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On Thursday, December 14th, key players in Brazil’s financial and private sectors met at the 3rd Annual New Ventures Investor Forum to discuss the state of business and environment in the country. Representatives from such corporate and financial leaders as Wal-Mart Brazil, Stratus Investimentos, and ABN AMRO discussed topics from the ecological impact of international supply chains to regulations of small enterprise, but the main issue on everyone’s mind was “Will society [and the private-sector] respond in time to the sustainability challenge?”

Posed by Andre Mariano of AxialPar investments, this may be the most important question of 2006, and it was answered by four of Brazil’s most promising small enterprises. These winners of the Investor Forum were:

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Sustainable enterprises in emerging economies take another step forward this month, this time in Brazil. On December 14, New Ventures Brazil will host its 3^rd annual Investor Forum. The new 2006 selection of New Ventures enterprises, including companies from seven states working in clean technology, new materials, organic agriculture and other sectors will be presented at Fundação Getulio Vargas in São Paulo. This was preceded by a separate Investment Forum on December 6-7 hosted by FINEP, Brazil’s Agency for Innovation and Entrepreneurship, which featured New Ventures enterprises among other small businesses presenting their business models to potential investors - check out Linax's great presentation as an example of some of the great material we saw (in portuguese). 

Some may ask what significance this flurry of activity holds. Think-tanks and development organizations seem to constantly be convening forums and conferences around specialized issues, so what is important about small and medium size enterprises (SMEs), and why support them?

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Remember Innovations?  First issued this past March, Innovations: Technology | Governance | Globalization is a relatively new journal from MIT Press about people using technology and new modes of organization to address global challenges.  I wrote about it on NextBillion back then, after Phil Auerswald graciously sent over a pre-publication copy.  At the time, I called it "a must-read for anyone interested in creative, local solutions to the world's problems", and suggested that "its content bridges the gap between 'whatever works' BOP practice and rigorous academic analysis."  More than six months later, I stand by my assessment, in part due to their upcoming issue's focus: microfinance and technology.

Those of us interested in reading more about microfinance and technology will have to wait until next March, but I’m sure there are plenty of NextBillion readers who are practitioners in this emerging field.  If so, consider submitting a paper.  Nick Sullivan, whose forthcoming book You Can Hear Me Now focuses on the impact of cell phone companies in development, is also publisher of Innovations.  He sent over some general criteria for submission:

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Map adjusted to reflect national populations in 2050


Investment in emerging economies is on the rise, following an increasing awareness of the improving business climate in these countries as well as burgeoning, high-growth green sectors. These were the thoughts of participants in a recent session on investment opportunities in emerging markets hosted by WRI's Enterprise and Innovation Program.

The discussion took place on November 9-10 at the Triple Bottom Line Investing (TBLI) Paris Conference, which convened 400 members of the socially-responsible investment (SRI) community to discuss the state and future of the SRI world. Luiz Maia of Rio Bravo Investimentos in Brazil, Pramod Shedde of BTS Investment Advisors Pvt., India and Michael Feldner of InSpire, South Africa were the featured speakers, representing three of the most important economies to watch in coming years. They drew on their experience as fund managers to analyze recent trends in developing country and sustainable investment.


Explaining Growing Interest in Emerging Economy Investing and SRI

The speakers attributed the attractiveness of emerging market investing to the low cost of failure and the high potential returns associated with countries like South Africa and Brazil. They also noted that venture capitalists getting involved in these countries early will have significant leverage in dictating the terms of investment since competition is currently low.

Feldner explained that based on his experience in Africa, investors would be wise to incorporate a sustainability component in their portfolios as well as focusing on bottom of the pyramid (BOP) companies. He used the example of micro loans in Africa to show how, much like the I-Pod in the US, business solutions that worked in one city or village were likely to work in most places, generating the kind of success experienced by the Grameen Bank and other micro-lenders.

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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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In Indonesia, less than half of small businesses have access to formal financing. This fact is staggering given the importance of entrepreneurship in the thriving South Asian economies and it is one of the main reasons why New Ventures hosted its First Annual Investor Forums in India and Indonesia.

Earlier this week, 350 investors, entrepreneurs, policymakers, and business leaders convened to see the twenty new enterprises being added to the New Ventures portfolio. These entrepreneurs represent a variety of sectors like clean energy and ecotourism, but all share a common vision of markets where sustainable practices lead to even greater market value.

Virginia Barreiro has the full story including the six big winners, but check out a few of the comments overheard from her and others attending the forums:

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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.

Let me share with you my state of mind after finishing a careful reading of the full World Bank report on Latin American remittances, Close to Home: The Development Impact of Remittances in Latin America. On the one hand, it is a closely reasoned, and (as far as this non-economist can determine) a fair-minded analysis of the data. I would expect no less from the Bank, and I applaud the authors.

On the other hand, it leaves me unsatisfied, hungry for more. Why? The conclusions and recommendations are appropriate to the evidence examined, but as the quite extensive and prominent news and analysis coverage of this issue suggests, there is an appetite for more, and one wishes that the authors had not felt so constrained, but rather, had taken a more expansive view of the potential for the study. But, for whatever reason, that was not to be, and one can't really criticize them for "staying within the lines."

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Last week, I reported on a conference in Pakistan organized by the Asian Development Bank (and in which I played a small role) to catalyze mobile phone banking in that country. The major banks all showed up, and heard the banking regulator tell them to get with the program. Later that same week, the Pakistan Minister of Information Technology, Awais Ah Khan Leghari, delivered the same message to the telecom regulator and all the major mobile phone carriers, with the Governor of the State Bank in attendance. In effect, both the banking industry and the mobile phone industry, and their regulators, are being told to remove barriers and develop workable systems, so that the huge unbanked population of the country (in which mobile phone use is spreading rapidly) can benefit. The government announced a coordinating committee to facilitate this, as well as a permanent focus group between the IT ministry and the State Bank, as well as a commitment to strengthen IT/telecom infrastructure.

Announcements don’t always translate into action. But Pakistan is moving with impressive speed to cut red tape and link the banking and telecom industries in ways that could have a major impact on commerce, especially for small businesses and ordinary individuals. In Southeast Asia, the Bridge Alliance of seven major mobile carriers is also coordinating technical standards to facilitate cross-border mobile phone banking. In the Philippines, the Smart and Globe mobile carriers now each have millions of customers for their competing mobile financial services models. These and other developments suggest that Asia is developing a lot of momentum, and could turn out to be the launch pad for truly large scale access to financial services for low income populations.

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I attended the press conference Wednesday, at which the new findings on remittances. Interviews with 2500+ migrants in the US, the IADB (research by Bendixen & Associates) give us a statistically valid picture of the dimensions of US-LAC remittances, and the IADB concludes that the number is now around $45 billion dollars (up from the 2004 number, $30 billion), averaging $300 a month (up from the previously reported $200/month), and representing about 10% of the estimated $500 billion in income being earned by the 17.2 million adult LAC-region immigrants. That most of the senders and recipients are un-banked was described as an unrealized business opportunity, and as defining a policy agenda for the IADB.

What struck me in the IADB's press release was the emphasis on the economic benefits of the migrant workers to the US economy, the fact that 90% was staying in the US and being spent here, and the "values" in evidence by the migrants' "strong commitment to family and community," as IADB President Luis Alberto Moreno put it during the press conference. The reason for this interesting formulation was readily apparent when Don Terry, head of IADB's Multilateral Investment Fund (MIF), which has spearheaded the tracking of remittances since 2000, appeared later on the Lou Dobbs show on CNN. Here's the full transcript.

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