Product Placement

Charity’s sale of water pumps and other devices helps impoverished Africans build successful businesses

When Julius Karanja relied on the rains and a bucket to water his crops, all he could grow were beans, corn, and a few tomatoes.

But six years ago, Mr. Karanja bought a manually operated water pump that allows him to pull water from a nearby

stream for irrigation. Now he grows cucumbers, eggplant, kale, papaya, spinach, watermelon, zucchini, and other crops — during both the dry and rainy seasons.

The pump, which looks like a rudimentary StairMaster, cost $95. But Mr. Karanja says the purchase has been well worth it. Just by expanding his tomato plot, he was able to bring in about $640 in three months, more than tripling the $200 he earned the entire previous year.

The irrigation pump is the brainchild — and most popular product — of KickStart International, a charity here that develops and produces devices that poor people in sub-Saharan Africa can use to build successful small businesses.

Since the organization got its start in 1991, it has made and sold more than 71,000 water pumps, as well as other products, such as hay balers and oil presses to turn sunflower seeds into cooking oil.

$52-Million

While many charities develop business ventures as extensions of their work, social enterprise is at the core of KickStart’s mission.

The organization believes that by creating products and then selling them — rather than giving them away — to very poor people, it can achieve its goals of moving people out of poverty and generating economic development in a sustainable way.

The charity estimates that the more than 50,000 businesses its customers have started using KickStart products generate annual profits of more than $52-million.

For Mr. Karanja, the increased income that the water pump has helped produce has enabled him and his family to move from a house built with sticks and mud on somebody else’s land to a sturdy house with metal siding and a blue door on their own property. There are cows, goats, and chickens in the yard. All four of Mr. Karanja’s children have finished secondary school.

And the family’s success is starting to have an effect on the village.

For the last three years, Mr. Karanja has employed another local man to help him on the farm, and during harvests, he often hires more temporary workers. The family also has opened a store in the village that sells rice, cooking oil, and other staples.

Surveying his fruit and vegetable plots, which stretch from the crest of one gently rolling ridge to the next, he says proudly: “With a bucket you can’t do all this.”

Applying Past Lessons

KickStart’s founders, Nick Moon and Martin J. Fisher, say they developed the business model after seeing problems with more traditional charitable approaches.

The two men met as employees of a British development organization, ActionAid UK, in the 1980s.

During that time, they helped Kenyans develop ways to collect rainwater and store it, while also helping local groups of women and youths develop small businesses.

While the work was rewarding, Mr. Moon and Mr. Fisher say they began to worry about their ability to achieve long-term progress.

“Several months or perhaps years after you had done community project X, you went back to find it was no longer operational,” says Mr. Moon. “The dam had silted up, or the pumps had stopped working, and nobody was continuing it.”

What’s more, they realized that by giving the women’s groups and youth groups training, equipment, and concessionary loans to start businesses, they were undercutting local businesses. “We were displacing the very people with whom we should actually be working,” says Mr. Moon.

With those lessons in mind, Mr. Moon and Mr. Fisher created KickStart.

The co-founders decided to sell the products that KickStart makes because of concerns about both sustainability and what they see as serious drawbacks of giving things away free.

Giveaways, they say, are demoralizing to the recipient and create dependence or resentment. People often take for granted something they have been given. And because resources are always limited, they say, deciding who should receive donated items is inherently unfair.

“All that most people want is that fighting chance, that little opening, and once they see it, they’ll go for it,” says Mr. Moon. “People don’t want free things. They really don’t.”

Sales Network

The charity has worked to create a supply chain of dealers, distributors, and manufacturers that could eventually sustain itself without charitable contributions.

Wherever possible, the organization has tapped into existing business networks. In Kenya, where KickStart started — the group has since expanded into Tanzania and Mali — 389 dealers sell the group’s line of irrigation pumps. The majority are shops that sell seeds, fertilizer, and pesticides, as well as supplies for the care of livestock.

The water pumps are usually the biggest-ticket item the stores carry. Early on, it was difficult to persuade merchants to carry them, says Mr. Fisher. “In the beginning,” he says, “butcheries and hairdressers were the only ones willing to take a risk.”

KickStart has also helped create new businesses to sell the pumps or sought out a person to buy the pumps wholesale and sell them to the dealerships.

Four years ago, a woman in Tanzania who had sold seeds and fertilizer at a market in Dar es Salaam scraped together the money to buy a single pump to start her dealership. She gradually built up her business, and in 2005 she became a distributor, selling 50 pumps a month to other dealers.

“It’s a combination of existing supply chain, which we strengthen,” says Mr. Fisher, “and when we need to, we add a little extra to that supply chain, but always using local people.”

The toughest job, however, is marketing — persuading very poor farmers, often in remote areas, to make what might be the biggest purchase they have ever made.

“When you’ve got a brand-new product, nobody is going to come knocking on your door and ask for it,” says Mr. Moon. “You have to spend a considerable amount of time — and, ergo, money — introducing that product in the marketplace.”

Trying Out the Devices

KickStart employs a sales associate at each dealership to demonstrate how the pump works and answer questions. It is not unusual for sales associates to take a pump to a prospective customer’s farm to try it out. Such associates earn a commission on each sale they make above their monthly target, in addition to their salary.

