williamkramer's blog

Red Hat Making BOP Play

williamkramer — Mon, 14 May 2007 11:20:35 -0400

One of my regular news feeds brought this item to my attention, and it struck me as perhaps a meaningful watershed. Red Hat, the Linux software/middleware company, just announced last week the launch of its "Global Desktop" -- enterprise software at affordable prices. Red Hat has been working with Intel to maximize performance on low-cost, Intel-based desktop PCs. It has also been working with One Laptop Per Child to simplify the functioning of highly-sophisticated desktop suites. Interestingly, Red Hat seems to have navigated the sometimes hostile relationship between Intel and the OLPC people for the purposes of this project.

For the open software folks, you'd think that the emerging economy markets would be a high visibility target, but the economics of their businesses are perhaps even more demanding than the proprietary software solution providers. The development, then, of specific solutions for low-income consumers represents to me at least a significant shift in the center of gravity of the overall markets. Admittedly the customers for this software are at the top of the BOP market, if not above, but still, it's a great sign.

Jane Nelson on Business' Role in Development

williamkramer — Fri, 20 Apr 2007 09:22:23 -0400

Jane Nelson, who wears many hats (IBLF, Kennedy School, Brookings), spoke yesterday at a meeting of the Global Poverty Roundtable at the GlobalWorks Foundation here in Washington. Jane offered a wide-ranging, yet concise summary of all of the ways business can engage in development. Jane said [and, Jane, I beg your forgiveness in advance for this shallow and truncated version of your presentation] that the activities fall in three general categories: core business activities, competence-led philanthropy, and influence on the enabling environment for business.

On Core Business: Two broad areas: First, practice responsible business (human rights, environment, labor, compliance, accountability, etc); second, increase economic opportunities -- innovate for new markets. How? By leveraging global value chains, increasing local content purchases, creating business linkages, creative financing mechanisms which draw on core businesss knowledge and skills, and perhaps most promisingly, through more and more effective collective business initiatives -- industry-wide efforts that both set standards and create healthy and friendly competition to succeed within these new standards.

On Competence-led Philanthropy: Jane's basic observation is that even though business philanthropy is a tiny part of post-tax income, it mounts up and quickly exceeds the resources of even the multi-lateral development agencies. (Specifically, she surveyed the philanthropic budgets of 50 Fortune 500 companies and found them equal, in sum, to the total budget of UNDP). Just re-balancing where money goes, and increasing attention to funding opportunities in emerging markets (that is, giving more money where goods are created and where goods are actually sold) will have big impacts. Flagship programs are good tools to unite a highly-dispersed MNC's efforts, create real brand value, and allow for more effective philanthropy. Mobilizing volunteers -- from one's own employees to affinity groups external to the company (e.g., diaspora communities, organizing remittances for development goals) -- can be effective. For the record, the term "competence-driven philanthropy" is something that I've only heard from Jane. Is it a new term?

On Business' Role in Public Policy: While businesses are acutely aware of crossing a line -- from "statesmanship" on policy to parochial lobbying, there are good examples of how to do it, such as the Extractive Industries Transparency Initiative. Weak governments and institutions present particular challenges (a point later amplified by others - notably Bruce McNamer of Technoserve and Fred Tipson of Microsoft -- who pointed out the severe "macro" problems that dwarf the "micro" efforts of any one company). Business can be helpful in giving support to governments in achieving the already agreed-to goals for development funding, e.g., the G8's Point 7 commitment for ODA.

Lots of food for thought here. Thanks to the Global Poverty Roundtable to hosting, and to Jane for her excellent remarks.

Grassroots Business Initiative Grows Tall

williamkramer — Tue, 17 Apr 2007 11:46:42 -0400

I attended an all-day workshop at the IFC yesterday on their Grassroots Business Initiative (GBI). A half dozen of the Initiative's enterprises from Africa, Asia, and Latin America, and 30 or so GBI partners also attended, along with their program staff. The meeting was conducted under "Chatham House" rules, which means that I can't report on who said what, but allow me to share with you a few general observations, and a bit about one talk.

