Acumen Fund, a global venture capital fund that invests in sustainable, scalable businesses that provide affordable water, housing, health, and energy services to people who earn less than $4 per day in South Asia and Africa, announced today four new investments in Pakistan. Even in uncertain economic and political times, Acumen Fund is committed to social enterprises that are providing access to critical goods and services – these are the enterprises that provide stories of hope.
The First Microinsurance Agency (FMiA), a company designed to provide health and life insurance to the poor: a $1.4 million joint venture investment with Aga Khan Agency for Microfinance (AKAM);
Kashf Holdings Private Limited (KHL), a holding company to establish a group of companies providing a suite of specialized financial services – micro-savings, micro-insurance, housing finance – to different segments of low income households: $750,000 equity investment and $750,000 debt investment;
Micro Drip, a business that markets and sells to smallholder farmers innovative drip irrigation systems that conserve energy and increase incomes: $200,000 debt investment and $300,000 equity investment; and
Sehat First (‘Health First’), a network of franchised tele-health centers that provide affordable healthcare and medications to low-income communities: $200,000 equity investment.
“First Microinsurance Agency, Kashf Holding Co, Micro Drip, and Sehat First, are the latest examples of Acumen Fund’s work to build scalable businesses that address the most challenging problems of global poverty,” said Acumen Fund CEO Jacqueline Novogratz. “Over the past six years Acumen Fund’s portfolio in Pakistan has grown more than $6 million in committed investments, and we are actively exploring new investments in health, water, housing and alternative energy to help move vast numbers of the poor out of poverty.”
Acumen Fund began investing in Pakistan in 2002 with a focus on the housing sector, providing slum-dwellers with affordable legal housing and infrastructure alternatives, as well as innovative financial services that allowed low-income clients to improve their homes and supplement their incomes. Acumen Fund has since then expanded its focus over the years in an effort to address in a more comprehensive manner the critical issues keeping the majority of the population of 160 million people in poverty.
“With three-quarters of Pakistan’s population living on two dollars a day o 1182 r less and up to 25% of hospitalized people in South Asia falling below the poverty line as a result of hospital related expenses, there is an urgent need for low-cost, high quality microinsurance products and healthcare services like FMiA and Sehat First to shield Pakistanis from health crises that threaten the livelihoods of entire families,” said Acumen Fund Pakistan Director Aun Rahman. “While FMiA and Sehat First are focused on health, Micro Drip seeks to transform the lives of rural farmers and their families by providing them with affordable, high-efficiency drip irrigation technologies that conserve water in drought-plagued regions and boost crop yields and incomes. And Kashf Holding Co is a true example of “patient capital” at work for investors interested in creating long lasting models for low income models – we estimate that over 1 million families, particularly women, will gain access to multiple financial services to meet their needs.”
The First Microinsurance Agency is the first systematic micro-insurance initiative in Pakistan, and is intended to catalyze a global microinsurance sector. Its overall objective is to establish the ability of commercially marketed insurance to reduce the vulnerability of poor families to events that are financially catastrophic such as the death of the breadwinner, unmanageable hospitalization expenses, or the loss of income generating assets. Families affected by such events often witness the loss of their livelihoods. Microinsurance protects families from these shocks and helps them maintain a minimum standard of living while providing them an opportunity to bounce back and take charge of their economic and social positioning in society. Microinsurance can also promote health seeking behavior, as research shows that significant percentages of the poor do not seek healthcare because of the cost. FMiA develops and markets microinsurance products for the poor and distributes the policies primarily through institutional partners, including micro-finance institutions, NGOs and social organizations, as well as corporations and local government agencies.
Kashf Holdings Private Limited is the first step towards reaching Kashf Foundation’s core objective of providing inclusive “financial services for all.” By setting up a conglomerate of companies that each focus on offering specialized financial services — from savings products, micro-insurance products, and affordable housing finance for low income populations – Kashf is diversifying into new portfolio areas. As a top performer in the microfinance sector, Kashf is well positioned to develop and distribute new financial products to the base of the pyramid and fulfill its long term aim to become a one-stop financial services institution for the poor and serve its broader objective of deepening Kashf’s services to the overall microfinance market in Pakistan.
Micro Drip markets and distributes affordable drip irrigation products in the Tharparkar desert and other arid regions of Southern Pakistan. For tens of thousands of rain-fed farmers, Micro Drip will make them less dependent on rain as a source of irrigation and allow them to farm all year round, often boosting their income three to four fold in one year. 80% of the farmers in these areas where Micro Drip operates live on less than $1 per day, making them some of the most economically insecure regions in Pakistan. The overwhelming majority of farmers lack access to an irrigation water source, a canal or ground water, forcing them to farm once a year during the monsoon season. Farmers who have an irrigation source are able to farm more than once per year, but the scarce water situation makes it very expensive for them to farm on all of their land. Micro Drip systems will reduce for these farmers the high costs of extracting water from its source and irrigating their fields.
Finally, access to high quality, affordable healthcare services is also crucial need for the base of the pyramid in Pakistan. There are only 74 physicians per 100,000 people in Pakistan, with a concentration of healthcare facilities in the urban areas. Rural areas often lack qualified doctors and specialists and suffer from an inadequate supply of vital medications. Sehat First provides health consultancy services to low-income patients using an online application that remotely links doctors an e7e d specialists with their patients via the Internet. Sehat First tele-health centers also provide medicines and offer general store items for sale.
“The lessons that we will learn and the insights that we will gain from our new investments in FMiA, Kashf Holding Co, Micro Drip, and Sehat First will help us to build viable and scalable models for the delivery of health services and innovative irrigation solutions to rural populations, not only in Pakistan, but around the world,” added Rahman. “We look forward to sharing with the entire social sector through our Website this knowledge of what works and what doesn’t.”
To learn more about Acumen Fund and follow the progress of its investments in the First Microinsurance Agency (FMiA), Kashf Holding Co, Micro Drip, and Sehat First.