NextBillion.net - Development Through Enterprise - Eradicating Poverty through Profit

Lunch Time Roundup: Defining Social Enterprise and The Latest on Water Concerns

Francisco Noguera — Wed, 23 Jul 2008 10:25:49 -0500

I believe that the dialogue on philantrocapitalism featured in NextBillion is actually rooted in a question of semantics. As Edwards points out in his book, the whole conversation surrounding NextBillion.net has coined a number of terms (Social Enterprise/Entrepreneurship, patient/creative capital/capitalism, blended value, double/triple bottom line, B, M and ToP, inclusive business, and the list goes on...) that can create confusion and may pose a risk overheating for the sector. Even SMEs are now being called Small and Growing Businesses. Not that I disagree; we want them to grow and become the next microfinance, but agreeing on a nomenclature wouldn't hurt. By the way, stay tuned next week for a wrap-up of the ANDE conference.

Anyway, I guess this is the case for any growing sector and challenges like Edwards' are necessary for the it to gain maturity and continue its consolidation. Skoll Foundation has previously tackled the question of definition, and two recent papers continue the conversation around key issues for the sector's maturity: the first, by CGAP, discusses the (some may argue) blurring line between the for- and non-profit models, analyzing ownership and governance challenges faced by MFIs as they leave the NGO model and transform into commercial institutions. Also, Harvard Business School discusses the future of social enterprise, as part of its year-long 100^th birthday celebrations.

On another note, just a couple of links to remain current on the latest water debate: Scientific American offers a very informative piece on the coming water crisis, possible courses of action and how it will affect everyone at the base and elsewhere in the economic pyramid. This week's Economist also goes into water shortages focusing on the markets and pricing issues, as does Aguanomics' David Zetland in a recent Forbes article. All pieces seem to agree at least on one point: sooner than later, prices will keep us from taking water for granted.

A Dialogue on Philanthrocapitalism: The Importance of Listening

Rob Katz — Tue, 22 Jul 2008 10:33:06 -0500

This is the fifth and final installment of our series reviewing Michael Edwards' Just Another Emperor and the concept of 'philanthrocapitalism'. Follow the links to read part 1, part 2, part 3 and part 4.

By Rob Katz and Francisco Noguera

Philanthrocapitalism – harnessing business and the market to the goals of social change – is a controversial term. First introduced by The Economist's Matthew Bishop, then expounded upon by the Ford Foundation's Michael Edwards, philanthrocapitalism has been the subject of no fewer than four major online discussions and debates. Here at NextBillion.net, we have dedicated five blog posts to the topic, offering a range of opinions on Edwards' new book, Just Another Emperor: The Myths and Realities of Philanthrocapitalism.

Derek, Moses, Manuel and Nitin – who authored the first four entries in this series – offer a range of viewpoints, mostly critical of Edwards' argument that market strategies are inappropriate tools for driving social change. Edwards, of course, makes many salient points, and is not to be criticized as a hack. (Over at the Global Philanthropy Forum blog, Benetech's Jim Fruchterman deconstructs Michael Edwards in no uncertain terms, and comes close to making this very criticism. Edwards responds.)

As I read through the NextBillion.net posts and comments, the Global Philanthropy Forum debate, the OpenDemocracy forum and other discussions on philanthrocapitalism, I wonder if we aren't talking past each other at least a little bit.

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Getting Involved in the Base of the Pyramid Movement - Part 1, My Story

Moses Lee — Mon, 21 Jul 2008 09:38:35 -0500

I visited the slums of Nairobi in the summer of 2002. I remember being completely overwhelmed by the poor living conditions: large families cramped into little rooms, putrid refuse scattered throughout the neighborhood, young children left seemingly hopeless. I remember thinking to myself, what can possibly be done?

That summer, upon graduating from the BBA program at the University of Michigan's Business School, I was in Kenya on a service project with a small group from my local church. For six weeks, a dozen of us taught English, science, and math in schools throughout Kenya. But it was while visiting the slums that something in my heart and mind shifted. It was an epiphany of sorts – similar to another epiphany I'd had the summer before, which led me to Nairobi in the first place.

Just twelve months beforehand, I was in a posh tower in Manhattan, working as an investment banker for the largest financial services company in the world. A brief snapshot of what my life looked like:

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MIT Launches Next Billion Network for Innovative Mobile Technologies

Manuel Bueno — Fri, 18 Jul 2008 15:08:53 -0500

Our regular NextBillion readers will already know that the MIT is one of the most important universities in the base of the pyramid arena. Some of their most important initiatives are the Legatum Center for Development and Entrepreneurship, stimulating bottom-up entrepreneurship fueled by innovations, and the Lemelson-MIT Awards, recognizing the impact that inventors can have on economic and social well-being.

In these and other cases, MIT's strategy has been to apply its engineering prowess to try to solve BoP problems in the shape of technologically-adapted inventions.

Now, MIT has launched a Next Billion Network to deploy innovative mobile technologies that can help people reduce friction in their local markets from the bottom up. This approach is based upon the belief (which I share) that mobile phones, by enabling increased connectivity, can offer new opportunities for low-cost, sustainable solutions in the BoP.

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What is Called Development?: Exploring the Nexus of Economy

Joseph Bornstein — Thu, 17 Jul 2008 15:03:04 -0500

I recently had the pleasure of attending a presentation by Al Hammond which detailed his plans for revolutionizing rural medicine and access to telecommunications in developing nations. Here is a condensed rendition of the picture he painted: The majority of rural communities in developing nations have no access to telecommunication systems, and this is a problem considering that telecommunications are an essential tool for offering the poor services and possibilities that they would otherwise not have access to. The communications gap can be bridged by installing wireless access hubs in remote communities and the hand of wireless technology could leapfrog reaching almost any community at a cheap price.

