organizations had such limited ability to talk to girls about reproductive health because they were limited by their own religious values or lack of comfort around the topic. And so girls were getting unintentionally pregnant and were unable to negotiate sex on their own terms. I thought that was appalling. I wanted to see how I could solve this problem not just for my 200 girls, but for how many? Could I create a sustainable model to serve two million? 20 million? How many commas can we add in there? And when I realized that nobody was going to do anything to sustainably solve these dual challenges of pads and related health education, I decided to step up. So that’s what I’ve done and am still doing.

“… when I realized that nobody was going to do anything to sustainably solve these dual challenges of pads and related health education, I decided to step up.”

Can you describe the WGCD Grand Challenge initiative and the ways that ZanaAfrica’s work fits that program?

Melinda Gates launched the Putting Women and Girls at the Center of Development initiative at the Grand Challenges conference in 2014. Melinda Gates has really been looking at how putting women and girls’ voices and needs at the center of development initiatives can lead to stronger long term outcomes.

 The Gates Foundation has taken increasing interest in menstrual health. This is our third Grand Challenges award. We’re one of the longer-term grantees in the Grand Challenges community on the African continent, having been a part of the program since 2011. At the Grand Challenges Africa launch, the Gates Foundation spoke of our work as an example of a project that started out with one type of innovation, the material science innovation of sanitary pads, and through that journey transitioned to a new type of innovation, namely leveraging sanitary pad brands to deliver reproductive health education through engaging, girl-centered comics and a magazine that is anchored in the UNESCO sexuality education curriculum.They also highlighted it as an example of an innovation that was at the fringe and has moved towards the center of their work.

The Gates Foundation and WGCD grantees are together thinking deeply about how to measure “empowerment.” We 19 grantees are really at the epicenter of a movement that is thinking through questions of what empowerment means and how to measure it, including the role of qualitative metrics to capture empowerment indicators. At a recent Monitoring and Evaluation workshop for the initiative, there were a lot of discussions about the importance of qualitative data when it comes to measuring the success of more nuanced gender-based work. That is huge because important projects are too often shelved because funders say, “it’s not measurable.”

Please describe the impact study the grant will fund.

The study is going to be a six-armed randomized controlled trial conducted by Population Council, an international research organization, that will elucidate the role of sanitary pad provision and different health education delivery methods on girls’ educational attainment and well-being. It is a rather large trial–we will be tracking approximately 7,000 seventh grade girls in 120 schools over two years–so as to provide statistically rigorous longer-term results. One of the key areas we will be assessing is whether and how reproductive health education delivered through our magazine and text message-based (SMS) service compares to reproductive health education delivered by a facilitator (someone standing up in a classroom and talking). The latter is the “go-to” approach for health education in Kenya and most countries, but can at times pose challenges when it comes to maintaining not only the quality of content, but also cost-efficiency at scale. ZanaAfrica’s combined magazine and SMS tool offers girls a referable resource that is rooted in their real questions, as well as UNESCO’s technical guidance on sexuality education.

ZanaAfrica’s combined magazine and SMS tool offers girls a referable resource that is rooted in their real questions, as well as UNESCO’s technical guidance on sexuality education.”

In the menstrual health space, much attention has been paid to the returns of menstrual health management and reproductive health education on girls’ school attendance. From our work on the ground over the past eight years, we’ve learned that oftentimes, even when girls attend school during their periods, they may become withdrawn in class due to shame or discomfort. Over our two-year evaluation we will be examining other aspects of educational attainment in addition to attendance, such as matriculation into eighth grade, scores on national exams, and advancement to secondary school. We will also evaluate other factors such as self-efficacy and self-confidence. Assessing these broader areas of potential impact will be of vital importance to global education and health research.   

“Over our two-year evaluation we will be examining other aspects of educational attainment in addition to attendance, such as matriculation into eighth grade, scores on national exams, and advancement to secondary school. We will also evaluate other factors such as self-efficacy and self-confidence. Assessing these broader areas of potential impact will be of vital importance to global education and health research.”

What do you hope will be the ultimate outcome of this impact data?

I hope that it will help organizations, whether large UN entities, small development organizations, or governments, pay attention to this link between menstrual health management and reproductive health education and be able to normalize that intervention across their girl-focused programs. We believe that girls deserve to manage their bodies with dignity because menstrual health management is a basic human right. We also recognize that data is fundamental to large-scale systems change.

“We believe that girls deserve to manage their bodies with dignity because menstrual health management is a basic human right.”

The onset of puberty and the provision of pads is an amazing opportunity to speak to girls about a range of issue that will affect them and to help them be in the driver’s seat of their own destinies. Hopefully governments and organizations that work with girls around the world will begin providing feminine hygiene products such as pads alongside comprehensive sexuality education rooted in girls’ real questions and experiences. That is not currently happening in many parts of the world, including in the US. And to be honest, I think reproductive health education is the next frontier in women’s rights. We deserve to know what is going on with our bodies and the choices and rights we have.

For instance, in Kenya, right now about 45% of girls’ first sexual encounters are unwanted—they are coerced, forced, or transactional. That is stunning and awful and we can and must change this. Answering girls’ basic questions about health, rights, and sexuality, while providing them with pads and tampons can help reduce this dynamic. While the focus of this WGCD trial is not to get statistically significant data to prove this kind of intervention reduces incidences of such trauma, I believe we are going to contribute to a growing evidence base that eventually will answer such questions.

