Guest blogger Peter Moers is economist and the regional coordinator for the Social Trade Organization in Central America. He has worked in several countries in Central America, West Africa and in The Netherlands in small enterprise, cooperative, rural and local economic development. He believes that local production for local markets is an underexplored development strategy and that biofuels offer a unique opportunity to many rural areas to create strong, diversified and stable local economies.

By Peter Moers

Paris Hilton and biofuels may have more in common than you think.  After all, they have both experienced the ups and downs of fame lately. After having been presented for several years by the media as the ultimate solution for many energy and environmental problems, biofuels' star has fallen to the point of being the main culprit of food shortages, high food prices, deforestation and even pollution.

Of course, there is neither a simple solution nor a single culprit. In the meantime, the generalizations that lead to biofuels’ Paris Hilton moments – the ups and downs – lead to a negative image for many initiatives that DO contribute to positive social and environmental change.

This article explores the food-fuel relationship in the specific context of rural development project in Honduras, Gota Verde. The project uses small-scale biofuel production for local consumption as a strategy to create employment, stabilize income sources for small farmers, reduce their dependence on loan sharks, avoid soil erosion, protect water sources and increase food production.

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Thanks to Francisco Noguera for his contribution to this post. Please note that the following should not be seen as an exhaustive compilation of everything that has been written about the base of the pyramid. I encourage NextBillion readers to comment and make suggestions to enrich this compilation of literature and resources. 

As the leaves are starting to change, and the mornings are becoming a little more brisk, it is apparent that it is back to school season. In the spirit of this shift, I would like to offer up the following list of books, articles and cases that comprise what we here at NextBillion.net consider the essential pieces of base of the pyramid reading.

I often get questions from students and readers about simply where to start. There is so much out there, and although NextBillion has done a great job of posting reviews of works as they are published, this post is designed to give a high-level overview of the literature over time. Therefore, the following showcases some of the most pivotal pieces that have influenced and continue to expand the base of the pyramid idea.

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I've long been an advocate of using for-profit business principles (e.g. capitalism) to promote development and world progress, specifically in technology. This belief has been formed from:

1. My personal experiences working with local entrepreneurs in emerging market countries.
2. Leading business initiatives such as Intel's "World Ahead" program that (uncomfortably at times) straddles business and philanthropic objectives.
3. Reading/following various proponents of marrying for-profit businesses and non-profit philanthropies into win-win scenarios (e.g., CK Pralahad, Muhammad Yunus).

This phenomenon has been gathering steam signaficantly over the last few years. Descriptors are abundant. From the original founders of NextBillion.net came "Eradicating Poverty through Profit" and "Development through Enterprise," the last being the site's current tagline. Social entrepreneurs and social capitalists are converging at SoCAP in mid-October 2008. Bill Gates introduced the term "creative capitalism" earlier this year at a speech in Davos and it has appeared frequently on NextBillion.net and the blogosphere.

In writings on this subject, you'll find a complex set of ideas, theories, and debates. If you follow my postings, you'll find that I'm a bit of a "simpleton." I like to simplify the complex. So what does all of this really mean to someone who wants to create a social enterprise?

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Guest blogger Lauren Withey is a research analyst for the Climate, Energy and Transport Program at the at the World Resources Institute, in Washington D.C.

By Lauren Withey

"So, we are going to help the indigenous people of the Colombian Amazon raise bugs," the young Colombian man explained simply as I looked over his poster, covered with photos of indigenous people in traditional dress alongside images of massive beetles, butterflies, and spiders.

"Uh-huh," I nodded understandingly. It seemed to me that if I lived in the Amazon, the last thing I would want to deal with would be more big spiders.

"Then, we are going to ship them around the world."

"The bugs?"

"That is correct. Here in the US, there is a big market for live butterflies for butterfly exhibits. In Japan, they pay a lot of money for these beetles the size of your hand. And the spiders. It will help these indigenous people to make a living and will protect biodiversity at the same time. And it will give them an incentive to protect the forest they live in instead of burning it for agriculture."

"Ahhh..." Who'd have thought it?

This encounter marked the beginning of an afternoon last week at the World Bank's 2008 Global Development Marketplace, in which my mind returned to this refrain many times.

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The base of the pyramid conversation often involves talking about the size and composition of BoP markets (which, in fact, was the topic of my previous post) and how to create business models that sustainably create wealth for the people in those communities and the firms involved.

I recently came across a very interesting paper from the World Bank that sheds light on something we have not touched upon that much (if at all): the changes in expenditure patterns of BoP consumers as new products enter the market. The paper is entitled "So You Want to Quit Smoking: Have You Tried a Mobile Phone?", and authored by Julien Labonne and Robert S.Chase.

The basic idea is very simple: how do the spending patterns of BoP consumers change as they gain access to more products?

