As we move into the weekend, here are a couple of BOP announcements (a prize, an innovation challenge, and a job) that should pique your interest. Coming soon – a report from the UN Meets Silicon Valley event held this week that I attended, and a review of the Fast 50 Awards in this month's issue of Fast Company. Oh, and a formal book review of You Can Hear Me Now and Business Solutions for the Global Poor are on their way as well. Have a good weekend...

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Last week, I attended "UN Meets Silicon Valley," an event convened by the UN Global Alliance for ICT and Development.  Craig Barrett, former CEO and now Chairman of Intel (full disclosure: WRI and Intel are partners), also chairs the UNGAID.  Going in, I was a bit skeptical, since the UN and the corporate world are often so different.  My main question was whether the event would run like a corporate meeting, or be dragged down in bureaucratic posturing.

Barrett's opening remarks were refreshing.  He spoke without notes, clearly excited about the potential of Silicon Valley to push the ICT4D agenda forward.  The UNGAID hopes to catalyze economic growth, and for Barrett, it all comes down to a simple question: "Where are the next billion users coming from?"  His answer: emerging markets.  No surprise there; Intel has been using the phrase "next billion users" for some time now in their communications.  But for the chairman to say that in front of a room full of corporate competitors and UN reps shows his committment to the business side of ICT for development and the BOP theory in general.

Hamadoun Touré, Secretary General of the International, had the unenviable challenge of following Barrett.  Between the requisite UN-ese of his slideshow, Touré managed to make a few off-the-cuff remarks, including a surprising "challenge" to Silicon Valley on the UN's behalf.  No offense, but the UN tends to back away from challenges, so I saw this as a good step - they want to play ball, but won't let the businesses get decent PR and intelligence from the process unless they contribute.

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My one-line review of Fast Company's March issue and its annual Fast 50 list: "It's exciting."

It's green, it's sustainable, and it has BOP written all over it, both literally and sequentially (from the Letter from the Editor, to Andrew Zolli's Business 3.0, to numbers 4, 5, 6, 7, 10, 11, 15, an interview with C.K., 24, 25, 31, 38, 41, an interview with Omidyar, and 44).

Did I say it was exciting?

It's palpable. Zolli writes a thought provoking introduction, heralding the "Eco-Innovation Revolution" and the Fast 50 that follow, "50 Profit-driven solutions for what ails the planet," reminds you just how much of this revolution is already underway - from Goliath GE (#37) to up and coming Terracom (#24).

I spent last night watching, "Who Killed the Electric Car?" with my girlfriend, and was left wanting to beat the piss out of a an auto-industry exec before working my way to an oil-industry exec (You start a bogus grassroots campaign to discourage zero emissions while 1 in 4 children in L.A. has lung lesions ...I'm sorry you deserve a re-adjustment....maybe it'll help you sleep).

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An interesting debate about the efficacy of microfinance has been going on lately, pitting development experts and economists against one another as they seek to understand the impact of microfinance on economic growth and well-being.

The whole thing started with an op-ed in the Wall Street Journal. In it, Amar Bhide and Carl Schramm argue that microenterprise, fueled by microfinance, is less good than a "transformative entrepreneurship" enabled by policy reform. Their basic point is that everyone is not cut out to be an entrepreneur, and that simple access to finance is not enough - people need jobs, and to create jobs countries need better business environments.

(My opinion on this argument is mixed. To be sure, not everyone is cut out to be an entrepreneur; many microenterprises are economic decisions of last resort. By last resort, I mean that there are no jobs or economic alternatives to selling vegetables by the side of the road, for example, even if it is a highly competitive local market with low margins and little prospect for growth. On the other hand, "policy reforms" are easier said than done, and even with the "right" policies in place, who is to say that the economy will magically transform? You still need a bottom-up, SME-driven economic development to create the kind of employment than Bhide and Schramm envision. And for SMEs to develop, you need finance...often starting with microfinance.)

