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Ciudad Saludable: The video report!

July 25, 2009 | Comments Off | Enterprises, Videos

Ciudad Saludable (healty City) is a NGO that develops micro-enterprises focusing on waste management in Lima. Founded by Albina Ruiz, Ciudad Saludable encourages and helps “recicladores” to organize themselves and create their micro-organisation. It has created 150 new jobs and Albina Ruiz pays a special attention to the self-estime and the dignity of the workers. Beside the trainings they give to the micro-entrepreneurs, Ciudad Saludable offers a technical and legal support and they developed an innovative microfinance system to finance the creation of micro-enterprises. After a successful experience in Peru, Albina is currently thinking how she could replicate her model in other countries such as India.

For more info, read Ciudad Saludable’s profile


Fair Street - Ciudad Saludable from Angalio Productions on Vimeo.

Our Peruvian report takes place in Lima where we met Albina Ruiz, founder and manager of Ciudad Saludable. Throughout our interview with Albina, we were really impressed by her enthusiasm and by her optimistic vision of the future. After this meeting, we have headed towards “El Pino”, one of Lima’s poorest neighbourhoods. There, we observed the work of the microentrepreneurs who drive all over the area with their tricycles to collect waste. The impact of Ciudad Saludable’s work is striking: despite the obvious poverty and the improvised buildings, we visited a clean neighbourhood dotted with green areas where it feels nice to move around.

Problematic and context:

Waste management is a major issue in Peru. The funding that the different governments allocate to this matter are insufficient and are mostly concentrated on the richest neighbourhoods. The demographic explosion in the main cities has also worsened the situation. The Peruvian households alone produce 20.000 tons waste daily. Among this waste, only 60% are collected and 35% treated appropriately. In the poorest areas where private associations do not intervene, some streets look like open sky dumps, the air is unbreathable, and the waste negatively impacts the hygiene and the health of the communities.

The inefficiency of the public services in the destitute areas is mainly caused by the lack of integration of the poorest populations within the legal system and the lack of political will to tackle the problem head on. Often without declared address and valid ID documents, the state does not have the opportunity to control the destitute citizens. Also, many politicians believe that the poor are not able to pay for a collection service. Once in a situation of free rider, the municipalities do not have enough means to cover all the areas and the waste excess start accumulating quickly in different places of the area.

The materials accumulated in these dumps represent a source of revenue for the poorest people. Improvising themselves “recicladores” go around these open sky dumps looking for plastic or paper that they can resell for a small amount of money (+/- $2 per day) to an intermediary who sells these materials to a recycling centre. These “recicladores” work in really bad conditions, without gloves, protection masks and working pants. Moreover, the “recicladores” are regularly persecuted by the local police who do not accept their activity. Finally, as they work alone during the night, the “recicladores” are often victim of the violence of the local gangs.

The initiative:

Ciudad Saludable (Healthy City) is an NGO which favours the development of microenteprises that collect and recycle waste in Peru. Ciudad Saludable regroups “recicladores” formally by organising them within microenterprises. Practically, Ciudad Saludable helps them in the legal work needed in the creation of a company, provides them a logistic support and enables them to finance the tools needed for their activity by giving them access to microcredit at very attractive conditions. This relatively simple model has revolutionised waste management in Peru and has improved the living conditions of millions of destitute people.

The organisation of the “recicladores” has several advantages: firstly, by regrouping the output of their daily labour, the “recicladores” together a larger amount of waste that they can directly sell to a recycling centre at a much better price, not using any intermediary. This quantity effect is enhanced by the Ciudad Saludable’s financial support that enables them to acquire tools increasing their productivity such as trucks, motorised tricycles.

Secondly, by providing appropriate equipment (helmet, gloves, working pants…) to its “recicladores”, Ciudad Saludable allows them to collect waste in better hygiene and safety conditions and in greater dignity. Ciudad Saludable gives a great importance to the self-esteem and the dignity of its workers. Therefore, they have to buy their own equipment through a system of microcredit developed in collaboration with Scotia Bank. In this context, they are not assisted but buy themselves the tools that will improve their condition.

On the field, the microenterprises collect the waste of the households that have accepted to subscribe to the services of Ciudad Saludable. The cost of the subscription is $1 per month. To encourage the people of the neighbourhood to contribute, Ciudad Saludale does a lot of sensibilisation stressing the interest of waste collection and the positive impact of a clean neighbourhood on children’s health. Ciudad Saludable also rewards the “good contributors” by creating green areas close to their houses. Today, the payment rate in the areas where Ciudad Saludable is working is over 60% and that rate is constantly increasing.

