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I was just finishing college in the late 90s when I first heard of the phrase ‘race to the bottom’. A few activist friends of mine had arranged a screening of Global Village or Global Pillage, an award-winning documentary that examined the harsh consequences of unchecked globalization. In spite of its underlying optimistic message about community organizing and empowerment, it painted a bleak picture of the private sector’s unquenchable thirst for profit and market domination.

“Today's global economy lets corporations pit workers and communities against each other to see who will provide the lowest wages, most abusable workers, cheapest environmental costs, and biggest subsidies for corporations. The result: a race to the bottom in which conditions for all tend to fall toward the poorest and most desperate.”

At the time there seemed to be a certain inevitability to it all, and part of me couldn’t help but hope that corporations sped up their efforts, because the sooner they hit the bottom, the sooner they could start moving back towards the top. But then a funny thing happened on the way to the bottom - a number of companies began to realize that the quest for continued profitability and growth in the next century might actually lie at the top!

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Thomas Dichter, a returned Peace Corps volunteer and development consultant to USAID and the World Bank, has written what Alex aptly calls a “provocative and controversial essay…in which he claims that microcredit is not nearly as good a tool as it's made out to be, and that what the world's poorest most need are good governance, clearer laws, less corruption and more development.” NextBillion readers will find Dichter’s essay, Hype and Hope: The Worrisome State of the Microcredit Movement, interesting in part because he calls for increased attention to mesofinance, an area we’ve written about before. You may recall that mesofinance is the oft-unserved gap between small microfinance (<$5000) and commercial finance (>$500,000). Dichter accuses MFIs of leaving promising entrepreneurs behind because “they are not poor enough”:

Indeed, in part because of what has been aptly called "microfinance evangelism," the prospect of significant returns from microcredit made available to solid enterprises has become less likely. This is because those who can really leverage a small loan -somewhere between poor and well-off - who have already got a genuine business going against all odds are often left out of microcredit basically because they are not poor enough. (My emphasis)

Dichter concludes:

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Just a short posting for those of you interested on what is being done to scale up biodiversity friendly businesses.  This was sent me to me by Mareike Hussels my colleague at WRI's New Ventures program, a business accellerator for sustainable business.  She attended an event in Brazil on biodiversity and enterprise creation and was particularly impressed by the caliber of the participants at the event.  Mareike thought that the meeting could represent the start of a renewed interest in SMEs that offer biodiversity-related services.  Check it out to see if you agree.

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Sara’s recent post about the mainstreaming of green investment got me thinking about the mainstreaming of base of the pyramid (BOP) trends. Is it fair to use that word for such a niche hypothesis? Two projects, both with new web sites, suggest that it may be.

Enterprise for a Sustainable World and the BOP Protocol are both outgrowths of Stuart Hart’s BOP center of excellence based at Cornell University. (Full disclosure: World Resources Institute is an institutional partner in both projects.) E4SW, as the first is called, is a recently-formed non-profit group headed up by Stu to undertake “action research, education, and organizational change for corporations (as well as governments and NGOs) interested in transformation toward sustainability.” They’re not the first group to do this, but an excerpt of their mission statement leads me to believe that they might be onto something bigger and better:

We believe that leapfrogging to inherently clean technologies through disruptive business models at the base of the pyramid can enable companies to confront directly the two biggest problems facing humanity: poverty and global-scale environmental degradation. These also provide the basis for the repositioning and growth that will be needed for companies to thrive in the future.

This two-sentence excerpt effectively sums up much of Hart’s research and writing – some of which can be found in the E4SW Papers section. His staff includes NextBillion members/allies Patrick Donohue and Justin DeKoszmovszky, both of whom have a wealth of on-the-ground BOP experience. Keep an eye on these guys – they’re doing great things. (Patrick’s off to India shortly to work with Solae’s BOP project).

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Three members of the New Ventures team (Virginia Barreiro, Mareike Hussels, and Rodrigo Villar) attended the recent Latin American Venture Capital Association (LAVCA) meeting in Belo Horizonte, Brazil. The conference featured more than 20 speakers from venture capital firms and development banks (incl. Stratus, Actis, MIF, & Aureos) who highlighted new trends in the investment environment in Latin America and how policy can support its growth.

