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ApproTEC: Winner's Statement

Social Capitalists

ApproTEC

ApproTEC's mission is to eradicate poverty in the developing world. However, in contrast to the many organizations that focus on alleviating the effects of poverty -- hunger, disease, squalor and lack of empowerment -- ApproTEC addresses the root cause of poverty: lack of wealth.

ApproTEC develops low-cost tools and sells them directly to the poor who use them to start highly profitable small businesses. This revolutionary approach empowers vulnerable adults to generate additional income, thereby lifting themselves out of poverty and generating a cycle of wealth creation.

ApproTEC's ultimate vision is to help build a middle class from the ground up. When there are growing, thriving local economies, democratic institutions begin to function properly, which leads to better policies, improving investment conditions, ultimately resulting in growing, dynamic, successful states. With this vision, Nick Moon and Martin Fisher started the organization in 1991 in Nairobi, Kenya.

The MoneyMaker Pump
While ApproTEC has developed numerous types of capital equipment targeting rural Africans, the most successful tool to date is the Super MoneyMaker (SMM) manually operated irrigation pump. East African farmers who buy the SMM irrigation pump easily recoup their investment in their first crop cycle and, in Kenya, are making more than $1,100 profit per year, increasing their annual farm income by a factor of 10 and more than doubling their total income. For the first time they can properly feed and educate their families, pay for healthcare, and invest in their futures. They are on an upward spiral of growth rather than a downward spiral of poverty.

Impacts
To date, 36,000 families in East Africa have used ApproTEC technologies to start profitable new businesses and are generating more than $37 million per year in new profits and wages. This is more than 15 times ApproTEC's annual budget. Currently 750 businesses are started every month. The new businesses in Kenya generate the equivalent of more than 0.5% of the country's GDP.

It costs ApproTEC approximately $200 per family to provide a tool they can use to lift themselves out of poverty forever. On average, ApproTEC creates $9 of income for the poor for every $1 donated. In geographies where ApproTEC is more established, the ratio is more than 20:1. This return on the donor's dollar is unprecedented among international development agencies.

The ApproTEC Approach: Market-Driven Solution to Poverty
ApproTEC achieves these impacts by operating like a business, not a charity. We design low-cost capital equipment that allows poor people to greatly enhance the productivity of their primary asset -- their land. These tools are manufactured, marketed, and distributed through private sector businesses to ensure the product is delivered in an economically sustainable way. Just as in developed countries, only products with significant return on investment for the people who buy them will succeed in a developing economy. ApproTEC uses the following process to develop markets for new money-making products in developing countries:

  • Conduct primary market research to identify small business opportunities
  • Design the required low-cost capital equipment
  • Develop a sustainable, profitable supply chain by contracting with existing private sector manufacturers to produce products and wholesalers and retailers to distribute products in rural areas
  • Mass-market the new technologies to poor farmers. Once a product has been designed, manufactured and delivered to retailers, ApproTEC provides consumer marketing to stimulate demand.
  • Cease consumer marketing when a "critical mass" of buyers has been reached -- when the products are well known and sales continue to grow without heavy promotions.

ApproTEC has developed a state-of-the art impact monitoring system to quantify the results of our programs. Customer information from the warranty forms provide a database of all customers. A random sampling of customers are visited to collect data such as incremental additional income, level of employment, whether children attend school, quality of housing, physical assets owned, and status in the community.

The World Bank estimates that 1.1 billion people are living on less than $1 per day, and 2.7 billion are living on less than $2 per day. According to the United Nations Food and Agriculture Organization, 75% of the world's poor and undernourished live in rural areas of the developing world and irrigation is the most effective way to increase agricultural yields and incomes in rural areas. ApproTEC operates in some of the poorest countries in the world targeting entrepreneurial people in rural areas, particularly with irrigation technologies. We estimate the worldwide potential market for manually operated irrigation pumps alone is 40 million, which could lift 200 million people out of poverty forever.

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The above information was provided by the profiled organization.