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Emeka Okafor from the blog, Timbuktu Chronicles, recently wrote about an extraordinary service in Bangladesh, which promises to provide significant benefits to the BOP.  GrameenPhone Ltd., Bangledesh’s largest cellular provider, has announced a partnership with MIT-based CellBazaar to produce a virtual marketplace, a la Craig’s List, that uses cell phones instead of computers.  As The New Nation, a newspaper in Bangladesh, reports, “The system is designed to be as simple as possible: it will not handle transactions, but will simply put buyers and sellers in contact with each other via mobile phone. It will be possible to access the system using just text messages.”  The CEO of CellBazaar, Kamal Quadir, told The New Nation that the service is “a phone-based equivalent of newspaper classified advertisements. If somebody wants to sell a bicycle, for example, they can list it in CellBazaar, where it will be visible to potential buyers.”

In Bangladesh, which boasts 11.6 million cell phone users, such a service has the potential to radically transform the way business is conducted.  Here’s how: Allowing buyer and seller to interact directly cuts out the middle man, guaranteeing that the seller gets a fair, market value price for his goods.  It also links together people who would otherwise not be in contact, creating business networks that encourage growth and expansion.

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If you were given the choice, what would you rather do: (1) Start a business in São Paulo, Brazil’s economic capital, or (2) Wait in a thirty day line at the Department of Motor Vehicles in Washington DC? Although number 2 sounds tempting, I would suspect that most everyone would opt to start a business in São Paulo. But don’t make up your mind just yet; there is reason to believe that waiting in line at the DMV is actually the better choice. According to a report released by the World Bank on Wednesday, it takes a staggering 152 days to start a business in São Paulo. That is, to get the proper authorization from local, state, and federal authorities, you need upwards of five months and a whole lot of patience. In São Paulo, bureaucracy is thick—in fact, it’s so thick that it makes the DMV look like the essence of efficiency.

The World Bank’s report, Doing Business in Brazil, analyzes the business climates in 13 Brazilian municipalities and states, ranking them from best to worst. I must confess that I was surprised to see Manuas, a “wild-west” boomtown in the state of Amazonas, at the top of the list. But after looking over the data more carefully, I noticed that Manaus is a duty free zone, which means that its businesses enjoy the lowest tax rates in the nation. The report notes that on average, Brazilian businesses in the surveyed cities have a tax burden of 147 %! Look out Taxachussetts, businesses in Brazil are actually required to pay more in taxes than they earn. In Rio de Janeiro, where taxes are highest, businesses that meet all of their financial obligations are obliged to pay more than double their gross profit!

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China has a huge impending energy problem.  While the US is by far the leader in GHG emissions worldwide, China - with its high growth and booming population - is quickly becoming the elephant in the room during discussions on global energy policy.  Issues of rising demand and environmentally-damaging energy sources are not merely confined to urban areas as the country's rural communities often find their production capabilities outstripping available infrastructure.  This phenomenon forces many families outside of cities to burn inefficient materials such as wood and straw for energy in the absence of alternatives.  Luckily the country's insatiable energy needs are often matched by its pool of entrepreneurial talent. 

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In my relentless search to find reasons to move to the fair city of Cape Town (as if biodiversity-friendly winelands, Lion's Head & the 12 Apostles, and the World Cup semi-finals in 2010 weren't enough), I regularly read South Africa's Mail & Guardian.   I am rarely disappointed and today's article on specialized "retail development bonds" that provide a mechanism to support small business growth is no exception.  The piece entitled, "A Friendlier Bang for Your Buck", discusses the finance gap that we have talked so much about on NextBillion (Shell Interview, Al Hammond on Mesofinance).  The M & G notes that while SRIs remain strong, there is a need to develop funding for projects under $3 million.  To this end, a law professor at American University is developing a government bond, which, "provides a semi-annual return equal to the government’s retail bond, the underlying funds being used to develop small and micro- enterprise business and low-income housing in South Africa."  While the product is not available yet, its potential to attract money from a range of investors, including corporations and the South African diaspora makes it an intriguing investment mechanism aimed at developing local entrepreneurial talent and drawing funding to low-income communities, while providing near commercial returns.

What do shrimp fishermen in Louisiana have in common with cotton farmers in Burkina Faso? Both have suffered serious financial setbacks because of American farm subsidies. And with the breakdown of the Doha Round earlier this week, both will continue to suffer well into the foreseeable future.

