Greg Van Kirk has developed the MicroConsignment model—a sustainable, replicable means of delivering health-related goods and services to remote Guatemalan and Ecuadoran villages using entrepreneurship; empowering the villagers to help themselves.
The New Idea
Greg’s MicroConsignment model creates access to health care-related goods and services in isolated rural communities. The key to the MicroConsignment model is that local women are given the opportunity to become entrepreneurs by selling goods and services in their communities using a consignment mechanism. Unlike the traditional approach of giving handouts to rural communities, the MicroConsignment model—which Greg implements through his American citizen organization (CO), Community Enterprise Solutions and Social Entrepreneur Corps, is scalable, replicable, and sustainable.
The majority of MicroConsignment’s local entrepreneurs are women who had no other opportunities to generate additional household income. They have successfully sold eyeglasses, wood-burning stoves, seeds/growing techniques, water filters and energy-efficient light bulbs, in over 1,000 remote villages at affordable prices; thereby improving public health and economic welfare. Greg’s model creates powerful synergies between all the stakeholders in the supply chain, from low-cost providers to the locally-owned social enterprise partner, Soluciones Comunitarias, to the local entrepreneurs and ultimately, the consumers. These synergies are the basis of the model’s success as well as its future replicability.
Some of the major challenges facing the tiny, isolated rural communities targeted by MicroConsignment are not only poverty and unemployment, but easily preventable health problems like gastrointestinal and pulmonary diseases, vision problems, and malnutrition. Whereas urban populations are more likely to have access to the goods and services necessary for basic health care, the residents of satellite villages in remote areas cannot obtain the items that they need to ensure minimal welfare. Rural populations also struggle with severe underemployment because the countryside is failing to generate new jobs. According to Greg, in most of the rural communities where he has worked, the jobs created by MicroConsignment have zero opportunity cost—in other words, many of his local entrepreneurs simply have no other options for employment or self-employment.
Greg insists that the fundamental problem is not that appropriate, reasonably priced health care related goods and services do not exist; but rather, that many rural communities lack the access to these goods and services. This lack of access not only affects villagers’ health, but also has negative implications on family economy in rural communities. For instance, because most poor rural families in Guatemala cook with indoor bonfires, villagers develop pulmonary diseases, children often suffer burns, and families spend a great deal of time and money collecting or purchasing firewood, thereby limiting their economic productivity. Various models of efficient, portable wood-burning stoves have been invented, but many of these satellite communities do not have access to them and if they do it is only through sporadic donations.
A lack of access to important health-related goods and services is largely due to the absence of distribution infrastructure in remote rural villages. Many villages are both far-flung and tiny, thus complicating the efforts of distributors to realize economy of scale in their services to these areas. Often the only roads leading to these communities are unpaved or in great disrepair. Moreover, many villagers speak a variety of indigenous dialects rather than Spanish, which makes it more difficult for distributors to deliver goods and services on a large-scale.
Some COs have attempted to deliver donated goods and services to satellite communities, but two problems arise. First, while these organizations are well-intentioned, their donations often increase villagers’ dependency, as critics of “handout” programs are quick to point out. Second, the donation-based approach is not a sustainable long-term solution. Should donations stop, villagers are left without recourse to support. Furthermore, limited financial resources make it unfeasible for donation-based programs to expand to address the needs of isolated rural communities on a national, regional, or global level.
Greg identified the need for a comprehensive model that would deliver necessary health-related goods and services to small rural communities at affordable prices while also providing sustainable, locally generated self-employment. All the necessary components for such a model exist, but need to be articulated and set in motion. “There is a need for an efficient and effective model that leverages all stakeholders’ competencies and mitigates limitations to address this lack of access in a sustainable, profitable, and scalable manner,” explains Greg. To be successful, such a model would have to be “variable-cost-based and holistic” and would have to involve “product vetting, social entrepreneur-identification, financing, [and] training,” empowering villagers to solve local problems on a continuous basis rather than attempting to impose external solutions. After years of experimentation and adjustments, Greg designed the MicroConsignment model to respond to vulnerable community members’ needs.
