This feature story is an outcome of infoDev, a multi-donor program administered by the World Bank Group, with a focus on entrepreneurs in developing economies.
This story was originally published on February 2, 2018.
In Tanzania, over 40 million subscribers have a cell phone, but only 4 million adults have health insurance. This is especially perilous for low-income, informal workers. Across the continent, high out-of-pocket health care costs plunge over 11 million Africans into poverty every year. Fortunately, digital technology offers a scalable solution to this challenge.
Jamii offers a mobile-based micro-health insurance product for as little as $1 a month to Tanzania’s low-income, informal sector. Last fall, Jamii’s founder, Lilian Makoi, participated in infoDev’s pan-African accelerator program, XL Africa.
Turn Problems into Opportunities
Makoi has co-founded several businesses and has over six years of experience in the telecom industry. Makoi believes that “Women have to start seeing problems in our communities as opportunities.”
When the husband of her housecleaner died because of lack of money to pay health care costs, she was inspired to take action. She began brainstorming about how to provide more affordable health insurance, and doing research on the potential market size.
“Given my background in telecoms, it was easy for me to unpack what the administrative costs would be, and how to digitize insurance products through a mobile app,” Makoi explained. “Then, we had to make it affordable for insurers to quote policies for the informal sector, work on developing partnerships, and start building the product.”
Jamii has formed strategic partnerships with Jubilee Insurance and with Vodacom Tanzania, the country’s leading telecom and mobile money platform. Their mobile platform allows users to select from coverage bundled into three-, six-, and 12-month periods for individuals or families with two to four members. The products are affordable, easy to understand, and cover users’ day-to-day medical needs.
Since its commercial launch in June 2017, the company has registered over 35,000 subscribers and sold 6,000 micro-insurance policies. Jamii’s revenue model relies on an administrative fee taken from users’ monthly payment, while the insurer and telecom split the remaining proceeds.
While Makoi might make it sound easy, the path from idea to a growing start-up in its second round of funding was not easy.
Makoi’s advice to aspiring entrepreneurs is to “Be prepared to endure setbacks. It will be a difficult journey, but in the end, it’s worth it!”
“When I started, the start-up ecosystem in Tanzania was almost non-existent,” Makoi said. “It is hard being a start-up in Tanzania. Having no accelerator or incubator is one issue. But finding investors who understand and buy into your problem is another. So long as you don’t have local investors who know your products and recognize your opportunities, it’s hard for a foreign investor to really believe in you.”
Through online research, Makoi found opportunities to compete in regional pitch competitions and apply for donor grants. During the initial seed round, Jamii received funding from the Bill & Melinda Gates Foundation and participated in regional entrepreneur support programs.
“I’ve been through other accelerators that played a great role in helping us with develop our products, groom our team, better communicate our value proposition, and learn how to negotiate with our business partners and potential investors,” she said. “We were exposed to investors and exchanged cards, but nothing really came out of it. So, our initial seed round was still really, really hard.
“At XL Africa, all the angel investors and venture capitalists we met were already active in the region. The contacts we made were all actionable. Since we returned home, the calls we’ve had have resulted in either term sheets or we’ve been connected to their lead investor.
“XL Africa is more hands-on in terms of getting actual investments, while the previous accelerators we’ve participated in were more focused on shaping your team or your product,” Makoi said.
Making an Impact
Listening to Makoi talk about Jamii, it quickly becomes clear how passionate she is about improving health care coverage and overcoming challenges around financial literacy.
“In Africa, we have an opportunity to create solutions that are solving real problems and making an impact in your country. So, I would call out others to not just become an entrepreneur to make a profit, but to make a difference,” she said.
To achieve her vision, Makoi hopes to collaborate further with insurance regulators and financial sector supervisors in Tanzania.
“The government has been really supportive. The insurance regulator has allowed room for testing innovative products, and has been willing to adapt their policies,” Makoi said. “The government understands that no one entity can solve the access to health care problems, and they’re very welcoming. The more, the merrier!”
Makoi and her team won’t stop at Tanzania. They’re hoping to expand across the continent, beginning with neighboring Kenya. Although the Kenyan insurance market is much larger and more competitive, Makoi sees the positive aspects of heightened competition.
“Yes, Kenya is a more mature market, where insurers are forced to be more innovative, which is a good thing,” she explained. “When you’re the first to market, people don’t know how it works and you have to invest more in educating consumers. The more of us on the market, the less we have to spend on marketing and awareness.”
Jamii is one of the start-ups supported by infoDev Digital, sponsored by the Swedish International Development Cooperation Agency, Norway’s Ministry of Foreign Affairs, the Ministry for Foreign Affairs of Finland, the government of Canada, and Korea's Ministry of Strategy and Finance.