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Changemakers is one of the web's most dynamic and interesting destinations for those of us interested in ideas and their power to advance tangible change in the lives of the "next billion". Its recent re-design and the upcoming finals for one of their competitions (one very much in the vein of development through enterprise) are reasons compelling enough for me to ask you: have you been to Changemakers lately? If the answer is no, well it's about time. 

Their new site is refreshing in so many ways. Visually it a made a great leap forward, showing beautiful pictures that introduce their variuous competitions, like the ones that ends in just five days which is focused on innovations to improve the lives of rural communities.  It also has other new and interesting features such as a space for stories, a summary of Changemakers and solutions by country and a space where anyone can start group discussions on topic related to social change.

The site (and competitions in general) serves a very important purpose: it helps unveil many solutions and entrepreneurs out there, who would otherwise remain unheard of. This platform opens up the space for people interested to identify previous entries ideas in their topic and region of interest. The one thing I'm not 100% on board with is Changemakers' prize structure. Cash prizes (which are the norm at least in the competitions I've checked out before... I hereby confess I've not  looked at every one of them) only go so far. Most of the entries in compatitions like Changemakers are entrepreneurs who would find other prizes much more useful for the purpose of launching their ventures.

Sure, you can argue that the competition's prize is not only cash but also recognition and visibility, which are also of great importance. Agreed. But how about recognition plus visbility plus, say, a scholarship at business incubator such as GSBI? Or a scholarship to travel and participate in the next IDDS or Maker Faire? Each competition draws a different pool of entrepreneurs who may benefit from different opportunities and connections that may well replace or add to the current cash prizes. 

The good news is that "prize design" is becoming more of a science and less of an art. At least that's my takeaway after reading Rob's entry on Incentive2Innovate, thanks to which I found out that McKinsey has been doing some thinking on the subject of prizes and competitions for social change. (A bit off topic but this is not the only fascinating thing McKinsey has surprised me with lately. Have you been to What Matters?)

I look forward to continuing the conversation on the topic and prizes and competitions in BoP contexts. In fact, stay tuned for what I hope will be an interesting interview with a researcher on the topic. However, this shouldn't be a distraction from the original purpose of this post: Check out the new Changemakers. If anyone in this space is testing ideas in this area for the rest of us to take action and comment, they are the ones.  

Husk Power Systems, a company we profiled here on NextBillion back in October, was announced today as the winner of the Global Business Plan competition sponsored by Draper Fisher Jurvetson and Cisco Systems.  As the winning entrant, Husk Power walks away with $250,000 in seed funding, which they will use to build and operate more power plants in rural areas of Bihar, India's poorest state.

Congratulations to Chip Ransler, Manoj Sinha and the rest of the Husk Power Systems team on this big win.  They have been featured in the Wall Street Journal, Fast Company and FOX Business.  More PR will inevitably follow.

I am personally extremely excited about this development, not only because I know and like Chip and Manoj.  Part of my excitement stems from the fact that Husk Power is working in some of the poorest, worst-served parts of India - Bihar - that are hardest-hit by the poverty penalty.  Many BoP-focused companies work in relatively better-off urban areas or peri-urban villages, where average incomes are higher and consequently, so is ability to pay.

But the single biggest factor that has me so excited about this is that the Global Business Plan venture competition was not limited to socially-focused businesses.  Rather, Draper Richards and Cisco collected thousands of entries from companies around the world, most of them focused on a single bottom line.  That the winner is a legitimate triple bottom line company - generating financial, social AND environmental benefits - shows how much the social sector is mainstreaming in the eyes of "non-social" investors.

Much remains to be seen - Husk Power remains a start up, and will for the foreseeable future - but, at least for today, there is reason to celebrate in Bihar.

By the time we got to Woodstock / We were half a million strong - Joni Mitchell, "Woodstock"

Well, there won't be half a million of us, but as Bill Baue noted in a recent CSR Wire article, the Social Capital Markets conference (2009 vintage) is quickly shaping up to be an important event for our generation of changemakers, investors, intrapreneurs, policymakers and innovators.  (His exact quote was "...[SoCap09] is quickly becoming the Woodstock for social entrepreneurs.")  NextBillion.net covered the event extensively last year, and we are pleased to be going back as a "Deep Channel Partner" (aka Media Partner).

