The Economist magazine (“Pyramid power“) has an interesting article on how to get reading glasses to poor individuals in third world countries. Below are two excerpts:
Government health clinics are understandably preoccupied with life-threatening maladies and urban optical shops typically shun simple reading glasses in favour of costly, high-margin prescription glasses. But this neglect takes a dramatic toll even on illiterates: farmers can no longer identify pests and choose the proper pesticides, craftsmen cannot manage fine handiwork, seamstresses cannot sew. As their sight fades, so does their income.
Unsurprisingly, The Economist looks to a market-based solution to the problem: “micro-franchising.”
âWe deliver a âbusiness-in-a-boxâ to local entrepreneurs, train them and enable them to make money helping people see better,â? [Dr. Kassalow] says. Each pair of glasses that Scojo provides to these entrepreneurs costs the firm about $1 to make and deliver. The franchisee pays it $2 or so and sells for about $3. Because every step of the value chain is profitable, the business model is sustainable. Profits are reinvested to expand the scheme. Scojo has sold 50,000 pairs of glasses so far and is aiming for 1m pairs by 2010 and 10m by 2016.
Micro-franchising may be successful when there are supply chain issues or individuals in third world countries are ignorant of new technologies available to them. These issues often occur in the health care industry. In other sectors, however, which need to be more responsive to local consumer demand, centralized micro-franchising may not be as successful.