John Paul's blog

The Latest on the $100 Laptop

John Paul — Thu, 15 Jun 2006 10:49:58 -0500

Since it was announced in April of last year, MIT's One Laptop per Child initiative has received a great deal of media attention, as well as some healthy skepticism. Questions were raised about the $100 laptop on NextBillion here and here. I hadn't heard much recently about the project until last week when WorldChanging's Ethan Zuckerman posted an excellent first-hand account of his use of the latest prototype.

Attitudinal Barrier to Microfinance

John Paul — Tue, 06 Jun 2006 15:19:17 -0500

I just read a news story describing how microfinance schemes in Ghana (and the banks providing them) are being undermined by a refusal to repay loans. According to the article, "The microfinance programme, which is the bedrock of rural banks, is being thwarted due to the attitude of some customers, which is creating many problems for the banks... some people had the perception that the money belonged to the government and was therefore free."

While working in India, I heard similar sentiments about repaying loans. In rural areas, there seemed to be a lack of consequences associated with failure to repay an institutionalized loan (as opposed to a local moneylender). This attitude may be the result of years of government rural development schemes in the form of grants rather than loans. Or it may be a lack of adequate enforcement outside urban areas. Whatever the cause, a cultural belief that money loaned by an institution need not be repayed is likely to slow the entry of larger commercial institutions into this arena, resulting in less microloans being made available to those who need them.

The solution proposed in Ghana was to provide adequate education to the groups and individuals before granting them loans, so that they know their repayments benefit others like themselves. But is this enough? I'm wondering if anyone else has had experience in this area. How widespread is this attitude and what is being done to combat it?

This Week in SME Investing

John Paul — Wed, 24 May 2006 14:44:10 -0500

I’ve just posted up several recent news stories about financing for SME development. Most of these came from the Business in Development Network, which promotes poverty reduction through entrepreneurship in developing countries. The group maintains a great newsroom for those interested in similar articles.

Here’s what’s happening this week:

Bangladesh: Banks urged to support SMEs
The numerable packages in saving schemes, monthly deposit, loan schemes etc. have played a role to close the gap between bank and the cross-section of people. Still it is noticed that there has not been such banking packages to support the big client group belonging to small and medium enterprises.

Innovation Blowback

John Paul — Tue, 23 May 2006 16:54:18 -0500

In his 1997 book, The Innovator's Dilemma, Harvard Business School professor Clayton M. Christensen showed that an upstart with an innovation that disrupts existing business models can beat out the big guys nearly every time. What's more, he said, venerable companies seal their doom by doing just what they're supposed to do: pleasing their most valuable customers.

Nearly a decade later, this threat for established companies is larger than ever, but is coming from a direction most aren’t even looking towards: the base of the pyramid. That’s the focus of a new McKinsey report, Innovation blowback: Disruptive management practices from Asia, which posits that Western companies think too narrowly about the emerging world, and that they do so at their own peril.

Blowback, as defined in the report, describes the unexpected consequences of the investments that Western companies have made in emerging markets. For instance, the presence of foreign businesses and the competition they bring often forces local businesses to take their game up a level. In doing so, they become more competitive on a global scale, threatening the foreign companies' home markets.

More to the point, the report states that companies can gain key capabilities by serving low-income customers. In a market characterized by a lack of infrastructure, low education, and little disposable income, businesses must innovate to survive. These cost and management innovations become strong competitive advantages for a company, regardless of what market they are serving.

Wi-Fi Phones – a Piece of the Rural Connectivity Puzzle

John Paul — Thu, 18 May 2006 13:25:58 -0500

Wi-Fi phones are taking off! According to a report by Infonetics Research, the global market for Wi-Fi phones rose 76 percent in 2005 to $102.5 million, and will reach $1.9 billion in 2009. The number of units shipped rose 112 percent last year, and will increase by 158 percent this year. These figures represent demand primarily from developed markets. But it is emerging markets that may in fact become the driving force behind the technology’s development.

Wireless networks have become the technology of choice for increasing access to phone and Internet services in developing countries. As we detail in our new report, A New Model for Rural Connectivity, they are not only cheaper, easier and faster to deploy than traditional landline alternatives, but also make possible business and service delivery models better adapted to rural, low income communities.

As Wi-Fi and WiMAX technologies enable the rapid expansion of telecommunications into rural developing areas, the market for Wi-Fi equipment will grow significantly. The resulting volumes will drive prices even lower, enabling many customers at the ‘base of the pyramid’ to enjoy the benefits of mobile services for the first time.

A number of Wi-Fi phones are planned or already available to take advantage of this emerging opportunity:

1. UTstarcom F1000 Wi-Fi VoIP Phone

The F1000 residential Wi-Fi handset expands the reach of VoIP communications. It provides consumers a new cost effective way to communicate, and includes features such as 3-way Calling, Call Waiting, Call Transfer and many popular features. The phone is being sold under a number of different names (e.g. Vonage & BroadVoice), and costs about $130.

GlobalGiving Seeks Projects to Fund

John Paul — Mon, 15 May 2006 16:10:03 -0500

While browsing through the booths at last week’s Development Marketplace (DM), I rediscovered an organization that had been inspired by the competition. GlobalGiving was founded by the same World Bank executives who created the Development Marketplace in 2000. Encouraged by its initial success, they decided to use the Internet to create a highly efficient online marketplace for international giving – basically a DM-like source of funds for innovative projects that runs 24/7 instead of just once a year.

