This post is the continuation of my previous one last Monday. Just as it was posted, Robert Katz sent me an email with the following question:

"That BOP firms, to be competitive, don't have to be innovative in the same way that Western firms do makes sense. But what about Western firms looking to enter BOP markets? Do they need to invest in R&D to create the sorts of incremental "piggybacking" innovations you describe? Or do they need to invest more in the anthropology/observation to unearth the "obvious" innovations?”

As I was writing my reply I noticed that I could have been more specific and less fuzzy about some concepts in the previous post. I also noticed that there was plenty of scope for further analysis – and further questions.

The mentioned tradeoff between growth and innovation at the BOP was with local big firms in mind and elaborated on innovation in broad terms as an "unusual combination of technologies and other components that generates value for the consumer." By doing that, I lumped together two basic types of innovations: product level innovations and operational innovations.

(Click "Read More" to continue reading this post)

NextBillion joins in congratulating Prof. C. K. Prahalad. Prahalad, India-born management guru and academician, has been voted the world's most influential living management thinker in the Thinkers 50 biennial poll.

A professor at the University of Michigans' Stephen M Ross School of Business (and - full disclosure - a member of WRI's Board of Directors), Prahalad specializes in corporate strategy research and is a globally
known figure consulted by the top management of many of the world's foremost companies.

Prahalad, who is the first Indian-origin thinker to claim the title, was ranked number three in last year's Thinkers 50 list brought out by
Suntop Media.

Each guru was assessed against criteria including Originality and Practicality of Ideas, Presentation Style and Communication, Loyalty of Followers, Business Sense, International Outlook, Rigor of Research, Impact of Ideas - and the clincher, "Guru Factor".

Prahalad is probably best known for his work with Gary Hamel on resource-based strategy, which gave rise to the term "core competence". The poll might drive new interest in Prof. Prahalad's work on the Fortune at the Bottom of the Pyramid.

At first glance, the lineup of products and services on display at this year's New Ventures India Investor Forum seemed to reflect traditional Indian knowledges and practices. Banana-leaf materials, light posts, and packaged Indian foods were some of the offerings on display by entrepreneur finalists. Only the banana leaves were fashioned into modern kitchen ware, the light posts were solar powered and the traditional Indian foods were harvested under an organic, fair trade system designed to exceed the most stringent international standards.

World Resources Institute Vice President Manish Bapna summed up this phenomenon nicely in his keynote speech: "Innovation is not invention; it is the application of existing ideas in a new context." I normally tell people that these enterprises are chosen for their innovation in building profitable businesses that benefit society and the environment, but in this case the word innovation deserves some clarification. As much attention as India gets from investors for its rapid growth and technological advancements, the November 3rd Forum demonstrated that India's entrepreneurs are spurring this growth on their own terms. Theirs is a uniquely Indian brand of innovation that readapts traditional knowledges for new environmental markets.

Witness the example of Span Pump (pictured), a company that adds a carousel or see-saw component to the technology of the many water pumps that dot India's rural areas. These "Funflow" pumps build upon conventional technology to create a device that harnesses the energy of children at play to pump water for sanitation and agricultural purposes. Span Pump is just one example of the modern-traditional innovations on display at the Forum. Others included bikes by Kabirdass which mimick the two-wheelers that are ubiquitous in cities like Bombay, but with electric, zero-emissions motors. Ankur Scientific presented power plants that utilize the jatropha weed, common in rural India, as a fuel source. Each SME taps into Indian traditions and practices of water management, agriculture, and other knowledges.

(Click "Read More" to continue reading this post)

Usually, I stand by the belief that bringing politics into development discussions is a recipe for disaster for anyone – be they journalist, blogger, development planner or, above all, the target "beneficiary."

Today, however, I can’t resist pointing to the political events in Venezuela (the extremely narrow 51-49% defeat of Hugo Chavez’s sweeping constitutional reform package two days ago), with the hope that they will spark discussion on NextBillion about what this means for the BoP. (For worldwide news perspectives on these events, click here).

What does the situation in Venezuela say about the state of the BoP and viability of market-based solutions to create sustainable development, especially where other traditional development mechanisms (FDI and government-backed policies) have yet to succeed?

(Click "Read More" to continue reading this post)

(via Just Means)

Position: Membership & Administration Coordinator (Entry-level)

Location: Washington, DC

The Social Investment Forum (SIF) is a national nonprofit organization for financial professionals and institutions that advances the concept, practice, and growth of socially and environmentally responsible investing.

This entry-level position offers an opportunity to learn about economic strategies that address key issues such as: corporate social responsibility, serving low-income communities through community investments, and strengthening the voice of shareowners and stakeholders in corporate decision-making.

For more details about the position, qualifications, and application instructions please click here.

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 profitability.

Codensa caters to the Colombian BOP. According to their 2006 Annual Report (in Spanish), more than 88% of their customers were households of which more than 80% belong to the socioeconomic population strata 1, 2 and 3. In value terms, households represent nearly 60% of total sales out of which 74% belong to the above mentioned strata. In both these cases, strata 2 and 3 represent the lion’s share in volume and value terms.

Customer growth has averaged around 3% since 2000 with the increase in the value of energy sales rising from 1% in 2003 to 5.77% percent in 2006.

How does Codensa do it?

(Click "Read More" to continue reading this post)

Some NextBillion readers may have noticed a rather provocatively titled piece that appeared recently as the cover article for BusinessWeek: "Can Greed Save Africa?"

What a way to cut to the chase! The article probably makes most development and aid activists squirm. After all, Renier van Rooyen, the South African on-site manager of ESV Biofuels, one of the investments featured in the piece, is quoted as saying, "I'd be the last person in the history books to go down as a philanthropist... But you cannot run a business when your workers are out with malaria or sick from dirty water." This was his way of explaining changes in the village of Inhassune where, as a result of the jobs created by the a new biofuel plant, "mosquito control, power lines, and potable water have quickly arisen from a barren stretch of bush" and people are registering to vote (with newly issued government ID cards) for the first time in their lives.

But, beneath the glorification of opportunism and hungry investors jetting around Africa and making wide profit margins, I find far more in the article that speaks to exactly what NextBillion is all about: market-based models that provide paths out of poverty. Building a biofuels plant where there was previously no economic option other than subsistence farming? Locally producing fertilizers that will address a severe continent-wide shortage? Microfinance institutions that have the bandwidth and Wall Street backing to expand from three to nine countries in a year? Doing all of this profitably? Sounds familiar - sounds like development a la BoP might be catching on.

(This post continues past the break; click "Read More" to continue)

Position: SME Equity Finance Director

Location: Amsterdam, with regular travel

Organization: The BiD Network Foundation operates the world’s largest international business plan competition for SMEs in developing countries. It does this online worldwide through its 16,000 member community and with seven national competitions in Asia, Africa and Latin America. Its mission is to contribute to economic growth in developing countries through entrepreneurship.

BiD Network is establishing an investor matchmaking service. It aims to gradually expand its local satellites from 7 to 14-20 countries and is taking steps to launch a Meso-Finance investment facility in 2008.

Job description: BiD Network seeks a director whose main task will be to take charge of the broadening of the Network’s financial services to encompass matchmaking and investor promotion. This task will be executed in tandem with the director in charge of day-to-day operational management of the competitions and continual website development. SME equity finance is a new field of activity that needs to be added to the emerging matchmaking service.

For more information about this position, please click here.

(Photo: The Women of Akbarpura, by Flickr user lecercle, used under a Creative Commons license.)

NextBillion readers often ask me why we don't cover the microfinance industry more closely. After all, microfinance is a slam dunk BoP success story: a business strategy that helps low-income communities access high quality, competitively priced financial services. So why not write about it more often?

I typically give a two-part answer to this question. First, I tell readers that, if NextBillion covered every development in the microfinance industry - and we cover some of the more interesting ones - we would morph from a BoP-focused web site into a microfinance-focused web site. And there are many excellent microfinance sites out there already.

The second part of my answer is to say that not every microborrower is an entrepreneur; that our focus at NextBillion.net is more on entrepreneurial approaches to social and environmental issues; and therefore, we don't cover microfinance quite as much as some would like.

This stance is somewhat controversial, since many microfinance institutions tout their assistance to "local entrepreneurs" in fundraising materials and other external communications. Let me clarify: I am not saying that all microborrowers (microfinance clients) are not entrepreneurs; rather, I am simply pointing out that not all microfinance clients are entrepreneurs.

(This post continues past the break; click Read More to continue)

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 Basu

The 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 President of India at a gala ceremony hosted by the Indian Institute of Technology, Madras. Dr MS Ananth, the director of IIT Madras began by congratulating the winners and then gave a brief overview of the various socially relevant inititiatves and projects under incubation at IIT M. This was followed by a short talk by Professor TT Narendran, the Dean for Industrial Consulting and Sponsored research (IC-SR). Charismatic as always, his message stressing the importance of “rural engineering” was largely aimed at the hundred strong engineering students in the audience.

Following this, the L-RAMP innovators were presented the awards by Dr. Kalam. The award carries a cash award of INR 25,000 INR and a trophy.

(This post continues past the break; click Read More to continue)

Anand Shah, CEO of the Piramal Foundation and a NextBillion reader, alerted me to the recently-announced $25,000//10 lakh rupees Piramal Prize for Innovations that Democratize Healthcare.  In his e-mail, he notes that prize was created

...to encourage and support bold entrepreneurial ideas which have a profound impact on access to higher standards of health for India’s rural and marginalized urban communities. The award recognizes high-impact, scalable business models that propose innovative solutions which directly or indirectly address India’s healthcare crisis. Entries may include, but are not limited to, innovations in service delivery, technology applications, health-related products, or mechanisms to address public health necessities such as potable water.

Initial entries for the prize are due no later than April 1, 2008; the winner will be announced at the end of May. 

The Piramal Prize is a joint project of the Ajay G. Piramal Foundation and the Centre for Innovation Incubation and Entrepreneurship at the Indian Institute of Management - Ahmedabad.  It is interesting to note that the Piramal Foundation gets most of its support from Piramal Enterprises, a major player in the Indian pharmaceutical industry.  This prize is an excellent example of how corporate social investment aligns with financial returns.  But that's the subject of another post.

Thanks, Anand, for the alert.  I encourage NextBillion readers to learn more about the Piramal Prize and submit their applications soon.  Even if you are not a BoP health enterprise, consider bookmarking the Piramal Prize web site, as the entries will be available for public viewing as they are submitted.

(Via story suggestion - yes, we really do read them!)

(Via Emeka Okafor and the International Private Enterprise Group)

Equity Investment Firm in Rwanda seeks a CEO to oversee all of its investments. The position is based in Kigali, Rwanda. The firm is investing $25-50 million of equity into a portfolio of companies based in Rwanda. The CEO will report directly to the firm's board of investors and will be responsible for overseeing all corporate governance and financial reporting of the firm and its portfolio companies.

The CEO will also be responsible for (i) developing strategic partnerships between the firm's portfolio companies and other international companies and financing sources, (ii) negotiating the terms and structure of all investments, (iii) overseeing the management of all portfolio company investments, and (iv) overseeing due diligence on all potential investments. Qualified candidates must have experience negotiating and structuring complex transactions, managing equity investments, and developing international strategic partnerships. Candidates must speak English. Speaking French is helpful but not required.

Compensation will be commensurate with experience and qualifications, but will likely be in the range of a monthly salary of $8,000-10,000, car and housing allowances, and possibly some profit sharing.

Interested candidates should send CVs with cover letters to rfogler@thvf.com

Last week, while checking out some regular blogs, I bumped into a short note about a magazine called "Upsides" in the CGAP Blog.

Upsides is an FMO (the Netherlands Finance Development Company) initiative, supported by other likeminded financial institutions such as Standard Bank, Plantersbank, Triodos Bank and ShoreBank.  As such, the core content of Upsides revolves around finance and development.

Every Upsides issue has, on average, three detailed articles that develop a particular aspect of development finance. These articles are peppered with several case studies that help add flesh to the bone and reflect stories from different perspectives.  Additionally there is a section called 20:20 featuring interviews with important actors in the arena.

Initially, I thought that I would read the four already published issues and give an overview here, but soon it became apparent to me that the magazine is just too good to do it the disservice of a mediocre summary. Plus the contents are well thought out and they develop several important well-connected points. Clearly, the authors are experts and they have put much time into their articles.

Instead, I have chosen to give some mouthwatering tidbits of the fourth issue with the hope of stimulating readership from NextBillion visitors. There were three main topics: remittances, the brain drain in emerging economies and branchless banking.

(This post continues past the break; click Read More to continue)

"I'm giving away 2 percent of my net income every month... I don't think Bill Gates is doing that." So says Turkish billionaire Husnu M. Ozyegin in an interview for a New York Times piece last Friday about the philanthropy of individuals who have recently achieved phenomenal levels of wealth in "once destitute countries."

Sounds very impressive, but I've also been perusing another report of interest today about what some other individuals are doing with their money that really knocked my socks off - and I can guarantee that they are passing on more than 2%!

Last year, 150 million migrants sent more than US$300 billion in remittances to developing countries worldwide. This information is presented in the 2007 IFAD report on World Remittance Flows. (Since we can be pretty sure that migrant workers are not, on average, making US$100,000 a year in any country, we can be pretty certain that migrant workers, on average, are remitting far more than 2% of their net incomes!)

Nothing new, you say? We already know that there's been an explosion of services that have made the market for transferring remittances to Latin America (and now to a number of other places as well) much more competitive and affordable, especially for BoP remittance receivers who previously had no access to any financial institutions at all.

But what of Africa? Click "Read More" to continue reading this post.

Position: Research Assistant

Location: Washington, DC -- USA

Organization: The Emerging Markets Private Equity Association (EMPEA) is an independent, member-based global industry association based in Washington, D.C., that promotes greater understanding of and a more favorable climate for private equity investing in emerging markets. EMPEA's 185 members represent more than $400 billion in assets under management. EMPEA convenes private equity practitioners to discuss pan-emerging issues, researches key industry trends, and collaborates with national and regional venture capital associations.

EMPEA produces research and industry statistics relevant for private equity practitioners and service providers, asset managers and local and regional venture capital associations. EMPEA research is widely used as industry reference data and disseminated in the market via publications, press articles, conference or workshop content, custom research for EMPEA members and the EMPEA website.

Job Description: EMPEA seeks a Research Assistant to support an expanding in-house research program. This is a newly-created role that reports to EMPEA's Research Director. Core responsibilities will include:

(This post continues past the break; click "Read More" to continue)