The creation and the assistance of micro-entreprises is Ciudad Saludable’s main program. However, Ciudad Saludable has other fields of activity: they offer consultancy services to different cities in Peru to help them improving their waste management. They have also created an innovative program enabling the production of gas using the excrements of pigs that feed themselves of organic waste.

Finally, Ciudad Saludable has developed a master in environmental management in collaboration with “l’Universidad Católica del Peru” in Lima. The goal of this master where Albina Ruiz and some of her collaborators teach different classes, is to generalise waste management solutions in Peru.

In the mid-term, Albina Ruiz’s objective is to replicate her model of micro-entreprises to all cities of Peru and to other countries in South-America. Deeply affected by a recent trip in India, Albina Ruiz also made a priority of adapting her model to that country.

The entrepreneur:

Albina Ruiz, the founder of Ciudad Saludable, grew in the Peruvian Jungle. Aged 18, she leaves to Lima where she is shocked by the amount of waste in the streets and by the air contamination. She quickly decides to fight this plague and launches several cleaning campaigns within her university.

Then, she will do her thesis on the management of micro-enterprises and the environmental management in the poor areas of Lima. This thesis will trigger a lot of interest among her teachers. This enthusiasm will encourage her to put her theories into practice and she decides shortly after to create Ciudad Saludable. Her model and her innovations have been awarded numerous times ; among others, Albina has been elected “Schwab Social Entrepreneur of the World Economic Forum”, she has received the “Skoll Award for Social Entrepreneurship” and she is an Ashoka fellow.

Social Impact:

The 13 micro-enterprises launched by Ciudad Saludable employ 150 people. Ciudad Saludable operates in 60 Peruvian municipalities, enabling the collection of 100% of the waste in the areas where it is active. By collecting waste and favouring the adoption of respectful behaviours, Ciudad Saludable’s different micro-enterprises have improved the living conditions of 4 million people.

Ciudad Saludable’s work has also had a huge influence on the Peruvian government. Recently, the company has been an important actor in the creation of the first General Law on solid waste in Peru.

Finally, through its master in environmental management, Ciudad Saludable has enabled more than 5,000 students to master in the field. Today, all these students have the skills to be the actors of the environmental change initiated by Albina Ruiz.

Financial impact:

The micro-enterprises are managed by destitute people living in the neighbourhoods where they operate. These people generally do not have access to the loans of “classic” banks and find it therefore very difficult to finance the purchase of additional material. To tackle this problem, Ciudad Saludable has developed a microcredit program with the Canadian Bank Scotia Bank. As Albina found the normal interest rates proposed by the microcredit institutions way to high, (between 30 and 40% annually) Albina created a special fund that Ciudad Saludable guarantees with a deposit of $30,000 at the Scotia Bank. With the guarantee to be reimbursed and not having to deal with the follow up of the loans, Scotia Bank offers credit at a much lower annual interest rate (12%).

In 2006, Ciudad Saludable has obtained a $615,000 grant from the Skoll Foundation after having received the “Skoll Award For Social Entrepreneurship” awarding the quality of the innovations. This grant enabled Ciudad Saludable to gain scale, to improve the quality of its support to the micro-enterprises and to accelerate the expansion process to other countries of South America.

Ciudad Saludable, by developing innovative solutions, has met the challenge to create “healthy cities”. Now surrounded by a skilled and optimist management team, Albina Ruiz wishes to extend her model to all the Peruvian cities and to export it abroad.

Fair Street highlights the role of finance in the development of social enterprises.

If there has been social entrepreneurs for a long time, their development and their influence has strongly increased in the last three decades. Among other things, this happened thanks to the work of several organisations which, convinced of the potential of these extraordinary individuals, support them to increase their impact and spread their innovations.

Ashoka was the first and is today the largest organisation supporting social entrepreneurs.

Ashoka is a non-profit organisation that aims at structuring and developing social entrepreneurship at the global level. It was founded in 1980 in India by Bill Drayton who was persuaded that the economy needs the dynamism and the innovations of social entrepreneurs in its long term development.

Bill Drayton famously commented that “our job is not to give people fish, it’s not to teach them how to fish, it’s to build new and better fishing industries.”

Guillerma Lazzaro, Ashoka’s director for the Cono Sur region (Argentina, Chile and Uruguay) received Fair Street in Buenos Aires to explain us in details the vision of Ashoka and the main challenges that social entrepreneurs will have to face in the coming years.


Fair Street - Ashoka Cono Sur from Angalio Productions on Vimeo.