Greg co-founded Community Enterprise Solutions in 2004 as a CO to coordinate and oversee the implementation of his MicroConsignment model in Guatemala, and plans to expand to other developing countries in the future. In addition, Greg co–founded Social Entrepreneur Corps in 2006 as a means to access additional financing and human resources. Community Enterprise Solutions operates in Guatemala and Ecuador via a for-profit holding company called Soluciones Comunitarias, whose managers, employees, and stakeholders are all local people in Guatemala and Ecuador. Community Enterprise Solutions provides the necessary capital for Soluciones Comunitarias to cover its overhead and inventory costs while Soluciones Comunitarias develops financial self-sustainability. To date, Community Enterprise Solutions has financed its activities through donations as well as revenue from Social Entrepreneur Corps, a volunteer/internship program Greg co-founded in December 2005 to partner American University students with local Guatemalan entrepreneurs.
The first step in the MicroConsignment model is product selection, which always begins with identifying the goods and services most needed by rural communities to improve villagers’ physical health and economic welfare, as well as environmental sustainability in remote areas. The goods must be portable, operable with a minimum amount of training, and affordably priced. Using these criteria, Greg and his team have developed a list of products for its local entrepreneurs to sell, including eyeglasses, wood-burning stoves, water filtration systems, seed packages and sustainable gardening techniques, and energy-efficient light bulbs. All of these goods have been selected for maximum social impact.
Next, there is an ongoing process to identify and train local entrepreneurs to act as distributors and advocates for health care and sustainable economic growth. Unlike microfinance or microcredit-based approaches to economic development, MicroConsignment necessarily involves circular transfer of knowledge, constant feedback and evaluation, and a rotating capital mechanism. Whereas microfinance and microcredit tend to cater to business owners looking to expand their operations, MicroConsignment gives individuals with no prior business experience the opportunity to develop entrepreneurial skills. In the case of microcredit, banks provide loans and occasional small-business training and then wait for the loans to be repaid. As Greg explains, “Success is measured by the borrower paying the loan back…” MicroConsignment, on the other hand, ensures that the business in question—distributing health care-related goods and services to isolated rural communities—creates a significant social impact on consumers’ lives. Greg explains that MicroConsignment considers the villager first and asks what do they need? It then creates the entrepreneurial opportunity to address that need.
The entrepreneurial and business aspects of the MicroConsignment model are key to its long-term sustainability. Since Community Enterprise Solutions is removed from direct operations on the ground, it does not profit from local entrepreneurs’ sales; all profits go to the local entrepreneurs as income or to Soluciones Comunitarias to cover operating expenses and expand product selection and geographic reach. The other critical advantage that MicroConsignment has over microcredit and microfinance is that local entrepreneurs are not forced to launch their business using debt, which discourages many would-be entrepreneurs, especially those with little or no prior experience. As Greg points out, MicroConsignment allows them to test-drive the model and achieve profitability within a month of the initial training and this is highly motivating.
Greg and his team at Soluciones Comunitarias visit satellite villages and invite villagers to attend an informational meeting about the MicroConsignment concept and its income-generating potential are introduced. Greg explains the various available products, their health, environmental, and social benefits, their profit margins, and the appropriate way to sell each product. For example, local entrepreneurs selling eyeglasses are taught how to give simple eye exams to fit consumers with the appropriate lens prescription. Villagers interested in the model are asked to participate in a three-session training program which culminates in a local sales campaign supervised by the Soluciones Comunitarias staff. Local entrepreneurs are provided with start-up inventory to begin selling immediately; without making the initial investment themselves.
At the end of each month, local entrepreneurs meet with a regional coordinator to evaluate their sales. The entrepreneurs keep a percentage of their monthly revenues while the rest goes to Soluciones Comunitarias to cover inventory and operating costs and to be reinvested in the model’s rotating capital mechanism. Each entrepreneur is granted exclusivity over a particular geographic region and must meet minimum requirements for frequency of sales campaigns and actual sales. As the local entrepreneurs accrue experience, they have the option to accept increasingly sophisticated products from Soluciones Comunitarias.
