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The name of this company, Ouro Verde, literally translates to "Green Gold," referring to the environmental and economic benefits of the sustainably harvested Brazil nut. One of the founders discusses the history and future plans of Ouro Verde in a recent interview.

In 2002, an adventurous professor from the University of Sao Paulo and his wife moved to the rural southern region of the Amazon. They took with them little more than seed financing from the Brazilian government and a dream of helping to reverse the resource extraction practices that threatened the rainforests. Five years later, Luiz Fernando Laranja da Fonseca is the director of a company that has helped to revitalize the declining Brazil nut industry of Mato Grosso in a way that protects the valuable regional ecosystem services and generates income for local farmers.

The name of Luiz’s company, Ouro Verde, literally translates to “Green Gold,” an apt title given the value his company has found in sustainably harvesting the Brazil nut. This highly versatile food product is native to the region of Mato Grosso, where Ouro Verde’s primary operations are located. The company gives local farmers a viable alternative to the practice of unsustainable logging – suppliers harvest the Brazil nut which Ouro Verde is able to buy at a premium, adding value to the product by manufacturing Brazil nut-based cooking oils, butters and granulated powders. Ouro Verde goes further to ensure that a significant portion of its profits are shared with producers and reinvested in the community, as it has effectively cut out expensive middlemen by creating partnerships with local municipal governments to provide transportation and direct market access.

Aside from the clear social and environmental benefits Ouro Verde generates through its fair trade practices, Luiz adds that his company is expanding rapidly as it has tapped into a profitable and growing niche market of health conscious consumers. His company’s market research has found that consumers prefer Brazil nut products as a healthy, omega 3 rich substitute for conventional cooking oils and food products. Despite the difficulties many Brazilian entrepreneurs face in trying to start up a busienss, Ouro Verde has been able to successfully create a presence in key markets. In Brasilia for example, Ouro Verde products were bought by vendors at 30 points of sale within the first three months of its arrival in the city. Ouro Verde products are now sold in over 100 stores throughout the country, and after being awarded as a winning enterprise of the New Ventures Brazil Investor Forum in 2006, the company has gained interest from a number of potential investors. Luiz is now seeking a US$1 million investment over the next three years to help Ouro Verde scale up and begin exporting its growing selection of foods. The company aims to ambitiously expand into international markets this year, and is currently in discussions with potential buyers in Canada, China and the US, where its products recently gained FDA approval. Luiz is also looking to Europe as an important market particularly as organic certification from Ecocert will help his enterprise tap into the region’s mature consumer demand for sustainable goods.

When Luiz and his wife, Ana Luisa, named their business Ouro Verde in 2002, they did not imagine how fitting that brand would later become. Five years later, as the company has produced substantial triple bottom-line benefits for consumers and the communities of Mato Grosso, it is clear that the two have indeed made the simple Brazil nut into “Green Gold.”

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Abhay Clinics in India reaches BOP markets through a business model not yet discussed on NextBillion--product franchising. Whereas business franchisors provide franchisees with a complete business format--from administrative processes to branding and products--manufacturers that run product franchises license existing retailers to sell products under a franchise brand.

Since product franchising is a way for manufacturers to distribute their products through existing channels, it's of course most appropriate in markets with existing retailers able to incorporate a given product into their offerings. Product franchising is compelling as a less intensive undertaking than business franchising, but may not work as a strategy for reaching rural communities that don't have sufficient commercial infrastructure. That said, there is plenty of demand among existing retailers for new products to offer their customers.

The following is a brief profile of Abhay Clinics, unique among the franchises we've discussed on NextBillion as having been able to reach profitability in only 3 years of operation.

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Pablo was kind enough to forward me the latest issue of A Closer Look, Aspen Institute's monthly briefing on the latest in MBA education.  This month's topic is BOP in the classroom -- check out the PDF, which is posted online via Aspen's Business and Society Program.

It's a well-done issue, featuring short interviews with Stuart Hart and Aneel Karnani as well as descriptions of actual BOP classes offered throughout the world.  To me, it's interesting to read about BOP courses offered at Stellenbosch (in South Africa), San Francisco State, Vanderbilt, and Thunderbird -- usually I read more about the BOP programs at Cornell and Michigan.

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Provocative, yes, but it has become fashionable to ask this question in other subsections of the financial community - the state of the venture capital industry and more recently, the private equity industry have been heavily and often bitterly debated.

It seems timely to revisit the need for scrutiny in the microfinance industry as it enters the mainstream and to hopefully broaden the debate beyond academic circles and development institutions. CGAP this month published a focus note analyzing the Compartamos IPO, essentially seeking to answer the question of whether the exceptionally high profits Compartamos has earned for its private shareholders can be justified for an organization that is supposed to have the social interests of its clients in mind. CGAP's answer, while not completely damning, is not a vindication for Compartamos either - they conclude that the NGO could have reasonably charged lower interest rates that would have decreased profits but allowed poor clients to keep more of their earnings.