CEGIN: Healthcare for all

June 2, 2009 | Comments Off | Enterprises

After problems faced by cartoneros, education and water access, Fair Street’s third report puts forward a doctor who seeks to provide the poorest of people with access to healthcare.

Problem: healthcare

In our previous report, we focused on the essential role played by education in economic and social development. Health must be considered as a second fundamental factor in constructing a sustainable future. One cannot imagine a country adopting a development policy which does not seek to improve access to healthcare services. For rural populations, whose workforce is often the main production factor relied upon for agriculture, good health is an essential basis for any progress to be achieved. In far-off regions, particularly, women and children suffer from difficult living conditions; one of the UN Millennium Development Goals is to reduce by three quarters the maternal mortality ratio by 2015. The Juyjuy Province is especially affected by this problem, with a maternal mortality ratio ten times higher than in France.

Context:                                                                                                 

In Argentina, over half of the population does not have access to social security. But even those whose work status allows them to enjoy social security benefits often choose in addition to subscribe to a private health insurance. This is because of the inefficiency of the public healthcare system, and for this two main causes are identified. First, it is decentralized and managed at the level of provinces, which leads to strong differences between regions in Argentina. Moreover, as the State is unable to offer a complete set of solutions, workers unions tend to create their own obra social (social security), which also causes irregularities and many organizational problems. The Argentinean population thus has two options: either to resort to private healthcare systems, usually too expensive for the populations at the base of the pyramid; or to use available public services and consequently accept its inefficiencies and waiting lines that can last up to several days. But this time spent waiting prevents the patient from working, and providing for the needs of his family.

The company:

CEGIN (Centro Ginecologico Integral) is a medical center founded in 1989 which specializes in the provision of medical services to poor women from rural areas. The CEGIN center manages to offer quality services at half of the market price! In order to achieve such results, their strategy is based on the use of the economies of scale. The medical industry is faced with very high fixed costs (equipment, infrastructure…), whereas the additional cost of a new client is actually relatively low. The CEGIN center therefore targets a very large number of patients in order to spread its fixed costs. By working many hours and treating a large volume of patients (40 000 total), the center can thus guarantee a quality service whilst achieving lower rates of consultations. Rather than offering free services, the CEGIN approach is to charge the patient a low — but fair — cost. They have come to realize that the patient feels more dignified that way, and in consequence is treated with greater respect by doctors.

Five years ago, Jorge Gronda launched the SER system within the CEGIN center. It is a membership card that patients can purchase for 10 pesos (€2) per year which gives them access to the 60 CEGIN medical practices. By presenting this SER card, patients enjoy preferential rates in CEGIN centers that charge less than half of the market price for medical services (for example, an ultrasound scanner costs 20 pesos in CEGIN centers, instead of 50 pesos normally). The main idea behind the SER card, beyond increasing access to healthcare, is to create a network that will later allow its members to enjoy various advantages. By creating this network, and taking advantage of its high amount of members, the SER system can have a considerable influence on shopkeepers in the Jujuy Province. Currently, card holders already enjoy discounts in some pharmacies, and in the long term, Jorge Gronda’s ambition is to develop a system of “social franchise”, and extend the SER card’s field of action to various fields such as food, construction and transports. His aim is that necessary fundamentals for a decent life be accessible at low cost for all the people living at the base of the social pyramid.

The entrepreneur:

Jorge Gronda is a doctor originally from the Jujuy Province. First active in the public sector, he left it over 25 years ago to found CEGIN. Tired of the public healthcare system’s many gaps, he launched the CEGIN initiative with two motivations: first, he wished to offer quality healthcare to those at the base of the economic and social pyramid; and second, he wished to reduce the distance between doctors and patients. Jorge Gronda’s has earned much recognition and gratitude for his work. He was first elected Entrepreneur of the Year by the Schwab Foundation in 2005, he then received the United Nations Development Prize, and he was finally invited to share his vision of the future at the Davos World Economic Forum in 2008.

Social impact:

The social impact of CEGIN and the SER system is obvious, and can be summarized as follows: to allow the people at the base of the pyramid (by definition, those who do not have access to social security) to have access to quality healthcare. Nowadays, over 40 000 people are followed by the CEGIN clinics (including 20 000 through the SER network). Over 10 000 biopsies are carried out each year in CEGIN clinics, which is estimated to have prevented the development of more than 300 cancers.