The SoCap team has released a version 1.0 of the schedule and speakers, which deserve a close look.  Keynote speakers include

• Sonal Shah, head of President Obama's Office of Social Innovation;
• Alvaro Rodriguez-Arregui of IGNIA Fund;
• William Foote of Root Capital;
• Jed Emerson of Uhuru Capital Management

And many more.  The panel sessions also look promising, giving participants a deeper dive than a typical "social innovation 101" you would get at a less-focused conference.  Take a close look at the web site for all the details; you can even follow SoCap on Twitter, read their (excellent) blog, check out the Facebook page, etc.

Once you've done your diligence, take advantage of a 40% discount (!) that will expire July 8.  Use the code WEB40 to receive the special discount.

Francisco and I will both be at SoCap; will you?

Occasionally one encounters a novel application of a familiar technology.  In this case, it's blogging.  David Roodman, fellow at the Center for Global Development and architect of the Commitment to Development Index, is writing an open-book blog about microfinance.  He drafts a chapter, then posts it for comment and critique.  Mr. Roodman shared the introduction to his book on February 17th and has since authored nine additional sections.  Although the work looks substantially complete, there is still a tremendous opportunity to contribute to its evolution.  (Talk about opportunities for co-creation!)

What I appreciate most about Mr. Roodman's approach (apart from his willingness to share the manuscript-in-progress), is his clear and thoughtful use of a framework to couch the discussion.  The purpose of the book is to explore the impact of microfinance from three primary perspectives : development as freedom, development as institution-building, and development as measurable impact.

Development as freedom, a concept introduced by Amartya Sen, refers to the ability to exercise one's sense of agency and maintain control over one's life.  With respect to microfinance, the question is whether (and under what circumstances), microfinance increases or limits the freedom of those who use it.  Creative destruction, described by Joseph Schumpeter as the dissolution of the status quo caused by disruptive innovation, is the underpinning of development as institution building.  From this perspective, the relevant query is whether the evolution of financing for MFIs has improved the state of the field.  Finally, development as measurable impact explores the debate over whether social impact can be meaningfully measured. In other words, how do we know if microfinance is really helping the poor?

Editor's note: A blog post written by Manuel Bueno, published yesterday on NextBillion.net, addresses this exact question. 

Given the extreme contrast between microfinance success stories and those of disaster and indebtedness, a balanced interpretation of these accounts and a rigorous exploration of the truth is quite welcome. Check out David Roodman's Microfinance Blog here.   

Happy Reading!

Microfinance in its simplest form involves extending loans to a group of borrowers (usually called self help groups) who agree to help each other by means of group savings and informal support. The typical self help group consists of 10 to 20 people who meet regularly to discuss social issues and activities and deposit their savings in a joint bank account. Once enough savings have been accumulated, group members can apply to internal loans within the group or apply for loans through a commercial bank.

Even though microfinance is estimated to have directly reached 100 million customers in 2008 (for more details see my previous post) there is still plenty of debate about whether it has a significant impact on the lives of the poor or not. There are many good reasons why it may benefit or harm the people it tries to help. In theory, microfinance self help groups are better at allocating resources because it takes advantage of  more comprehensive local information regarding local needs and lower monitoring costs, thus mitigating challenges like moral hazard and adverse selection. Therefore transferring resources to self help groups should result in local empowerment and efficiency. On the other hand, those resources devoted to the self help group may be appropriated by local elites. Additionally, if these resources are channeled through institutions parallel to local governments they may undermine rather than strengthen local capacity.

Continue reading this article

Financial inclusion has long been a challenge in India, where bank transactions are mainly urban based and people living in rural areas rarely even have a bank account. Financial inclusion is the delivery of banking services at affordable costs to vast sections of disadvantaged and low-income groups.  The Reserve Bank of India’s initiative to reach rural India by extending banking services through Non-Governmental Organizations (NGOs), Micro Finance Institutions (MFIs) and other Civil Society Organizations (CSOs) has been a welcome step forward.

A Little World, a Mumbai based organization is one such organization working to connect rural India with mainstream financial institutions.  In less than ten years, A Little World has expanded into more than 20 states in the country and developed partnerships to run the banking operations of over 25 banks.  Recently, the company was awarded the The Sankalp 2009 High Impact Award for Highly Scalable Social Models at the Sankalp Social Enterprise and Investment Forum.

During my internship here in the company, I recently had a chance to speak to Anurag Gupta, Innovator, Founder and Chief Technology Officer of the company and also the Director of the company's Zero Mass Foundation.

NextBillion.net:Tell us a little bit about yourself - where do you come from, your educational/professional background.

Anurag Gupta: I come from the state of Uttar Pradesh in India and studied architecture from the School of Planning and Architecture, Delhi.