 What call to action would you offer the SOCAP Community?

To any organization that works with girls, I would ask you to consider how you are coming to understand girls’ needs around menstrual and reproductive health. To think about how your organization could leverage that understanding. One of the most powerful ways to engage with girls is to give honest answers to their real questions. The first step is offering a listening ear to whatever they feel the need to say or ask.

I would also add that the field of menstrual health management, tampons and pads, is a $13B global industry with an $85M market in East Africa alone. I think, coming from both a human rights perspective and from a business perspective, we should be asking how can we be innovating products that meet the needs of women and girls who are locked out of the market in a responsible way without being completely extractive.

ZanaAfrica Group is looking at a “buy one–give one” type model locally, where a percentage of the revenue would go back towards giving out free products for girls whose families can’t afford them through our nonprofit arm ZanaAfrica Foundation. This would be the first of its kind that directs sales from within a low-income country to serve needs of girls in that country, which inherently gives greater dignity to consumers, and creates a movement that enhances brand equity. Such a model would require more patient capital. If we are taking out, say, 5% of every product sold to give back to girls that could take slightly longer to repay.

Right now ZanaAfrica Foundation supports 10,000 girls a year throughout Kenya by delivering reproductive health education, sanitary pads, and reusable cotton underwear through a network of 21 community based organizations, while also collecting data on each of those girls every term. While the Foundation receives some institutional support, we also rely on a strong network of grassroots donors to help fund our programs. A donation of $10 can help provide a girl with the tools she needs to stay in school for an entire academic year. I encourage the SOCAP community to support our Foundation’s work or just learn more about how this issue is affecting so many girls in Kenya (and around the world).

For those interested in supporting the work that ZanaAfrica is doing on the manufacturing and product development side, we are going to be opening a new round of investments soon. Menstrual health management–real, comprehensive MHM–is a field that can sometimes fall through the cracks when it comes to investment, because this work cannot be classified only as education, or health, or sanitation, or even gender. I urge impact investors to think about broadening the ways at which they are looking at health and education. Educate Global Fund is a fabulous fund out of London that is expanding the definition of educational investment beyond brick and mortars or teachers to include all the educational inputs that school children need, including menstrual products, sanitation, and more. I think taking a more integrative and ecosystem approach is where this space is heading and where it should be heading.

“Menstrual health management–real, comprehensive MHM–is a field that can sometimes fall through the cracks when it comes to investment, because this work cannot be classified only as education, or health, or sanitation, or even gender. I urge impact investors to think about broadening the ways at which they are looking at health and education.”

We are also currently in the process of looking for a CFO for the business, and welcome inquiries about that.

Can you tell us about other developments that have taken place for your enterprise since SOCAP15?

On the company side, it’s been an epic couple of months for us. We’ve introduced our second-generation product design and rebranded our Nia pad products with a new look, as well as sourced a new producer. Also our sales closed last year at $90K and we are serving about 20,000 customers in the market. We’ve experienced 10X growth in sales from 2014, as we have launched into commercial markets to meet the BOP where they want to shop.

On our Foundation side, we’ve really formalized our Accelerator Program. We have five amazing Community Based Organizations that are getting a much deeper dive in terms of basic leadership skills, fundraising, and organizational capacity building. Because we recognize that change comes from within communities, we want to equip existing organizations that are already on the ground to be agents of change from within their own communities.

Also, on the policy side, our team in the US at ZanaAfrica Foundation has been collaborating with advocates in New York who are working to eliminate the “tampon tax” and provide free pads for girls in public schools. As you may know, across the US and the UK, bills are being put forward with advocates and politicians clamoring to end what’s called the “tampon tax,” which is an antiquated tax code on feminine hygiene products that unfairly penalizes women and girls. In some states in the US, prescription drugs like Viagra are not taxed, but tampons are. There is simply no way to justify that.

 “… Kenya was actually the first nation to eliminate a tax on tampons in 2004, ended an import duty on pads in 2011, and through our organization’s advocacy efforts, Kenya became the first nation in the world to provide pads for girls in schools. Now we can help to leverage that expertise to help advocate for girls in New York and other states.”

This has been very exciting–to see the Menstrual Health movement really take off in the United States. What many do not know is that Kenya was actually the first nation to eliminate a tax on tampons in 2004, ended an import duty on pads in 2011, and through our organization’s advocacy efforts, Kenya became the first nation in the world to provide pads for girls in schools. Now we can help to leverage that expertise to help advocate for girls in New York and other states. That is a great example of innovation happening in Africa that we believe America and other countries desperately need. We are committed to helping make that happen, not just in the US, but for girls globally.

What is inspiring you in your work right now? What gives you hope?

I have a strong faith and I think that really helps. I’m also inspired every day by our team. We have such incredible people! On the company side, our brand tagline is Live Your Purpose and I think every one of my team members really is living her or his purpose. They are so smart in their areas of expertise and so passionate about listening to girls and women. With the right people, it is inspiring to see the ideas that I’ve had come to life even better than I originally imagined them. And then the girls themselves inspire me daily. There is nothing more inspiring than seeing girls believe in their inherent value and dignity, and thrive.

Watch Megan Mukuria speak about ZanaAfrica Group’s work on Stage at SOCAP15.