I'm struck by the seeming convergence of a number of new options for providing/generating energy in rural BOP areas. Wind-up radios and pedal-power water pumps are already succeeding commercially in Africa. Photovoltaic packages look promising for powering cell phone and other mobile device chargers, and may be a good match to power low-voltage WiFi wireless data networks and new hyper-efficient LED light sources. New work on the genomics of cellulose-digesting and ethanol-fermenting organisms may lower costs and widen markets for ethanol fuels, already a success in Brazil, creating both local substitutes for petroleum-based products, export markets, and jobs.

Q. So you really think this whole movement is going to drive itself?

Yes. Eventually, the spoils will go to those who figure out how to do it. And if those who figure out how to do it come from the developing world, then those are the companies that are going to be the companies of the future.  I would bet on the companies that are rising up from the developing world, the companies that are coming from Latin America, from Africa, from India, from China. Those are the companies that are cracking the code, that are figuring out how to do this first. And as a result, they have a beachhead, a strong position to work from, and then to move their way up, over time.

My colleague and first mentor in BOP business strategies, Stuart L. Hart, is one of the world’s authorities on the implications of sustainable development for business strategy. Stu is S.C. Johnson Professor of Sustainable Global Enterprise at Cornell’s Johnson Graduate School of Management, from which post he teaches, does research, and runs the Base of the Pyramid Co-Laboratory. With C.K. Prahalad, Hart wrote the pathbreaking 2002 article “The Fortune at the Bottom of the Pyramid,” which provided the first articulation of how business could profitably serve the needs of the four billion poor in the developing world.

Q. How can business strategy that you describe here provide an alternative to extremist ideology and terrorism?

The leaders of terrorist organizations are, more often than not, driven by extremist ideologies. Militant Islam, for example, weaves together fundamentalist religious beliefs, moral values, and a radical political agenda to create a particularly virulent form of such extremism. As the leaders of such groups know, however, special circumstances are required to attract the large numbers of people needed to effectively advance the cause. Most people are not born to be suicide bombers or militia members. It takes a lifetime of neglect, despair, dashed hopes, thwarted opportunities, or worse--intimidation, exploitation and humiliation--to drive most people to such extremes. Only by reversing the conditions that breed such behavior--poverty, inequity, hopelessness, loss of dignity--will we deal with the root cause of the problem. Yet while thousands of lives were lost or altered forever by the events of 9-11, and hundreds of known terrorist leaders have since been killed or captured, these underlying conditions remain largely unchanged--or have perhaps even worsened. Terrorism, in short, is a symptom; the underlying problem is unsustainable development.

In today's New York Times, Elizabeth Becker and David Sanger report that President Bush refuses to deviate from his administration's policy not to increase aid for Africa, despite strong support for such a proposal from US allies including Great Britain.  Thus, in the run-up to the G8 summit in Scotland next month, I find myself asking, "What's the private sector's response?"  While many in the development community have latched onto the double-aid-for-Africa bandwagon, it’s looking less and less likely to happen as currently packaged.  Sorry, Jeff Sachs and Co. 

So what's the next step?  With the Bush Administration firmly in business' corner, perhaps now is a good time for the private sector to step up and talk about business opportunities in low-income markets.  I’ve heard about two events happening in Scotland around the G8 meeting.  The first will be co-organized by the Partnership to Cut Hunger and Poverty in Africa and the German Marshall Fund.  The second will be run by Business Action for Africa.  Both seem pretty interesting, and high-level.  Hopefully something real will result.

Kurt Hoffman of the Shell Foundation wrote an interesting piece for the Guardian today that comments on one of the main conundrums facing current poverty reduction efforts: that job creation offers the best chance for poor people to escape poverty permanently, but the development community does not know how to start up and grow businesses. While cross-sector partnerships aimed at overcoming this challenge are on the rise, Hoffman points out that "In the case of big business, it's the wrong company representatives talking to the development community: instead of talking to the core value creators of companies, the development community ends up talking to experts in corporate social responsibility." His suggestion: that the development community should take advantage of the experiences of both established businesses as well as independent entrepreneurs that have already succeeded in the tough business environment present in poor countries.

Thanks to Jamais Cascio and his excellent World Changing weblog, I recently learned about India’s Rural Innovations Network (RIN). RIN is a non-profit organization that functions as “part business incubator, part fabrication and market research facility;” through partnerships with venture capitalists, it also matches good ideas to funding. Rather than applying developed-world technologies to BOP problems, RIN takes a “technology outward” approach. Jamais nicely summarizes for us:

[Rural] people intimately understand their environments and create thousands of innovations that have immense potential to improve the well being of the rural population. What rural innovators don't have though is access to the skills, networks and other resources needed to take their innovations to the market. [...] RIN's mission is to identify, nurture and sustain innovations by enabling the management of commercially viable enterprises, thus leading to improved economic, social and creative environments for the rural population. [...] While other organizations take technologies and products into rural areas, RIN differs in taking technologies out from rural areas. RIN champions this "technology outwards" approach because it believes innovators innovate out of local need, and in many cases the same needs exist in other rural areas.

