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According to Business Day, South Africa's plastic revolution is putting credit card firms in the pink. Cheeky title, but the subject matter is serious business - signaling that the formal economy is growing rapidly in southern Africa. Visa and Mastercard, the industry leaders, report annual growth of its credit and debit card user base anywhere from 9 to 42 percent (depending on the product).

Some growth can be attributed to South Africa's credit-access legislation, which prompted leading banks to introduce formal savings and credit programs for low-income communities. Visa's sub-saharan general manager "expects growth to be in excess of 100% in the region outside South Africa and 150%-200% in some countries."

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BusinessWeek dedicates this week's issue to China and India, and, not surprisingly, did an excellent feature on some Indian BOP success stories - namely Bharti (telecom), Tata (autos), ITC (agriculture), and ICICI (finance).  Those of us following BOP trends over the past months and years will have heard those names before.

"Asking the Right Questions" highlights companies' profits at the BOP - for instance, how Bharti can charge 2 cents per minute and still yield 1 cent profit - and the social benefit.  It reports that farmers affiliated with ITC e-choupal have increased incomes of upwards of 30 percent.  While this figure is substantially higher than what was reported in a What Works case study in 2003, the expansion of e-choupal - and other successful BOP models - may have increased margins as well.

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In Uganda, incumbent telecom MTN has now registered its 2000th entrepreneur in the Village Phone project. MTN's partnership with the Grameen Foundation and local microfinance institutions gives entrepreneurs access to start-up capital ($230) which includes a car battery or solar power panel, a wireless handset, a user manual and a fixed line dedicated simcard that can be loaded with the prepaid airtime.

Entrepreneurs sell airtime, for profit, in their villages - providing a previously unavailable service and creating an income stream at the same time. The Grameen Foundation web site features some of the entrepreneurs' stories. An excerpt:

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For-profit equity funds supporting SME development seem to be in the news lately. The GroFin East Africa Fund provides $22M in SME financing, supported by business mentoring programs. From the GroFin web site:

"As in other developing regions, many East African SMEs are unable to enter the market largely because of a lack of business skills, absence of collateral and high level of perceived risk by financial institutions. The GroFin East Africa SME finance facility was established to service these needs by offering financial and business support services to SMEs within the target regions countries of Uganda, Kenya and Tanzania."

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Aid organizations sometimes face a catch-22: donate much-needed medical or food supplies, addressing today’s need – but by doing so, aid poisons the market for future sales (people won’t pay for what they’ve received free in the past). The Washington Post recently published a controversial article on Niger’s free market policies in the context of an ongoing famine; the Center for Global Development released an excellent report on making markets for vaccines.

After reading these, I can’t help but think of A to Z, the Tanzanian company manufacturing long-lasting, insecticide-treated mosquito nets. Often, these kinds of nets are purchased by aid agencies and distributed free – tending to poison the market for them down the road.

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Innovations in microfinance have been ongoing since its inception in the mid-seventies. Recently, however, a group of microfinance institutions worked with Hewlett-Packard and developed an innovative technology, then piloted it using 3 unique microfinance business models. The technology - the Remote Transaction System - dramatically reduces transactions costs, fraud, and client/lender downtime using off-the-shelf handhelds and already-available GSM network capacity. This innovation, with its potential for broad-based application, could help microfinance leapfrog from small-scale, donor-funded operations into comprehensive financial systems serving developing communities around the world.

Changemakers’ Solutions Mosaic provides us with a useful visual when it comes to business models that work in low-income markets. The mosaic (it probably ought to be called a matrix instead, but oh well) has both X and Y axes; they list distinguishing features of low-income markets and corresponding business principles that are emerging to address them. At the intersection of each row/column, Changemakers provides a link to an enterprise using the business model in question to address that column’s feature. CEMEX, Casas Bahia, and the Aravind Eye Hospital are among the stalwart enterprises listed; others may not have appeared on your radar quite yet. All in all, a very cool tool – check it out. As an aside, what rows or columns would you like to see added to the Mosaic?

(via WorldChanging - thanks, Alex!)

While discussing examples specific to GMOs and other agriculture technology, this paper addresses the broader question: are public-private partnerships (PPPs) simply a new development fad or a promising approach to achieving advances for the poor?

The article points out that while public-private partnerships are not essential to harnessing new technologies for the poor, private companies tend to have better equipment and facilities than the public sector, and the private sector controls some important intellectual property. The work will go much faster and the results will likely be more powerful if the private sector is involved.

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The Conference ended this afternoon, and I just returned from a gala concert held in an old quarry about 30 minutes bus ride from here.  Quite a spectacular setting.  The Bolshoi Ballet Orchestra, two large singers, with a finale of Handel's Water Music with fireworks.  Nice.

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Tallberg, Sweden. Monday August 1, 7:10 pm

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