September 1, 2009 | Read Time: 2 minutes
VillageReach, a nonprofit organization in Seattle, took a novel approach to trying to improve the health of people living in remote areas of Northern Mozambique. It started a propane-distribution company.
In 2002, the charity started VidaGas with the country’s Ministry of Health as its first and, at the time, only customer. With a reliable source of energy, clinics were better able to keep vaccinations cold, sterilize medical equipment, and offer night-time birthing services.
In five year’s time, the percentage of young children in the region vaccinated for diphtheria, tetanus, and pertussis climbed from 69 to 95 percent.
The company quickly began to expand its customer base to include hotels, restaurants, hospitals, small businesses, and eventually residential households. The business has had the added benefits of spurring economic developments and reducing the use of charcoal and wood for cooking.
Last year, VidaGas delivered 240 tons of propane, and is now the largest distributor in Northern Mozambique.
Impressed both by the company’s business prospects and the social benefits of its work, the Oasis Fund has made a $1.4-million equity investment in VidaGas. The money will allow VidaGas to expand its business in Northern Mozambique and potentially start exporting propane to surrounding countries.
The Oasis Fund is a commercial investment fund in Europe that invests in businesses that provide housing, health care, education, water, or other services to poor people in developing countries. But while the fund focuses on businesses that provide a social benefit, it also is looking for significant financial returns.
“I come from investment banking and then later dealt with private equity and venture capital, and I can tell you that the terms of this deal are as stringent as I’ve ever seen,” says Craig Nakagawa, co-founder of VillageReach.
In an interview with The Chronicle, Mr. Nakagawa talked about why he thinks a hybrid approach to social problems has the potential to “magnify the impact” of philanthropic dollars and create sustainable change.