Interestingly, this approach echoes Thomas Friedman’s postulate in today’s New York Times: “Indian companies know that if they can make money producing low-cost technology for poor Indians, it gives them an incredible platform to then take these products global. (Imagine the profit potential if they work in the West?) China is doing the exact same thing.”

The RIN is applying an emerging status-quo among BOP experts: innovate at the local level, based on local needs, then match good ideas with top-notch funding. So far, its innovations haven’t spread beyond India. If Friedman’s right (and he probably is), it’s only a matter of time.

I've recently come across several reports written by Linda Mayoux that may be of interest to readers of this blog, particularly those looking for a better understanding of how to go about establishing cross-sector partnerships aimed at pro-poor enterprise development. 

The first - "Marrying Jekyll with Hyde? Transnational Enterprises, Pro-Poor Development and Sustainable Ethical Learning" - discusses the challenges of bringing together NGOs, unions and other civil society organizations with the transnational corporations they monitor and lobby, in order to establish meaningful cross-sector partnerships aimed at creating sustainable pro-poor development.  The paper focuses on recent innovations which can contribute to a key element in seeking constructive ways forward: the building of a participatory ethical learning process which can increase trust, transparency and mutual accountability.  The paper was originally commissioned for EDIAIS.

Fast Company's Jessica Silverman reports from the UN in Friday's FCNow blog. Ms. Silverman may represent business' point of view when it comes to issues surrounding the MDGs - that is, the MDGs are so wide-ranging and vague, they risk becoming trite. I don't know if I completely agree with her, but I struggle to defend the current UN plan as anything more than more of the same. An excerpt:

The World Business Council for Sustainable Development has released its 'Sustainable Livelihoods video library', an online video gallery showcasing the views of global business leaders about Sustainable Livelihoods and how they are actually implementing the approach in their companies. The easy-to-navigate site also features a variety of short video clips illustrating concrete examples of sustainable livelihoods businesses already undertaken, as well as links to several other resources, including WBCSD publications and links to CNBC's Business and Development video series. The video clips I viewed were all well put together and very informative. You could spend hours exploring this site.

A recent article (available here, PDF) in the journal Science tackles the problem of electrification in low-income households with analysis showcasing a robust technical solution that could be made available for US$25 fixed-cost, without subsidy. The technology, solar-powered white light emitting diodes (WLEDs) are more efficient than fuel-based lighting (biomass, kerosene, candles, etc) by a factor of 100. In addition, the article’s author, Evan Mills, estimates that fuel-based lighting accounts for annual worldwide energy consumption of 77 billion liters of fuel per year – an amount equivalent to US$38 billion per year or US$77 per household. Mills states:

Key terms to the Development through Enterprise discussion, Leah and I, interns at the World Resources Institute, have posted definitions of ‘Bottom of the Pyramid’ and of ‘Next Billion’ on Wikipedia, the free online encyclopedia that anyone can edit. We want these definitions to become accessible points of reference both for newcomers to the field, and for experienced practitioners who need suggestions for how to articulate these ideas to people unfamiliar with them.

At the launch of “The Market for Aid” yesterday, authors Michael Klein and Tim Harford described how the market for development aid was changing – indeed, growing more competitive.  Will this increase in competition lead to more efficient aid agencies that will, in turn, make important reforms?

Not very likely.  The trouble with aid is that it’s difficult to ensure that it is properly dispersed.  Conditions attached to aid often do not create sustainable development within a country, and grants and loans given directly to governments often end up wasted in bureaucracy or corruption.  Creating a system of accountability and promoting the development of transparency within government is necessary if the current system is to continue – things that are far more easily said than done.  Even if “rating agencies” are created to rate projects and organizations distributing aid, as the authors suggest, the problems of accountability and excessive bureaucracy still exist.

Article from The Economist: Banking on the Unbanked

The success of South Africa's controversial Black Economic Empowerment (BEE) legislation in encouraging South African firms to engage low-income communities as clients suggests an alternative optimal relationship between private firms and government that allows both for market efficiency and desired social outcomes.

Wolfowitz, Ending African Tour, Calls for Changes

Unsurprising conclusions made by Paul Wolfowitz, President of the World Bank: the Bank needs to make changes in its bureaucratic structure, and government corruption doesn’t help in resolving the problem of poverty.  Indeed, back in 2002 President Bush proposed the creation of “Millennium Challenge Accounts” to address the problem of giving aid to corrupt governments, the idea being that poor nations pursuing democratic growth and “sound economic and social welfare” policies would receive more aid from the U.S. to encourage these developments.