African slum dwellers spend 60% of their daily income on food. Compare this to the average household in the US where food expenses account for 7% of the daily income. The slum population in Africa is therefore constrained by price in making food purchases. These African households may not be starving but the choices available to them – filling staples or at times skipping meals- ensures that they are not properly nourished.
This is part of what informs SokoText’s mission among slum dwellers – improving nourishment by increasing the variety of food available to households through reduced prices.
But how does SokoText achieve this? The main idea behind the service is the formation of a virtual buyer co-operative using mobile phones. Kiosk owners form a crucial link in distributing groceries across slums in the country. Transporting this produce to and from the market alone, eats up at least 25% of the kiosk owners’ daily income. These small scale entrepreneurs cannot raise the amount of capital required for bulk purchases which would guarantee them wholesale prices. Coupled with high levels of competition and a lack of trust, this limits the benefits enjoyed among the traders.
Founders of SokoText namely: Suraj Gudka, CFO (Kenya), Verena Liedgens, COO (Germany), Jonah Brotman, CEO (Canada), Sofia Zabolotskih, CMO (the UK), Carolina Medina, CCO (Chile) are a group of students from the London School of Economics came together to create socio-economic impact among slum dwellers. The social venture has been under incubation at the Nailab since November 2013. And in the few past months, the project’s growth has attracted the interest of Start-Up Chile which will provide the SokoText team with $40,000 capital.
By enrolling to SokoText however, orders are grouped together without the kiosk owners having to work together. Steps for participating in on SokoText are:
- kiosk owners pre-order vegetable produce using mobile phones (evening)
- these orders are aggregated on the SokoText platform
- orders are purchased in bulk from farmer co-operatives and stored in SokoText wholesale outlets
- kiosk owners pick up orders from nearest wholesale outlet (the next morning)
- 20% savings gained by kiosk owners, passed on to customers which leads to an increase in sales
The slums form a massive market for rural farmers in Africa, SokoText serves as a link between these two groups. By tapping into Africa’s mobile revolution, SokoText plans to create access to better nourishment among slum dwellers through the mobile phone.
Sales is the major revenue stream for SokoText. By purchasing from farm co-operatives, good quality produce is obtained at wholesale prices. Kiosk owners benefit from 20% savings which they pass on to customers, another 10% saving is retained by SokoText – some of this is re-invested into the project while the other covers expenses.
In its pilot stage, SokoText has setup a wholesale outlet in Mathare slums. 27 kiosk owners are served by this outlet allowing the project to reach over 2000 residents in the slum. The project’s model provides an incentive for more small businesses to join SokoText, in the end the SokoText team is empowering slum dwellers to take ownership of their own nutritional choices.
Milestones achieved to date:
SokoText’s unique idea and value stand point got them a place at the world renowned Start-Up Chile program which they are set to commence come March 2014
This is a program created by the Chilean Government, that seeks to attract early stage, high-potential entrepreneurs from around the globe to bootstrap their startups in Chile and use it as a platform to go global.
The program will provide them with US$40,000, an equivalent of Ksh3.5 million, of equity-free seed capital, and a temporary 1-year visa to develop their projects for six months, along with access to Chile’s social and capital networks.
They have also received recognition from the London School of economics, who after a holding a competition geared to funding the best student solutions that would help impact the society, proved to be among the best from over 30 ideas presented
This won them a £5120 (Ksh730, 000) grant.
SokoText were also finalists of the 2013 Hult prize. The Hult prize is the world’s largest social enterprise competition, the winner of which gets $1m in seed funding. The team pitched SokoText to a judging panel at the Clinton Global Initiative in New York in September 2013. Apart from having a chance to meet the former US president, Bill Clinton, they presented to a judging panel consisting of Nobel Laureate Prof. Muhamad Yunus, Mobile communications entrepreneur and billionaire Mo Ibrahim, Indian American venture capitalist and entrepreneur and Co-founder of Sycamore Networks Desh Deshpande and others.
Below is their pitch video: