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?

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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.

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