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Luckily there are live webcasts for the rest of us who were not able to sit at the sessions and ask questions during the sessions at this year's Clinton Global Initiative.  I have spent a handful of hours during the last few days browsing around the content of this year's CGI, listening to some of the panel discussions and trying to get a feeling of the venue's commitments, which are its cornerstone and measure of future accountability.

However, I was able to recruit a great guest blogger that sat in many of the sessions at CGI. Stay tuned for her posts about the venue later this week. (By the way, if you are interested in a more detailed coverage of CGI make sure to take a look at the good job done by Philantopic live-blogging the conference).

Today I just want to highlight one of the sessions that discussed the challenges of clean water, sanitation and hygiene, which have become a passion of mine as I've had the opportunity to dive deeper into them over the last few months. Here are a few takeaways but I encourage you to watch the full video.

Community-scale water treatment: The promise of decentralizing access to vital services

One of panelists was Mr. Tralance Addy, President and CEO of WaterHealth International. His presence in the panel signaled the increased relevance of an approach that is successfully in bringing safe drinking water to millions in rural communities all across India: community scale water treatment.

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Do we need another Fellows program?  That was my initial thought when I first heard of the Legatum Center for Development and Entrepreneurship and its related Legatum Fellows program.  After all, there are so many programs dedicated to identifying and supporting existing or budding social entrepreneurs - Skoll, TED, Ashoka, GSBI, Agora, Echoing Green, Pop!Tech, Acumen Fund - the list goes on.  Would Legatum be able to add any real value alongside these existing programs?

The answer, I think, is yes.  Legatum just formally launched its program yesterday, but in reviewing their materials and speaking with their Managing Director, I am more than cautiously optimistic that Legatum is going to make a significant impact in the base of the pyramid space.

Why am I optimistic?  First of all, look no further than yesterday's event.  It featured the largest-ever public gathering of Nobel laureates in Economics:

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Guest blogger Sofia Leon is currently the Senior Program Coordinator at the Center for Financial Inclusion at ACCION International. Her passion is sustainable social enterprise, specifically seeking to scale BOP energy delivery without subsidies.

By Sofia Leon

Following an all-star Opening Plenary, I walked upstairs at the 2008 Clinton Global Initiative to see Chris Crane of Opportunity International, Elizabeth Littlefield of CGAP, and Maria Otero of ACCION International. I work in microfinance and was clearly excited to hear this panel, but I walked into a packed room whose attention was set on the microfinance discussion at hand.

Track director Jane Wales introduced the panel, and after individual project updates from each of the three panelists, Jane asked Maria Otero to announce a new CGI Commitment spreading across the microfinance industry: The Campaign for Client Protection in Microfinance.

Maria Otero set the stage, describing how the growing interest from commercial lenders in serving the markets at the BoP make it essential for MFIs, MFI networks, and in general, institutions serving low income markets to proactively embrace client protection rather than having it forced upon them by governments, donors, or as a compliance matter by investors.

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In times like this, when clean energy technologies are the hype and talent in the sector is in high demand, Mathias Craig could have any job in the world. His training includes engineering degrees from both UC Berkeley and MIT, and his true passion is wind power. In stead of getting taking one of the job offers he got after graduate school Mathias decided to found blueEnergy Group and bring energy to underserved communities. He is now the executive director of the organization.

blueEnergy helps communities in the caribbean coast of Nicaragua develop sustainable energy systems through hybrid wind and solar technologies that are manufactured, maintained and operated by themselves.  I learned a lot from Mathias, his passion, vision and commitment. Like most entrepreneurs, he didn't have much time to plan at all when he decided to become one in such an isolated area. He just did it. Now he is living up to his dream, with all the ups and downs that entails.

Like everyone I met in GSBI, I will keep an eye out for Mathias and how he continues to build a robust organization and scale his initial idea. I wasn't able to get him on film in California but he sent us the following clip, recorded a few days ago while working with his team in the caribbean coasts of Nicaragua. 

Finally, make sure to catch Mathias' blog on Social Edge. You'll get a good feeling of the challenges he faces as an entrepreneur but mostly the drive and passion that keep him at the job.

NextBillion is heading west – San Francisco, to be precise.  Francisco and I will be on the road this weekend – along with 600+ fellow attendees – in preparation for next week's Social Capital Markets conference, which runs Monday through Wednesday in the city by the bay.  We'll have full coverage here on NextBillion, including guest posts from a stable of experts.

I'm excited, and more than a little nostalgic.  After all, San Francisco was the site of another conference, Eradicating Poverty Through Profit, which helped launch the base of the pyramid concept into the mainstream back in 2004.  On Tuesday, I was on the phone with Justin DeKoszmovsky, SC Johnson's Manager for Strategic Sustainability – and one of the company's BoP champions.  Justin and I first met at Eradicating Poverty Through Profit – he as a Cornell MBA student volunteer, I as a conference staffer with the World Resources Institute.  When I mentioned the purpose of my San Francisco trip to him this week, Justin laughed and replied, "It's amazing how far the base of the pyramid sector has come in just four years."

