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Riding the 42 to work last week, I was surprised to see a poster advertising a remittance service offered by Home Depot; familiar orange and white logo, copy half written in English, half in Spanish.

A multi-national retailer testing the remittances waters? A lure to bring in new customers? Is the model in-store credit only? Or what about a discount if used in-store? Would it make sense for other MNCs with locations both in the U.S. and the developing world; Wal-Mart? IKEA? McDonald's?

Certainly makes you think.

A search of homedepot.com yielded no information, and even Goggle left me with no more than the memory of the poster.

A call to Home Depot customer service, a transfer to Home Depot Internet Customer Care, a transfer to the Credit - Early Fraud Warning - Department, and still nothing.

A call back to Customer Service, a referral to the local D.C. store on Rhode Island Ave, a call to the Corporate Office Media Relations with a request for more information (and a promise that they'd get back to me) but still, as of this moment, nothing.

So does Home Depot offer a remittances service?
Is it so new that almost no one in the organization knows about it? Or was it just a Monday morning mirage and a sign that I need to stop skipping breakfast?

If anyone in the NextBillion community has any information, we'd love to hear.

'Til then, stay tuned.

I’ve had a couple emails from NextBillion readers, wondering why I haven’t been blogging much of late. Despite their pleas to the contrary, I’m back. In all seriousness, I’d like to update you all on why I’ve been so conspicuously absent from these pages.

You may remember that the Inter-American Development Bank recently launched a new BOP web site? Well, the Bank is putting out a fresh agenda as its new president settles into office, and messages from the top are all about developing the bottom (of the pyramid). To formally launch the new agenda, IDB will host a major conference June 12-14 here in Washington called, “Building Opportunity for the Majority – Reaching Those at the Base of the Pyramid.”

During the conference, WRI will release a map documenting the size and scope of the BOP in Latin America. Despite years of research and documentation about BOP success stories, there hasn’t been much concrete data on the size of the BOP by country and sector. With our partners at the IDB and the World Bank, WRI has taken the first steps in terms of quantifying the size of the BOP market. The map will be introduced on June 13 (stay tuned to NextBillion for more BOP map details).

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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.

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My eyes were stuck to the news that the UN Secretary General Mr. Kofi Annan, while launching a 100-Dollar Laptop, on the World Summit on the Information Society (WSIS) in Tunis, Tunisia, said “the invention is an impressive technical achievement. The project promises to provide flexible technology that can be used in any place, even in the desert without energy supply”. It is also reported that the U.N. is backing the project even with financial support thinking that it could help to promote education in the Third World. A professor and his team mates of MIT (USA) have claimed the credit for the project and the invention (!).

At the very outset, let me state certain hard facts, which I believe will largely explain the title of today’s write-up. Long 31 years ago, in 1975, I invented the Free-play Radio technology and demonstrated a working model in a jam-packed press conference on 23 July 1975 in Dhaka.

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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.

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Just a quick note for those of you who are interested in venture capital / private equity in emerging economies: IFC and EMPEA hosted the 8th Annual Global Private Equity Conference in Washington, DC last week. Three power points are available on EMPEA's website that have some great quantitative info on sector trends. Take a close look at David Rubenstein's presentation (Carlyle Group) on countries to watch (Argentina & Nigeria, anyone?). In addition, Rubenstein calls for an updated vernacular. I would be interested to know if you agree.

Also, the opinion polls that were highlighted by Michael Klein (IFC) present a window into public opinion of the role of the private sector in development. Complementing this, Sarah Alexander (EMPEA) notes the opinions of investors regarding the success (or failure) of their previous investments in emerging economies that clearly outlines the risk perception (and therefore the challenge) for new investments in emerging economies.

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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.

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A week ago David Wheeler published an opinion piece in the Globe and Mail in which he argues that it is illogical and even arrogant to call for divestment of Sudan, as have done many activists and scholars, notably Eric Reeves  and Peter Kinder. 