Nonetheless, Gronda does not limit himself to the provision of healthcare services. Instead, he takes an interest in acting out of consideration for the poorest of people. During his interview, Gronda insisted several times on the important role of the SER card. First, people pay in order to subscribe for this card, therefore valuing it more than if they received it for free. This requirement has a direct impact on the level of the care they receive, as they are more inclined to share information on their health that facilitates the work of their doctors. Second, belonging to the SER networks and enjoying quality healthcare services considerably increases the self-esteem of people suffering from social exclusion. Thanks to the satisfaction of SER clients, Gronda has never had to publicize his system. The pride they take in being part of this network encourages people to talk about it in a positive way, and this word of mouth has proved to be an essential contribution to the development of CEGIN.

Financial impact:

 Support from a fund: Gronda is currently attempting to finalize negotiations with a European fund. Because of a confidentiality clause, we are unfortunately unable to divulge its name. The financial contribution from this fund should allow the consolidation and extension of the SER network. The objective is to extend the number of members from 20 000 to 50 000 over the next five years. According to Gronda, such financial support from an external organization is necessary in order to achieve this objective.

Use of microfinance: 80% of health problems can be resolved with an SER card and the consultations at half price that it allows. However, some serious problems require much more expensive surgery. In these cases, CEGIN uses the benefits of micro-credit in order for its clients to afford these operations. The most common operations they have to carry out cost on average 3 000 pesos (€ 600 +/-). A micro-credit fund financed and managed by CEGIN allocates credits equivalent to the costs of the required operations. These credits are usually reimbursed in ten regular payments. Gronda is a pioneer in the use of micro-credit for health purposes; considering that health is a basis for development, he believes that it is essential for people to have access to capital in order to extend their access to healthcare. For the worst cases that micro-credit cannot finance, CEGIN is trying to set up a micro-insurance system. Statistically, these cases only represent one in a 100 000 patients, so Gronda is trying to take advantage of the “strength in numbers” effect of the SER network; the small contributions of all members of the network would finance the treatment of exceptional cases.

The SER system rests on a fundamental financial principle: diversification. Members of the network are at the base of its success and development. That is why, by extending the network, Gronda is consolidating it. With more members, the various risks are diversified and the global risk is reduced. This diversification that reduces the system’s profile of risk also plays an essential role in financing both the workings of micro-credit and the development of a micro-insurance system.

 

Sources:

 Interview with Jorge Gronda, founder CEGIN and SER System

Llobeta Robert, Recuperando la salud, Grupo Editorial Lumen, Buenos Aires, 2007

www.oms.org

www.undp.org

www.schwabfound.org

 

The second report takes place at Bariloche, in Northern Patagonia. After a meeting in Buenos Aires with the manager of Ashoka, a network that supports social entrepreneurs, we decide to change our itinerary and make a “small” 2000 km detour to Bariloche.

Problems:

Water: Water is a crucial concern, at the very heart of the environmental challenge confronting humanity. Management, supply and diminishing resources are all issues on which much progress still needs to be made. Water quality has a huge impact on the living conditions of the poorest populations. Better water quality improves both the food supply and the hygiene of those “at the Base of the Pyramid”. With improved hygiene they are better prepared to confront the challenges of their everyday life and they can shift their efforts from fighting for survival to their personal development.

Education : In developing countries, there are currently 75 million children who do not attend school, and 861 million illiterate adults. Access to education is universally recognized as a key factor for economic and social development. Education develops knowledge, and gives access to employment: by learning concepts and techniques, marginalized communities can benefit from growth and improve their situation. They are then able to take personal responsibility for themselves and for their families. In developing each individual’s potential,  Education makes a real difference to the dignity of the human condition. “To ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling” is one of the objectives of the United Nations’ program to eliminate poverty by 2015.

Context

Despite its status as an emerging country, Argentina is a country where poverty is still prevalent, be it in big cities like Buenos Aires or in far-off regions such as Bariloche. The economic crisis that hit the country at the start of the decade had a profoundly detrimental effect on the country’s economic and social situation (between 1998 and 2001, the GDP fell from 300 to 220 billion pesos!), and its consequences remain highly tangible today. In Argentina, over half the population lives below the poverty line, and one in five is in a state of complete destitution, with revenues insufficient to provide even the necessary minimum to maintain physical capacity. This situation is mainly the consequence of a high unemployment rate: in the region of Bariloche, a quarter of the active population is unemployed, and this figure reaches 75% in the most remote areas.

The direct consequence of this poverty is the marginalization and social exclusion of a substantial proportion of the population. People live in precarious conditions which are often difficult to escape.

