Guest blogger Bree Olivari is a second-year MBA candidate at Thunderbird Global School of Management and is a leader of the Net Impact chapter. At Thunderbird, Bree integrates her interest in sustainable business with her degree in supply chain leadership. Her projects include mapping best practices of supplier codes of ethics, organizing Thunderbird's Sustainable Innovation Summit and greening procurement practices on campus. During a recent internship Bree helped design the distribution of micronutrient sachets to undernourished children in Mexico.By Bree OlivariAs I bit into an apple provided in my Net Impact lunch box, my mind wandered to the farm it came from and how this juicy treat related to a growing and global food crisis. It is expected that such a thought cross my mind...
Last July CGAP issued a new report about the main building blocks for any bank that is thinking about offering mobile phone financial services to its customers. (Shame on me for doing this post so late). Banking on Mobiles: Why, How, for Whom? is, not surprisingly, very good report. After all, these are the people currently in the forefront of research efforts to understand and develop mobile phone banking and the place to go for anyone interested in this market. An additional point in their favor is that their reports are “waffle-free” and go straight to the point.The report takes the perspective of a small/middle sized bank or microfinance institution in a developing country that wants to start offering mobile phone financial services, but does not really know how or where to...
The final day of last week's SoCap event was, for me, the best of the 3 days. It was the chance to meet with lots of other participants, hear their ideas, and get actively involved in the things that I really cared about and wanted to discuss. The "strategically unstructured" format of the day was SoCap’s way to take the informal discussions of the hallways and expand on them. It was also the place to find the people that were in the sessions on Monday and Tuesday who you never found the time to have a chat with. I attended only 2 sessions that day, the first on franchising as a tool for scale and the second on China and development, but I actually spent the entire day on-site chatting with new found friends, old-found friends, and a whole host of compelling...
Guest blogger Roxanne Miller is a 2nd-year MBA student at the Haas School of Business at UC Berkeley, focusing her studies on the intersection of international development, social enterprise and technology. She spent this past summer interning at Unitus and working on an ICTD health care project in Uganda. Prior to Haas, Roxanne was a Kiva Fellow in Tanzania and spent several years in marketing roles at Yahoo! and American Express. She is a graduate of the University of Pennsylvania with a degree in Communications.By Roxanne MillerKevin Jones recently said that "markets convene in conversations" and part of the impetus for SoCap08 was to foster a space for dialogue. By the time Tuesday afternoon rolled around, the conversations were flowing. As I tried to hurry between...
Guest blogger Charlene Chen is a 2nd-year MBA at the Haas School of Business at UC Berkeley, with a focus on international development through ICT and social entrepreneurship. She spent this past summer working in SME development at an internet services provider in Ghana. Prior to Haas, she worked at Deloitte Consulting and earned a B.S. in Computer Science and Psychology from Duke University.By Charlene ChenThese may seem like depressing times, judging by the current economic crisis. Yet there were nothing but smiles at the Social Capital Markets conference, brought together dozens of organizations and hundreds of individuals reaffirming their commitment to investing in or sustaining social enterprises. I was particularly inspired by the variety of creative approaches to address...
With three weeks to go before the U.S. presidential election, it’s no surprise that there’s a lot of interest in democracy here at the Social Capital Markets conference. Fortunately, the conversation has (thus far) steered clear of moose burgers and the Weather Underground. After all, the democracy we’re discussing here at SoCap08 is actually related to democratic capital, not democratic governance. What is democratic capital, and why should the base of the pyramid community care? Well, on a very basic level, the democratic capital panel is all about giving investors and borrowers the power to connect directly, without the intermediation of too many financial institutions. This person-to-person connection takes the shape of four panelists and their social enterprises:...
Every few weeks, members of the Silicon Valley Microfinance Network (SVMN) converge in the San Francisco Bay Area to learn about microfinance, microcredit, and related finance and economic topics. The last session, Fueling the Growth of Small and Medium Enterprises (SMES), was led and hosted by Google.org members Linda Segre and Swati Mylavarapu, who outlined why SMEs are so important and their plans on stimulating SME growth in developing economies.In most economies, small and medium enterprises, generally employing between 10 and 250 workers, are the drivers of new job creation, innovation, and overall economic growth. The World Bank estimates that SMEs contribute an average 51.5 percent of GDP in high income countries-but only 15.6 percent in low income countries. By contrast, the...
