The WBCSD-SNV Alliance recently released a fantastic video introducing their work in the promotion of inclusive business models across Latin America.

Besides profiling interesting models that bridge the interests of MNCs and the base of the pyramid, the video highlights the role Governments are playing in promoting market-based approaches to poverty alleviation. It is indeed a sign of promising trends to hear about Ecuador's transition from a "Ministry of Welfare" to a "Ministry of Social and Economic Inclusion". 

Kudos to the alliance and the work being done in Latin America!
I hope you enjoy watching this, as I very much did.

Location: Atlanta, Georgia

Organization: Gray Matters Capital Foundation is a charitable arm of Gray Ghost Ventures, a social investment company that seeks to invest in visionary people, with an emphasis on microfinance and education.  Since 1996, Gray Ghost Ventures has worked to foster strategic innovation by incubating and investing in enterprises and tools to provide market-based solutions to social issues. 

Through the initiatives of its charitable foundations, The Rockdale Foundation and Gray Matters Capital Foundation and through its investment activities Gray Ghost Ventures has improved capacity of the microfinance industry in the Arab world, supported successful reform efforts in the Atlanta Public Schools, created the first privately-held global microfinance investment portfolio and social venture capital fund, offering both financial and social returns. Gray Ghost Ventures seeks to expand the mission of its charitable foundations and its social investing in the area of expanding the access and quality of primary and secondary education to the poor in developing countries.

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Last night I read a good piece in the interesting Aguanomics blog. It comes from a recent article related to "The Persistence of Poverty: Why the Economics of the Well-Off Can't Help the Poor" a book by Charles H. Karelis.

I found it thought-provoking and worth sharing with the NextBillion community: 

"When we're poor, Karelis argues, our economic worldview is shaped by deprivation, and we see the world around us not in terms of goods to be consumed but as problems to be alleviated. This is where the bee stings come in: A person with one bee sting is highly motivated to get it treated. But a person with multiple bee stings does not have much incentive to get one sting treated, because the others will still throb. The more of a painful or undesirable thing one has (i.e. the poorer one is) the less likely one is to do anything about any one problem. Poverty is less a matter of having few goods than having lots of problems."

"Poverty and wealth, by this logic, don't just fall along a continuum the way hot and cold or short and tall do. They are instead fundamentally different experiences, each working on the human psyche in its own way. At some point between the two, people stop thinking in terms of goods and start thinking in terms of problems, and that shift has enormous consequences. Perhaps because economists, by and large, are well-off, he suggests, they've failed to see the shift at all."

On my way to work I was thinking about the market-based approach to poverty alleviation discussed here in NextBillion, and whether or not it aims in the right direction when confronted with Karelis' "bee stings" metaphor.

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I just ran across one great idea (and a great video that explais it), via NextBillion ally Emeka Okafor and his great blog Timbuktu Chronicles.

Market for Change was founded in 2007 "to catalyze sustainable economic development and poverty alleviation by creating a thriving, active market for small and medium-sized business process outsourcing vendors in Africa and other developing regions."



Market for Change won the second place in the last edition of BiD Challenge and is a current finalist in other venues such as the Global Social Venture Competition. What I find most interesting is how the model makes the case for outsourcing as a vehicle for creating economic opportunity in emerging economies, adding up to the usual argument of lowering costs for MNCs.

Kudos to founder Leila Chirayath. We will keep an eye on how the model unfolds and eventually replicates into other regions, hopefully including Latin America!

Today's New York Times front page features, once again, the pressing crisis that has risen from soaring food prices around the world. The debate has found its way to institutions like the UN and the World Bank, who have called for urgent measures to keep the world's poorest from suffering the hardest consequences.

Meanwhile, another issue is slowly gaining momentum and I'm sure we'll begin to hear more and more about it in the coming months: water scarcity. The past two weeks have seen extensive coverage, discussing everything from proper pricing and innovative technologies, to business models and new concepts like that of "virtual water." This is an issue I will explore in depth in the coming months as I will be joining Al Hammond in the Global Social Benefit Incubator project, studying and mentoring innovative business models that tackle the issue of clean water supply for the poor.