Here's where the debate gets more interesting. Following on the WSJ op-ed, Thomas Dichter (of Despite Good Intentions fame and previously featured here and here on NextBillion) recently published a new essay through the Cato Institute. A Second Look at Microfinance argues that the democratization of credit will not affect economic growth or drive business development. Based on a mix of economic history and field experience, Dichter argues that development creates jobs, "which in turn makes the working poor an attractive target for financial services." Indeed, he seems to think that financial services are used by the poor almost exclusively for consumption smoothing and not for business investment; the poor would rather turn to informal networks to fund their enterprises.

Reaction to Dichter's piece has been muted, but one very credible critic has posted a response: Gil Crawford, CEO of MicroVest. Gil is an economic historian and development expert in his own right; he also founded and runs a for-profit microfinance investment fund based in Bethesda, Maryland. His response is posted to the MicroVest site; in it, he accuses Dichter of focusing too closely on donor-driven microcredit and not talking about the growing world of for-profit microfinance. Crawford systematically deconstructs Dichter's arguments over the course of a 1-page letter - worth a read.

Where do I fall in this debate? I'd say somewhere in the middle. Clearly, not enough small- and medium-sized enterprises are being created, and there is a definite lack of financing mechanisms to enable those stuck in the "missing middle" or "mesofinance gap" between microfinance and formal finance. Investments between $10,000 and $1,000,000 are needed, but MFIs have not shown much willingness to make them (as yet) and commercial financiers can't make the kind of returns they need to justify the risk and diligence costs. That's why the Acumen Fund and New Ventures and Endeavor and Technoserve and Aavishkaar are around - to try and fill the gap.

But why not enable MFIs to do it themselves? If, as Crawford argues, MFIs are making profitable small business loans as part of their portfolios, why aren't there more good jobs being created? Going back to the original WSJ article, where is the creative destruction? It could be too early - microfinance is just now making the transition away from donor-funded models to commercially-financed work, which gives MFIs better incentives to seek out, mentor, and invest in promising entrepreneurs from within their own portfolios. It's still not happening...and until it does, the debate will go on.

Could Brazil break the curve on sustainable investing? If Philippe Lisbona, manager of the new Stratus VCIII fund has his way, the country's investment landscape could look significantly different in the next decade. Philippe's call waiting kept buzzing incessantly during our recent phone interview - his firm, Stratus Investimentos, had recently finished raising investment for a new sustainable small business fund and he and his co-manager, Wagner Duduch, probably haven't gotten as much sleep since.

Showing how far some elements of the financial sector have come in triple-bottom line investing, Philippe didn't see this as an even remotely philanthropic exercise - after a heavy dose of market research, his firm decided that moving capital into key green sectors in Brazil would generate high returns for investors. They are taking the lead in vetting companies in the sustainable agriculture and alternative fuels industries in particular, and are seeing companies with double or even triple digit growth rates.

The IFC's Innovation's blog earlier this week announced that "Brazil Banks are Global leaders In Sustainable Finance," based on a UNEPFI report showing the initiatives taken by the likes of Unibanco and ABN AMRO. It seems that actors in the financial sector are beginning to vote green with their dollars and Stratus is positioning itself to be an early winner in this growing trend. Philippe gives the details of the fund and fleshes out the philosophy a little more in the full article - take a look and stay tuned for announcements on the fund's first deals within the next month.

Guest blogger Nicholas P. Sullivan has written widely about technology and entrepreneurship, most notably as editor-in-chief of Inc.com. He compiles the annual Wealth of Nations Index, a ranking of seventy developing countries, is publisher of Innovations: Technology/Governance/Globalization (an MIT Press journal), and is a partner in the Global Horizon Fund, a private-equity fund of local funds in emerging markets. You Can Hear Me Now, Sullivan’s book about Iqbal Quadir and the GrameenPhone revolution, was published earlier this year.

