CAPE TOWN — Buying in bulk is a favored method of saving money across the world. Purchasing more of staple food items helps buyers save their pennies and helps businesses maximize profits through economies of scale. But for low-income earners experiencing severe hunger in South Africa, even bulk purchases can be out of reach.
Cape Town also imposes a poverty tax on people who live too far from grocery stores, taking up more of their meager food funds. Ironically, those who need the most food have the least amount of money because they can only afford to buy food in small amounts.
In 2015, Nokwethu Khojane and Lauren Drake, two graduates from the University of Cape Town, did research in several of the city’s low income areas. They saw that many in the city struggled to barely feed their children—but they also saw a solution.
As students, they researched the struggles of citizens living in low-income areas and learned that people in Cape Town naturally clump together in small communities. One of these groups are crèches. These groups are usually daycare services or children’s educational groups, consisting of children and their families banding together to provide resources that are not available nearby. Some are recognized by the government to receive subsidies, but most are informal.
Khojane and Drake reasoned that if all of the people in one of these crèches pooled their savings, they would have enough funds to buy food in bulk for all of them to eat well, thus ending their case of hunger in South Africa. They began to bring low-income households that sent their children to these crèches to make buying groups. Using the combined resources of these families, Khojane and Drake found more opportunities to buy food in bulk for them.
Thus Lakheni was born. Two years later, the business now works with 95 different buying clubs. Each group is run by a member of the local community, who works to bring the crèche together as a community through sales commissions. The company originally ordered on pen and paper; now crèches have their own bank accounts to deposit money for food orders, or they use Lakheni’s new app. Once orders are placed, a team from Lakheni then delivers packaged orders for each customer to the crèche.
Orders typically consist of staple food products like maize, oil and sugar each month. Khohane and Drake estimate that their customers save about 30 percent each month on their groceries. The crèches benefit as well since they receive fees for processing the orders.
In addition to these financial improvements, though, the communities using Lakheni are also growing. Khojane noticed that after several months, their customers were depositing money onto the app before they placed their orders. Khojane says this shows that the people were beginning to trust each other but also the team at Lakheni. Giving money upfront is not common in poor areas because they usually don’t have any money left by the end of the month. “If we don’t deliver, families don’t eat,” Khojane said.
Hunger in South Africa is a big deal, but the people trust Lakheni enough to follow through, and their trust has gone a long way. Lakheni’s growth caught the attention of the Africa Innovation Foundation. The app was a finalist, chosen from among thousands of other entrepreneurial innovations for the Innovation Prize for Africa. Although Lakheni didn’t end up winning the grand prize, it still received great publicity and a voucher for about $5,000.
Khojane and Drake plan to expand their app and marketing field. They are currently looking for ways to provide other products besides food, perhaps even airtime, data and financial services. They continue to research their customers and the companies they buy from to find more efficient ways to help people get enough food to eat. Their hope is that as these crèches and communities grow, they will soon rise above the low-income level and out of poverty, and then help others in their community end hunger in South Africa as well.
– Sydney Cooney