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With the Year of Microcredit behind us, and investments in the sector accelerating, rarely do you hear criticisms of the much lauded poverty alleviation tool. One notable exception is a recent piece by Thomas Dichter, long-time practitioner in the international development industry and author of Despite Good Intentions: Why Development Assistance to the Third World Has Failed.

He cautions that “microcredit is an almost perfect case of a phenomenon that has come to characterize much of development assistance - a widening gap between reality and propaganda.”

Dichter argues that in the rush to scale up microfinance offerings, many newcomers to the field might actually be doing more harm than good. He points out a number of flaws with the current approach to microfinance, cautioning that there is little historical evidence for the developmental role of credit to the poor; that there has been little rigorous evaluation of the overall benefits of microfinance to a person’s quality of life; and that the poorest of the poor are by definition the ones who "need" credit the most, but can do the least with it.

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Editor's note: We encourage anyone holding a bachelor's degree or who will be earning their B.A. or B.S. in the next few months to apply. The application period for NextBillion.net's internship will end soon! (Updated 12 April 2006)

Interested in working in the BOP realm but not sure how to get started? Here’s an idea: NextBillion.net and its parent project, Development Through Enterprise, is now recruiting interns to work in its Washington, D.C. office.

The 3 to 6 month position(s) will be full-time; successful interns could become full-time, salaried Research Assistants contingent on performance and availability of funds.

Primary responsibilities include working on the NextBillion.net web site and Activity Database, as well as general research and writing support. For more information, including how to apply, please see the job description.

We look forward to seeing your applications!

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You may have noticed a new look to Nextbillion this week. Our crack design team has updated the fonts and colors a bit to make our content more readable. We've also added a few new blog topics - water, housing, and marketing - making it easier for you to find the specific information you're interested in. As we approach our "official" one-year anniversary in early May, we've got some more upgrades in store for you, including enhanced search features and improvements to our user profile pages.

As long as we're in the mood to give our developers more work, we thought we'd find out what features YOU would like to see on Nextbillion. Some of our readers have already suggested the addition of a BOP jobs database. Others have said they would find a database of BOP-related business plan competitions useful. What would you find valuable?

Nextbillion has grown steadily over the past year thanks to loyal readers like you. Here’s your chance to help us make it even better. If you’ve got ideas, leave a comment to this post or email us directly at info@nextbillion.net.

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The fact that poverty alleviation and environmentally conscious policies go hand in hand is nothing new, yet much work is needed to support the development of sustainable entrepreneurs at the Base of the Pyramid. WRI’s New Ventures works with these socially responsible entrepreneurs to sharpen their business plans, network with like-minded professionals and attract venture capital from major investors.

NV is pleased to announce that we are launching a new featured content section on NextBillion to showcase some of our outstanding entrepreneurs who have developed innovative strategies for generating sustainable profits. The site will be loaded with in-depth articles, video, and podcast interviews featuring the next generation of CEOs who are redefining the way businesses interact with the world. You can also visit our Entrepreneur of the Week site for more information on each company we highlight. In discussions on climate change and other intractable global issues, many still see developing countries as part of the problem rather than as a potential source of creative solutions. Fortunately, NV enterprises are breaking new ground in everything from green advertising to zero emissions transportation by harnessing the resources of the BOP and giving new meaning to the phrase “walking the talk.”

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From the Base (of the Pyramid) to the Top (of the Ivory Tower)

Rarely do I get excited about academic journals. They conjure up memories of researching my undergrad political economy thesis (on political conditionality and microfinance). So when the inaugural issue of Innovations crossed my desk, I was naturally skeptical. Well, consider me converted – Innovations is a must-read for anyone interested in creative, local solutions to the world’s problems. Its content bridges the gap between ‘whatever works’ BOP practice and rigorous academic analysis. Not only that - all the articles in the current issue are available for free!

My first clue that this was not a standard (read: boring, niche) academic journal was the list of authors for Issue 1. Stuart Hart and Erik Simanis, Bill Drayton, Martin Fisher, Jean Lanjouw, Zoltan Acs (and more) all show up here. The editors of Innovations are Philip Auerswald (GMU’s Center for Science and Technology Policy) and Iqbal Quadir (Harvard’s Center for Business and Government; founder of Grameen Phone). This list is a who’s who of base of the pyramid, social entrepreneurship, and innovation for development. I’m excited (yes, this stuff excites me).