"Open sourcing social solutions". I loved it since I first heard of it about 18 months ago while I was booking tickets, packing bags and spending long hours understanding "who was who" in this fascinating and rapidly changing base of the pyramid space. I learned about it from Changemakers (most likely via NextBillion.net), an initiative of Ashoka whose idea competitions open the door for a very interesting dynamic of feedback and model refining between different stakeholders involved in this space. After hosting competitions in areas as diverse as healthcare, water and tourism, Changemakers.net has naturally become an obliged stop for anyone interested in identifying, learning about and getting in contact with innovative and entrepreneurial solutions to social...
Want to lull me to sleep? First, start your event at 6:30 and go until 8:00 in the evening; I get to work early, so I'm often exhausted by the end of the day. Second, draw the blinds to keep out natural light; exacerbate the soporific effect by dimming the lights (so I can see the PowerPoint slides, sure). Third, serve food – especially heavy, rich food like meat and cheese – before the presentation starts. Between these three, you're guaranteed to have me – and at least 75 percent of your audience – asleep by the 20 minute mark. Or not. To my surprise, there's an antidote to this sedative trio – and his name is Nachiket Mor. Last night, along with 150 or so others, I sat in rapt attention while Nachiket described his latest thinking on banking at the...
Want to lull me to sleep? First, start your event at 6:30 and go until 8:00 in the evening; I get to work early, so I’m often exhausted by the end of the day. Second, draw the blinds to keep out natural light; exacerbate the soporific effect by dimming the lights (so I can see the PowerPoint slides, sure). Third, serve food – especially heavy, rich food like meat and cheese – before the presentation starts. Between these three, you’re guaranteed to have me – and at least 75 percent of your audience – asleep by the 20 minute mark.
Or not. To my surprise, there’s an antidote to this sedative trio – and his name is Nachiket Mor. Last night, along with 150 or so others, I sat in rapt attention while Nachiket described his latest thinking on banking at the...
Last night I attended a reception to launch Global Savings, Assets and Financial Inclusion, a new report issued by Citi Foundation drawing on the conclusions of last year's Global Symposium on Savings, Assets and Financial Inclusion organized, among others, by New America Foundation.CGAP's Kate McKee, who collaborated in the report, offered some very interesting insights on the symposium and the report based on her experience designing asset building strategies. Especially interesting were her remarks on the fact that the microfinance movement and the BoP community in general must go beyond credit and transaction mechanisms --i.e. mobile banking, which have predominated in the debate about financial services for the poor so far-- and offer the poor real and practical alternatives...
Thanks to Dana Krechowicz, Associate, Markets and Enterprise Program at WRI, for providing the background on Socially Responsible Investing. In April of this year, The Opportunities for the Majority Office of the Inter-American Development Bank (IDB) and Innovest Strategic Value Advisors (Innovest) announced the completion of a groundbreaking project – to create the Opportunities for the Majority (OM) Index of publicly traded national and multinational firms operating in the Latin American and Caribbean (LAC) region that are engaged in BoP activity. In Latin America and the Caribbean, the majority of people, estimated to be over 70 percernt of the population, lives on less than $3,260 a year (about $9 / day). The Opportunities for the Majority program was launched to engage the...
This weekend I had the chance to read CGAP’s new report about branchless banking. The report is a short summary about the current state of the branchless banking market. To those readers who do not know anything of the market it is an easy introduction. To those readers who have been following the sector in recent months, it offers a good peek into the future of what branchless banking may become and what it needs to get done. The paper lists off seven key observations about the current state of the market, in addition to four uncertainties about how the market will develop and four predictions. In my opinion, most of the seven observations are already well-known. Still, these known knowns are nicely and succinctly explained. Many of these observations were brought up during my...
The debate around SME finance is rapidly maturing. Development professionals and socially-minded investors are well aware of the difficulty entrepreneurs in emerging economies have in securing capital larger than microloans. A World Bank conference to be held next Monday and Tuesday in Washington, DC takes the conversation forward - from acknowledging the challenges of SME finance to getting into the specifics of how to make SME finance work. Speakers including: Thorsten Beck - World BankAllen Berger - U. South Carolina and Wharton; andMeghana Ayyagari - George Washington Universitywill discuss best practices and new mechanisms for channeling capital to this sector. See the IFC site for more details. Via PSD Blogread more...
"What poor countries need most is not more microbusinesses. They need more small-to-medium-sized enterprises, the kind that are bigger than a fruit stand but smaller than a Fortune 1000 corporation." These were the words of James Surowiecki last month in his New Yorker piece What Microloans Miss. Now another mass media hit for the SME cause - the Miami Herald interviewed Root Capital founder Willy Foote this week about the basics of his enterprise development organization. Root Capital identifies and supports SMEs in countries where the private sector is dominated by micro-enterprises and large corporations. This structure represents a dearth of businesses in the investment range of roughly $100,000 - $3 million - the infamous "missing middle" Willy, a key player...
