The rise of Myanmar's social entrepreneurs

SAN FRANCISCO — Thirteen years ago, Debbie Aung Din and Jim Taylor moved to Myanmar with their two children to launch Proximity Designs. The nonprofit aims to make rural families more prosperous by designing, creating, and selling products that boost the productivity and incomes of farmers. The 555,000 households they have reached typically earn an additional $250 a year, which they invest in feeding their families, improving their farms, and sending their kids to school.

“We treat people as customers,” she said in a talk at the We the Future event organized by the Skoll Foundation and the United Nations Foundation during Global Goals Week in September. “They’re not charity recipients or aid beneficiaries. It’s a relationship of mutual exchange and power. You see, if you give something away free you never know whether it’s used or valued.”

The World Bank announced Thursday it will delay the release of $200 million in financing to the government of Myanmar, in response to "the violence, destruction and forced displacement of the Rohingya."

Aung Din began her talk by referencing the “dark and difficult times” that Myanmar is facing, in reference to the Rohingya crisis. She discussed the power of “proximate leadership,” which means living with and truly understanding people before trying to help them, and spoke with Devex onstage about how the global development community might get closer to the people they aim to serve. Her talk focused primarily on the farmers who she said inspire her team to keep going “in this difficult task of building a nation that can someday be democratic, fair, prosperous, and inclusive for all.”

As donors and NGOs focus on the humanitarian crisis in the Southeast Asian nation formerly known as Burma, social entrepreneurs are continuing their work on other health and development challenges facing the country. A few years ago, Myanmar was second only to North Korea in terms of low connectivity and isolation, but since five decades of military rule ended in 2011, mobile phone usage has grown to 90 percent of the population, with 80 percent on smartphones. Since the country opened its doors to foreign investors, there has been growing interest, from bilateral and multilateral donors to venture philanthropists and impact investors, in a rising number of social enterprises.

“The lack of legacy infrastructure creates room for ‘leapfrog’ technologies to scale in Myanmar,” said Julian Rowlands, Asia director at Alter Global, which describes its work as “scaling frontier ventures with Silicon Valley resources,” and recently organized a meetup in San Francisco on ways to support entrepreneurship and development in Myanmar.

Myanmar's high rates of smartphone usage, compared to other developing countries, is partially due to the fact that the country never went through the feature phone phase when it was closed off from the outside world, he said. Similarly, the lack of internet fiber cable infrastructure presents room for other more sophisticated technologies, such as Wi-Fi mesh, he added. The country presents a blank slate for more recent technologies, especially in information communication technology or infrastructure, to scale rapidly, he said.

“Social entrepreneurship in Myanmar is exciting because it is a wide open field in terms of the problems to solve,” Matt Wallace, executive director of Opportunities NOW, a Myanmar-based social enterprise focused on financial literacy and education, told Devex via email.

But he added that a challenge is the staying power of social entrepreneurs, due in part to the fact that so many of these social enterprises are focused on niche markets. In order to have lasting impact, they will need to transform to mass markets or replicate their models.

“The sheer number and size of societal issues which require creative solutions and alternative business models necessitates that a successful social entrepreneur has a long runway to achieve success at scale,” he said.

An evolving sector
Myanmar has an unusually strong presence of social enterprises, explained Henrich Dahm, an independent private sector development expert based in Yangon, in a column published Monday in The Myanmar Times.

“In an environment like Myanmar, social enterprises can achieve social impact more efficiently than the government, more sustainably and creatively than not-for-profits, and more generously than business,” he said.

More systematic and long-term support, as well as increased cooperation between government, development partners, and enterprises, will be needed to support the rise of the social entrepreneurship sector beyond its nascent stage, he said.

Experts told Devex the global development community is well positioned to support a more favorable business environment, with the resources and networks startups need to scale, in order to unleash the potential of entrepreneurship to achieve health and development outcomes in Myanmar.

Raymond Guthrie, senior partner at the Global Innovation Fund, a nonprofit organization that invests in solutions for the poor in countries including Myanmar, told Devex he is bullish on the country. He recently returned to London from Myanmar, where he met with a number of “repats,” expatriates who are returning to their home country. He explained that because many of them have to focus on laying the foundations — addressing problems such as logistics, transportation, and infrastructure — the startup scene will not yet look anything like Kenya in two or three years’ time.

But the sector will continue to grow and develop even in the midst of crisis, he said.

“The needs aren’t going to stop,” he said. “The best entrepreneurs are still seeing those needs and figuring out ways to solve those problems.”