David Thomas, Chairman of LAVCA and Managing Director of Intel Capital Latin America opened the conference, followed by the keynote speaker Ricardo Malavazi, Director of Petros, the pension fund of Brazil’s national oil company Petrobras and the second largest pension fund in Brazil. In order to diversify their portfolio, Petros has very recently entered the Private Equity market with 5-10% of their investment. It will be interesting to see if other pension funds follow suit and insert new capital into the private equity market. Other panelists spoke to the importance of raising the Brazil’s profile as an investment destination. Álvaro Gonçalves, President of the Brazilian Association for Venture Capital and Private Equity stressed the importance of national and regional associations working together to promote Brazil’s many success stories abroad.

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E-commerce has long been hailed as a means of providing sustainable livelihoods to artisans in developing countries. Historically, these artisans have marketed their wares directly to local consumers, tourists and to export markets. To reach these global markets, local artisans have had to work with middlemen who mark up the prices significantly, leaving the local producer with only a fraction of the profit. Over the past decade, however, a number of initiatives have begun to harness ICTs to give artisans a competitive alternative to this exploitative system.

The most exciting and useful of these tools that I’ve found is CatGen, an open-source e-commerce platform created by PEOPLink. I had a chance to hear Dan Salcedo, founder of PEOPLink, talk about his software yesterday at USAID. Based on the information presented, CatGen has proved to be a great success.

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In the last couple of weeks a number of issues near and dear to my heart
have gone mainstream...or at least they are getting a little more of the
limelight, which is fine by me. But, how did this happen? And what
does it have to do with emerging market investments in sustainable enterprise?

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We received a notice recently that the Acumen Fund was celebrating its 5-year birthday. That's remarkable, because the organization, with a mission to create and support sustainable enterprises that deliver affordable healthcare, water, and housing to the poor, has accomplished an amazing amount in so short a time, including:

• More than six million Africans each year have access to life-saving long-lasting insecticide-treated malaria bednets.
• Almost 7,000 farmers have seen their crops and incomes improve significantly through the purchase of drip irrigation systems.
• 12,000 women in Pakistan have access to credit and borrowed to build their small businesses and improve their incomes.
• 430,000 low-cost healthcare services have been provided to rural Kenyans
• 18,000 South Africans are receiving anti-retroviral treatments through networks of private clinics.
• More than 5,000 people in Southern India have access to affordable, clean water for the first time.
• More than 2,000 people, most of them women, now have steady jobs.

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The Kenyan Development Network Consortium held a “co-creation” workshop on Friday and Saturday, April 7-8, in Washington DC. (KDNC was founded by Macharia Waruingi, a long-time member of NextBillion.) Participants were mostly members of the Kenyan diaspora, working professionals with a passionate interest in bringing development benefits to Kenya through private sector vehicles. The event’s agenda focused on the health, agriculture, housing and ICT sectors, and appropriately drew attendees whose careers were in these fields.

Dr. Wilson Endege, a biotechnology researcher at the Harvard Institute of Proteomics, and Sam Njoroge, a Manufacturing Engineer of medical devices at MEDEFAB, discussed the possibility of establishing in-country manufacturing facilities for basic drugs and devices. The workshop was attended by several highly experienced ICT professionals and entrepreneurs who discussed ideas to bring connectivity to Kenya. Present were Joseph Manthi, CEO of Wanza Technologies; William S. Odongo, President of TKN Global Spectrum, a company specializing in management information systems (MIS) applications; and Peter S. Maina, President and COO of GeoNet (satellite-enabled low cost, high speed Internet and telephony).

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We’re happy to announce that NextBillion.net has been nominated for Best Business Blog of 2006 in the 10th Annual Webby Awards! Hailed as the "Online Oscars" by Time Magazine, The Webby Awards is the leading international award honoring excellence in Web design, creativity, usability and functionality.

As a nominee for a Webby Award, NextBillion.net is eligible to win a People's Voice Award. Voting is open to the public from April 11th to May 5th. Show your support of NextBillion.net by casting your vote today! Winners will be announced May 9th.

"The Webby Awards honors the outstanding web sites that are setting the standards for the Internet," said Tiffany Shlain, founder and ambassador of The Webby Awards. "Nextbillion.net’s Webby Award nomination is a testament to the skill, ingenuity, and vision of its creators."

We’re thrilled to be nominated, and want to thank all our loyal readers and members for helping make NextBillion.net such a success! We look forward to making the site even more useful to you in the coming year.

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