The World Bank recently released the April edition of Development Outreach, which happily addresses head-on the connections between development and climate change. I was pleased to see articles on topics as diverse as development for climate change adaptation and environmental considerations in China's growth, but NextBillion readers might want to check out a piece called "Microfinance: Climate Change Connections" in particular. I was surprised and maybe even a little disappointed to see that most of the article by CGAP's Katharine McKee focused more on the possibilities of using microfinance to provide renewable energy to BoP households and businesses rather than financing microenterprises working in environmental sectors. Still, Katharine does a good job of...
By all measures, this has been a pretty long post to finalize.In January, Ana’s post about the mobile phone banking conference at Chemonics aroused a series of insightful comments. Al Hammond then weighed in with a post of his own (he also recently wrote about Biometric Security for Mobile Banking). In this context, I felt I could join in the debate with a post about business strategies in the mobile phone banking sector (or m-banking, as it is commonly known). Specifically, I set out to analyze what affects mobile phone banking business models, their most common critiques and their challenges for the future.However, the post quickly got a bit out of hand, growing beyond what I had envisaged to more than 10 pages. With this in hand, I felt I could develop it from a blog post into a...
Mobile phone banking is already fully commercial in the Philippines, South Africa, and Kenya. It's about to happen in perhaps a dozen additional countries. With more than 1.5 billion mobile phones deployed in the developing world, the potential market is large and growing. The need is equally apparent-most of the BOP have no access to modern financial services, despite the success of microfinance. So what is keeping this from becoming a revolution in financial services for the poor? In a word, regulatory hesitation. Central banks-and behind them, the U.S. Treasury-want to be sure that the democratization of financial services does not also lead to widespread money laundering and consumer fraud. And a key part of current security systems-the SIM card that gives each phone a unique...
As Robert Katz posted last week, a BoP Conference entitled “How to do Business at the BoP” was held on February the 27th in Madrid. The conference had pretty impressive speakers and visitors, since it was mainly directed at the corporate world. Robert was the first speaker of the day. He kicked off by explaining the reasons for BoP studies and briefly went through the three main penalties suffered by BoP customers: price, quality and access. After giving an overview of business strategies at the BoP, he presented “The Next 4 Billion” study and explained some of the most important conclusions that the study sheds light upon, such as the significant unmet needs in the ICT and Transport industries. The second part of the conference introduced several BoP case studies from different...
Which banking models could be used to enable access to the BoP? A recent BCG publication, entitled "A Roadmap for Expanding Financial Inclusion in India," tries to answer just that question for the Indian market.India has the second highest number of financially excluded households in the world with 135 million (China is first with a whooping 263 million). Rural households represent a big share of those financially excluded. BCG estimates that between 2007 and 2010, 17 million households will enter the financial markets thanks to income growth and 30 million more thanks to innovative banking business models. BCG further estimates that these 30 million people will represent Rs 10,000 crore (about $2.5 billion) for banks and Rs 20,000 crore ($5 billion) for insurance companies,...
In "The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid," the authors analyzed several markets. However, only one market - financial services - was not estimated in terms of exact size and scope. Financial services can be a fiendishly hard thing to measure, but is at the same time a crucial tool to develop markets for BoP customers. In fact, financial markets often help other BoP markets flourish. Data measuring access and efficiency in financial markets are notoriously hard to come across in emerging countries, because most of these markets lie under the cover of informal economies.A new publication by the World Bank, Finance for All? Policies and Pitfalls in Expanding Access, tries to give an overview of the most recent advances and conclusions...
I had an interesting meeting today, during which one of the people I was speaking with brought up a talk given by Jonathan Schwartz last August. Schwartz - the CEO of Sun Microsystems - delivers a fascinating talk over about 25 minutes during which he relates important demographic and development trends to Sun's need to develop and implement a "base of the pyramid" strategy.(Full disclosure: during the speech, Schwartz mentions NextBillion writer and WRI Vice President Al Hammond by name, and cites data from The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid. What can I say - I'm proud that Fortune 500 CEOs are looking to Al and to our report in support of their emerging markets strategies.) read more...
Position: Communications Officer / Web EditorLocation: Washington, DCOrganization: CGAP (Consultative Group to Assist the Poor) is a consortium of 33 public and private funding organizations - bilateral and multilateral development agencies, private foundations, and international financial institutions - working together to expand poor people's access to financial services. Position Description: CGAP seeks a Communications Officer with high energy and fresh thinking who can generate innovative ideas for communicating CGAP's work to a wide range of audiences as well as implement these ideas for strategic results. The ideal candidate will be an experienced Web editor with knowledge of Web marketing techniques, the ability to write well and a track record in effective Web...
