My friend David, NextBillion reader and BOPreneur, pinged me last night and rightly asked why NextBillion.net has been slower than usual these days, missing a few of big news pieces that relate to the base of the pyramid and development through enterprise. He's right. The truth is Rob and I have been with our hair on fire testing and working on what will very soon be the new face of this website.

In fact, if everything goes according to plan, this will be the last post I publish in NextBillion as it looks and feels now! Anyhow, it's Friday and I do want to take the opportunity to point you to a couple of relevant media pieces for you to catch up with this weekend, in case you haven't yet.

The first (hat tip, David) is a 14-page special report about the middle classes published in The Economist last week. Why is this relevant to our readers? Well, NextBillion.net is based on the premise that business, enterprise and the profit motive can serve the poor enhancing their dignity and choice so they can climb the ladder up to that level of the pyramid.

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There has been a lot of buzz about new models of foreign aid and the role of social entrepreneurs since our post on President Obama and the NextBillion.net Agenda for the Base of the Pyramid. Guest blogger Apoorva Shah also shared some great points about the important actors in aid reform, including the American Enterprise Institute. 

Iqbal Qadir, a noted social entrepreneur and Founder of MIT's Legatum Center for Development and Entrepreneurship, argued effectively in his opinion piece in the Wall Street Journal for the overhaul of America's current model of international aid and a renewed focus on supporting entrepreneurs in developing countries. Qadir details America's earlier motives in pouring aid into other countries as a way to cement alliance and allegiance to the U.S. and he points out that such models are now sterile and in fact often inhibit the true democratic development of aid recipient countries. While Qadir offers a historical perspective on why such models are in dire need of re-shaping and re-doing, other noted journalists and bloggers have also been focusing on the link between Obama, sustainability, foreign policy, and international aid.

I came across some important materials and entrepreneurs for the NextBillion.net community to ponder and discuss and I hope you'll join in on the dialogue. I will also echo Apoorva's central  question: What role can the NextBillion.net community play in the debate and formation of President Obama's policies on foreign aid? What do you think is the role of entrepreneurs in development and in helping America better support international development?

First, I was thrilled to read in the attached Obama Campaign policy statement that he has plans to create an entitiy that provides seed capital to SMEs and even build "SME Universities" in partnership with American business schools. Based on this policy statement alone, there is clearly thought being put into new approaches to development, including an understanding that the private sector plays a critical role.

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The American Enterprise Institute recently convened a two-day symposium on the future of U.S. development policy and foreign assistance. The nexus between development and enterprise was a recurring theme at the event, and participants discussed how entrepreneurial philanthropy, social entrepreneurship, and base-of-the-pyramid approaches to development will influence U.S. engagement in the developing world. We invite NextBillion.net readers to join the dialogue about foreign assistance under a new U.S. administration.

Guest blogger Apoorva Shah is a research assistant in Foreign and Defense Policy Studies at the American Enterprise Institute in Washington D.C.

By Apoorva Shah

Jenara Nerenberg's timely post on President Obama and the NextBillion.net agenda reminded readers that the new administration will make substantial changes in America's foreign assistance policies. Obama and his colleagues in Congress, most prominently Rep. Howard Berman (D-CA), chairman of the House Committee on Foreign Affairs, have promised an ambitious and large-scale reform of the U.S. foreign aid system.

In this effort, will they consider the growing influence of entrepreneurial philanthropy, social entrepreneurship, and private sector based development in U.S. policies for engagement with the developing world?  And what role can the NextBillion community play in influencing these decisions?

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It was a high profile news day for the development-through-enterprise community today.  First, a report was published at the World Economic Forum in Davos, Switzerland entitled The Next Billions: Unleashing Business Potential in Untapped Markets.  The report was produced by the Boston Consulting Group; Francisco and I were able to see an early version - we encourage everyone to check it out.