This innovation opens a whole new market for cell phone companies and offers yet another excellent pipeline for BoP development and for getting a share of the fortune at the base of the pyramid. This is what we in the BoP community would call a double bottom-line profit model because the business plan is not only economically profitable, but also reaps social benefits by providing the services of telecommunications to poor rural communities. In this model, social justice meets capitalism. They shake hands, and build a better tomorrow.

Like many bad things, the concept sounded fantastic at first. But then, I found myself stopped in my thinking's tracks when the presenter remarked that the natural progression of services provided by this newfound rural telecommunications industry would be as follows: First there would be mobile banking. Then, education services. Lastly, entertainment would inevitably enter the market. This progression, if we can all it "progress" invokes Henry D. Thoreau's critique of the technology boom that took place during the industrial revolution in US America.

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How to Write About Failed Bottom of the Pyramid Ventures

Rob Katz — Thu, 17 Jul 2008 09:47:11 -0500

Like any business, base/bottom of the pyramid ventures fail - often. I have neither the space nor the inclination to list those I know of - besides, writers from Erik Simanis to Aneel Karnani to Anand K. Jaiswal have done some of the heavy lifting for me.

We don't talk enough about failed bottom of the pyramid ventures. After all, what CEO wants to risk his company by talking about all the things they did wrong?

Answer: Matt Flannery. The Kiva CEO is incredibly forthright when discussing what they've done well and what they haven't. His latest blog post is practically a how-to guide for talking about failure inside a BoP venture.

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Job: Investment Officer, Opportunities for the Majority, Inter-American Development Bank

Rob Katz — Wed, 16 Jul 2008 10:58:31 -0500

Position: Investment Officer(s), Opportunities for the Majority Initiative

Location: Washington, DC

Organization: The Inter-American Development Bank is the leading source of financing for regional development in Latin America and the Caribbean. The Opportunities for the Majority initiative (OMJ) applies sustainable, market-based strategies to bring the benefits of economic and social development to the poor and low income majority population of Latin America and the Caribbean.

Description: OMJ seeks to grow its team of professionals in Washington with the objective of generating high quality, creditworthy, sustainable and demonstrative projects that can be replicated and scaled up to result in significant development impact.

Investment Officers will be responsible for helping OMJ source deals. For more information - including the full job description and instructions on how to apply - please see the IDB job posting web site.

Application deadline: August 1.

New Base of the Pyramid Resources on NextBillion.net

Theresa Newhard — Wed, 16 Jul 2008 07:25:50 -0500

After a few weeks of non-blogging, I'm happy to write my first post on NextBillion. I've spent some time over the last few weeks updating the Resources section of the site, complete with additions to the case study, reports, books and articles sections. A couple of highlights are summarized below, but we'd love to hear your thoughts and comments on what's particularly valuable and what you think we're still missing in our virtual library. The entire list of resources can be accessed here.

Happy base of the pyramid reading!

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Guest Post: Maya Nut Trees Make A Comeback in Central America

Francisco Noguera — Tue, 15 Jul 2008 13:19:26 -0500

Guest blogger Karen Bennett is a Research Program Coordinator at the World Resources Institute. Her current work focuses on mainstreaming an ecosystem services approach to assure ecosystems' capacity to provide humans with needed goods and services. She also provides support to projects in the People and Ecosystems Program.

In Central America, the Maya Nut is making it clear that trees are worth more standing than cut down. Trees are critical to the well being of forest inhabitants in Central America. Ironically though, many forest dependent communities find it pays more to cut trees down than to keep them standing. That's because timber can be used for firewood, building material, or sold internationally, and cleared land can generate income from agricultural products. Unfortunately, deforestation eliminates other ecosystem services that forests provide, such as climate regulation, soil retention, and water regulation. As current deforestation rates attest, many of these forest benefits have received little recognition.

That is starting to change, however, as local communities discover the financial potential of the forest's often overlooked services. For the past few years, 56 women in Ixlu, Guatemala, which is located on the border of the Maya Biosphere Reserve, have operated a business to market the Maya Nut, also known as the Breadnut or Ramón. Dried and roasted, the Maya Nut can taste like chocolate or coffee and can be used to make cereal, cookies, cakes and other foods.

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Guest Post: Healthcare and India's Low Income Market

Rob Katz — Mon, 14 Jul 2008 11:10:42 -0500

Guest bloggers Shaila Parikh and Biju Mohandas work for Acumen Fund, based out of Hyderabad. Shaila is a Summer Associate and a Master of International Affairs candidate at Columbia University's School of International and Public Affairs. Biju is Acumen Fund's India Business Manager. Before joining Acumen Fund, he served for five years in the Indian Army's Medical and Dental Corps. Later, Biju completed his Post Graduate Program in Management with a dual major in analytical finance and strategic marketing from the Indian School of Business.

By Shaila Parikh and Biju Mohandas

In the middle of June, Acumen investee LifeSpring opened its second low-cost maternity hospital in a peri-urban area near Hyderabad. They plan to have six hospitals opened by the end of 2008, and by the time this post goes live, they will have launched their third hospital in Nellore, a small town in southern Andhra Pradesh.

As LifeSpring and other Acumen Fund investees slowly and steadily gain scale, we have started asking broader questions about healthcare for the low-income market. Mainly, we want to understand the major gaps and bottlenecks to providing healthcare to the low-income market in India and how these issues can be overcome. The India office is presently working on a status report of the healthcare sector in which we are trying to understand the challenges of the industry for our target market. What follows is a brief summary of our understanding thus far. Your feedback through questions, comments, nudges, pointers and criticism are appreciated.

Simply put, healthcare for the poor seems to have three central challenges: affordability, availability and quality. Effective, viable solutions will need to address all three issues.

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