MBA students propose fighting hunger with mobile micro credit
BY Linda Childers ’85
In a slum on the outskirts of Bangalore, India, a mother feeds her children small helpings of flatbread and vegetables, and hopes her family’s meager food supply will last throughout the week.
Although her husband is employed as a day laborer, his work as a farmer on small plots of land only earns him $2 a day. This stark reality faces many families living in the slums of India and other underdeveloped countries when, on the days the family’s main breadwinner doesn’t work due to a monsoon or labor unrest, the family goes hungry.
Nearly 9,000 miles away in Oakland, five Cal State East Bay business graduate students spent months exploring ways to help families such as this stabilize their often unpredictable flow of food and income. In March, the student team composed of Michael Salemi, Yashashwini Basetty, Victoria Fernandez, Alexander Henderson and Ravikumar HK submitted their project for a shot at the $1 million Hult Prize, a social enterprise business plan competition.
In partnership with the Clinton Global Initiative, the Hult Prize invites college students from around the world to tackle the world’s most pressing issues by developing practical solutions to social challenges. For the 2013 prize, President Clinton personally selected the challenge for students to address in the competition: reducing food insecurity and hunger in urban slums.
The CSUEB students competed against college students from around the world. Each team proposed practical strategies for combating the global food crisis. Teams were selected from more than 10,000 applications, representing approximately 350 colleges and universities from some 150 countries. Regional competitions were held in five cities, offering teams the chance to secure $1 million in funding to launch a sustainable venture. The regional competitions were held March 1 and 2 on Hult International Business School’s campuses in Boston, London, Shanghai, Tokyo, Dubai and San Francisco, where the CSUEB team competed. Following the regional finals, one team from each host city was selected to move into a business summer incubator where participants received mentorship, advisory and strategic planning.
Although the CSUEB team didn’t move beyond the regional competition, team members say developing solutions to urban hunger was enlightening. Salemi and his team looked at how families in the slums of India might sustain themselves through periods of unemployment by combining cell phone technology with a loyalty program in which consumers could earn points that later would be used to purchase food.
“If a day laborer is out of work for a day or two or several weeks, they typically don’t have a savings account that will allow them to purchase food during the time they are unemployed,” says Salemi, a student in CSUEB’s accelerated master of business program.
By earning approximately 3 percent back on food purchases made throughout the year, Salemi says, families could create a “savings account,” accruing a nanocredit of approximately $10 to $35. The nanocredit would allow them to purchase several days’ worth of food, in the event that the family’s main breadwinner was unable to work.
Ravikumar and Basetty, who both hail from India, helped design the project drawing on their firsthand knowledge of the country’s demographics and prevalent use of cell phones. According to information released in 2012 by the Indian telecom regulatory authority, there are 920 million mobile subscribers in the country.
Other programs have used cell phone technology to create mobile-based savings platforms. The CSUEB team set their idea apart by building it around a customer loyalty program that would benefit both companies and consumers.
A former mechanical engineer, Ravikumar says his background coordinating international aerospace projects in India helped him make a strong contribution to the CSUEB team.
“I think of myself as a visionary entrepreneur,” says Ravikumar who notes that many of the lessons learned in the MBA program in statistics, entrepreneurship and presentation were employed by the team when formulating their Hult Prize project.
After tossing around several ideas, Basetty says the team began examining the root causes of hunger in India’s slums.
“It’s not availability of food, but rather the cost and the fact that many familaies don’t have a savings account,” says Basetty, a former software engineer. “We wanted to construct a program that would allow families to earn credits that would go directly into a savings account.”
Victoria Fernandez who joined the competition late helped the team shape and focus their presentation for the Hult judges based on her long-term experiences working with non-governmental organizations.
“My goal was to help our team clearly articulate the benefits of the program by telling a story, while also imparting facts,” she says.
Salemi says the team also examined the problem of distribution where on a per-unit basis, families in the slums pay more for their groceries than wealthier families. In addition, ration shops, which are supposed to distribute rice, sugar, wheat and even kerosene at subsidized prices to anyone in need, often turn into money-lenders and withhold food as collateral for debts. Other seasonal migrants who don’t have a fixed address or an identity card fall through the cracks and don’t even have a ration card to fall back on.
“We looked at the possibility of going to larger companies that would give residents in India access to less expensive goods and working with these companies to devise a digital points-based program where consumers could earn 3 percent of their purchase back,” Salemi says. “The program would also give companies insight into the buying patterns of families so they could tailor product offerings to reflect consumer-buying patterns and ultimately introduce healthier food options.”
Henderson, who previously worked as a portfolio manager in asset management, was responsible for facilitating the business model and value proposition for the proposal.
“I calculated expected returns and gave growth projections,” he says. “Our presentation was on par with what a start-up would submit to a venture capitalist to receive funding.”
Although the students’ pitch didn’t win them a spot in the summer incubator, Salemi says witnessing some of the other proposals at the competition gave them ideas on how they might tweak their project, while also reaffirming their commitment to social responsibility.
“This has become a real passion for me,” Salemi says. “One of my fellow MBA students, Feruz Kurbanov, and I are looking at ways that we can take this idea and move it forward.
Basetty and the other team members, who will all graduate in June, agree, noting that whatever job they land after graduation will be with a socially conscious company.
“Having emigrated to the U.S. from India and seeing the conditions that many people face over there makes me want to secure a job where I will be in a position to give back,” she says.