I'm very excited about this opportunity to learn more about a subject that will be increasingly important for my generation, so stay tuned for detailed coverage. Meanwhile, here's a quick roundup of the last two weeks for those of you interested in following this discussion:

Financial Times addressed the issue of proper water pricing, based on the penalty that the world's poorest pay for access and possible measures of accountability on behalf of the world's most water-intensive industries.

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Guest blogger Lauren Withey is a research assistant for the World Resources Report at the World Resources Institute, in Washington D.C.

By Lauren Withey

It used to be that most U.S. college graduates, perhaps after spending a few years testing their penchants for various occupations or getting a second degree, would expect to settle into a consistent office job for the rest of their working lives. Attending a Microfinance Research Symposium at Georgetown University last week reminded me why such a smooth career path has become increasingly the exception rather than the rule among young job seekers today.

The Symposium was organized by FINCA International, a non-profit microfinance institution founded in 1984. Its first project was to create a group lending system - a "Village Bank" - in Bolivia. The success of this enterprise led to the growth of an extensive franchise network of these village banks, which now spans 21 countries, and serves over 700,000 clients.

The NGO's annual Research Symposium consists of presentations by the winners of a call for papers. The papers use FINCA's extensive client data, which is collected around the world each summer by Fellows, to advance the microfinance research agenda.

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Now in its fourth year, World Challenge 08 is a global competition aimed at finding projects or small businesses from around the world that have shown enterprise and innovation at a grass roots level. The competition seeks social entrepreneurs who are making a difference without costing the earth. It could be you or someone you know.

World Challenge 08 is organized by BBC World and Newsweek, in association with Shell, and is about championing and rewarding projects and business which really make a difference. The winner will receive a grant of USD $20,000 to put back into their project/business, and two runners up will each receive USD $10 000.

One representative from each of the three finalists will be flown to The Hague, The Netherlands to attend the award ceremony in December.

Nominations will be accepted online until May 31st. Click here to learn more about the rules for entering the competition, read profiles and watch videos of the winners and finalists from the last three years.

A new wave of Internet connectivity for the BoP is under way by means of making the Web audible.

Internetspeech has developed a technology that makes the Internet accessible over the phone. That's right. Just a phone line and your voice; no keyboards, no screens and no literacy required.

Click here to listen to a demo while you read the rest of the post.

The model is similar in concept to Question Box, and would allow a potentially large segment of the BoP to benefit from the access to information and a global marketplace that the Web offers.

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The World Bank Institute is hosting an executive development program titled "Inclusive and Sustainable Business: Creating Markets with the Poor", aimed at business executives interested in the design of business strategies with the BoP.

The curriculum includes various interesting topics, including strategies to reach the 4 billion at the base of the pyramid, the role of multi-stakeholder partnerships, aligning business strategies with the development agenda, and more.

From the program's website:

"The program is designed for business executives from larger companies responsible for managing business in emerging and developing economies, as well as public sector leaders, donor agency executives, civil society organization representatives, and staff from international development agencies who are actively interested and engaged in involving the private sector in meeting development goals."

It's interesting to hear about this kind of programs, yet another sign that BoP business models are increasingly becoming mainstream. The program will be hosted between the 9th and the 13th of June, and early registration is encouraged.

Via WBCSD

Two stories have got me thinking about capital markets and their interaction with the BoP.

The first one involves a State Minister of an industrialized country announcing funding for a project to create a "social stock market". The second one features 12,500(!) new shareholders of a Colombian corporation, packing the room during the first annual review meeting since it went public.

Both are exciting news and I wanted to share a few thoughts on how capital markets may serve as either bridges or gateways for the BoP into the formal economy.

Let's see.

Markets as bridges

Phil Hope is England's Minister for the Third Sector, a very forward-thinking position all by itself. Just as interesting was his announcement at the Skoll World Forum 2008 of a project to study the feasibility of a social stock market, supported by a $500,000 grant from the Rockefeller Foundation. The story was featured by the featured by the Financial Times last week.