First, no surprise here, it's remarkable how many of the issues that are of concern to these quite small enterprises (and intermediaries helping them) are exactly those that big organizations must contend with —finding and succeeding in markets, managing for growth, balancing objectives. It's no solace to these small, struggling social entrepreneurs, but things don’t get easier when you get bigger.

Second, there was general agreement that the big issue for these fledgling enterprises is (lack of) access to some hybrid form of capital combined with technical assistance and business mentoring. Solving this problem is critical, not just for the businesses, but also the multilateral development banks who are losing — no, have already lost — their central role in financing big enterprises; there is so much private capital sloshing around the world that the MDBs need to go downstream, and fast. These are, of course, exactly the issues we are focusing on inside DTE for the foreseeable future (more on that as activities unfold).

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TN4B: Focus on Financial Services

williamkramer — Tue, 27 Mar 2007 12:37:59 -0400

The Next 4 Billion includes a whole chapter on a topic for which we were unable to present a single, real number from our analysis of household surveys. Not surprisingly, the chapter is short. So, why did we include it, if we couldn’t report any numbers? And why do we recommend it to you?

Well, as these pages have shown numerous times, we believe that financial services are a breakout sector - for the BOP, for business, and for the development community. For the BOP, access to financial services means new jobs and income; the creation of formal identity (perhaps for the first time); the reduction of physical risk (it’s dangerous to carry cash on your person, or store it in your home, in many parts of the world); the economic empowerment of women, perhaps the single most critical element of development; among other positive impacts.

But wait, there's more! Special for the readers of NextBillion, something you won’t find in the chapter (we ran out of time and space….) The Inter-American Development Bank created for us a set of two graphics that represent why businesses need to look at the BOP. Here they are:

What these maps are saying, to me at least, is that there is a huge, unmet need waiting for smart businesses to serve. A lot of money is going places where there are no financial institutions. Were these not poor people, you can bet that this market opportunity would have been acted upon long before.

For business, the increasing understanding that the poor need more than microcredit opens their eyes to what I believe is likely a trillion dollar market at a minimum. Why a trillion? Just the tracked country-to-country remittances are approaching $350 billion; most informed observers are confident that this underestimates the between-countries market by as much as 50%, which gets us around half a trillion.

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On Remittances as a Platform

williamkramer — Mon, 11 Dec 2006 15:51:17 -0500

Let me add my thoughts to Bal Joshi's fine post of 12/6 and AnnaLee Saxenian's reply of 12/8. I couldn't agree more with most of the points made in both. The notion of remittances as a development platform is just right, in my view, and Ms. Saxenian strikes a fair balance on "good" and "bad" remittance impacts. When remittances become just another form of dependency, they get in the way of real development. I take note, however, of what might be a few hidden traps buried in Bal Joshi's post.

Bal offers three primary justifications for them. First, it reduces costs; second, it increases sender control, "lowering waste and misuse"; third, it offers "the sender more options" for productive use, such as savings, build-up of capital, etc.; and fourth, it fosters creativity in the pipeline. My concern comes in points 2 and 3, as both are, to my perhaps over-sensitized ears, reminiscent of the "top-down" and "north to south" control that has so plagued development policy in the past. A considerable amount of criticism of the BOP agenda (particularly as relates to Prahalad's enthusiastic portrayal of creating the capacity to consume) has revolved around "misuse" of this new-found buying power. This approach can, and often does, take on a moralistic tone; however well intentioned, this kind of guidance is usually counterproductive. Economic empowerment is all about choice, and yes, some of the choices will be less than fully efficient, or productive, or even healthy.

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Google.org Hiring BOP Staff

williamkramer — Mon, 27 Nov 2006 13:19:19 -0500

NB's Chapel Hill NC correspondent, Jacob Kramer-Duffield, has sent an interesting job posting our way. Jake, a former sometime WRI staffer, and now a PhD student at UNC's School of Information and Library Science, keeps close tabs on the goings-on at Google. Google.org, the company's hybrid NGO/for-profit philanthropy/investment facility, is seeking candidates for their Global Poverty & Sustainable Development programs. As Google describes it, the new team will work "to innovate, establish and support sustainable models for global development" using "market-based, entrepreneurial approaches that promote sustainable economic growth and empowerment." It is a "poverty alleviation strategy" combined with an active "portfolio of grants and investments." Hmmm...