At the end of 2008, Community Enterprise Solutions/Social Entrepreneur Corps and Soluciones Comunitarias had trained over 150 entrepreneurs in rural Guatemala using the MicroConsignment model. The Ecuador program was launched in January of 2009. In Guatemala, these entrepreneurs speak ten languages and have sold their products and services in over 750 villages in thirteen of Guatemala’s twenty-two departments over the past four years. They have sold approximately 15,000 pairs of glasses, 1,500 wood-burning stoves, and recently began selling vegetable seeds/gardening techniques (1,000 sales), water filters (250 sales), and energy-efficient light bulbs (1,600 sales). They as well offer a free small business newsletter/website called EmpresarioRural.com and are testing U-specs (glasses whose refraction can be adjusted manually to eliminate the need for multiple pairs of eyeglasses over time) as well as additional water purification and solar solutions. On average, a MicroConsignment entrepreneur earns a wage of US$2 per hour for her work in a country where the average hourly wage is fifty cents. Working with Soluciones Comunitarias allows women to earn additional income while continuing to fulfill their household and family duties.
To Greg, however, the most profound impact of the MicroConsignment model is less tangible. What we provide is a mechanism whereby the villagers and entrepreneurs feel a sense of dignity and pride and this cannot be measured. As they gain confidence in their business skills, they are better able to care for their families. By creating easy access to basic health care-related goods and services, they improve the lives of their neighbors; generating revenue rather than accepting handouts. The entrepreneurs, many of whom are initially timid and semi-literate, become recognized as community leaders and develop a sense of purpose.
Through strategic integration of Community Enterprise Solutions and Social Entrepreneur Corps, Greg hopes to introduce the MicroConsignment model to other developing countries, to collaborate and/or create local for-profit holding companies in each country. Greg’s team will accompany each local holding company in the search for and development of new MicroConsignment opportunities. VisionSpring, which focuses on eyeglasses, has successfully adopted the MicroConsignment model in India and other parts of the world and Greg and his team helped them launch in Mexico, Paraguay, and Nicaragua. Greg is motivated not by the desire to build a for-profit business, but rather, is driven to develop a self-sustaining model in which local entrepreneurs generate income while creating access to affordable goods and services that improve rural villagers’ health and economic welfare.
Greg was born and raised in the United States. During his college years at Miami University in Ohio he had the opportunity to travel to other parts of the world, including Europe, during the dismantling of the Berlin Wall. His travels awakened a desire to broaden his horizons after college, and he moved to Japan to teach English for two years and to study for the government’s Japanese proficiency exam.
Returning to the U.S., Greg wanted to join the Peace Corps to continue his travels, but he opted to first acquire a skill set that would be useful in international development. He embarked upon a highly successful five-year stint in investment banking, working for both boutique financial firms and major international banks, such as UBS, where he conducted transactions in telecommunications, real estate, and railroads.
As his thirtieth birthday approached, Greg was faced with a difficult decision—within finance, he was building a strong reputation and entering his peak earning years, but he continued to feel a strong draw to international development work. He decided to give up his career in finance and for the opportunity to apply his business and finance knowledge to economic development; particularly in Latin America. He accepted an offer to join the Peace Corps in Guatemala, where he was given more autonomy and responsibility than usual due to his unique professional experience. In addition to fulfilling his Peace Corps duties, Greg also opened a restaurant and tourism center in the Guatemalan village of Nebaj to stimulate job creation and to nourish the tourism industry. He continued to invest and start a variety of locally owned businesses in Guatemala—including a Spanish language school for foreigners and an internet center. During these formative years in Guatemala, Greg developed the idea for the MicroConsignment model.
Greg’s personal history illustrates the power of incorporating business acumen with social entrepreneurship in economic development. Greg knows that the combination of business and grassroots experience enabled him to this work, and he could not have created nor achieved what he has if he did not have the combined skill sets stemming from both of these experiences. Due to the global success of microfinance and microcredit organizations, Greg’s MicroConsignment model has great promise for empowering local communities to improve their lives through entrepreneurship.