Venda

In Zimbabwe the informal sector accounts for over 80% the workforce and yet its participants are largely left out of the digital economy and the financial inclusion that comes with it. One of the hallmarks of being an informal worker is a lack of any social security benefit and hence use of savings or business funds to cover for an economic emergency. The digital economy has improved access to financial tools such as insurance but due to low incomes, they haven't been utilized by informal workers. Our solution innovates around payment of insurance by creating a system of complimentary demand between insurance and more immediate needs such food or medicine through an e-commerce platform. If successfully implemented Venda will provide a way for informal workers to thrive in a digital economy by strengthening the ability to bounce back from risk as well as allowing them to buy and sell online.

Access to financial tools remains a benchmark problem to informal workers mostly because of low incomes. Several digital financial solutions are made available to them but they cannot simply afford to pay. Improving data access is a starting point towards increasing digital economy participation but more has to be done to ensure they stay in it. One of the best digital solutions is the availability of micro-insurance solutions but due to low and irregular incomes the ability to keep up with regular insurance premiums is severely restricted if the opportunity cost is usually more immediate needs such as food or medicine. We have to provide digital financial solutions that are tailor made to 60% of the world's workforce taking account of the fact that the informal workers do need access to tools such as digital payments, savings and micro-insurance to enable participation in e-commerce and the digital economy at large but these technologies still have a price that the low incomes that are often found in informal sectors cannot afford to keep up with in their present form.

Venda is an online solution that makes insurance affordable to the informal worker at the same time exposing them to buying and selling on the e-commerce platform. Little disposable incomes are a hindrance in providing insurance in the target market. Insurance cannot compete with more immediate needs such as food/medicine but that is where our solution lies. Rather than let insurance compete with this expenditure, as it has been a losing case so far, our model creates a system of complimentary demand between insurance and essential items such as food items. Our solution is an e-commerce platform that discounts the price of essential items such as food and medicines and allocates that discount as an insurance premium. Our solution is two pronged employing a bot and the main e-commerce website, the bot offers access to the website but across various social media platforms such as Facebook, WhatsApp and  even SMS taking advantage of the tiered access to the internet through "social media bundles" that are popular throughout Africa making it an inclusive approach towards the digital economy even to those who cannot afford general access to the internet. 

Our solution is specifically targeted at informal workers. In 2018, Zimbabwe had the second largest informal sector in the world according to the IMF. In Zimbabwe alone, the covid-19 pandemic is expected to push a million people into extreme poverty and with one of the hallmarks of the informal sector being lack of adequate social security schemes , it will be hard for informal workers and their respective business to recover. This is bearing in mind that most businesses in the informal sector are sole traders, what affects the owner affects the business and vice versa. Lack of financial inclusion means that most informal workers dip into personal and business income if they suffer from an economic emergency such as a medical issue leading to a worse off financial position. To strengthen participation in the digital economy by improving access to digital financial tools, in our case insurance, will allow an informal worker to insulate themselves from risks that might otherwise harm their participation. First our solution recognizes that we have to first provide cheaper access to the internet for the informal sector to access the digital economy. Whilst we have no control over data prices we can utilize trends that have been going on for some time. By using a multi platform bot we will offer access across multiple social media platforms taking advantage of tiered access to the internet through "social media bundles" that are popular in Africa. This means a person who can only access a single social media service at a time for example WhatsApp can be provided full access to our service. The next thing and what we think is a bigger problem is that due to low incomes there are little to no disposable incomes, the ordinary worker will just not afford to pay the insurance premiums. Our solution then brings in the e-commerce part where we take note of the fact that most of an informal worker's income is spent on the bare essentials such as food and creates complimentary demand between that and insurance products on our site. That way by simply purchasing groceries or other essentials on our site will allow a contribution to an micro-insurance policy by discounting from the purchase and allocating that discount as an insurance premium. That way an informal worker can afford to have regular insurance payments just as frequent as they purchase groceries and other essentials.

Our solution is targeted at the informal sector that takes at least 60% of the world's workforce and represents 2 billion of the unbanked. To provide a dignified and productive life to them we have to give them the ability to recover from risk that is afforded by their formal counterparts. Our solution recognizes that digital inclusion is more than providing cheaper access to the internet only but also equipping them with the right financial tools to participate in the digital economy by giving them a platform to sell and buy at the same time ensuring that they are insured.

We have developed our solution to be a working MVP that is currently being tested with a few users but we do not have the funds to fully launch the project. We have focused the year 2021 to raise finance for the project with a target of raising at least USD2,500.00 from personal savings as well being part of the Tony Elumelu Entrepreneurship program upon successful completion will give us a windfall of USD5,000.00. 

One of the strengths of our solution is that it allows informal workers to engage in the digital economy even with limited access to the internet. We have employed the use of a bot that can also be available on SMS and in that way we are keeping use of data to the bare minimum and eliminates the issue of data affordability. The best thing, however for our solution is that it makes digital insurance affordable by pairing or bundling its purchase to the sale of essential items such as food and medicine through our ecommerce site and the bot as well. In Zimbabwe, 80% of income is spent on food alone and that leaves little to spend on insurance premiums but our solution goes around this by creating a system where we leverage the constant payments made towards food and medicine expenses. If these payments reach a certain threshold, they will be discounted and that discount will be allocated as a premium payment creating derived demand for insurance just by purchasing with us. Our system will potentially open up the benefits of insurance to millions who were previously excluded and the advantage is it requires little more investment than purchasing your groceries and medicines with us.