By Nicholas P. Sullivan

The 8th annual Harvard Social Enterprise Conference last Sunday (March 6) at the Harvard Business School drew a sellout crowd of 1,000 people. Cheryl Dorsey, president of Echoing Green,
and Victoria Hale, founder and ceo of the Institute for One World Health, gave morning keynotes.

Echoing Green acts as an “angel for emerging social enterprises,” and has awarded $25 million to more than 400 entrepreneurs since 1987. Dorsey noted that when she graduated from medical school, she intended to practice medicine, but saw a Boston Globe story on the high incidence of infant mortality in Boston’s black neighborhoods. It was this “ZIP code as destiny” epiphany that led her in 1992 to start The Family Van, a community-based mobile-health unit that provides basic medical services to at-risk residents in Boston’s inner city neighborhoods, and earned her an Echoing Green fellowship.

Dr. Hale is an Ashoka Fellow festooned with awards from The Economist, Skoll Foundation, and Schwab Foundation, not to mention a MacArthur Fellowship. She is founder of the America’s first non-profit pharmaceutical company, which recently received Indian government approval (FDA approval in 2005) for a low-cost drug to combat Visceral Leishmaniasis, a deadly disease of the spleen and liver that occurs primarily in the Indian state of Bihar (as well as Nepal and Bangladesh). More “geography as destiny,” for in this state alone a sand fly bite injects the deadly parasite. She showed slides of children with inflated bellies trying to fight off infection, slides of Indian women and girls with red hair due to malnutrition. Because the disease is confined to a poor and remote region, it has not been on the radar screen for big pharma, but Hale has corralled industry to develop a low cost drug.

One World Health now has a $10, 21-day cure, but still has to deal with the issue of distribution and education. Hale notes that of all the big pharma companies who have tried to develop effective drugs to combat diseases in poor countries (Glaxo Smith Kline, Merck, Pfizer, Novartis, Eli Lilly), only Merck has succeeded—with its cure for river blindness in Africa. Hale is out to change that lamentable track record, and noted that “industry doesn’t know the world’s poorest people, doesn’t know what need doing, but they want to do well and do good. We need to ask, she says, ‘What do you need to engage? What are you afraid of?’”

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Guest blogger Miles Lasater is founder and COO of Higher One which provides financial services to colleges and students.  As creator of the Yale's annual business plan competition, the Y50k, he was instrumental in ensuring that it has a Social Entrepreneurship category.  He has a hobby as an angel investor in for-profit and non-profit ventures.

By Miles Lasater

I attended the Harvard Social Enterprise Conference on Sunday and felt the excitement of 1000 people who want to change the world.  There was a sense of new possibilities and new ways of solving old problems.

First thing, I met with a board member of One Acre Fund which is an early stage non-profit.  One Acre that improves the poorest farmers lives by enabling them to increase outputs and incomes by 3 or 4 times which creating revenue to drive itself towards financial sustainability.  I first met the founder when his team won the social enterprise category of the Y50k.  Since then, they've secured funding from Draper Richards and Echoing Green.  Being an entrepreneur myself, I can't help but be excited by the thought of scaling an organization that can live on its own without donor funding.

As the day wore on, despite my excitement, I kept wondering - what's really new here?

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Unitus, Inc. is a Seattle, WA based nonprofit 501(c)(3) organization creating innovative solutions to global poverty using a venture capital model. Unitus also has offices in San Francisco and Bangalore, India and relies on innovative financial instruments and the resources of individuals and foundations to fulfill its mission. Unitus dramatically accelerates the growth of microfinance institutions (MFIs) and demonstrates that MFIs can be run as profitable, large-scale, poverty-focused businesses with links to formal capital markets. It has been named one of the most innovative nonprofit organizations by Fast Company magazine for two years in a row. In addition, Unitus was named one of the best places to work in Seattle by Seattle Metropolitan Magazine.

Unitus is hiring a Chief Operating Officer.  See the attached job description (click "Read More" and scroll down) for the full details, including how to apply.