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John Paul and Julia have both posted information about efficient and low-cost modes of healthcare delivery, such as microfranchising and low-cost BOP products. Microfranchising has built-in incentives to keep costs low and services accountable, making it ideal for delivering service to rural areas with a scarcity of doctors and health monitoring equipment. Low-cost BOP products that diagnose, prevent, and treat

illnesses (e.g. water-borne and malnutrition-caused) are ideal for reducing the size and occurence of pandemics in developing areas.

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1.1 billion people do not have access to safe drinking water, and more than 2 million children die from dirty water and unhygienic sanitation each year. This was the bleak picture painted this week in Mexico City during the 4th World Water Forum. But is privatization the answer?

The Globalisation Institute thinks so. This week they released a report advocating greater use of private-sector management and investment in developing country water systems. Water for Life blames the current problems on the fact that 95% of the world's potable water is supplied by governments rather than by properly regulated private sector providers.

"Government provision in water has overseen millions of deaths through poor quality and lack of sanitation. Bringing in private sector expertise and investment is needed, both to meet the UN's Millennium Development Goals and to actively contribute towards social justice the world over. In the vast majority of cases, where the private sector has been called upon, it has delivered the goods – even in cases decried by critics as failures."

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Are you aware of all the social entrepreurship-related competitions and awards out there? You've probably heard something about contests by Ashoka, BiD Challenge, and the World Bank's Development Marketplace, but there are lesser known ones as well.

I've been compiling the information on about two dozen with information on how to apply, deadlines, judging criteria, and awards. Some of these contests are tech-related; some are microcredit-specific; some have a strong environmental component; others are for students only.

My questions to faithful Nextbillion readers:

1. Would a database of information for all BOP-related competitions be useful to you?

2. How many of you are aspiring/current entrepreneurs?

3. Would a space on Nextbillion.net for sharing business problems and advice with other contestants be useful? Check out Ashoka's Changemakers forum to get an idea.

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Last week, John, Cory, and I went to a symposium on the BOP hosted by the Bretton Woods Committee. The symposium was paneled by four individuals from academia, an MNC, a technical assistance non-profit, and a small social for-profit corporation. Kai Schmidtz, EVP and COO of MicroFinance International Corporation (MFIc), delivered a fascinating presentation on MFIc’s conceptualization of remittance flows as a potentially enormous source of capital for MFIs in Latin America. MFIc, a social, for-profit corporation, positions itself as “the natural financial bridge between the developed and developing worlds.” Remittance funds--USD 52 billion in remittances were transferred to Latin America from the US in 2005--typically accumulate in money transfer systems due to the lag of about three days between the time when a remittance is sent and received. These accumulated, “floating” funds could be made available for lending to MFIs. MFIc has developed a simple, web-based platform, the Electronic Settlement System, that allows MFIs to process and administer payments; interact with the US banking system; safely maintain interest-generating remittance funds in the US banking system; and use the capital shared by MFIs to create lending programs for participating MFIs.

Bruce McNamer (TechnoServe), and Jeff Morgan (Mars, Inc.), delivered presentations on their business and technical assistance programs for farmers. Mars participates in an industry-wide protocol among cocoa buyers to support higher wages and environmentally sustainable farming practices. Part of Mars’ efforts to fulfill protocol requirements includes the establishment of the Sustainable Tree Crops Program, a public-private partnership in Cameroon. STCP provides direct assistance to farmer organizations on business planning, marketing, accounting, and farmer co-ops that can increase farmers’ negotiating power and profits.

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Recent news stories in the New York Times, Red Herring, the Economist, and others note new features that allow cellular phones to serve as mobile wallets. While no article has said so explicitly, the potential application to BOP markets is huge. Cell phones are cheaper, hardier, and more functional than ever – and low-income consumers are snapping them up, driving penetration growth rates to astronomical levels in Africa, Asia, and Latin America. Meanwhile, a lack of existing credit card infrastructure opens the door wide for cell phone-enabled wallets, which may leapfrog more naturally than in developed markets. Financial services at the BOP? With apologies to John Donne, the ring tone tolls for thee.

Transforming cell phones into wallets involves embedding contactless chips into the phone during assembly; Nokia is already planning to make this standard on all their handsets. The Economist describes how it works:

“These contactless cards do not need batteries. Instead, when a card is placed close to a reader an electrical current is induced which powers up the card and enables it to exchange short bursts of data with the reader. Such induction happens only over very short distances, which is why close proximity between card and reader is required.”

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