KickStart also uses radio commercials, billboards, and newspaper advertisements to tout the benefits the irrigation pumps can bring.

And the organization stages “pumping contests,” during which participants compete to see who can pump a certain amount of water the fastest, and other events to raise awareness. In rural areas, the pumping contests generate a lot of excitement and take on a festival feel.

The goal is to get to a point where a big enough share of potential customers know about or have bought KickStart products that demand will continue to grow, even as the organization scales back its marketing efforts.

KickStart believes that to reach that point in Kenya, it will need to sell pumps to 16 percent or 17 percent of likely buyers — roughly one in six — a mark the organization says it is still several years away from hitting. Right now, KickStart estimates that somewhere between 7 percent and 8 percent have purchased the pumps so far.

“Once we reach the tipping point, it will leave in place a completely profitable supply chain,” says Mr. Fisher. “We’ll be able to walk away, and the supply chain will continue to operate because everybody’s making money, including us.”

In the meantime, KickStart’s need for both earned income and charitable contributions will increase substantially as the organization embarks on an ambitious plan to help 400,000 people in the next three years. That translates into selling 57,000 irrigation pumps annually by the third year of the plan. In the 2006 fiscal year, the organization sold fewer than 16,000 pumps.

To do that, the organization plans to accelerate marketing and sales efforts in the countries it is currently working in, and start operations in three more African countries, which are still to be determined.

Seeking Donations

The kind of expansion that KickStart is aiming for doesn’t come cheap. The organization estimates that meeting its three-year goal will cost roughly $17.5-million.

While KickStart has had some notable fund-raising successes — such as a three-year, $3-million grant from Deere & Company, the farm-equipment manufacturer in Moline, Ill. — Mr. Fisher says the organization’s hybrid approach to combating poverty makes raising money difficult.

“Very often our donors are split into two camps,” he says. “There are those donors who would rather that we give our pumps away, because they think it’s so unfair to force poor people to buy these things. And there’s another half of the donors who would like us to be a for-profit business and would like to invest in us.”

While the expansion plan was formally announced in September, KickStart has been laying the groundwork for the anticipated growth for several years.

The organization spent the past two years making arrangements to manufacture the irrigation pumps in China.

The factory that the organization is working with, located near Shanghai, started production in September, and already can turn out 1,500 pumps a month, augmenting the 400 that are made in Tanzania each month and the 600 to 700 in Kenya. When production at the plant in China reaches its full capacity, it will be able to turn out 2,500 pumps a month.

Machines in the Chinese factory automate many of the steps that are done by hand in the African factories. As a result, output is higher, and the cost of manufacturing is lower.

Last year, KickStart introduced a smaller version of its irrigation pump, which it sells for $35. When production of that pump starts in China, the group hopes to reduce the price to $25, putting it within reach of even more farmers.

The charity also hopes its increased supply will enable it to sell more pumps to other development organizations that want to use them in their programs.

“When a U.N. organization comes in, they don’t say, ‘We just want to buy five pumps or 10 pumps,’” says Ed Chan-Lizardo, KickStart’s director of business development. “They come in and say, ‘We want to buy 1,000, we want to buy 2,000 pumps.’”

Before starting manufacturing in China, he says, KickStart’s limited production capacity combined, with the group’s own need for pumps to supply its wholesalers, meant that filling an order like that would take six to eight months.

Full Review

The organization is now in the midst of a review of its sales and marketing activities as it prepares for rapid growth.

Overseeing that review is Cindy Kerr, who runs her own marketing company in Denver and has been volunteering for KickStart since July. She will make her second trip to Kenya next month.

Ms. Kerr says some of the decisions KickStart has made in the past — like how to spend the organization’s advertising budget — have been based largely on what seemed like a good idea to the person charged with making the decision, rather than on data about what would be most effective.

To help it collect such data, the charity has taken several steps, including asking customers who call its telephone hotline to get information about the group’s irrigation pumps to say how they first heard about the pumps.

“We’re spending 30 percent of our marketing budget on billboards, yet we’ve only had nine calls a month from them,” says Ms. Kerr. “I’m not saying we should abandon all billboards, but that tells me that I should watch this, because I’m not sure it’s the best use of our funds.”

Another big issue: KickStart’s relationship with the dealers who stock the organization’s water pumps.

The group is looking at what factors determine whether a dealership will be successful selling the pumps.

Ms. Kerr believes KickStart needs to start setting standards for dealers on how its products should be displayed and promoted, and to be ready to say, “Sorry, you’re not the right store for us” to dealers that aren’t willing to agree. Cutting down on the number of dealerships, she says, would allow the organization to focus more time and energy on those that are most committed.

As a result of the review, the charity realized that a lot of the materials it uses vary. For example, the polo shirts that sales associates wear and the stickers that go on the pumps in Tanzania are different from those in neighboring Kenya. To be more consistent in the way the organization presents its brand — and ideally to save money by buying in bulk — KickStart is working to standardize all marketing materials.

In the field, the charity’s irrigation pumps are sold under the brand name MoneyMaker.

“Money is the only thing a poor person cares about,” says Mr. Fisher. “They want to make money, so MoneyMaker is a perfect name for selling to poor people.”

Then he adds with a chuckle: “Of course, MoneyMaker’s a pretty bad name for a nonprofit.”