Everyone agrees that microfinance is the coolest thing since sliced bread.  That’s why in the last two months we’ve seen it covered by the Financial Times, Reuters, The Globalist, The New York Times, The Economist, The LA Times, Business Week, CNN, and The Times of London.  And in all likelihood there are other articles still hovering beneath our radar. 

I must confess that at first I was excited to see the mainstream media weighing in on development issues affecting the base of the economic pyramid.  I held the opinion that microfinance articles—no matter how repetitive and formulaic—attract publicity to an important cause that draws less attention than Paris Hilton’s latest sexcapade.  But I’ve changed my mind.

Bloggin

g to wrap up a lazy Sunday evening on a beautiful Labor Day weekend (post Ernesto that is).  Lotus Quimica- this week's featured company is an interesting case- they also tackle the water issues I touched on earlier in the week, although at first I was a bit aprehensive about their solution.

You have probably heard of Open Source Software - software developed by hackers and released into the community under licenses that freely allow copying and modification. Linux is a good example.

David Rowe, an engineer from Adelaide, South Australia and a small team of hackers around the world are developing "open source hardware" - high quality, professionally designed hardware designs that are being released for others to copy and build on.

The hardware (when combined with open telephony software such as Asterisk) allows anyone to build advanced telephone systems at very low cost. The idea is to help close the digital divide by building telephone exchange (PBX) hardware for $200 with features matching existing PBX systems - that cost $10,000. This makes it possible for a small village to deploy and maintain a telephone system at very low cost.

The BOP business news from India brings readers updates on three firms whose names ought to ring a bell - Arvind, Hindustan Lever, and ITC. All three were featured in "The Fortune at the Bottom of the Pyramid" and have been the subject of case studies, speeches, articles, and much more. And now, thanks to the Indian business press, we hear about their continuing push down market.

Continue to read past the break for detailed reports on each company's progress.

As Labor Day came and went in the United States over the weekend, style-conscious clotheshorses put away their whites in favor of browns, greens, and greys; community pools closed their gates; barbeque grills were sheathed for the season. All are signs that summer has come and gone. We at NextBillion must add a final sign - the departure of our trusty summer intern, Ethan Arpi.

Ethan joined our team in June, contributing news and blog posts and plenty of analysis. Readers have enjoyed Ethan's focus on Latin America, the culture of the BOP, and all things sustainable. While he will be missed by NextBillion readers and by our staff, he hasn't gone far - Ethan's taken a fresh internship with the World Resources Report, WRI's flagship publication.

Good luck at WRR, Ethan, and we hope you'll contribute some guest content from time to time.

You can only change what you measure. Doing Business 2007, just released, offers good evidence of the wisdom of this epigram. Whatever issues you might have with the way the World Bank Group does its work, it would be hard to quarrel with the value they are bringing to business climate reforms - at least as I see it. The report itself mentions the dynamic, noting "When the government succeeds in these early reforms, citizens start seeing benefits - more jobs, more resources for health and education. The appetite for reform grows."

As the flow of remittances has expanded massively in recent years, many in the private sector have taken advantage. While this has positive effects for facilitating formal transactions (rather than, say, having your cousin deliver money by hand), there has not been enough competition to keep prices reasonably low. Transfer services such as Western Union can take as much as 15% of the money a migrant worker sends his family in Nicaragua from the US. Rates this high hurt the ability of remittances to have positive development impacts and give senders incentives to transfer their money through informal networks.

 

Fresh off the presses, a new publication by the Foundation for Development Corporation argues for creative solutions to breaking this oligpolistic market open. In Remittances, Microfinance and Development: building the links, a slew of authors with experience in the field make the case for why MFIs should be in the remittances business. A telling excerpt gives the main gist of the book:

"Some people think I'm crazy."

These were the words of Alexandre Wainberg as quoted by The Estado de Sao Paulo last Sunday (Article in Portuguese - Subscription required). In an excellent piece detailing the environmental damage and social issues surrounding the aquaculture sector in Brazil, the Estado focuses on Wainberg as a lone and oftentimes beleaguered advocate of sustainable practices. What was most fascinating in reading this was seeing the pure passion and entrepreneurial drive of someone willing to essentially defy an entire local industry; the question that kept popping into my head was: where is the government support?