AMD Says Press Report on 50x15 Inaccurate

williamkramer — Mon, 20 Nov 2006 11:00:41 -0500

NextBillion has spoken with 50x15 project management, and has been told that the press report of the project's demise is not correct. AMD representatives claim that the report was generated due to a misrepresented SEC filing. AMD says that the PIC will continue, 50x15 is still a goal, and there are other products and projects in the pipeline. Perhaps AMD will put out its own press release to set the record straight.

Back to the Future: Oxfam Report Is More of the Same

williamkramer — Mon, 13 Nov 2006 16:03:10 -0500

Oxfam International has just published a report, "In the Public Interest: Health, Education and Water and Sanitation For All." One can hardly dispute some its assumptions - it's a scandal that people go without basic services, the money is theoretically there to solve problems, aid policies are often misguided, local governments have often proven incapable, incompetent, corrupt and uncommitted to their own citizens' welfare. But one can argue with their solution set...it's like going back to the future.

As I read this report, the private sector is seen as the enemy at worst and a wild beast to be caged at best, the profit motive as antithetical to welfare, and more aid as the solution. The past and current failures of the public sector in the developing world to make headway in solving these problems for billions of people across all regions are acknowledged but then largely ignored. The Oxfam doctor's prescription is to throw more money at these self-same entities - but more consistently and in larger amounts.

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Vodafone's New M-Banking Reports

williamkramer — Fri, 10 Nov 2006 10:33:58 -0500

Of the MNCs with which we have worked, none goes to greater lengths than Vodafone to create opportunities to listen to its "stakeholders" - and the company counts us as one. I attended such an occasion in New York Wednesday evening, linked to the publication of a new Vodafone report, "Economic Empowerment Through Mobile," (pdf) to which we contributed a piece. Cynics will say that these gestures are mere flattery, or worse, bribery, designed to disarm potential critics, and no doubt many companies do just that, but in the case of Vodafone, I don't buy it. Vodafone understands what it takes to generate innovative ideas - and it's not gathering only like-minded folks to reinforce everything they already know. In my experience, the company actually listens hard to what outsiders say, and they try to respond. As Vodafone is a big company, and there are lots of competing interests and priorities - and the demands of the market (Vodafone has had a few bad years, and it has slowed them down) - but, in the main they are inclined to be responsive, and that puts them in a class of company with few peers. And by the way, read the report, it's good, if we must say so ourselves.

Continuing the social butterfly circuit, I returned to DC to attend yet another soiree related to the release of the full study of Wizzit, the South African BOP-focused cell service on which we have previously reported, that is contained in the aforementioned Vodafone publication. This study, "Mobile Phone Banking and Low-Income Customers: Evidence From South Africa", (pdf) was done in cooperation with CGAP and UN Foundation. CGAP's Elizabeth Littlefield made it abundantly clear why mobile phones are the platform of the future for all manner of BOP-related activities, including financial services. It's just in the numbers - try 20 million total existing outlets worldwide for financial services as traditionally defined, and 2 billion mobile phones today, with the number rising by the hundreds of thousands a day, mostly from growth in emerging economies.

There's a Right Way and a Wrong Way - China in Africa

williamkramer — Fri, 03 Nov 2006 15:20:29 -0500

Elizabeth Economy and Karen Monaghan write in the International Herald Tribune (The perils of Beijing's Africa strategy) that China is quickly creating blowback in Africa despite its purportedly "hands off politics" approach. You would be hard-pressed to design a more anti-BOP strategy than much of what China is doing - obsessively chasing resources for China's own benefit, without regard for the environment or the interests of local populations; bringing in its own workforce so little money even reaches the citizens of the country where they are operating. China clearly needs some fast education on sustainability and corporate responsibility. Chinese leaders, we're an NGO....and we're here to help.