Currently America’s federal farm policy “rewards farmers for the amount of corn they grow, not how they grow it.” What this means is that farmers use extra fertilizer on their crops in order to ensure that they have an abundant harvest. During the spring, when heavy rains pass over the Midwest, this extra fertilizer runs off into the Mississippi River and flows into the Gulf of Mexico. “The fertilizer has the same effect in the Gulf as it does on the Midwest fields it came from,” National Public Radio reports. “But instead of giving corn a growth spurt, the nitrogen fuels massive algae blooms that then die and suck all of the oxygen out of the water as they decompose.” This lack of oxygen has created a dead zone thousands of square miles in size, which cannot sustain aquatic life. For shrimp fishermen who depend on sea life for their livelihood, farm subsidies are actually sinking their businesses. As Doug Daigle of the Environmental Protection Agency told NPR, “if the dead zone continues to grow, it could eventually cause a complete collapse of the Gulf Coast ecosystem. At stake, among other things, is Louisiana's $2.3-billion fishery.”

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Readers of nextbillion may have noticed recently that the company profiles I've been blogging on every week have taken on a new theme. This is because the New Ventures program (also part of the World Resources Institute and a partner of nextbillion) decided to make these featured articles on up and coming businesses into a series. Given the recent development, this is a good time to reiterate why we work with these emerging economy SMEs and what we mean when we call them "Rising Ventures."

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In 1905, Upton Sinclair produced his seminal work, The Jungle, which first exposed the American public to the wretched and foul conditions of the meatpacking industry.  Since its publication, industrial slaughter houses in this country have improved considerably, becoming more sanitary and humane.  But as Eric Schlosser, the author of Fast Food Nation, has pointed out, they still have a long way to go.  Until 1997, when the USDA stepped in and tightened regulations, about 80% of American cattle were fed slaughterhouse wastes—“the rendered remains of dead sheep and dead cattle.”  According to Schlosser, since the practice came to an end, “Millions of dead cats and dead dogs, purchased from animal shelters, are being fed to cattle each year, along with dead ducks, geese, elk and deer.”

I must confess that such horrific stories do not deter me from eating a juicy steak cooked to a pink, medium rare.  After all, shouldn’t we give the meat industry props for being so resourceful with waste?  Isn’t this what sustainability is all about?

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This Saturday the New York Times jumped on the biodiesel bandwagon, publishing this article on Jim Nornman and his experience driving a car powered by vegetable oil.  Here at Nextbillion, we have covered biodiesel and its use in the developing world on two separate occasions—in Rwanda’s prisons and in South Africa’s automobiles.  Now I would like to cover it once more.  After doing a few quick google searches, I discovered several news stories on a Vietnamese company doing some interesting business.  The company is Agifish, a catfish processor in the Mekong Delta, which recently announced that it would begin producing biodiesel from left over catfish guts.

For some time now, Agfish has been using the fat from catfish to power the pumps at its fish farms in this southern region of Vietnam.  The company’s original business model focused on producing an array of culinary delights, like sweet and sour catfish and breaded filets of catfish.  When the company learned that it could cut costs by reusing catfish scraps, it invested in a biofuel digester which uses bacteria to break down organic waste into methane.

However, it wasn’t until recently that the company realized that it could actually turn a profit by producing and selling fuel made from catfish scraps.  According to Nguyen Dinh Huan, the Deputy Director of Agfish, the company has sent catfish fuel samples to laboratories in Ho Chi Minh City, where government officials have inspected the product.

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In this week’s cover story, Emerging Giants, Business Week explores the phenomenon of “innovation blowback.” For those of you not familiar with the term—like me only 15 minutes ago—innovation blowback refers to businesses from the developing world that expand into overseas markets and go head-to-head with established multi-national corporations. From what I can tell, the term was coined this year by John Seeley Brown and John Hagel in The McKinsey Quarterly. (To see Nextbillion’s review of their article, Innovation Blowback: Disruptive management practices from Asia, click here.)

So how is it possible that companies from the developing world out compete multi-nationals that have long dominated the market? The answer, it seems, is that companies that succeed in places where it is trickier to do business are more adaptable and, consequently, more likely to thrive in the hyper competitive global marketplace. “Hardscrabble origins,” Business Week writes, “can be a vital source of strength. These companies have learned to make money by developing reliable, easy-to-use goods and services at very low prices.”

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As I've noted before, what is often most fascinating about the work we do is realizing how adaptive the entrepreneurial spirit can be and how given a market with considerably less resources, entrepreneurs in emerging economies are finding creative ways to provide what were previously considered developed country services at heavily reduced rates. I thought about this when I was leafing through the latest issue of Forbes yesterday and ran across an article on Earthlink's next big steps in ICT. Two of its new major initiatives are designed to lower the price of internet usage to make access more affordable for a wider audience. Earthlink has created a wi-fi cloud that will soon encompass all of Anaheim (with other cities to follow) which can be accessed for $22 per month. For the second initiative, the company is teaming up with a South Korean cellular provider to distribute prepaid packages or "buckets" of phone minutes at a reduced price. What really interested me in reading this is that an ICT company in the Philippines is already beginning to provide these services at a fraction of the cost. I wondered if Earthlink had already heard of SMART Communications...

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