Of course, there are miles to go before we sleep.  But the Social Capital Markets conference may mark an important milestone in the BoP and social investment spaces.

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Guest blogger Jenara Nerenberg is the Founder of BOP Source. She is a graduate of UC Berkeley and Harvard University and lives in Kathmandu, Nepal, where she is a Columnist for a national business magazine and a Consultant on new media marketing.

Jenara was a Consultant to the Harvard Center for Health Communication and worked on cause-related marketing at the Harvard Business School and the Harvard Kennedy School of Government, bringing together leaders from YouthAIDS, MTV, and the academic community.

By Jenara Nerenberg

Manuel Bueno recently wrote a post about the need to go beyond basic needs business strategies to a more holistic approach when engaging the BoP in business. I thought I would take this idea up in the context of my own field, new media marketing. Below is what I think should be the marketing component of the next wave of economic and social value-driven businesses at the base of the pyramid, an area that I am currently working on at BOP Source.

Imagine the BoP using social networks. Think entrepreneurs, members of microfinance self-help groups, and villagers in remote areas of Nepal or Mongolia. Imagine listening to buzzing conversations of micro-entrepreneurs about their products, challenges, needs, ideas, and desires for collaboration.

Imagine an entrepreneur in the middle of her village who is literate with her elementary school education and who is now the chief ethnographer of her community, appointed by Nokia, Danone, Unilever, or any other large MNC.

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The traditional talent support approach for base of the pyramid (BoP) projects has been a sending model: workers/professionals from the developed world are sent by an organization to a developing country to manage a local project.

The American Peace Corps was established with the intent of sending American volunteers in "helping the people of interested countries in meeting their need for trained men and women." Large multinational corporations have for decades sent their professionals from the developed world to start/manage local offices in developing countries.

However, the sending model can be very costly and be met with significant challenges. Studies have shown that international assignments can cost three to five times an assignee's host country salary per year. This is primarily due to cost of travel, relocation, and cost of living allowances. Outside of cost, there are also a number of other challenges for expatriates working at the BoP.

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Not yet.  That was the first message I heard at Social Capital Markets today, as I approached the registration table; they weren’t ready for me yet.  In fact, they weren’t ready for me, nor were they ready for the 20 other people who had queued up early.  If there’s any indication of interest in a conference or event, it’s usually the line of people arriving 2 or 3 hours early.  (No, they weren’t giving away iPhones.)  Read my SoCap08 conference preview here for some context.

When the table finally opened, I was greeted by a familiar face – Meredith Lobel, now a second year MBA student at Harvard Business School and formerly a tried-and-true changemaker with Ashoka.  She’s volunteering here at SoCap08.

Two hours later, the excitement hasn’t died down; in fact, it has steamrolled.  Thus far, I’ve run into other base of the pyramid and social enterprise veterans including Jocelyn Wyatt of IDEO, Margot Brandenburg of Rockefeller Foundation, Dev Appanah from ChangeFusion, Pradeep Suthram from the Social Stock Exchange and Ray Cheung from New Ventures.  I’m sure more will be filing in as the day continues.  (In fact, as I wrote that sentence, David Auerbach and Elmira Bayrasli from Endeavor took seats behind me, and I noticed Ted London across the room.)

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Monday afternoon sessions just kicked off with the panels on each of the three tracks here at SoCap08. The "Social Entrepreneur Track" is of special interest to me, as it concernes the tools and skills needed to turn social entrepreneurs into sustainable and scalable organizations that can scale and successfully serve the poor.

Paraphrasing Moses Lee in one of his recent posts, the questions is how to turn will to serve the poor into business skills to do so in a sustainable and scalable manner.

The first panel in this track was on "Building a Business Plan", featuring panelists Kevin Braithwaite, from RootSpace, a business incubator based out of Lebanon and Kirsten Gagnaire, an advisor with the Social Enterprise Group.

A quick raise of hands at the start of the panel shows what could be an accurate diagnostic of this sector: When asked how many in the room were "early stage social entrepreneurs", around 80% of the room rose hands. A few minutes later Kirsten asked how many were currently functioning organizations and only a third of the initial hands went up this time.

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With three weeks to go before the U.S. presidential election, it’s no surprise that there’s a lot of interest in democracy here at the Social Capital Markets conference.  Fortunately, the conversation has (thus far) steered clear of moose burgers and the Weather Underground.  After all, the democracy we’re discussing here at SoCap08 is actually related to democratic capital, not democratic governance.  

What is democratic capital, and why should the base of the pyramid community care?  Well, on a very basic level, the democratic capital panel is all about giving investors and borrowers the power to connect directly, without the intermediation of too many financial institutions.  This person-to-person connection takes the shape of four panelists and their social enterprises:

• Robert Chatwani, WorldofGood
• Mads Kjaer, MyC4
• Premal Shah, Kiva
• Tracey Pettingill-Turner, MicroPlace

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