NextBillion.net: Can you provide us with some background on A Little World?

Anurag Gupta:  A Little World is operating micro-banks in rural and remote areas of India, which have traditionally struggled with financial inclusion. We are spread in over 20 states working with local governments and 25 Banks, including State Bank of India, the largest in this regard, to carry out transactions and other financial activities in those areas. As a business correspondent for these banks, we enroll new customers and follow up on transactions by utilizing Bank-in-a-Box methodology. The enrollments and transactions are authenticated by using a finger print scanner, which also serves as a printer for the receipt of transaction details. The operators, 98% of which are women, also have a smart-card-enabled mobile phone with them to type in the details of the transaction. GPRS technology is used to communicate between the mobile phone and the finger print scanner. At present, we have 8,200 outlets in the country with 24,000 trained women operators running them.

NextBillion.net: What ideas led to it's inception? What was your inspiration to start this venture?

Anurag Gupta: There was a clear need for a domestic payment system that was affordable despite the amount involved in the transaction. Credit cards, for example, have this inherent challenge because it is infeasible for all the parties involved to approve transactions at very low amounts. In 2003 we started  mCheck which is a mobile payment platform that could make and receive payments securely and instantly over any distance. After the adoption of this technology by the State Bank of India, Airtel, and others, we sold off this business model in 2006. On the 7th of November 2007, we created the first outlet for Zero Mass Foundation in Mizoram to work as an implementer of the Social Service Payment System.

NextBillion.net: What’s the biggest challenge you face as a Director?

Anurag Gupta: It has always been difficult to raise investments to scale a business model like ours. Dr, Sayed AR Zaidi,former head of the Philosophy department at University of Delhi and  one of our investors, has been the soul of the company although he exited the company after we sold mCheck. Without his support all this time, the company would not have been in existence.

NextBillion.net: What’s the one thing you never would have imagined when you started the company, but is obvious to you today?

Anurag Gupta: When we started in 2000, the proliferation of the mobile phone as a tool we could utilize was definitely not at the levels that it is today. We never thought our company would be based around the cell phone to this extent and that now we would be creating a whole eco-system around it. At the inception, we were visioning a model based on stand-alone terminals rather than using mobile phones. Now, the thought only of the terminals seems so obsolete.

NextBillion.net: What was the most important thing you read in college relating to your work today?

Anurag Gupta: As an architectural graduate, I realized that we need to think openly in three dimensions. It is more flexible and gives you a much better understanding of a challenge. Also, the company and its operations are an architectural model in itself and so the principles are applied in an organization context as well.

NextBillion.net: What does Base of the Pyramid mean to you?

Anurag Gupta: For me, Base of Pyramid means the kind of people we are serving - the underprivileged and poorest in the income pyramid. A 95 year old widow with a mere pension of INR 200 month, a physically handicapped staying below the poverty line and millions others. Our business model is based on improving the quality of their lives and making it as sustainable as possible in the process.

NextBillion.net: Where do you see the company to be in next 18-24 months?

Anurag Gupta:  We vision to make this company the largest microbanking organization in the world. We hope to reach a level of 100,000 outlets serving a base of over 50 million customers in the process.

With this long overdue post I want to direct your attention to an innovative, relevant and icreasingly active platform called Akvo.org. Its topic area is one of obvious relevance to the NextBillion audience: drinking water and sanitation in the developing world. It's overdue because I learned about Akvo quite some time ago, back when I was working with Al Hammond, Jim Koch and the Global Social Benefit Incubator team on a review of community-scale, enterprise based approaches to these challenges. I choose to write about it today to join them in announcing the investment that of Rabobank recently made in the project and to finally put a check next to it on my list!

Akvo's platform serves three main purposes: First, it facilitates the flow of funds and resources to water and sanitation projects in the developing world; in Akvo, you'll be able to find hundreds of projects in many countries with detailed descriptions of their funding needs, executing organizations, etc. Once you donate to the project of choice you'll be curious to see how it performs and grows over time, of course. Well, project performance metrics is Akvo's second pillar of work through a methodology called Really Simple Reporting. Finally, through Akvopedia, it facilitates the transfer of skills and knowledge among existing projects and basically anyone interested in learning more about the different technologies and approaches that address the challenges of water and sanitation. 