"Growing Inclusive Markets" is a new multi-stakeholder initiative, led by the United Nations Development Programme, which strives to identify and examine the vast unmet potential at the base of the world economic pyramid-the population of 2.7 billion people who live on less than $2 a day. Truly inclusive economic growth depends on embracing the Base of the Pyramid (BOP) not only as consumers with unmet needs for goods and services, but also as drivers of growth, innovators and producers of wealth. By identifying the BOP's needs, and exploring how meeting those needs can bolster development as well as private-sector bottom lines, the initiative will inform policy decisions and provide valuable incentive for private-sector engagement.

We are currently looking for an expert with a track record of publication on the BOP to do a 10,000 word BOP literature survey for this Initiative. Preference will be given to candidates who have published in academic journals on the topic. Interested candidates should submit their resume with writing samples to the programme manager of the Initiative, Sahba Sobhani at sahba – dot – sobhani (at) undp – dot – org.

For more information, see the attached Terms of Reference.

I take pleasure in introducing three gentlemen who exemplify the spirit of innovation in rural India. These innovators demonstrated their ideas at the Rural Innovators event at Engineer 2007 - the national level symposium of NITK Surathkal.

Annasaheb Udgavi is a farmer from Sadalga village in Karnataka. Aged 80, he hasn't received any formal education and yet has a good grasp of basic science and engineering. He is highly enthusiastic and enjoys helping solve people's problems through his ideas. His Chandraprabha Water Gun (Rain gun) is an innovative sprinkler, which washes away white flies and Aphids from the tobacco plant. The sprinkler system is also useful in irrigating sugarcane.

Narasimha Bhandari, has only passed the SSLC exam (equivalent of X grade) and has worked in a hardware shop for several years. He now owns a small engineering outfit. His innovations include an areca nut dehusking machine, a tiller generator and an innovative wheel barrow for farmers. The innovator's automatic areca nut dehusking machine is four times as efficient as proficient labor.

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Discussions of base of the pyramid (BOP) markets have, until now, relied principally on business case studies and rough estimates of market size. On Monday, March 19, WRI and the NextBillion.net team (in conjunction with the IFC) will launch our publication, The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid. "The Next 4 Billion" uses household survey data to measure the empirical size and scope of BOP markets.

The launch event by invitation only and will include remarks from BOP experts including:

• C.K. Prahalad, Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy, Stephen M. Ross School of Business, University of Michigan
• Nariman Behravesh, Executive Vice President and Chief Economist, Global Insight, Inc.
• Jonathan Lash, President, World Resources Institute
• Michael Klein, World Bank/IFC Vice President for Financial and Private Sector Development and IFC Chief Economist
  

The event is by invitation only; all NextBillion.net readers are invited and encouraged to attend.  Details on the event can be found on the WRI web site.  Please contact us for invitation information.

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The word "cool" has many connotations and it seems to be one of those colloquialisms that exists in every culture - "chido" (spelling?) if you're passing through Mexico, Brazilians use a variety of expressions; "legal" and "maça" are two common equivalents. The meaning or definition changes drastically from place to place as well; I remember when I was traveling around Brazil and the popular theme song to the number one novela at the time was written by Michael Bolton.

Michael Bolton was thus in many ways at the height of cool if you happened to be in Goiânia in 2001. I doubt Mr. Bolton would have ever gotten the same treatment in the US. Despite the cultural rift over songs like "Can I Touch You...There?" I did find in Brazil that sometimes cool is universal, and I'm not talking about Coca-Cola commercials. Brazilian icon Gilberto Gil embodies this concept in every language everywhere - there is a reason that the man who helped turn his nation's musical sensibilities upside down with the advent of Tropicalia is now the country's cultural ambassador. So when you see this icon of "legal" holding up a sustainably made, FSC-certified guitar, you have a feeling that a genuine trend has just taken off.

