Development of a Market-Creating Innovation for Zambia

Answer

Zambia is a country in the southern part of Africa with an estimated population of 17 million people. The nation is landlocked and, therefore, depends on its neighbors for international trade engagements through maritime routes. The nation spots rugged terrain that has significantly affected the national government’s effort to establish an elaborate road network. The nation has a railway line and 21 airports some of which are international and others local. Zambia, as is the case with most African nations, faces health and poverty problems. Currently, it is estimated that about 60 % of Zambians live below the poverty line of which 42% are regarded as being extremely poor. Primarily, the poverty line is described by the ability to live under one US Dollar a day. In this regard, those who cannot afford to spend or use over a dollar in a single day make the group living below the poverty line. Poverty is rampant in rural areas, especially in female-headed homesteads since the urban population only account for 15% of poor individuals. Central to poverty as a significant concern is disparity in health outcomes. Primarily, the majority of the population is affected by various ailments led by malaria and HIV. In this regard, poverty is a significant factor in causing poor health outcomes and high mortality rates due to diseases such as malaria. Based on this background, this report proposes a mobile-based insurance plan for malaria.

Product Description

The mobile-based insurance platform seeks to rely on handsets to register individuals into a health insurance program that will enable them access care for specific conditions. Primarily, malaria is among the most prevalent disease in the nation. Therefore, it contributes to the realization of a low life span in the nation as indicated in figure 1 below. Clinically, there are established malaria treatment for individuals at all ages as well as healthcare educational programs that can enlighten people on how to minimize their risk factors for malaria. Thus, unlike HIV and AIDs, malaria is treatable (Shah et al., 2015). Therefore, the high member of causalities as a result of malaria in Zambia can be minimized and eventually eradicated if people, especially those in rural areas can access vital care whenever they experience any ill feelings or depict signs of malaria.

Figure 1: Life expectancy in Zambia. Health Data Zambia. (2018). http://www.healthdata.org/zambia

Primarily, the product will require individuals with mobile handsets to register and contribute to their malaria insurance plan every week using mobile money transfer platforms in Zambia. At the start, the MTN mobile money transfer platform will be used since it is the most common one in the nation. After that, whenever a contributor or registered person falls seek, he or she will be required to inform the insurance company which will provide payments for medications. The company will seek to collaborate with local hospitals in a bid to reduce the total cost associated with providing care to individuals on the platforms as well as reaching an agreement on the proper payments methods between the insurance platform and the healthcare facility.

Cost Effects and Management

The contribution by individuals, especially those living below the poverty line, is not expected to be significant in the short run. Consequently, there is a possibility of having a higher expenditure on medication for the members as compared to the available funds. Therefore, the platform will first begin with a funds pool provided by the founder. The funds will be utilized in the short run as the contribution of the people continues to accumulate. One advantage that the system will enjoy is that most malaria medications are not expensive. For instance, the financing expense for diagnosing malaria in a single individual range between $0.34 and $9.34, $2.36 to $23.65 for treating uncomplicated malaria, and $15.64 to $137.87 for complicated malaria (Pinchoff et al., 2016).

In most rural settings, common incidences are of uncomplicated malaria, which means that treatment costs for diagnosing and treating the condition will range from $2.66 to $32.99 per person. In this regard, the insurance plan owners will seek an agreement with primary caregivers in which they will provide malaria diagnosis and treatment at the lowest possible cost of $2.36. Based on the model of insurance, the likelihood of an insured risk occurring at once to all contributors is low. Therefore, the more the number of individuals registered to the platform, the higher the pool of funds making it cost effective to cater to medical expenses. Moreover, incidences of malaria re-infection within a week are not feasible as a treatment for one episode of malaria can take up to two weeks (Battle et al., 2016). As such, it is impossible to have one individual require financing for malaria treatment twice within two weeks. On the other hand, the contribution is weekly. Consequently, the increase in cash flow will be steady and will offset the cost of catering for the member’s care after one year. At this point, the business will reach a breakeven point.

Business Scale-Up

At the breakeven point, the founders will manage to recover their investment. After that, they will decide on a percentage of income or compensation they can get from the available pool of funds (Xue, Zhang, & Fan, 2018). Going forward, the yearly contributions based on the number of members and the expenses will be balanced and then net profit identified. From the net profit, the service will use some funds to train community members on health matters, especially those specific to malaria, provide items such as mosquito nets that prevent malaria prevalence, and carry out environmental management approaches targeting at minimizing the spread of the illness. The techniques are expected to reduce infection rates for Malaria within the community, thereby translating to lower hospital visits and reduced expenditure on healthcare financing by the insurance service. The saved funds can then be accumulated and used to acquire medical supplies such as drugs from producers at lower costs and avail them to local healthcare practitioners. Consequently, the cost of care for malaria will go down for the people. Therefore, they will have better healthcare outcomes. In the long run, more person members will be trained as community healthcare officers to help in offering home-based care to other Zambians, especially those in rural areas who are elderly or find it difficult to go to healthcare facilities. Training community members who will offer their services at a fee will lead to improvement in economic status. Consequently, they will be able to help their families thereby leading to improved socioeconomic indicators.