Akvo is a fantastic resource and it's only beginning to gain traction. Surely, it will continue to gain strength, relevance and visibility in years to come. Nonetheless, there are a couple of things I would like to see happening in the site as it continues to mature. The first is a shift from donations to investments in these projects, or at least that the choice is made available for users to make. It would be interesting to see how different projects (whose goals are ultimately the same) compete for resources in a single marketplace that houses both "pure philanthopy" and social investment alternatives. The second is that the Akvopedia would be greatly enriched if all the entries included two examples: one of "where it has worked" and another one of "where it hasn't worked" with an explanation of the whens, hows and whys.

Given the open nature of the platform, both suggetions are not for Akvo staff to take on but for users to propose and submit. That said, go ahead and explore this great resource. NextBillion will continue to report on the progress of the "open source for water and sanitation" as it continues to grow and create change.

Intellecap launched Beyond Profit, a print and online magazine dedicated to the businesses, people and ideas within the social enterprise space, on April 28. The inaugural issue was released at Sankalp 2009, South Asia’s largest social enterprise business and investment forum.

Intellecap is a social business advisory firm that provides services to the for-profit development sector in areas such as microfinance, water, energy and education. The firm also publishes Microfinance Insights, a magazine that serves the knowledge needs of the growing microfinance sector.

Both of these publications are offering a free, 1-year e-subscription. Find out more on the Beyond Profit and Microfinance Insights websites. The offer ends June 30.

Read more about Beyond Profit on Next Billion.

"I'm going to a conference this week..."  This phrase generally fails to inspire, especially after you've been to a few keynote-panel-keynote-lunch-panel-panel-reception type events.  There are exceptions - TED and Pop!Tech both stand out in this regard - but the average conference is usually valued more for the off-hours networking than the content itself.

For the base of the pyramid sector, the trend of boring conferences is beginning to reverse itself, albeit slowly.  First we had the Social Capital Markets conference in 2008, which featured, on its third day, an "unconference" format - where participants planned and hosted panels of their own choosing - that was universally well-received.  Earlier this month, the Cornell Global Forum pushed boundaries by asking delegates not to sit in long plenary or panel sessions but rather to break into deep-dive working groups.  Both formats value active participation and break down the speaker/participant glass ceiling - all in service of getting something done (beyond talking, of course).

In this vein, I am really excited to learn about a truly innovative "non-conference" being planned by a group including NextBillion allies Emeka Okafor, Erik Hersman and Nii Simmonds.  Their Maker Faire Africa event, which will be held in Ghana this August, is no-talk, all-action.  The 3-day event will bring together roboticists, hobbyists, blacksmiths - MAKERS - to jam collectively on home-grown solutions to local problems.  In Emeka's own words, "we want to spark an interest in fabrication - make it sexy, if you will."

As if Emeka, Erik and Nii weren't heavyweights enough, the Maker Faire Africa guys are working with the grandmaster of local, appropriate technology - Amy Smith (another NextBillion ally).  Amy's International Development Design Summit will be taking place in Ghana this August, which will allow her group to interface with the Maker Faire.

Bringing home the spirit of this non-conference, Maker Faire Africa is not a ticketed event with flashy speakers that fly in and out the same day.  In fact, it couldn't be further from what we think of as a conference - it's free, it's open, and you're encouraged to bring your prototypes so that everyone can tinker along with you.

We'll be sure to report back on Maker Faire Africa as the event gets closer, but the idea of it is incredibly encouraging.  Yes, talk - discussion, research, writing, etc. - is important.  But time and again, we leave conferences without a tangible call to action.  I applaud the Maker Faire Africa team for pushing the boundaries of what a conference is all about, and keeping the focus on putting ideas into action.

Most of you are probably familiar with the story of Dr. Mo Ibrahim, the British-Sudanese entrepreneur who built Celtel (now Zain) into one of the most successful telcos on the African continent (and beyond).  Then you can imagine my surprise when the following email landed in my inbox:

Dr. Mo Ibrahim, founder of Celtel and a 2008 Time 100 honoree, will be on campus next week as the 2009 Bartels World Affairs Fellow.  Dr. Ibrahim is one of Africa's most successful businessmen and created the Mo Ibrahim Foundation in 2006 which           awards the Achievement in African Leadership [prize].

I have been fortunate enough to secure a portion of Dr. Ibrahim's time to attend Monday's class.  If you are interested, I would love to have you join us for a continental breakfast from 8:00-8:40 am, followed by discussion from 8:40-9:55 am.

Unbelievable-I couldn't believe my good fortune.  Never would I have imagined that I'd be within twenty feet of an entrepreneur of Mr. Ibrahim's caliber.  Not only is African telecom one of my primary interests, I'd been enamored with the CelTel/Zain story since completing a strategy project about its rival, MTN.  Furthermore, I was intensely curious about Mr. Ibrahim's motivation for creating his foundation. 

