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Implementation Planning

Business Harmony

Because of a variety of reasons (geographic distance, economic disconnect) small business operators and other entrepreneurs in rural, and even urban Kenya cannot connect. The value of making a potential connection between business operators is that the products they create, or the services they provide, are not valuable alone.

Kumar and Matsusaka (2004) propose an economic model in which traders reduce transaction costs using social capital. An important assumption is that there are two types of social capitals: “village” capital depends on personal networks and repeated interactions to ensure future contracts, while “market” capital depends on independent entities like auditors and courts. It is a prerequisite for market institutions that work effectively. Localized economies work well with village capital. On the other hand, market capital can lead to business transactions between strangers and more specialization. With WishVast, users can cross over from ‘village’ capital to ‘market’ capital by building relationships with people outside their normal purview. It is easy to imagine how they can expand their business with an expanding network.

Tiepoh and Reimer (2004) proposed that people’s social capital impacts their income by virtue of facilitating “the flow of income-related knowledge and information between economic agents” (p.427). They studied a rural Canadian community. They classified social capital vis-à-vis four kind of social relations: market relations, bureaucratic relations, associative relations, and communal relations. The researchers cited a paucity of data in their failure to arrive at strong evidence to support their primary hypothesis, but several other conclusions were derived. Results show that as rural household income increases, the dependence for income generation on bureaucratic relations decreases and on market relations increases. A high community income increases its social capital in the market (a two-way street). They found that the availability of social capital was not the same as its use. Another finding was that internet use in the four different kinds of social relations was positively associated with household income. Also, “the social capacity for income generation can be improved through the exchange of information using the internet” (p.447). Although the users in this study had access to the Internet, it has implications for the WishVast system to the extent that the WishVast network will be used for the same reason that the Canadian community used the Internet- for accessing information.

The current idea requires the WishVast station to be located somewhere with Internet access. There is a centralized website, similar to Ning, that logs all the groups and allows users to sign up for whatever groups they wish. We charge 5 cents per recipient to send a message. Here’s how it works:

Gakuru, a mango farmer from northern Kenya, walks into a new WishVast station, and asks to see a list of mango farmer groups. The Station operator searches the WishVast database and doesn’t find any. Gakuru asks to start his own. The operator sets up the first WishVast mango farmer group. Gakuru tags his group with "mango, farmer, northern Kenya, and whatever else he thinks is relevant. When other mango farmers anywhere in the region see his group, they join to gain access to other people struggling with the same problems as them. When they have a pressing question, like “What do you do about the Mango weevil?” they send it to the group. It is worth a few shillings to find answers from knowledgeable people about problems they encounter. The farmers who answer only have to pay for one message, or 5 shillings (about 4 cents) and they are motivated to answer well because the recipient will give a high WishVast rating to anyone who helps him out, and because it increases the chances of people answering them advantageously in the future.

Another client who would like to see this would be a Mango jelly maker and canned mango producer. When Mang-nificent Jelly producer David Mgawa, a small businessman who has the equipment to produce branded value-added products out of mangos, wants to connect with mango producers, he joins the mango farmer’s group, tags his profile with "needs mangos, mango jelly, etc." and sends his messages asking if anyone would be interested in selling him some mangos. The mango farmers receive the messages free, and who doesn’t like to see someone asking to buy their stuff? If they want to respond, they need only send one message directly to him, and put together a deal. 

We call it Business Harmony because it uses a sort of E-Harmony model of linking like-minded individuals who complement each other in some way. The difference here is that everybody has many potential complementary partners, rather than just one.

When a mango farmer does business with David, the farmer and David exchange WishVast ratings and each build their reputation. Now when a new mango farmer gets a message from David, he can check to see if other mango farmers have had good experiences selling to David. They have, and the new farmer feels more confident that he can trust David as a result of this and goes ahead with his deal.

By charging 5 shillings/recipient, WishVast skims 1.5 shillings off each message. The value comes from the volume of messages that go through the system. Just as cell service providers make a fortune from tiny transaction fees on short calls and text messages, WishVast does the same, but with a much smaller set-up cost.

The ideal scenario doesn't work without WishVast. Each individual's economic and social network does not overlap and because of geographic separation, there is a VERY LOW to ZERO chance of these two, who can economically benefit each other, connecting.


Reference:

Tiepoh, M.G.P. and Reimer, B. (2004) Social capital, information flows, and income creation in rural Canada: a cross-community analysis. Journal of Socio-economics, 33 (4), pp. 427-448.