Opportunities for the Local Market

Besides building community projects from the profits realized from providing the insurance service as a means of enhancing the social standing of most Zambians, the company will consider offering education and business sponsorship to individuals within their members. In this regard, learners who perform well will have their education be financed in institutions of higher learning. On the other hand, individuals with brilliant business ideas that promise to enhance the economic status and experiences of the ordinary people will receive financial and mentoring support. Primarily, the approaches are expected to enhance both the economic and social status of the people. Training is vital for emerging economies like Zambia as the people become specialist and earn from their occupations. Moreover, they help advance training to others thereby leading to increased literacy levels.

Business Model

The mobile-based insurance service will be electronic and will register individuals then provide finances for care when the members fall sick. Ideally, it will resemble the conventional insurance system where funds are provided whenever a risk insured against occurs (Xue, Zhang, & Fan, 2018). However, financing for the platform will be through weekly premiums by members. The premiums will be from both the affected population as well as other individuals who might not be targets but willing contributors. Consequently, the model hopes to have a sufficient pool of funds to cater for malaria treatment for the registered people. At the start, the focus will be on the poor population and the premiums will be set to a low value of about $0.5 a week. In Zambia, the figure is high for the daily contribution but can be raised within a week comfortably by many people.

The service will form a pool of funds from which ailing members will be treated. The services are expected to attract more people thereby leading to a large pool of funds. As a result, the service providers will gain bargaining power with the hospitals thereby negotiating with them to reduce the cost of care (Rampini & Viswanathan, 2018). The reduction will allow the company to save more funds from their pool and use for other socially enhancing programs. In this regard, the platform will seek to use the proceeds on training community members to become specialists, especially in healthcare and help educate community members about healthy living. Other funds will be used to procure medical supplies for patients and local hospitals in a deal that will lead to a significant reduction in the cost of treating malaria.

Supporting Elements for the Service

The provision of mobile-based insurance to individuals at the lower end of the socioeconomic scale in Zambia will require various supporting infrastructures. Primarily, the system will depend on a conducive political and regulatory environment, which will allow the developers to register a company offering the services (Christensen, Ojomo, & Dillon, 2019). Moreover, as per Majid, Seang, and Lee (2018), the company will thrive well if incentives such as tax holidays are offered based on its social impact. Another vital aspect that the service will rely on is the ability of the target population to own, access, and know how to operate mobile handsets. Ideally, most of the communications and transactions will be facilitated over the phone making it crucial that everyone registered to possess one. The other vital factor to consider will be the willingness of the target population. Ideally, they are the clients and their participation in the process will make it successful.

Obstacles for the Business

The use of mobile phones in providing the services makes it reliant on technology. Even though many nations across the world have embraced technology and are using it in most of their operations, the adoption rate in Zambia is still the law in rural areas (Joseph, 2017). For instance, computer and phone literacy levels are still low, and people have little exposure. Therefore, this could affect the services since databases might need to be managed remotely using computers.  

Another limiting factor is the availability of mobile phones among individuals living below the poverty line especially in rural areas. According to Banda and Tembo (2016), the number of individuals who own mobile handsets in Zambia is about seven million and represents a penetration rate of 79%. Even though this is an indicator of high mobile usage, the majority of phone users are in urban areas. Moreover, based on demographic indicators, mobile phone penetration in elderly individuals in the nation is low. Therefore, the service might fail to capture this group of individuals yet they are among the most affected by the malaria pandemic.

Electricity is also likely to pose significant challenges to the provision of the mobile-based insurance service. Ideally, rural Zambia experiences frequent power outages that sometimes last for a day. As a result, electricity is not reliable for powering computers to be used on the project. Moreover, due to energy unreliability, mobile phones can go off and remain out of service for days before recharging.

Mitigating the Obstacles

The developers of the services will engage with mobile phone services provides in Zambia especially MTN to ensure that they increase the efficiency of their services all over Zambia. The conviction to achieve this change in operators will be because increasing their coverage areas enhances their market as new subscribes manage to access their network resulting in a win-win situation for everyone (Saebi, Lien & Foss, 2017). The issue of a few phones will be solved by developing a platform that will allow phone sharing. In this regard, two or more people can use the same handset to access the services of the organization and they will be recognized independently. The solution for power issues is to obtain an alternative energy source especially the solar due to the proximity of the country to the tropic of the equator, which enables it to experience long hours of direct sunlight.

In conclusion, it is apparent that there are market-creating innovations that can help improve the economic and social status of people in specific areas. Based on the example of Zambia, having mobile-based insurance provider specific to malaria will help improve the people’s health status, especially those in rural areas. Moreover, the funds gained from the service will help train and educate community members in professional areas that will earn them income while at the same time encouraging them to be advocates of social change in the society. As such, the service will provide a market for healthcare services focused on malaria treatment across Zambia. Consequently, most caregivers will be engaged and those who are entrepreneurs in the sector will realize more revenue. However, for the approach to succeed, supporting events such as appropriate political and regulatory environment needs to exist. Moreover, the targeted population should be willing to be part of the service for it to be a success. On the other hand, low mobile penetration level, unreliable electricity, and limited technology could hamper the implementation of the project if they are not appropriately mitigated.