By Rob Katz and Mareike Hussels

At World Resources Institute, our New Ventures team tends to think about the "next big thing" as far as small and medium sized enterprises (SMEs) are concerned. This morning, I had a great discussion with my colleague Mareike Hussels about the emergence of SMEs as an investment-worthy asset class.

Mareike - who manages New Ventures' Latin America portfolio and has a background in sustainable finance with UNEP-FI - has been wondering about the emergence of a "SME asset class" for some time. History may give us some guidance as to whether this will happen soon, if at all.

It took years - and a concerted effort across NGOs, investors, philanthropists, and governments - for the microfinance community to be capable of absorbing large amounts of capital. The question Mareike and I struggle with is, what market mechanisms and institutions need to be in place for the same kind of emergence for SMEs?

Neither of us is sure - it's an open question, and we welcome your comments. That said, some members of the SME investment and microfinance community are already thinking on the same sorts of questions.

One leading thinker in this space is Naoko Felder-Kuzu. Felder-Kuzu is an author and independent consultant whose book, Making Sense: Microfinance and Microfinance Investments, effectively educated the investment community about the emerging microfinance world back when it was published in 2004. Now, Felder-Kuzu maintains an excellent web site and blog, Microfinance Journal.

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NextBillion ally and Timbuktu Chronicles author Emeka Okafor sent me a note today, asking me to post the attached job description.  Emeka - a Nigerian ex-pat - is working with Ngozi Okonjo-Iweala and the Small Enterprise Assistance Fund to launch a new private equity fund based in Lagos called the Makeda Fund:

Responsible for full-time management of the Makeda Fund in Lagos, Nigeria, a $50 million equity investment fund. The Fund will focus on making investments of $1-5 million in SMEs that are women-owned or led.

Expressions of interest in the position can be sent directly to Emeka Okafor, emeka (dot) okafor [at] gmail (dot) com.

For those of us who spend most of our waking hours thinking about BOP news and activities, who already know the buzz words, the acronyms, and the fact that microcredit is only the tip of the iceberg… well, sometimes we lose sight of one of the most important audiences: the business and government decision-makers who are just starting to explore the value of these ideas as they begin to crop up on mainstream radars.

That’s why I’m very happy to see that the WBCSD (World Business Council for Sustainable Development) has done an admirable, concise, and smooth job of presenting all this "new" thinking on the role of business in development in its recent report, "Doing Business with the World – The New Role of Corporate Leadership in Global Development."

 
It's not to be expected that the WBCSD’s report would reflect anything but confidence about the role that very large MNCs are well-positioned play in this space; however, this is also something that serious thinkers shouldn’t gloss over. The report is in no way lip-service to business’ positive social development role, but even a detailed read of the report doesn’t resolve contradictions that MNC actors (and government decision-makers) will still face in the current international business environment.

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"All Biofuels Aren't Created Equal" noted Tom Schueneman over at Triple Pundit yesterday. A solid point that brings some perspective to the ongoing discussion over the viability of biofuels. There is a significant difference between the moral issues raised by, say, a huge American corporation jacking up global corn prices by converting food products into fuel and a small company producing biofuel from crop waste.

In fact, I just posted a Rising Ventures article profiling a Chinese company that is characterized by the latter. Shengchang Bioenergy produces biofuels from what they call "crop waste," a much better source than ethanol from corn as it does not convert crops that would be used for food into fuel.

The article Tom's blog references makes this distinction pretty clearly, quoting Jean Zigler at a UN meeting on Friday. I was surprised to read his claim that contrary to what Shengchang says to have accomplished, biofuels made from crop waste are about five years off. Rather than Shengchang employing some technology of the future unbeknownst to American scientists, it is more likely there is a wide definition of what entails "crop waste."

Any thoughts on this? I would be interested to know if readers feel that crop waste is actually a desirable alternative energy or if it raises yet more moral quandaries. And are there major differences in energy yield between different types of crop waste?

Either way, the Shengchang model is one to be emulated - crop waste purchased directly from farmer co-ops so that no additional energy is expended growing crops specifically for energy and farmers get a good source of extra income on materials they would discard anyway. Is there finally a biofuels win-win for the environment and the BoP?