This is a guest post written by Pamela Riley, the Senior mHealth Advisor of SHOPS project.

While mobile technology has attracted widespread recognition of the enormous opportunity for its application to development challenges, few mobile-enabled solutions are commercially viable.  New business models in mHealth are needed that take into account the constraints of a country’s health system and a community’s purchasing power.

SHOPS co-funded a study conducted by the Monitor Group which mapped 430 inclusive businesses* from nine African countries.  The purpose of the study was to identify successful business models that enable enterprises to engage profitably at scale with base of the pyramid (BOP) populations.  In the study, twelve m-enabled businesses were identified, but none were profitable other than M-PESA, which offers financial transactions through mobile phones.  A new primer released last week entitled m-Enabled Inclusive Business Models: Application for Health, examines enterprises leveraging mobile technology with considerable potential to contribute to poverty alleviation.

The aim of the primer is to highlight key practices that will assist m-enabled enterprises in potentially reaching commercial viability in the near term.  The selection of initiatives examined in the primer differs from other mhealth inventories in that its screen focused on financial sustainability, primarily consumer-facing models delivering health or agriculture information or services targeting the poor.  The ten business model lessons for mhealth are drawn from market-based solutions in other sectors that are on their way to commercialization and scale.

Following is a sampling of three of the ten lessons highlighted in the primer:

• Use trusted intermediaries:  Volatile cash flows make the BOP risk averse consumers, particularly for intangible goods. While ever-increasing mobile penetration has established a powerful channel to reach this market, successful service uptake requires engagement of trusted agents.  This translates into higher customer acquisition costs as experienced by the Pesinet program in Mali.

• Bundle services:  Intangibles such as insurance, information and preventive health care can enhance sales by combining with other offerings, focusing on portions of the bundle with near-term benefits.  Kilimo Salama bundles a crop insurance premium with agriculture inputs such as seeds and fertilizer.  Registration in the service is done via SMS and pay-outs are made through M-PESA.

• Diversify the customer base: mHealth programs driven by social mission and donor targets to serve the poor should consider their target market across broader income segments to secure a stable customer base.  Esoko provides market updates and trading information for agriculture value chain players.  A tiered pricing structure allows large corporate subscriptions to subsidize services to individual smallholder farmers.

By applying these and other levers to improve self-sufficiency of mhealth enterprises, sustainable business models are emerging.  But time, experimentation, and patience are needed.  As noted in Monitor’s earlier study on market-based solutions in India, it can take as long as 10 to 15 years for social enterprises to reach scale.  This suggests that the proliferation of pilots in the mhealth field today is an important contributor to the evolution and maturation of m-enabled solutions over time.

*Inclusive business, or market-based solutions, include those initiatives that offer socially beneficial goods or services to poor consumers or provide improved incomes to small producers, agents or distributors, at scale, in a way that is commercially viable.

Photo: By Jessica Scranton. Photo Courtesy of SHOPS.