The need for human agency: Is the middleman always a monster?

By | October 28, 2013
Mobile phone charging receipt, Kenya  Photo credit: Niti Bhan

The unfair demonisation of the middleman is apparent in this recent article on solar power products for the low income market in Africa. “Putting African ‘power pimps’ out of business” is the headline and the rest of the text goes downhill from there:

It’s hard to imagine the concept of a “power pimp” in Africa unless you have lived there. But it makes sense and cents on a continent that lacks a unified power system. There is basically no electric power in most rural places unless you are enterprising enough to own a battery and generator of some sort –– making you the “pimp” by letting other people charge their cell phones at crazy inflated prices.

It’s a problem that humanitarians worldwide seek to address, but an Israeli solution would do this using a cell phone. The idea of Nova Lumos is to buy solar power by phone on a needs basis, putting the middleman (that pimp) out of business.

Nobody would stay in business for very long in their local communities if they were truly the “power pimps” this company has gleefully labelled them. The day 20 Kenyan shillings, about 25 cents – the standard rate for mobile charging up and down the country – is considered price gouging, rather than a standardized regional service, is one to wake up and question the gross assumptions underlying this sweeping generalization. It is no different from the top down blanket perception of the entire informal sector as “a bad thing” and the demonisation of micro entrepreneurs providing much needed services that fill the vacuum left by inadequate systems.

Its time we took a closer look at the role of the middleman, better termed as the intermediary between an unmet need in the market and the provision of a convenient and affordable service. Agency banking is one such example where enough research has been done to demonstrate the beneficial value of the middleman, not to mention the socent favourite MPesa, which would be crippled without the value addition of their nationwide agent network.

This ignorance of the realities on the ground and perception of the hyper local social networks in the rural economies of the developing world only too easily explain the consistent failures that the social enterprise industry has demonstrated to date with their attempts to enter these emerging markets.

Here is another snippet from the same article describing the product and service in terms that clearly demonstrate that absolutely no competitive analysis or market research has been conducted. A simple online search would show companies like MKopa and Econet wireless way ahead of the game, having completed pilots and launched in their respective markets.

Davidi Vortman, general manager of the company, tells ISRAEL21c that the idea is to sell small mobile solar systems to individuals –– for charging cell phones, lights or small appliances –– paid for in affordable increments using a cell phone.

“The system is small enough for one person to carry and simple enough for a person to put on the roof. Just connect it without any technician; and use a cell phone to operate it through a mobile phone with a simple SMS,” Vortman

Paying in increments by phone could eliminate this barrier. The challenging part will be securing the systems and penetrating the market before other companies jump on the bandwagon. Nova Lumos was founded in 2012 and is now carrying out pilot projects to test the system using several hundred units in Nigeria and Guinea.

What concerns me about these hyperbolic claims and sweeping generalizations is that they inevitably lead to spectacular failures on the part of this sort of enterprise yet the negative impact is primarily borne by the local populace. Not quite the kind of social impact we’re seeking …

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