GlobalGiving's vision is to direct the most funding to the best grassroots projects all over the world. They do this by: 1) providing project leaders access to funding - they are local leaders who are most knowledgeable about the needs of their communities, and 2) allowing donors to compare, contrast, and then select the best projects to be represented on GlobalGiving, thereby providing a more transparent, engaging way for donors to give.

Since its launch, GlobalGiving.com has been growing rapidly and is now seeking new projects to fund. Last month the organization launched a new initiative called the "GlobalGiving Open,” which allows project leaders to submit their proposals for a spot on the GlobalGiving website. The next deadline to submit projects is June 17. After this date, the GlobalGiving community will vote on which projects should be featured on GlobalGiving.com.

To learn more, check out the GlobalGiving website, or contact Saima Zaman with questions.

Another Competition, Another Missed Opportunity

John Paul — Wed, 10 May 2006 13:38:35 -0500

The World Bank’s Development Marketplace (DM) competition took place in Washington this week. Begun in 1998, and held in DC about once every 18 months, DM is “a competitive grant program that funds innovative, small-scale development projects that deliver results and show potential to be expanded or replicated.” This year’s competition, entitled, "Innovation in Water, Sanitation, and Energy Services for Poor People," awarded $5 million to the best ideas that provide clean water, sanitation, and energy to local communities in developing countries lacking these basic services.

For those keeping score, projects focused on providing clean water won just over half the grants. Alternative energy projects – including solar, biomass, and human-powered – accounted for most of the rest, with only a handful of sanitation projects receiving funding. Africa was strongly represented, with 14 of the 30 winning projects coming from the region. The largest number of winners from a single country was India with five projects receiving funding.

While walking through the project stalls located in the World Bank’s grand atrium, though, I couldn’t help thinking that the initiatives around me were not getting the support they deserved. The World Bank has an annual budget of US $20 billion and is the largest foreign aid organization with a mission to reduce poverty. $5 million is only .025% of total annual expenditures, and most of that money didn’t even come from the Bank. Donors to this year’s Marketplace included the Global Environment Facility (GEF), the International Finance Corporation (IFC), the Bill and Melinda Gates Foundation, and the Global Village Energy Project (GVEP).

A New Water Filter, An Old Debate

John Paul — Mon, 08 May 2006 14:24:49 -0500

The BBC reported last week about a new device being marketed to purify water in developing countries. The LifeStraw looks like a large plastic flute, and contains internal filters that remove bacteria from the water as it is drunk. The device is priced at around $3.50, and is designed to purify 700 liters over the course of six months to a year.

In spite of its initial cost ($3.50 is still expensive to someone making $1 a day), the device is still a welcome addition to other water purifying devices now coming to market. Apparently, not everyone agrees. The BBC article included a critique of the device by Paul Hetherington, a spokesman for UK charity WaterAid.

“The problem is that many people live very far away from their water, often walking a total of 20km or more carrying a weight of 25 kilos. The LifeStraw isn't going to prevent that long journey, even if it does improve the water they drink. ” He continued, ”It only costs a charity like WaterAid £15 per person to provide them with water, sanitation and hygiene education, which, provided there is decent water resource management in the country, will last them a lifetime. At that rate, $3.50 is expensive.”

Comments like this increasingly frustrate me, and I’ve seen them made repeatedly by sector-specific non-profits who believe that it’s pointless to try and solve one problem if efforts are not simultaneously made to solve another. It’s unfortunate that some organizations think that their solutions are the best and others should be disregarded, but that is precisely where development through enterprise adds value: it’s not an either/or proposition.

The Business Case for Clean Cooking

John Paul — Sat, 06 May 2006 09:07:01 -0500

Every year, smoke from traditional stoves fueled by wood is responsible for 1.5 million deaths. Sub-Saharan Africa and South East Asia are particularly affected. Now a new report from the World Health Organization makes the business case for investing in cleaner household fuels. The report claims that $13 billion dollars per year would halve the number of people worldwide cooking with solid fuels by 2015, resulting in a payback of $91 billion dollars per year. This seven-fold return on investment is a result of savings gained not only from less illness and death, but of less time spent ill, collecting fuel and cooking.

"Making cleaner fuels and improved stoves available to millions of poor people in developing countries will reduce child mortality and improve women's health," said Dr LEE Jong-wook, WHO Director-General. "In addition to the health gains, household energy programmes can help lift families out of poverty and accelerate development progress."

The report concludes, “With more time available, children would do better at school, while their mothers could engage in childcare, agriculture or other income-generating activities as a way to break the vicious cycle of poverty.”

Development without the Dependency

John Paul — Mon, 24 Apr 2006 14:57:12 -0500

I was just reading through the new issue of Co-Creations, the e-Newsletter by the Kenyan Development Network Consortium (KDNC). Amidst informative articles about sustainable eco-tourism and the current state of ICT development in Kenya is a fascinating piece about the provision of appropriate medical devices to the country. The article is worth a quick read not only for what it says about Kenya or healthcare, but about approaches to development in general.

According to the story, most people living in Eastern Africa (and many other developing regions) have traditionally obtained medical devices and equipment largely through donor-funded initiatives. These efforts may in fact do more harm than good.

“The majority of the equipment is literally dumped into the African continent by suppliers who are funded through donor agencies. Indeed, close to 75% of medical equipment donated from industrialized nations are not in usable condition six months after arrival. Some 25% have major defects, another 50% fail progressively due to age or lack of proper maintenance.”