Is there much new here?  Yes and no.  There's not much in the way of new data, nor is there much as far as new analysis (if you've been following NextBillion.net at all, most of the points in here are old hat.)  Still, for a report to come out at the World Economic Forum about the BoP and specifically, the "next billions" is huge.  Important people go to Davos.  They listen.  Then they go back home and, in theory, they act.  So this is a huge day for the development through enterprise world.  I got an e-mail from one colleague calling it a "stop the presses" moment.  As we have no actual presses here at NextBillion, perhaps not literally, but you get the idea.

The other big news story of the day was a great op-ed written by Iqbal Quadir in the Wall Street Journal.  Entitled "Foreign Aid, Bad Governments: Helping entrepreneurs is the right approach," Quadir argues that the Cold War model of direct aid is broken and, instead, we should focus on lowering trade barriers and funding transformative small and medium enterprises.

Couldn't agree more.

Francisco and I will chew on these over the weekend and hope to have something more substantive by way of analysis for Monday.  In the meantime, happy reading.

Not much has been written here on NextBillion.net about the election of Barack Obama to the American Presidency, as our news scope centers on base of the pyramid approaches to development in developing countries. However, I felt compelled to link the two together as we near Inauguration day tomorrow, January 20th, so here it goes.

Obama has a huge opportunity to transform how international aid is designated and distributed and I hope that he will convene a dedicated and experienced team to re-think and re-do the United States' current model of foreign aid. The most recent statistics from the Organization for Economic Cooperation and Development (OECD) indicate that in 2005 the United States issued 27.6 billion dollars in official development assistance. While the U.S. funnels much-needed money into developing countries to assist with meeting basic needs such as water sanitation, education, and healthcare services, I'm always left wondering how we can better direct funds.

What would happen if the U.S. channeled more funds into microfinance initiatives and small and medium enterprises and made BoP economies more attractive to multinational companies? Wouldn't our stated goals of helping developing countries develop be better achieved by adjusting how and to which agencies we distribute funds? Meeting basic needs is undoubtedly important and should remain, but for countries to develop beyond meeting basic needs, or to empower local people to help meet those basic needs sustainably and profitably, a shift in paradigm is needed.

With this in mind, I wanted to highlight a few developments as well as resources available to help you make your "development through enterprise" voices heard.

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Aneel Karnani, a Professor at the University of Michigan and a Managing Director at FSG Social Impact Advisors, is a long-time critic of market-based approaches to poverty alleviation and the "base of the pyramid" concept in general.

His latest article, Romanticizing the Poor, appears in the Winter 2009 issue of the Stanford Social Innovation Review.  A brief excerpt:

Market solutions to poverty are very much in vogue. These solutions, which include services and products targeting consumers at the "bottom of the pyramid," portray poor people as creative entrepreneurs and discerning consumers. Yet this rosy view of poverty-stricken people is not only wrong, but also harmful. It allows corporations, governments, and nonprofits to deny this vulnerable population the protections it needs. Romanticizing the poor also hobbles realistic interventions for alleviating poverty.

This article came across my desk last week, and I've been thinking about it since.  A formal response is in the works - to which I will invite Professor Karnani to respond here on NextBillion - but I wanted to make sure that everyone reading the site knew about the article and had the chance to read it themselves in the meantime.

Comments are open below if you have immediate thoughts; should this spark an interest, here are some of Professor Karnani's other critiques of the BoP concept:

• The Mirage of Marketing to the Bottom of the Pyramid
• Microfinance Misses its Mark
• Doing Well by Doing Good Case Study: Fair and Lovely Whitening Cream
• Help, Don't Romanticize, the Poor
  

Update 12/15/08: Aneel Karnani is not a Managing Director with FSG Social Impact Advisors, as I reported Friday.  The erroneous material was sourced from the Stanford Social Innovation Review web site; even so, I should have cross-checked it.  My apologies.

Although we in the BoP sector often talk about the role of the informal sector as an important factor (both as a competitor and as an ally) when crafting sustainable models for low income communities, precious little has gone into analyzing it. One of the most important reasons for this lack of analysis is because of the shortage of data referring to it. By definition, informal businesses are hidden from the eyes of the state and so most of what we have relies on estimations and very micro-level studies.

