Photo: SABMiller

Small-Scale Retailers and Social Innovation

By Estrella Peinado-Vara and Maria Elena Nawar, Multilateral Investment Fund, IDB

Small-Scale Retailers and Social Innovation

In Latin America, the tendero, or small neighborhood shop, is a vital community element in small towns and cities; and for many companies, it’s an important distribution channel for consumer goods. In some cases, tenderos represent 50% of companies’ total sales. If you have ever visited one of these small shops, you will find virtually any type of household good, from drinks to shampoo to vegetables and cold cuts. And you can locate a small shop on almost every corner. Given their widespread accessibility, why not use them to provide goods and services to improve the quality of life of the same communities who are drinking a soda?

The Multilateral Investment Fund (MIF) has teamed with FUNDES and SABMiller to develop a program where business and social leadership skills are provided to 40,000 shopkeepers (of which approximately 70% are women) in Colombia, Ecuador, El Salvador, Honduras, Panama, and Peru. Studies and results from a pilot project in El Salvador indicate that small shopkeepers need to consolidate and grow their businesses first to generate sufficient income for themselves and their families’ before they can become more involved in their communities.

We have done this before. The MIF is a laboratory of sorts to test new models and innovative development approaches. The MIF has financed several projects working with small shopkeepers in Bolivia and Colombia. We had to find a new angle and started working on a proposal based on SABMiller’s Latin American corporate social investment program, 4e Camino al Progreso, in partnership with FUNDES.

The MIF is targeting its financing and expertise in four areas: gender, financial education, tenderos as change agents and knowledge.

  • Given that approximately 70% of the shopkeepers are women, the project required a strong gender approach. The program will adjust the current model to ensure that a gender perspective is applied during the training program and all project activities to achieve equitable access.
  • Financial education was another area deemed necessary, particularly for women, so a financial education module is included for all participants.
  • Enhancing the shopkeepers’ role as change agents in their neighborhoods is the most innovative aspect of this program and distinguishes it greatly from past projects MIF has financed for shopkeepers.
  • Finally, results are measured, and knowledge is disseminated to others (e.g. governments and other companies) as one tool for scaling successful initiatives going forward.

In the area of knowledge specifically, the project’s evaluation strategy seeks to understand the financial and social impact on the shopkeepers and their families as well as the indirect benefits for their communities. The evaluation will seek to understand the efficacy of the training, its delivery mechanisms (i.e. face to face and online), and to what extent the use of tablets or smart phones have increased productivity. Furthermore, the project will generate learning experiences regarding specific vulnerable populations such as women-led households, mechanisms for promoting small social community projects in low-income neighborhoods and converting small stores into agents of change to provide information, innovative products, and services for community development.

The most transformative aspect of the project will involve empowering small shopkeepers to become community leaders so they become change agents equipped to carry out initiatives to improve the socio-economic conditions of their communities. The program involves shopkeepers in six countries (and many communities) with very different needs and levels of sophistication. Shopkeepers will be trained to offer new products and services and/or lead initiatives in their communities. Examples include building and maintaining common spaces, waste management initiatives, financial services, microinsurance or channeling information directed to the community on diverse issues such as health, education, or domestic violence. Communities’ needs will drive the types of community services to be offered.

These small shops are a vital community element, possibly the most efficient way to reach people living in low-income communities. The “capillarity” of this distribution channel should be leveraged to deliver goods and services that contribute to economic and social development of low-income communities. The MIF is all about innovation, knowledge and scale, and this project has them all. This is social innovation at its best.

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