SaveAct is now in the second phase of a two-phase approach to test the feasibility of using savings group networks as a means to support last mile distribution channels. Current research questions include the following:
  1. Which rural community in which Save Act currently works is the most appropriate for a pilot?
  2. What needs can be fulfilled in this community through accessing of products not currently available?
  3. What products available in South African and internationally can be useful for these communities?
  4. How do we sell the right product, at the right price, to the right customer through the right channel?
When commercial activities in rural communities provide access to products and services
that serve people’s needs and expectations, they contribute to alleviating poverty. This effect
is further enhanced when value chains are well integrated and able to efficiently overcome
bottlenecks.
The potential of business to reduce poverty and transform lives positively relies on two aspects:
  • The relevance of the products and services to the needs and expectations of the communities;
  • The entrepreneurial incentive, or how wealth is spread along the value chain, and to what degree all actors see an interest in actively pushing sales.
A direct sales model can benefit from linking with existing savings and credit groups, which often take the form of rotating savings mechanisms or other forms of collective and individual savings mechanisms. Indeed, available evidence shows that in most low-income communities, some form of financial literacy exists, and a sense of entrepreneurship tends to emerge organically, as enterprising individuals make use of opportunities and people tend to have a natural willingness to improve their condition.
Furthermore, there is an opportunity to leverage the social trust and social capital on which such credit and savings organisations rely, in order to ultimately reach more customers. One of the most efficient ways to do this is by developing social businesses or inclusive businesses, which combine financial viability with social impact.
The aim of social businesses is to serve people’s needs on an economically sound basis, and rely on a form of sustainability that cannot be achieved through charity.
In this context, SaveAct is seeking to pilot a social business that would provide socially and environmentally responsible products to rural customers through its current network.