A recent cross-country report that appeared in the Brookings Papers on August 2008 aims to improve the understanding of the relationship between economic development and the informal economy. The report, entitled "The Unofficial Economy and Economic Development" is authored by Rafael La Porta and Andrei Schleifer, two renowned professors and scholars in the development studies field.

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Francisco and I have been remiss in not posting more news & notes roundups here on NextBillion, so here's a shot at redemption - at least for today.  Without further ado, some news and notes within the Base of the Pyramid community:

The Aspen Network of Development Entrepreneurs - ANDE - just announced the hiring of its first Executive Director.  Randall Kempner will be based at the Aspen Institute; he starts January 6.  ANDE, which we've written about before, is basically a trade association for organizations working with small and growing businesses in low-income communities.  (Full disclosure: both Acumen Fund and World Resources Institute, who sponsor NextBillion.net, are members of ANDE.)

For the curious, check out Randall's profile at Prosperity Strategies, the Council on Competitiveness and OTF Group.  We at NextBillion wish him the best of luck in his new job and look forward to working with ANDE to further the cause of small and growing businesses in developing countries.

In other base of the pyramid news, the Legatum-Fortune Technology Prize was announced earlier this week at a lavish dinner in Washington, DC.  The five finalists attended, each vying for the USD $1 million prize.

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I'm writing from Cartagena, Colombia, where "The Business of Inclusion" conference will take place later this week. The conference is organized by the Inter-American Development Bank, and the Multilateral Investment Fund (FOMIN) and NextBillion has been invited to cover the discussions that will take place during the next few days as a media sponsor. As someone whose interest is contributing to a stronger and more maningful development-through-enterprise movement in Latin America, I am grateful for this opportunity.

There are two aspects of the conference I am particularly excited about. First, WRI will co-host a panel on Friday, in which we want to highlight creative and entrepreneurial solutions to some of the most pressing challenges faced by our society. Also hosting the panel will be AVINA, one of the largest private foundations in the region, and FUNDES, a key actor in the local enterprise development space.

The three organizations form the Network for Inclusive Markets, through which we intend to identify scalable business models serving the base of the pyramid in key sectors and mobilize key actors for their implementation in Latin America.

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Interested in mobile technology applications for development?  Need $10,000?  If you answered "yes" to both of the above, then the Development 2.0 Challenge is made for you.

The Development 2.0 Challenge is an initiative of the Global Development Commons, which works to crowdsource solutions to pressing development problems.  What's interesting about this particular effort is (a) it's focus on mobile phone applications to development, (b) the $10,000 winner's prize - double that of the Changemakers collaborative competitions - and (c) the community voting process that will help determine the winner.

Applications to the Challenge close next Friday, December 5.  Be sure to check out both the Challenge as well as the Global Development Commons for more information.

(Via a press release - how web 1.0 of me!  Ah well, nobody's perfect...)

At NextBillion.net, we follow the various universities leading innovation in base of the pyramid strategy and research.  It gets better when this research leads to actionable, practical solutions for development. 

The Massachusetts Institute of Technology (MIT) is becoming a center of excellence for market-based approaches to poverty alleviation throughout its entire ecosystem. I was excited to learn about a number of initiatives at the university driving development through enterprise. Even as I was writing this post, the MIT Global Poverty Initiative was running Poverty Week at MIT, featuring dozens of events and spotlighting the biggest problems facing humanity.

Base of the Pyramid Curricula:
MIT faculty and lecturers (including, for example, Amy Smith, Iqbal Quadir, Rick Locke, Ken Morse, Diane Davis, Alex "Sandy" Pentland and Anjali Sastry) have been leading various BoP-focused curricular innovations that bring together students from different disciplines and combine academic discussions with field work. Not surprisingly, these courses are popular enough to have a waitlist of interested students. Here are just a few examples:

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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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