Giving things away free to people who need them but can’t possibly afford them seems, on the face of it, to be a totally reasonable thing to do. We rate generosity, philanthropy – it’s the right thing to do. However, there are consequences, often negative consequences, of giving things away for free.
The first consequence is that you destroy the market, where a market exists, for the product you are giving away free. This will have serious consequences for those earning a livelihood in those markets. I remember, when I worked in the Dominican Republic trying to improve the incomes of small dairy farmers, the frustration we felt as yet another ship load of milk powder arrived as a ‘gift’ from the EEC (as the EU was called then). These shipments completely undermined the local market for fresh milk and destroyed the livelihoods of the small farmers working hard to try and earn a living. On a recent trip to Zambia, we tried to buy some of the locally made textiles we liked so much when we lived there 20 years ago. The textiles factory is closed – hundreds of jobs gone, a whole industry destroyed. Why? Because of the bales of donated clothes coming in from the west. In Lusaka markets, you can even buy cast off ski-wear.
Where no market exists, giving things away free removes any incentive for a market to be created and this can stifle development.
The ColaLife Business Model is about creating a market for a new public health product – an anti-diarrhoea kit or ADK. Part of our work is to see if we can establish a demand for this product and ensure that local wholesalers and retailers can make money fulfilling this demand. If we can do this, the prize is huge – we mobilise the existing private sector to distribute ADKs. We don’t need our own distribution system and the enormous costs associated with that – 40% of the cost of a medicine in these areas can be transport. In addition, we put money into the pockets of some of the poorest business people on the planet, and get an essential public health product to those who need it. The next step would be to base as much of the manufacture, sourcing and packing as possible locally.
This is all very well, but what about the people who cannot afford to pay for the an ADK no matter how much it costs? Do you just shrug your shoulders and say: “Well, we can’t help everyone? Off you go to the clinic – it’s 20 km that way.” No, of course you don’t. It would be totally unjust to do so with an commodity that relates to a basic human right. But what you don’t do is give away the product for which you are trying to create a market. What we are going to test in the ColaLife Trial (details to follow shortly) is the use of vouchers. Mothers and care-givers will be given vouchers as part of the social marketing activity and they will be able exchange these vouchers at retail kiosks for an ADK. The retailer will then redeem this voucher using his or her mobile phone. So, the mother will get the ADK at no cost to her limited purse, and can choose to buy one when she needs it, rather than taking that 20 km walk. The retailer will get their reward for bringing the ADK to the remote rural community.
But there are losers doing things the ColaLife way. Can anyone spot who they are?