Maase Presby School, Ghana
Last year, I helped to cofound a social enterprise named Lawdax, and so I was very lucky to have support from Ross to be able to go back to Ghana and visit our operations. The mission of the organization is to be able to provide healthy and organic foods for students in rural areas at affordable prices. Currently, we serve school lunches (typically Waakye, although we also sometimes provide plantains and beans with egg) to students at schools like the one listed above. We hold partnership with both this school, as well as another one located not far from this school. This has resulted in around 500 different students being served per week, with around 130 of the students eating from our stalls every day of the week. In addition, after serving the school lunches, we then also sell foods like fried yams to rural communities during the evenings.
An attribute that we place great emphasis on, would be the profitability of Lawdax. Our goal is for the organization to be completely sustainable, and set up with the intent that it would be made and run by Ghanaians for Ghanaians. For us, this means a business that is able to provide value that the students would appreciate enough to pay for, to be able to assist us in helping them, and also in growing our operations. This has meant that setting up a reasonable pricing strategy has been particularly salient given the margins that we are playing with. For our operations at the schools, we are currently retaining the current pricing that my co-founder chose based on his understanding of the rural community. Due to the lack of funds for students, we do not want to experiment with the elasticity of the pricing, because our goal is more in being able to help as many students as possible rather than increasing profitability. Of course, there is somewhat of a contrast here as higher profitability could potentially mean that we actually can impact even more students due to more resources for expansion. However, from a more emotional standpoint, we think it would be immensely unfair and could lead to a loss in trust, if we are to change prices without adequate notice. As for the rural communities, we believe that we hold more of a quality rather than a pricing advantage, and as such, generally keep our prices pretty similar to that of our nearby competitors. In the future, we hope to be able to develop some land that we own as well as set up shops in more urban areas. In this situation, we will of course be heavily switching our pricing strategy to reflect upon these changes. However while our mix might become much more profitable, the heart and soul of the organization will still be revolving more around that of being a good solution for school children.
We currently have 6 employees working for Lawdax, and we have been very blessed to have their support and help. From the culture of the rural communities, there is a very strong “family” culture in which people treat each other like family, even if they are not blood relatives. As such, we have had amazing success in terms of accountability and trust within our organization so far. Of course, it is still very small and young, and it remains to be seen how this might change going into the future once we further scale. But as of now, I was very impressed with what I was seeing when visiting the villages of our employees. A particularly interesting concept that I got to touch on through actually learning more about the employees, would be the concept of lending and saving in the developing world. In the book “Poor Economics”, Duflo and Banerjee brought up the importance of Rotating Savings and Credit Associations (ROSCAs) in informal economies. This would be a system in which people save together, and there would be a rotation for which person would get access to the whole pot at once. Interestingly, there is a time difference between when a member gets their share, verses when everyone puts their money into the pot. As such, the person who is in charge of the ROSCA can take the money and use it to lend to other people. However, this is particularly risky, as it is a shorter time frame, and he would be liable to all of the members of the ROSCA if he is not able to come up with the money in time. And so, the interest rate is also extremely high given the risk involved, which can lead to crippling interest burdens for the borrowers, whos supposedly profitable businesses are not profitable once subtracting for the interest expense. One example of one of our employees would actually be someone who was a borrower from one of these ROSCA’s in Accra. She had to flee from the city due to her debt, but since joining Lawdax, the stability that we have provided her has helped to get her back on track. She is even able to now begin repaying back the moneylenders that she owes in Accra. Furthermore, given her own experience having successfully sold food in Accra, she is a great cook, and is able to make dishes that our customers also consider to very good tasting.
