Posted by: Sanette | July 19, 2010

Part II: MicroConsignment Hits the Mark

Note: As my internship in Guatemala comes to a close, I would like to use my final blog post to reflect on the Social Entrepreneur Corps program and analyze the work in the field. The post will consist of a background piece and three parts. Thanks for reading!

The new micro model

The Guatemalan-run enterprise Soluciones Comunitarias (SolCom) utilizes SEC co-founders Greg Van Kirk and George Bucky Glickley’s innovative MicroConsignment Model (MCM). Before arriving in Guatemala, I likened the MCM to the microfinance model, in which microfinance institutions, such as Grameen Bank, Acción International and Opportunity International, give high-interest loans to impoverished entrepreneurs to start small businesses. Microfinance, microcredit and microfranchise quickly became the hottest new tool to combat poverty, resulting in billions of dollars in loans. Using group lending and accountability, microloans can potentially increase household income and empower women. In many cases, the model works.

In contrast, critics maintain that the poorest demographic do not benefit from taking on entrepreneurial risks, as reported in Aneel Karnani’s assessment of microfinance in the 2007 Stanford Social Innovation Review. The poor are often entrepreneurs by circumstance because steady jobs are not available. Additionally, in group lending, one or two people may default and end up in a worse position economically than before. Loans taken out by women can also become subject to the will of their husbands.

Van Kirk and Glickley’s MicroConsignment Model, on the other hand, bypasses some of the inherent risk built into the microfinance model.

According to the “The New New Thing: The Micro-Consignment Model” by Van Kirk and Brett Smith, founding director of the Center for Social Entrepreneurship at Miami University, the MCM is “a sustainable, replicable means of delivering health-related and economically beneficial goods and services to remote villages in developing countries.” The model addresses community needs in a two-fold manner by training women entrepreneurs (asesores) to sell beneficial products on consignment, as well as providing rural persons access to such products. In contrast with microfinance, the asesores do not need to invest anything but their time for training and selling products, reducing the risk of default. Since they receive the goods on consignment and without monetary investment, the asesores do not stand to lose financially. SolCom field leaders and volunteers also provide support during promotions and campaigns.

Every week our team of eight students split into two groups, each traveling to a different rural town to host a campaign with an asesora partnership. Together, we administered free eye exams and sold reading glasses, eye drops, sunglasses, water purifiers, wood-burning stoves, energy-efficient lightbulbs, seeds and solar lamps. SolCom provides the products and the asesores sell them. Part of the money generated from the sale goes to SolCom to reinvest in more products, and the other part goes straight into the asesores’ pockets. Neither side sees a profit until the product is sold.

Obstacles along the way

Working on the micro level is not an easy task. Although I understood the impact on paper, the small-scale approach can create a tunnel vision view of our influence. After selling yet another pair of reading glasses during my fourth campaign in Xela, I found myself wondering, what difference does it make whether this one particular 60-year-old woman has a pair of reading glasses? What contributions would she make to society from her little town off the map? In all honesty, I thought, there was no point.

On the contrary, sometimes I got a little too attached. In Solola, a vacant-eyed little girl in tattered clothes hung around our campaign, murmuring an indigenous language I could not understand. The other children avoided her like a leper. Finally, my field leader and I asked a man to translate, but he told us not to worry about her. I never did find out what she wanted, and as far as her broken eyes were concerned, no pair of glasses could help her there.

I also had to overcome my image of SEC volunteers as “salespeople.” I found our value as soon as I had to prove myself to Guatemalans. As part of a developing country, Guatemalans are accustomed to receiving goods and services for free. Some were surprised and even resentful upon learning that they had to pay for items that many foreign groups typically donated. With pure donations, though, the consumers lack the same sense of ownership and care that come with paid goods. Donations are also unsustainable since no profits are generated. The cycle ends. I had to explain to Guatemalans that SolCom is a business and not a charity. In a consignment model, though, money can be reinvested into additional goods to reach an even broader range of people.

Finally, I struggled with the inconsistency and inefficiency of some of the campaigns. Though most of the asesores were brilliant businesswomen, some continued to defy SolCom protocol, such as trying to sell the magnifying glasses to people with far vision problems who were in need of a certified doctor. Our campaigns were haphazard at times, especially when we tried to conduct surveys about diabetes and hearing aids on top of giving eye exams. We also spent hours traveling to villages where we sold products for one short morning to one small sect of people. I couldn’t help but wonder who else would benefit from, say, a water purifier but did not have the means to attend the campaigns or the resources to purchase the goods.


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