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Josh Weissburg, a Project Associate at The Aspen Institute has shared his perspective on Prof. Aneel Karnani’s SSIR article “Microcredit Misses Its Mark". He argues that the poor need options, not prescriptions.

Josh acknowledges merit in Prof. Aneel Karnani’s article that we shouldn’t romanticize the poor as entrepreneurs. Bedrock economic principles—such as economies of scale—still apply in the developing world, and access to credit alone does not impart the specialized skills and financial wherewithal that a successful microentrepreneur would need to grow her business. Also, even in wealthy, well-educated countries, some 90% of the labor force are employees, not entrepreneurs.

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REMINDER: This event will be held on Wednesday. Please RSVP if possible, and feel free to bring friends/colleagues.

Also, it's worth noting that early registration for September's BOP conference, "Business With 4 Billion: Creating Mutual Value at the Base of the Pyramid," will close on Friday. More info at the BOP 2007 web site.

While interest and debate about the base of the pyramid (BoP) as a poverty alleviation perspective is growing, most of the current research has focused on market entry strategies for organizations interested in exploring these markets. Indeed, a deep exploration of the unique poverty alleviation implications of a BoP perspective has lagged. With organizations from the development, non-profit, and private sectors increasingly incorporating BoP approaches in their strategies, this gap in our knowledge is increasingly untenable.

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I just finished reading Freakonomics, the NY Times Bestseller written by “rogue economist” Steven Levitt and journalist Stephen J. Dubner. It’s about using economic thinking and data analysis to answer practical questions and challenge conventional wisdom. Truly, there is nothing I love more than folks who consciously and skillfully upend easy assumptions. Except perhaps, those who find ways to prove what works using hard data. In the words of the recently-liberated Paris Hilton, “that’s hot.”

As a result, I suppose that it’s not surprising that Freakonomics has inspired me to tackle two of the most difficult questions on my list of twenty:

1. How do you define success at the BoP?
2. How do you quantify it?

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Ironically, as Nitin posted his piece on the $3000 1-lakh car, I came across this article, Just What Overcrowded, Polluted India Didn't Need - The $3000 Car, in The Independent.

Well, we never said it wasn't controversial. In fact, the whole thing gives me pause. On the one hand, who are we - especially when "we" means Western environmentalists - to tell others that they shouldn't enjoy the same luxuries we do? In this case, environmentalists rightly point out that increasing the number of cars on the road in India will dramatically increase the amount of greenhouse gas emissions going into the atmosphere. But the West's own automotive revolution - started early last century - is a major culprit in the dramatic growth of global warming. Sounds like a case of hypocrisy.

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There has been considerable enthusiasm - including on Nextbillion.net - about Tata's much hyped Rs. 100,000 car. Nextbillion post - India's Model T: Tata's $2000 car out by 2008 - has been on the Most Popular list of posts for as long as I can remember!

While some are enthused by the project - and others are not, what cannot be denied is that the Tata project represents a paradigm shift in the automotive industry. The project has been in the news because of its agressive pricing, controversies over land acquisition and its impact on traffic congestion and pollution.

The Times of India reports:

Urban planners might be appalled at what this could mean for traffic congestion and parking, but companies - and consumers - are raring to go. The first launch will be that of Tata Motors' much-talked-about Rs 1 lakh car. But in just a couple of years, you might have half-a-dozen such vehicles to choose from. Nissan Renault on Thursday joined the bandwagon, unveiling plans for a $3,000 (around Rs 1.25 lakh) car for Indian roads.

Nissan Renault is expected to team up with Indian manufacturer Mahindra & Mahindra to enter the sub-Rs 1.5 lakh segment in which the likes of Hero Group, Bajaj Auto and Maruti Suzuki, the original aam admi car manufacturer, have already evinced interest. Even Xenetis, a low-cost PC maker, intends to be in this segment.

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Something that has consistently bothered me since I began exploring the “business for social good” continuum is the notion (implied, but not often stated), that the government has been usurped as the primary provider of public goods. Government has failed and private enterprise must take over. Conventional wisdom dictates that government bureaucracies aren’t facile enough to meet the dynamic needs of the populace. In the words of David Bornstein, author of How to Change the World: Social Entrepreneurs and the Power of New Ideas:

Today, many people do not believe that we can alleviate poverty, or fix the education system, or improve the government, or find better ways to deal with many social problems. Amidst this disenchantment with government, the field of social entrepreneurship has emerged…..But in order to [solve these problems] society needs to think differently about the approach.
(Source: article introducing How to Change the World: Social Entrepreneurs and the Power of New Ideas by David Bornstein)

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