And then there's Alberto Bertolazzi. The CEO of Hering Instruments has been running a business specializing in world-class harmonica manufacturing that is now expanding its line of products to include environmentally responsible guitars and basses. Alberto is a visionary to be sure, but he also has a keen intuition that knows when the music industry is ripe for change and knows how to follow through. Alberto has watched hybrid cars move out of their eco-geek phase and become a mainstream phenomenon. He watches the world's largest companies going green and wonders why his competitors haven't caught on.

Alberto is pictured in the above photo, looking on just behind Gilberto Gil in much the same way as he is just behind the scenes expanding his business by doing good and greening an entire sector. In essence, he is making the sustainable guitar universally "cool".

Watch in the coming years and see if this trend takes off. You never know what cultural icons will take hold, but with the amount of dedication Alberto pours into his work (combined with a genuine love for music), I wouldn't put it far past him to have that big of an impact. Read the full profile of Hering instruments here.

A quick reminder, if you may have forgotten: The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid will be released today at the International Finance Corporation.  C.K. Prahalad, Nariman Behravesh, Jonathan Lash, and Michael Klein will be speaking.  Check my post from last Wednesday for the full details; if you need an invitation, please contact us immediately.

The event starts at 11:00 am, which is when the publication's web sites will go live as well.  We have developed special content and discussion space for The Next 4 Billion.  The main publication page features the full-text executive summary in HTML, as well as chapter-by-chapter PDF downloads.  Readers can also access in-depth data tables on the BOP in 36 countries, and PowerPoint graphic presentations.  You can also order the print book (hint, hint) and read author bios.

Here on NextBillion.net, we've developed a special page dedicated to discussing The Next 4 Billion within our BOP community.  Check back reguarly for updates and analysis from the book's authors, as we give our insights on the book, chapter by chapter.  The first post will be a direct report from today's launch event, for those unable to attend.

Finally, we have partnered with Earthtrends, WRI's esteemed information portal, to develop BOP indicators.  Those should be live onsite today as well.

Questions?  Let me know by suggesting a story, submitting a comment, or simply by contacting us.

Today's The Next 4 Billion book launch event at the International Finance Corporation was a success by any measure.  There was a full house to hear C.K. Prahalad, Nariman Behravesh, Michael Klein, and Jonathan Lash.  Books ran out (if you were there and didn't get a copy, let us know).  We will have a full recap of the day's events here at NextBillion.net tomorrow; Al Hammond has already promised to blog, and I will be offering my synopsis of the speakers and Q&A.

In the meantime, a few small articles have appeared here and there regarding the book and its data.  Earthtrends developed a set of indicators based on the BOP data inside TN4B, and put out a release highlighting them.  The WRI home page also has an article about the book and how it came to fruition (full disclosure - I wrote that).  Have you seen other articles about the book?  Other sites or blogs covering it?  Please let me know (comments below or by contacting us.)

The launch of our The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid report yesterday triggered a number of thoughts and conversations about how forces are starting to align in support of market-based approaches to alleviating poverty. First, the standing room only crowd in the large auditorium of the International Finance Corporation (private sector arm of the World Bank), largely from NGOs and development agencies, says something about the appeal of finding private sector “solutions” to improve conditions at the base of the pyramid.

Second, the hunger for hard data on BOP markets and opportunities—the essence of the report—among both large agencies and large companies was palpable. As Nariman Behravesh of Global Insight put it, there is a market for the data, because no one has had any comprehensive picture of the BOP until now. Over lunch, Mattia Romani of the Shell strategy group explained that, to a senior manager trying to decide which projects to green light for capital investment, the existence of data such as that in The Next 4 Billion could make all the difference. Jonathan Lash, WRI’s president, shared a similar experience from a recent Board of Directors meeting of an investment company—who, hearing about the report, were almost desperate to get copies. Our corporate underwriters are also anticipating the detailed briefings we have promised them on the data.

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