The company:

ETV (Emprendimientos de Tecnologias para la Vida) was founded in 2006 and aims at developing, building and distributing technological solutions to improve the living conditions of the people at the base of the social pyramid. Currently, the main product developed by ETV is the Bomba de Soga, which pumps water. ETV’s objectives are threefold: to harness the potential of technological innovations for the poorest communities; to provide work to young people from the Fondation Gente Nueva; and finally, to use some of the revenues generated by the sales of their products to fund the foundation. However, at this stage, the profits generated do not yet allow significant progress towards the achievement this third objective.

Created 25 years ago, the Fondation Gente Nueva aims to promote education and access to employment to those excluded from the traditional educational system. Helped by a network of primary and secondary schools, and the development of workshops and regional education programs, Gente Nueva wants to give each individual a chance to realize his or her potential. The schools of the Gente Nueva network are free, and the salaries of teachers, who are selected by members of the foundation, are paid by the State.

ETV products are made in the workshops of Gente Nueva, which employs a workforce of young apprentices.

The entrepreneur:

Gustavo Gennuso is originally from Buenos Aires, but he has been living in Barichole for the last 30 years. He moved there when he started studying nuclear energy at the Balseiro Institute. He continued to work in this field until 2000, whilst developing his social innovations. After creating the Fondation Gente Nueva, Gustavo now wants to prove with ETV that a viable and lasting social impact is possible. Gustavo Gennuso’s ambition is to achieve profound social change. He wants to give the poorest members of society every opportunity to develop. By accomplishing social change, he wishes to transform not only the lives of the poor, but also society as a whole.

Social impact:

ETV aims at making significant improvements to the living conditions of the poorest people. Technology development is but a means to this end. The company’s social impact is threefold: first, it improves the living conditions of those at the Base of the Pyramid; second, it creates opportunities for those suffering from exclusion; and thirdly, it finances the Fondation Gente Nueva. In three years of existence, ETV has already succeeded in reaching out to 300 families. The long-term objective is to have a direct impact on the lives of 150 000 people.

Since its creation, the Fondation Gente Nueva has welcomed over 5000 young people into its classes. It has also trained  another 3000 young people through its regional education programs. Gustavo Gennuso’s initiatives have also had an influence on political decisions relating to education in the regions where he is active.

Financial impact:

In this case, the financial impact lies more in the role played by microfinance in extending the company’s social impact than in direct financing.

Microfinance : Micro-credit is an innovation that has allowed millions of people to extract themselves from poverty. If access to capital can allow poor people to create a micro-enterprise, why should it not also allow them to buy products that will significantly improve their living conditions? Such is ETV’s strategy. It is true that the targets of Gustavo’s social business can often not afford to buy his products. The “Bomba de Soga” costs 700 pesos (+/- €140). People who earn an average of €2 per day can hardly hope to find such an amount. So, in order to extend its social impact, ETV uses the micro-credit formula to make its products more accessible. Thus, ETV’s clients fund the purchase of a water pump with a micro-credit. This support from microfinance has a twofold impact: it extends ETV’s social impact, but it also increases the future benefits of the company — and, therefore, the financial resources available to Gente Nueva, who can in turn accelerate social change through increased access to education. As micro-credit is not one of ETV’s activities, they collaborate with different MFIs (Microfinance institutions) and NGOs from the regions where they are active (mainly Northern Patagonia and the Jujuy province). This collaboration with the microfinance sector is the only way to reach the targeted 150 000 people.

Financing: In parallel with its social vocation, ETV also aims to provide financial resources for the Fondation Gente Nueva. This type of model is fairly widespread among social enterprise initiatives: in order to avoid being dependent on donations, “business” solutions are preferred and “social businesses” are created with the aim of financing the non-profit side of their activity. The remainder of the profits are reinvested in the company in order to finance research for other new technologies.

ETV and Gente Nueva have received a financial contribution from the organization Ashoka — which we will present later — of which Gustavo is a member. The company also benefited from various funds, essentially from philanthropic investors, in particular a Swiss “business angel” who has provided a credit on very favorable terms (but about which we have not received any other details). Today, ETV is seeking financial backing amounting to $74 000 (€54 833) in order to finance investments necessary for them to achieve the objectives of their business plan — specifically, for the launch of new technologies.

The strength of Gustavo’s model resides in its capacity to tackle different problems simultaneously. The all-embracing nature of his organization is striking! His model features three essential elements in the fight against poverty: education, access to capital, and healthcare. By creating synergies between different organizations, he can considerably extend his social impact, and this allows him to implement lasting change.

Sources : Interview with Gustavo Gennuso, founder of ETV and of Fondation Gente Nueva

www.unesco.org

www.oms.org

www.schwabfound.org

www.changemakers.net