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Position: Associate

Location: South Norwalk, CT

Organization: SeaChange Capital Partners is an entrepreneurial nonprofit finance firm established by former leaders of Goldman Sachs. Our mission is to enhance the flow of growth capital from wealthy donors to select high-performing nonprofits, to contribute to the vital long- term effort of creating more efficient financial capital markets for the social sector. We will identify nonprofits with records of measurable success and present opportunities for supporting them to a network of potential donors, including wealthy individuals, foundations, and other funders.

Position Description: The Associate will support the development and execution of systems and processes for SeaChange's work with its grantee organizations. In addition to being involved in the design of the program, s/he will identify, screen and help advise potential and current nonprofit grantees. The Associate will assist senior staff as they meet with nonprofit leaders and learn about organizations of interest to SeaChange, conduct due diligence on organizations to evaluate their potential for success, advise selected organizations about their growth plans,
and maintain ongoing relationships with grantees to ensure progress toward agreed upon milestones. In addition, the Associate will work closely with all members of the SeaChange staff on a wide variety of projects all working toward the launch of the firm's efforts.

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Today's main headline in the online version of El Tiempo, Colombia's largest newspaper, reads as follows: "Government abandonment and malnutrition ramble in Chocó, where 17 children starved to death"

In a couple of hours, another headline will replace Chocó's tragedy and few will remember these events and, more importantly, acknowledge the pressing challenge that they represent. I can't let these news go by without at least sharing my thoughts with a community that discusses precisely what is needed in such remote and often forgotten areas: active involvement of the private sector to build creative and sustainable solutions to the urgent needs of the poor.

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Moses' last week post raised the very interesting discussion about the concept of scale in BoP business models. I enjoyed the read and, while I agree with his thoughts about --and answer to-- the what is scale question, the article made me move on to one of my current research subjects, which is how to achieve and maintain scale.  

Well, just this morning I came across a fine essay on this matter. Professor Christian Seelos from IESE was awarded the Golden Prize in the Essay Competition sponsored by IFC and Financial Times, with his essay Corporate Strategy and Market Creation in the Context of Deep Poverty. The paper is refreshing for the BoP dialogue, as it introduces an interesting framework for analyzing strategic alliances as an effective means for giving scale to BoP initiatives.

Through the presentation of two cases of alliances between companies and existing BoP initiatives, Professor Seelos shows companies may leverage their already existing capabilities and expertise to work with and provide scale to existing organizations at the BoP level, thus creating new markets or expanding those already in place. This approach is complementary to the traditional --and often challenging-- recommendation for companies to enter low-income markets by redesigning their value chains and business models to address the needs of a new base of customers.

The following two excerpts may provide a feeling of what the new research is all about.   

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Who better than two remarkable female leaders to quote introducing Goldman Sachs' recently launched 10,000 Women program?

"Creating more female entrepreneurs in developing and emerging economies satisfies all the requirements of smart development: the benefits will multiply far beyond the investment; it is sustainable over the long run; it is adaptable to local needs; it is focused; it is measurable and it helps beneficiaries, communities and states alike." Linda Rottenberg, Co-founder & CEO, Endeavor

"The professional development of talent is a critical component of addressing global inequities. Providing women with access to education gives them entrepreneurial tools they need to build their own futures - which in turn creates a corps of leaders with the skill and will to effect broader change." Jacqueline Novogratz, Founder & CEO, Acumen Fund

Goldman Sachs will invest $100 million over the next five years in providing 10,000 women in developing economies with business and management education. Also, through partnerships with U.S. and European Universities, the program seeks to strengthen business education programs in developing countries. 

Once again, the importance of building talent and execution capacity in the field arises.

Recent Goldman Sachs research highlights this kind of investment as the one with the highest possible social return. I can only agree and express my admiration for this visionary initiative.   

The quote is from an interesting NYT Magazine article I just read and got me thinking about successful models to scale the impact of socially minded initiatives. Freakonomics authors Levitt and Dubner discuss innovative models implemented by Smile Train and the Prevent Cancer Foundation to scale impact on the ground level and provide incentives to attract potential donors.

The Smile Train model was specially thought provoking, as it lies on the power of fostering local talent and capacity to deliver benefits where they are most needed, as has been discussed by Abigail, Grace and Moses in recent NextBillion posts.

I hope you enjoy the read! Stay tuned for upcoming posts on strategies to scale impact at the BoP level.