This is an issue particularly interesting to me, as I supported Amherst College’s decision in February 2006 to divest from Sudan.  However, Mr. Wheeler’s arguments stopped me in my tracks, and I’ve since realized a number of other problems with divestment in Sudan:  

1. Activists are quick to cite apartheid South Africa as an example of effective divestment in the 1980s, and clamor for the same action towards Sudan.  However, the divestment from Africa was implemented worldwide, whereas today, there is little chance that China (also Malaysia and India) will cease buying Sudanese oil and gas; they have in fact vocally announced their intention to prevent the UN from imposing sanctions (requires TimesSelect subscription).   I suspect that unless divestment is worldwide, the economic result on Sudan’s government will be minimal (See: Cuba).

2.  Mr. Wheeler cites the number of NGOs working in Sudan to promote small-scale entrepreneurship for economic development.  If divestment actually works and cuts off major investment to Sudan, it would destroy any chance of success for the small enterprises that are the very seeds of social improvement. 

3. There is the ethical problem cited by John Silber, former Pres of Boston University, who says that to divest yourself of “immoral” stocks, you either sell them—i.e. hand off the guilt to someone else—or destroy them, and help the company by “reducing the number of stock outstanding.” 

4. In South Africa, resistance and divestment were a homegrown movement.  To divest in Sudan—which will increase the hardship of the Sudanese people beyond what they are already enduring—is presumptuous unless they themselves request such world action. 

After considering all these quite convincing arguments, I decide that there is a place for divestment.  #3 is a completely valid paradox, except that China may yet be persuaded out of financial self-interest-to start pressuring Sudan.   How? The answer is targeted divestment, which addresses #2.  Yes, blindly divesting from all Sudanese companies (or businesses operating there) would indeed hurt SMEs and NGOs, but divestment strategies I’ve seen, say for Amherst College (designed by alum economist Stieglitz) and at Boston University (post-Silber)  specifically target the energy plants providing Sudan’s government with the majority of its revenue; the desired effect of selling stocks is to lower their share value, which “will cost China billions of dollars in equity value…even as China desperately needs Western capitalization for dozens of its domestic behemoths struggling to compete under the terms of the World Trade Organization that China has committed to.” If this works, and China joins the international community opposing the Darfur regime, the effect of sanctions will be much stronger. 

It’s hard for me to respond to #4, except that I’m not convinced that Sudanese people have the ear of the media enough to request world divestment. 

As always, the NB page is for readers to comment.  Criticize my points at will—the blog forum is yours.

Attendees of 2004’s Eradicating Poverty Through Profit conference may have only dim memories of the 3-day BOP bonanza (flashes of Scott Shuster, anyone?), but not me. Which brings me to today’s Wall Street Journal, whose front page featured 3 conference speakers in an article entitled “Entrepreneur Gets Big Banks To Back Very Small Loans.” As you rifle through the Rolodex to check if you know the famous ones, keep an eye out for Vikram Akula, CEO of Chicago-based SKS Microfinance – he’s the article’s main attraction, featured for his innovative microfinance practices which cut out waste and maximize return. Author Eric Bellman gets points in my book for excellent quotes from Citibank’s Robert Annibale and ICICI Bank’s Nachiket Mor.

Didn’t find the stars’ cards in your Rolodex? No worries – Rolodexes are outdated anyway; why aren’t you using LinkedIn or even Facebook? – but the article is not-to-be-overlooked. Some excerpts:

On microfinance: "This can work driven only by greed," says Mr. Akula, a one-time McKinsey & Co. consultant who was born in India and grew up in Schenectady, N.Y. "That's the magic of it."

The [microfinance] programs were run by well-intentioned people, he recalls, but poorly managed. The way that nonprofit organizations "were doing microfinance was incredibly inefficient and hopelessly unscalable," he says. Mr. Akula decided in 1997 to build his own microfinance company from scratch. His goal: to model a business on McDonald's Corp. or Starbucks Corp., using technology and standardized systems to wring enough efficiency out of each tiny transaction to lower costs.

"We are taking microfinance beyond philanthropy," says Robert Annibale, the London-based global director of microfinance at Citigroup. "I may have the smallest business (within Citigroup) but I have the largest potential client group in the world."

More-efficient systems have enabled SKS to drop its annual interest rates to around 24%, from 36% in 1998. That's lower than what most people pay for credit-card debt in the cities. More important, the rate is less than half that charged by many rural loan sharks, who have been blamed in a rash of suicides by farmers who faced ruin in the past year when their crops failed.

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.

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