Conversations with Unreasonable Fellows: Ties Kroezen of NICE
Ties Kroezen lives in the Netherlands, but the fruits of his labor are in Africa. His company, NICE International, brings IT services and clean energy development to The Gambia and other African countries. Kroezen was selected to represent NICE at this year’s Unreasonable Institute in Boulder, Colorado, where he was able to spend part of the summer with social entrepreneurs from around the world. He spent some time recently talking with Dowser about his company’s work in Africa.
Dowser: Can you describe how NICE works?
Krozen: NICE International is based in the Netherlands, where I am. We have a subsidiary company in The Gambia called NICE Gambia. We’re in the process of setting up a company in Tanzania, and next year we’ll set up one in Zambia.
In these countries, we are building a network of NICE centers, which are retail outlets powered with solar energy. Inside these centers, you find two areas. One is an area with computers, typically between 15 and 30 computers connected to a server and to the Internet. The other area is a cinema, where we use flat-screen TVs to show content to larger audiences. It depends on the center, the biggest cinema can sit up to 200 people, but on average it’s about 70 people that can sit in a cinema.
These NICE centers are retail outlets. We try to sell products and services that help people in their development. Sometimes we call ourselves a supermarket for development. Currently we sell IT accessories like USB sticks and telephone cards, but we’re in the process of expanding our portfolio of products. We are working on selling computers, new and secondhand; we are in the processing of offering a portfolio of solar products — solar lamps, solar chargers. We’re also looking at things like water filters, cookstoves, etc., so typical products that target the “base of the pyramid” consumer, those are the kinds of products we want to sell through these NICE centers.
Then we have services, for which we use the computers and the cinema. We organize our services into four categories:
Energy services, which we sometimes call portable energy because what we do is battery charging — cell phones, batteries for radios, and we’re working on a service where people can charge bigger batteries that they can use to run their house for a couple days.
We have infrastructure services, which is basically using the equipment. So that ranges from printing, scanning, using the computers or Internet, watching TV or cinema.
Then we have value-added services, where we try to go beyond just offering the equipment. At the moment, that is mostly done through education services. We offer a range of courses, starting with a basic computer course for people who’ve never used a computer before and running all the way up to an entrepreneurial IT course, that teaches people how to run a small business and how to use a computer in the process. We’re also looking at other areas, things like healthcare services for farmers. That’s an area where we want to expand. Those services, we don’t develop them ourselves — if we see a need in the market, we look for partnerships with organizations who offer these kinds of things, then we try to distribute them through the NICE centers.
The last category is what we call the revenue-generating services, where the idea is that customers can earn an income through the NICE centers. That is done through outsourcing work. We’ve done some first trials with Samasource from San Francisco. They bring outsourcing work, and we organize people in Africa to do that work, and they are being paid for that so they can make a living from these activities.
We started five years ago, we now have seven NICE centers running. And last year, we introduced a franchise concept, so six out of the seven centers now are operated by local entrepreneurs through a franchise.
How does the franchise work? Aren’t the initial costs unrealistic for the average person in the areas where NICE works?
The biggest investment that needs to be made is in the equipment — the solar system, the computers, etc. — which is typically beyond the means of the entrepreneurs that we’re targeting. So what we’ve decided to do is to offer the equipment through a lease. We buy the equipment, we own it, and we lease it out to the entrepreneurs. The lease includes technical support and maintenance, so the entrepreneurs pay a monthly fee for using the equipment. They also have to invest themselves, but the amount they invest is far smaller than the amount we invest.
Some borrow from family. We have two people who are former employees. Normally, franchisees have the responsibility to raise the funds. We’re also talking to banks to see if banks can support them with a loan to help them make this investment.
How has the franchise concept been received so far?
The reactions have been largely positive. The best example is probably the first franchisee, who started in May 2010. He was running an Internet cafe for several years. That was converted into a NICE center, and he saw his sales triple within a few months, which made him to decide to invest in building a cinema — that is the 200-person cinema, the biggest one we have. After half a year, he took over one of our own centers as a second franchise.
That’s an example of what can happen. If you look at why that happens, it’s a mix of, first of all, quality of the equipment. Everything works and we have a technical support department to make sure it continues to work. We have the solar system, so electricity’s always available. So the availability of the equipment is far better than people are used to; the speed of the Internet is much better. We buy it from an Internet service provider, but we have the knowledge to really monitor the bandwidth that we’re getting, so we have a contract with penalty clauses, etc. to make sure we get what we pay for. So that’s a big difference.
And then there’s the portfolio of products and services that they can offer. That helps the entrepreneurs to generate much more revenue than they normally would if it would only be an internet cafe. For instance, the education generates about a third of the revenues, the cinema generates about a third of the revenues. There’s a lot of revenue streams that are available to the entrepreneurs.
As franchises have opened, have you seen any tension or resentment develop within a community over the growing profit, and perhaps power, of a single member of that community?
We haven’t had anything like that. I think on the contrary. Typically what we see is that the communities are extremely happy with the NICE centers because people really see that these services are helping the community to develop. And at some of our centers, people have even organized themselves into a customer association, trying to help the entrepreneur to make sure the services fit the needs of the community. So typically there’s a very strong relationship between the community and the entrepreneur that’s running the center.
Can you talk more about the education courses you offer?
We have basic IT skills at different levels, and we have job-related courses. For instance, for secretaries — teaching a secretary how she or he should use a computer. It’s problem-based learning, so it will have assignments like: your boss wants you to type a letter. What do you do?
We are preparing to do a pilot for an entrepreneurial IT course targeting small entrepreneurs.
We’re also looking at other areas. We have some contacts with NGOs that do medical training that could be done at the NICE centers. We have school TV for primary schools — we do that in the cinema, where primary schools will come to the cinema and get educational programs on TV. We’re also working with an organization called E-learning For Kids, they have a lot of educational content available from the Internet. So we are working with different organizations to expand our education portfolio.
Do you use new or used computers at the center, and what happens to equipment as it wears out?
The computers that we use are new. We use special types of computers that are very energy efficient, and they’re hard to get secondhand. After a couple of years, they will reach the end of their lives, so the issue is what do we do with a computer when it’s broken down and can’t be repaired anymore. We are now part of a project in Tanzania where we are looking for solutions to recycle these computers. We are still in the research stage, but what will probably happen is the computers will be disassembled locally. Some components can be recycled locally and some components have to be shipped to Europe or other parts of the world for recycling.
The same goes for the batteries in the solar systems, the batteries that we use have a lifetime of about five years, and of course that’s chemical waste. So as part of the same project we are looking at how we can best get rid of these batteries in a responsible manner.
But it is an issue. There isn’t much of a recycling industry in Africa yet, especially the more complicated recycling processes. You have to ship the stuff out, which is a challenge in itself — the customs authorities look at you strangely. They’re used to importing old computer stuff, but exporting — that’s new to them.