Barriers to scale
In Myanmar, challenges present opportunities for social entrepreneurs. For example, education is one of the sectors that suffered most from decades of military rule. Transportation to and in rural areas is problematic, especially during the rainy season, which floods roads five months of the year. And the country is a cash- and paper-based economy. Entrepreneurs are capitalizing on the rapidly rising usage of ICT to bring new models to each of these sectors, but they face a number of barriers to scale.

“We believe that entrepreneurs here can contribute immensely to the country's development by scaling their businesses and benefiting large numbers of people. The challenge is helping the ventures grow into robust companies from the early stages of operations. This requires a good amount of hands-on guidance,” said Bradley Kopsick, an investor at Insitor Impact Fund, which focuses on the Mekong region and Indian subcontinent.

There have been a number of acceleration and mentoring programs launched to provide entrepreneurs with training to learn the intricacies of running a business. One example is Phandeeyar, a for-profit accelerator which the Silicon Valley-based philanthropic investment firm Omidyar Network supported with a $2 million grant towards a nonprofit social impact accelerator. Stories of social enterprises receiving investment and scaling up are likely to attract more entrepreneurs interested in running a social business, said Kopsick, adding he hopes to see more grant funding and small-scale investment so companies can conduct pilots and sharpen their business models.

An example of that is Koe Koe Tech, a Yangon-based IT social enterprise that is behind the “May May” application, the most popular maternal and child health app in the country.

Michael Lwin, co-founder of Koe Koe Tech, credits a number of partners with helping him get where is today, including Echoing Green, which provides unrestricted seed-stage funding; Miller Center for Social Entrepreneurship, an accelerator at Santa Clara University that connected him with mentors to help the company expand its work to sectors beyond health; and the U.S. Agency for International Development, which supported Koe Koe Tech through Development Innovation Ventures — a program that now has an uncertain future at USAID.

In an interview with Devex at the Social Capital Markets conference in San Francisco this October, Lwin talked about the importance of grant capital for social entrepreneurs such as himself. He also said the presence of the international aid community in Myanmar, from donors to NGOs to social enterprises, could act as leverage on the country’s leadership to improve the situation in Rakhine state and elsewhere. Myanmar presents a great opportunity for agencies like Australia’s Department of Foreign Affairs and Trade, a major donor to Myanmar and Southeast Asia, to be “useful and innovative presences,” and now is a critical time for their support, he said.

“You’re already getting actors acting on individual incentives and not thinking what the big picture is,” he said. “But it looks like those of us trying to fight the good fight are making headway.”

Funding limitations
The Koe Koe Tech team works closely with Population Services International, which has operated in Myanmar since 1995, and is one of the largest NGOs in the country. PSI explains that the health sector in Myanmar, where one quarter of the estimated population of 52 million people lives on less than $2 a day, has yet to catch up to the quickly growing economy. Part of the NGO’s strategy is to work with social enterprises, including Koe Koe Tech and Living Goods, which adapted its model of door-to-door entrepreneurs to create the Win-Win network of community health workers.

The challenge of working with donors and NGOs, though, is that funding is still predominantly short-term and project-focused, which demands regular reporting of impact metrics, and limits the flexibility and time that social entrepreneurs need to test ideas and build a business, said Liz Jarman, community health strengthening director at Living Goods.

“The premise of funding needs to shift so that social entrepreneurs are given the space to fail, innovate, and grow,” she said. “This means that donors need to think more like investors, and fund overheads and running costs rather than specific programs.”

This focus on program-based funding holds social enterprises back from becoming financially sustainable businesses, and distracts from what it takes to bring about systemic change in public health, Jarman added. She noted the difference between the metrics that donors and NGOs tend to focus on, such as the number of people trained or the number of children immunized, versus the metrics that represent systemic change, such as increased government ownership of health services.

“While there are a number of examples of donor support for mid to late stage social ventures, there are almost no donors willing to back social enterprises in early ideation stages,” Wallace of Opportunities NOW added. “Given the need for a long time horizon to prove concept and achieve sustainability, this limits the extent to which social enterprises can test and fail quickly as they search for their core business model. Donors just don't have much stomach for failure in the nascent Myanmar market.”

Prior to launching Proximity Designs, Aung Din did evaluations for the U.N. and assessments for the World Bank. When that work took her to Myanmar, she noticed a distorted power dynamic.

“The whole village came out and had a dog and pony show and it was very scripted,” she said. “And also I saw that when you give things away free in a village of 100 households and you can only provide for 30 or 40 households, the other households are trying to figure out how to get this free item.”

A culture of patronage has been developed in Myanmar, Aung Din said, but the younger generation is changing this dynamic of deference to the donor.

“Because Myanmar is coming out of isolation, I think there’s a real thirst and hunger for different ways of doing aid,” she said.




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