Today, Bill Gates' speech at Davos has thrown the spotlight on "creative capitalism" and an emerging groundswell of interest in market-based solutions and business models that can drive positive social and environmental change. The excitement around these ideas to create self-sustaining, scalable options for development at the bottom of the economic pyramid (BoP) is encouraging, and the potential for a snowball effect of increased action is huge. Yet all of the grand words and fanfare remind me that what is most riveting - what really seems to capture attention and combat ingrained suspicions (about "development aid" and about "capitalism") - are the actual stories of the models themselves. So, today I'd like to provide a brief vignette of pieces...
In
Housing,
Energy,
Health,
water,
General Banking,
Consumer Products,
Marketing,
Business Development,
Strategy,
The Policy Agenda,
Microfinance,
Telecommunications and IT,
Successful Models,
Financial Services,
Agriculture
Both the New York Times and Emeka Okafor's Timbuktu Chronicles point out Google.org's newly-announced philanthropic commitment to small and medium-sized enterprises. From the Google.org web site: Small and medium sized enterprises (SMEs) are critical for creating more equitable economic growth. SMEs create opportunities for more people to participate in the formal economy and help reduce poverty by creating jobs. In many developing countries large businesses have access to formal, bank-based credit and capital markets while households and micro-entrepreneurs have access to micro-loans. This leaves a massive gap known as the "missing middle." While SMEs in rich countries represent half of GDP, they are largely absent from the formal economies of developing...
Today I'd like to highlight what I see as a frequently occurring theme in BoP business models, and an element that could make it or break it for companies that look to target BoP markets. Entrepreneurship is often cited as the critical component for small and medium-scale enterprises, especially ones that employ a franchise model. Enterprises such as Scojo, Medicine Shoppe, Drishtee, HMX Sumaya, Florestas and Berni Labs are among many examples of business plans that rely on entrepreneurial individuals to take a model and make it work in their own communities.Despite this impressive list, I think what underlies some of these entrepreneurs' success is not based on ‘entrepreneurship' per se. Rather, there is another, crucial element that explains why smaller enterprises often...
I found Peter van Dijk's comments on Ana's report from the Mobile Banking Conference interesting but not convincing. Not surprisingly, the evolution of mobile phone banking has not been without false steps, fraudulent operators, and systems that have flaws. But evolution also tends to produce winners that survive because they solve those problems. And the experience with G-Cash and Smart Money in the Philippines, with M-Pesa in Kenya, and, yes, with Wizzit in South Africa is that customers on the whole find a significant value proposition. If these systems didn't work, didn't protect their customers' money, and didn't deliver value, they would hardly be growing at the rate they are. M-Pesa already has over 1 million customers (in 9 months), and the buzz on the...
The results are out for first annual BoP e-Journal competition organised by the Center for Sustainable Global Enterprise at Cornell University’s Johnson School. We have recently blogged about how Cornell's BoP Learning Labs are moving the discussion to developing markets, and gaining live insights from BoP experiences gleaned from around the world.The competition was developed to highlight the challenges of doing business in underserved markets and identify innovative business experiments or solutions to those challenges. The winning submissions were able to clearly articulate a business challenge that an organization, either a non-profit or for-profit enterprise, working in low-income communities is striving to overcome. These are prominently included in the BoP e-Journal...
Shatajit Basu, a college junior at IIT Madras and a core member of the India chapter of Asia-Pacific Student Entrepreneurship society (ASES), attended the L-RAMP Innovation Awards 2007 and sent us this guest post.By Shatajit BasuThe L-RAMP Innovation Awards is a joint initiative of premier Indian engineering school – IIT Madras and the Rural Innovations Network, supported by the Lemelson Foundation. L-RAMP is an acronym for "Lemelson Recognition and Mentoring Programme." The foundation identifies innovators and harnesses their creativity to build their innovations into sustainable and scalable enterprises. The goal is to transform living standards of poor communities through such ventures. The winners of L-RAMP Innovation Awards 2007 were feted by Dr. APJ Abdul Kalam, former...
Codensa is a very successful utility company that serves 2.2 million customers in Colombia. It is controlled by Endesa, the largest electric utility company in Spain, which in 1997 took control of Codensa and Emgesa (this second company accounts for 21% of the generated electric capacity in Colombia).Its return over equity (that is, the rate of return over shareholders’ investments) has grown from 4% in 2003 to nearly 12% in 2006. This is a measure of the current company's profitability.Furthermore, last July, Codensa’s debt offer was oversubscribed three times, despite being in Colombian pesos rather than a more stable international currency and despite the jittery markets at the time (they still are). This was a bet the market made in favor of Codensa’s future stability and...