On the surface, his two careers, telecom entrepreneur and democracy advocate, seemed rather disparate.  However, (as I was recently reminded), the role of government is critical to the success of business in Africa, particularly when it comes to infrastructure.  Given the critical role that government officials play in the distribution of licenses, it's little wonder that he linked the two.

Those of us who attended this session were treated to an Inside the Actor's Studio-style interview conducted by Mark Milstein, Director of the Center for Sustainable Global Enterprise.  Please read on for a smattering of what we discussed.  (Note: This is not a verbatim transcript.  It's just a summarized excerpt of a much longer conversation.)

Mark Milstein:
How did you spot an opportunity for telecom in Africa?

Mo Ibrahim:
People thought that Africa was too dangerous.  People didn't want to work in Uganda because of Idi Amin despite the fact that he'd been gone for more than 15 years.  Cynicism and romanticism co-existed.  Both are true, but the larger picture is also true.  For example, everyone knows about Mugabe, but this is an incomplete, inaccurate picture.  Life can be as boring in Africa as it is in Ithaca-people get up, go to work, etc.  (Who knew Mo Ibrahim had such a wry sense of humor!)

Mark Milstein:
Why was the success of the mobile phone so dramatic in Africa?

Mo Ibrahim:
First, there was a high degree of equity in the phone call and secondly, the market was defined.  There were limited ways for people to communicate; often, they had to meet in person.  In Kinshasa, people used messengers.  If you didn't live in the same town, it could take ten days just to tell your mother that you were engaged.

Mark Milstein:
Did you realize that cell phones would be so powerful?

Mo Ibrahim:
They definitely exceeded our expectations.  They are essential for trade and education and are a tool for democracy and openness.  Zimbabwe and Kenya represent a great victory; people stopped elections from proceeding [due to their ability to communicate about what was going on].

Mark Milstein:
What quality made it difficult for companies to learn how to operate successfully in this space?

Mo Ibrahim:
Business people who were shifty and behaved illegally made things challenging.  People warned us that it wasn't possible to do business with integrity.  But at CelTel, any check for more than 30,000 pounds had to be signed by the board.  This was our silver bullet because the clout of the board discouraged bribery.  At the end of the day, the level of transparency and quality of corporate governance enhanced the value of the company.  When we sold the company we received 8.5 times EBITDA.  In fact, Celtel's story is taught at Harvard Business School as an example of how strong corporate governance attracts a premium.

Mark Milstein:
How did the state of leadership help you determine what markets to enter?

Mo Ibrahim:
We looked beyond the condition of the market to governance.  We've paid for licenses but then walked away.  We delayed entry in another place due to corruption.  Don't let short term gain push you to do something.  In the end, it will harm the value of your business.

Mark Milstein:
What advice do you have to give for people starting business with a social value?

Mo Ibrahim:
Any business has social value, otherwise it's unethical.  For example, prostitution and gambling have no social value.  Creating jobs and looking after the community are important.  A business cannot thrive in a community that is failing.  Social value should not be invoked as an excuse to do lousy, unsuccessful business.  Mixing the two is a recipe for disaster.  The sole purpose of business is to generate value generally, not just the kind that is social in nature.  As long as the company is ethical, there is social value.

Mark Milstein:
Why decide to promote democracy?

Mo Ibrahim:
Democracy is terrible, but it is the least evil system we know.  Democracy, transparency, good government, rule of law, and strong law enforcement are all very important. 

Mark Milstein:
A society of entitlement compounds the likelihood of success for the wealthy. 
Doesn't the Prize for Achievement in African Leadership give money to the already wealthy?

Mo Ibrahim:
The first part of the statement is correct, but we we're not dealing with wealthy, crooked people.  Once you finish the job as head of state, you leave your means behind.  Tony Blair charges $500M per speech and $2M to sit on Merrill Lynch's board.  But many leaders can't rent an apartment in the capital where they were living because they can't afford to.  Also, we're not paying people excessively.

Well, that's all she wrote.  Not surprisingly, the dialogue during this session was much richer than I could convey in this excerpt.  Of particular note was the James Lipton-like approach to the initial round of questions.  Thanks to that, I now know that Mo Ibrahim likes the sound of babies, admires Madame Curie (complete with poster on the wall), and detests hypocrisy.  How's that for a 360 degree view of a leader?