Our solution is not currently in the market as we are still on prototype and testing out the solution with a few users. However, in a economy where over 80% of a 7 million strong workforce are the target market, our prospects are as high as they can be. Our numbers are going to be high as our ability to effectively tune our ecommerce solution. We need to have fulfillment centers/warehouses that feed into the smaller tuck/spaza shops owned by informal traders and are at almost every street corner. This will effectively improve our last mile delivery making sure the ecommerce side of our business is  better than its closest ecommerce competitors. We expect each fulfillment center to serve ten thousand customers. By end of 2022, hopefully our first year of operation we expect to have 5 warehouses serving at least 50000 customers. We expect grow at a rate of 3 warehouses each year on average for our first five years of operation leading us to have 20 warehouses serving 200000 at least by the end of five years. Given how technology is being tipped to change the insurance sector and how we addressed one of the biggest problems of how to target the low income population as seen here,https://www2.deloitte.com/content/dam/Deloitte/za/Documents/financial-services/za_2019_03_Deloitte_Emerging_Markets_Growing_insurance%20_challenges_with_a_focus_on_Africa_presentation.pdf, we expect that at least 40% of the 200000 clients will take up our insurance solutions giving us an absolute  number of 80000 by the end of 5 years that will take up our digital insurance solutions.

The main objective of our solution is to improve the lives of informal workers by providing digital insurance solutions that are more tailored to their needs through an ecommerce platform that allows them to participate in the digital economy. This will be shown by the increase in the insurance penetration among informal workers. The national insurance penetration rate must be accounted for in part as a result of our efforts. As a result of our solution we aim to achieve business resilience shown by the increased ability of informal workers to bounce back from personal emergencies without their businesses being affected (spending business income to cover for personal emergencies). Our solution is mostly aligned to SDG 8 for full productive employment and decent work for all especially 8.10 that states to strengthen the ability of domestic financial institutions to increase access to banking, insurance and financial services for all. We will measure our progress as the percentage of our customers who will take up insurance as compared who just buy and sell products on the site.

We have two people currently working full time on our project and one other person on a part time basis.

Our solution has been in development for quite some time. We have had our idea validated by a few organizations. In 2018, our solution won the national NicozDiamond ThinkTank Challenge which allowed us the opportunity to intern at one of Zimbabwe's largest insurers. This gave us invaluable knowledge about the technicalities of the insurance industry as well as experience in software development. The internship also exposed us to a greater depth, the problems associated with attempting financial inclusion for informal traders. In a country where 80% of the workforce is in the informal sector, we have family, friends and even ourselves at some point as part of the sector. With one of us now working in the related healthcare industry he has personally witnessed the negative consequence of not having insurance to achieve better health outcomes. Our solution advocates for digital inclusion in such a way that not only informal workers are empowered to be part of the digital economy by buying and selling on our ecommerce platform but goes to further their participation by providing risk  cover that would really help them protecting their income from future economic emergency. In 2020, our project then went on to be a finalist on the African Telecommunication Union Innovation challenge showing our ongoing commitment to see through the project that can benefit millions of lives. This application to Solve is now part of more concrete plans to launch by the first quarter of 2022.

We foster teamwork and value partnership within our small group regardless of qualifications. One of out team members is an informal worker himself contribute immensely to our project and he has first hand experience of the problems that affect him in such a sector. His contributions are critical to our project's success. We believe in the contribution of each team member and value their input in the overall success of the project.

What led us to apply to become solvers is the support that MIT Solve gives to social entrepreneurs worldwide. We believe that with the technical expertise of MIT Solve in building enterprises like ours, its support will be immense in helping us launch our solution to help informal workers in our country. Applying to Solve also opens us up to a worldwide ecosystem of similar minded impact leaders whose ideas and contributions can lead us in a positive direction. We might have an idea and a vision but we also believe the mentorship that we will receive from Solve will help us fine tune our solution leading us to have a better product-market fit. 

We need help in validating our business model. We always appreciate another view of our project especially from experts in the social entrepreneurship field. MIT Solve will help us in validating our model helping us smooth over rough edges. We need help in product-market fit, this is crucial for any business awaiting launch, we need to capture the attention of the target market and to do this we must have the right marketing strategy as well as a product that seeks to solve a need. We also need help in developing a winning pitch, our project depends so much on raising funds for it and therefore we need help in drafting a winning elevator pitch that communicates who we are, the problem we are solving and how are solution is the best approach and how the funds will help us achieve our projects. Our project also involves legal and regulatory issues, areas we admit we have no functional expertise of, we need help in drafting out a strategy to negotiate the legal and regulatory hurdles that may come our way. Our project also depends a lot on public perception, we need to properly communicate to stakeholders our vision through proper branding and how to negotiate advertising in an increasingly online world taking into account ethical considerations.

According to the GSMA, the end of year 2018 saw Sub-Saharan saw 456 million unique subscribers with 239 million using the internet on a regular basis and is poised to remain the fastest growing mobile penetration rate in the world with an additional 167 million expected to take over by the year 2025. With 66% of the mobile connections expected to be smartphones by the year 2025, Africa has realized the value of being digital literate. However, more action must be taken towards achieving equity in the digital economy. The covid-19 pandemic highlighted the growing inequalities in the digital space. Whilst, ecommerce giants like Amazon saw increased revenue margins, informal traders/workers suffered losses due to the enforced lockdowns and some of the businesses have had to close as they receive no financial support from government or otherwise. Informal workers are still ill equipped to take advantage the technology available to them. Our solution offers them a gateway to the digital economy by providing a platform where they get to buy and sell online at the same time promoting financial inclusion. Our solution incentivizes ecommerce for the informal sector with digital insurance products that would strengthen their participation in the digital economy advancing the ability to get gainful income and risk cover in an increasingly online world. With a weighted average of close to 40% of the informal sector being in sub-Saharan Africa our solution will ensure access and participation in the digital economy for everyone.