Fans of technical and sustainable innovation, take note - the Lemelson-MIT Awards are coming up again. For those who don’t know, the awards recognize inventors' impact on economic and social well-being - to the tune of $500,000 (technology), $100,000 (sustainability), or $30,000 (student prize). Past winners include D-Lab founder/BOP design guru Amy Smith, and Segway inventor Dean Kamen – whose recent work has centered on clean water delivery in poor rural communities.

The awards will accept nominations through October 27. NextBillion readers may be particularly interested in the Sustainability award:

The $100,000 Lemelson-MIT Award for Sustainability celebrates individuals whose inventions and innovations enhance economic opportunity and community well-being in developing and/or developed countries, while protecting and restoring the natural environment.

Wrapping up another work week, I’ll leave you with another excellent emerging economy SME that is creatively meeting new market needs while achieving environmentally beneficial outcomes.  One of our New Ventures folks, Kelly Desy, recently interviewed an entrepreneur who saw plenty of money to be made in….. fluorescent light recycling.  Not a pressing environmental concern you say?  As Kelly reports, Brazilians discard 100 million lights every year, almost entirely straight into landfills, leaving hundreds of pounds of mercury to enter the environment.

Mr Vasquez has come with friends from his village in a remote part of Cajamarca, a department in Peru’s northern highlands, to pick coffee in the Moyobamba region on the edge of the jungle…He and his co-workers work from 6am to 4.30pm, for which they are paid 10 soles a day (about $3) – better than the eight soles a day some coffee farmers pay, he says. However, the amount is below the 11.20 soles a day that is the legal minimum he should receive.

This quote is from an article in Friday’s Financial Times, and it reminded me of why we at NextBillion.net have relentlessly promoted development driven by the underserved themselves.

MIT's entrepreneurship, innovation, and engineering for the BOP have been on our mind lately. Here's another shout-out for the Techies. On September 21, the New York MIT Enterprise Forum will host Global Entrepreneurship: Inefficiency as Opportunity in the Developing World. The event features a New York-based panel discussion and a broadcast panel, live from Cambridge, with on-campus faculty members.

The speaker list is a who’s-who of the entrepreneurship/poverty set: Eric Cantor (Acumen Fund), Iqbal Quadir (GrameenPhone), Sandy Pentland (MIT Media Lab) and many more. The private equity community is particularly well-represented (since this is a New York-based event, that’s not surprising).

I was thinking of what to express as the United States enters a fifth year of reflection on the WTC attacks in 2001. Instead of getting into the charged debates over which countries were okay to invade, who has or has not told the truth and the like- instead of engaging in discussion over what role the US should play in the world, I want to focus on what role marginalized peoples everywhere can and should play in the global system (be it economic, political or social).

When 9/11 comes up in debates, pundits and scholars often wrangle over what the long-term causes of these attacks were; what drives ‘terrorists’? Is it pure hatred for US incursion or the American lifestyle? Is it the result of a hopeless nothing-to-lose attitude fostered by poor living conditions and little upward mobility? Many academics argue that data shows there is no correlation between poverty and terrorist acts (see, for example, this recent UNC paper). This may be the case, but even these studies have found something interesting- that there is in fact a correlation between political violence and social cleavages within a society. As the Piazza paper I linked above shows, countries with heavily divided political factions, for example show a greater level of unrest largely attributable to the exclusion that can occur if a rival faction takes power.

A Special on small and medium sized enterprises (SMEs) by the South Asia based Financial Express explores various angles of the evolving SME development movement from the very heart of the original microfinance revolution: Bangladesh.  Once you start really paying attention to development trends, it’s amazing to see how one new focus can receive little to no attention and then within a span of years, emerge out of the dust as the next ‘big thing’- all of a sudden 2005 is the year of microfinance.  In researching an upcoming overview on SMEs and their role in sustainable development for the Earthtrends project, I have observed something similar happening with the small business sector (not to be confused with microenterprise). 

I am forever humbled by the ability of those in academia to engage in and inspire catfights that rival some of the verbal battles I observed tutoring elementary school children last year. Few bring it out worse than Joseph Stiglitz, who recently released his new book Making Globalization Work, the follow-up to his fiery denunciation of the Washington Consensus brand of economic liberalization in Globalization and its Discontents.

Stephen Kotkin of the NY Times wins the award for bad kitty scratch: