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It was a high profile news day for the development-through-enterprise community today.  First, a report was published at the World Economic Forum in Davos, Switzerland entitled The Next Billions: Unleashing Business Potential in Untapped Markets.  The report was produced by the Boston Consulting Group; Francisco and I were able to see an early version - we encourage everyone to check it out.

Is there much new here?  Yes and no.  There's not much in the way of new data, nor is there much as far as new analysis (if you've been following NextBillion.net at all, most of the points in here are old hat.)  Still, for a report to come out at the World Economic Forum about the BoP and specifically, the "next billions" is huge.  Important people go to Davos.  They listen.  Then they go back home and, in theory, they act.  So this is a huge day for the development through enterprise world.  I got an e-mail from one colleague calling it a "stop the presses" moment.  As we have no actual presses here at NextBillion, perhaps not literally, but you get the idea.

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Guest Blogger Lesley Pories is a Deshpande Foundation Sandbox Fellow, working with the Water Literacy Foundation in India.

Before taking on this role, Lesley worked as a Research Analyst with the People and Ecosystems Program at the World Resources Institute. A graduate of Emory University, she double-majored in International Studies and English and minored in French.

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Guest Blogger Lesley Pories is a Deshpande Foundation Sandbox Fellow, working with the Water Literacy Foundation in India.

Before taking on this role, Lesley worked as a Research Analyst with the People and Ecosystems Program at the World Resources Institute. A graduate of Emory University, she double-majored in International Studies and English and minored in French.

By Lesley Pories
 

Small excited confusion abounds as people scan the collection of buses for the signs that designate which program each bus is going to see: livelihoods, education, health or agriculture.  But soon enough, people are generally settled in and the still-inevitable puffs of smoke let everyone know the buses are moving and the day has officially begun.

I write from Day 1 of Deshpande Foundation's Development Dialogue, their second annual collection of NGOs, academics, businesspeople and socially-minded others who share an interest in the development of Northern Karnataka (nicknamed the "Sandbox" by the Deshpande Foundation), India.  In an earlier guest blog post, I described the work of the Deshpande Foundation and its commitment to promoting development through entrepreneurship. 

As a Sandbox Fellow working at local water conservation NGO Water Literacy Foundation (WLF), courtesy of the Deshpande Foundation, I'd been hearing about this event for months. It was both exhilarating as and exhausting to help it take off.

The morning started with the 250+ participants piling into buses that spent the morning visiting one or two sites of Deshpande-funded NGO work in the nearby area.  My group started with a brief visit to see the work of my NGO, WLF, in nearby Girls English High School in Deshpande-Nagar, Hubli.  We arrived before classes had begun and so avoided too much awed giggling from the schoolchildren.  WLF's Director (my boss), Ayyappa Masagi, showed and described the system we had installed for catching rainwater from the roofs and channeling it the bore-well instead of letting it run off the side of the building, unused.  I piped in with the occasional English-to-English translation for our non-Indian guests (1 lakh = 100,000, for example), and overall the visitors seemed to appreciate the system at work.  A representative from the school was also there to answer more questions about the use of the water and its impact on the school's functioning.

From there, we got back into the buses and headed out to Chandapur village in Haveri District, where we were visiting a project site of Habitat for Humanity/India and NEEDS, a local self-help group that invited the international NGO to assist them in meeting the housing needs of its community.  A simple but nice welcoming ceremony was laid out for us in Chandapur, where we heard some thank you speeches before walking around the village to view 3 homes that Habitat was in the process of building.  Each home was at a different stage in the process, so it was kind of like watching a home go up in slow motion.  It brought me back to the Habitat builds I had done back in college, and I was quick to speak to the main people and volunteer to bring a group of us Americans to help build a house one of these weekends.  Though I was also aware I'd be coming back to this village anyway, as my organization was to assist in the project by outfitting these new homes with rainwater harvesting systems...

The sun had been hot, and the ride back to Hubli was quieter than the previous journey, where everyone had been in an excited mood and eager to learn from the experience of everyone around them.

After lunch, people had the opportunity to walk around various booths and learn about the projects that had been carried out this year by LEAD students.  LEAD is another of the Deshpande Foundation's programs, in which students with ideas apply for a very small stipend to carry out a social idea or innovation in a nearby community.  In a culture which is only beginning to inculcate the value of community service, these students had reached out to slum communities and other target audiences for a number of different projects, ranging from children's education to nutrition to sanitation to water conservation to the arts, etc. 

"I'm running around getting so many ideas for new partnerships, and its really inspiring me," commented Polai Av of the Stevens Center for Innovation at the University of Southern California.  "Although, it's hard NOT to be inspired here."

Some of these projects included selling things - I am now the proud owner of a small vase that was painted by an orphan after a group of LEAD students came to his orphanage 6 times in one month to teach painting on ceramics.  The profits from my purchase are going back to the orphanage.  Who could resist that?

The Dialogue was officially kicked off in the evening with some remarks by the Deshpande Foundation's co-founder, Gururaj "Desh" Deshpande of Sycamore Networks.  Over the course of his words of welcome, Deshpande outlined his vision for the Sandbox for 2020 and the Development Dialogue's role in that vision: northwest Karnataka as one of the best experimental sandboxes for social entrepreneurship in the world, with the Development Dialogue sharing best practices all over the world and therefore playing its part in furthering social entrepreneurship worldwide.

Indeed, several special guest attendees at the conference are Ashoka Fellows from Kenya, Peru, Colombia and Spain.

While the bulk of the actual Dialogue will emerge over the next few days, it is clear that people are already inspired and motivated by the little they have witnessed so far.

"It is really striking to me to come here from Boston," remarked Paul Grogan of The Boston Foundation.  "Based on the day and a half that I've been here, the global possibilities here...[are] really interesting."

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Guest Blogger Sergio Guzmán currently works for the Center for Financial Inclusion at ACCION International from Bogota, Colombia. He graduated from the George Washington University with majors in History and International Affairs.

A Spanish version of the following post can also be found in NextBillion en Español.

By Sergio Guzmán

Nearly 2,000 people convened at the International Symposium on Microfinance as a Tool for Peacebuilding last week in Cali, Colombia, to discuss how microcredit could be used to rebuild the social and economic fabric in post conflict areas of the country.  When it comes to financial services many of the rural municipalities in Colombia are either completely lacking (67 municipalities) or have only the most rudimentary services.  

The country's ongoing political, social and economic conflict, which has lasted over 45 years, has severely damaged the country's social tissue and broken trust between people. This makes it hard for any endeavor, microfinance included, to be successful.

Sponsored by the Alvaralice Foundation, the symposium highlighted various state projects, public-private partnerships, and private projects working on many of these issues, funded by domestic and foreign sources. A myriad of NGOs and regulated financial institutions like WWB Colombia, Finamérica, Banco Caja Social and Bancamía provide financial services to the poor.  From the director of a small NGO in conflict ridden Barrancabermeja to a Miami based NGO called Give to Colombia that channels funding for projects in Colombia from US-based companies who invest there, participants analyzed what it takes to succeed in tough conflicted areas.  International participants brought in experiences as diverse as Kosovo, Palestine, Sierra Leone and Cambodia, all with a message that microfinance can be an effective tool, because as conflict dies down people are eager to restart their lives and need financial services to help them do so.

Sometimes the connection between microfinance and peacebuilding is more implicit than explicit. Many speakers pointed out that microfinance creates economic stability which paves the way for social advancement, upward mobility and cohesion; however there are many more elements to be thrown into the mix to achieve that objective. One key is to accompany financial services with education, training and other forms of support through programs like ACCION's Diálogo de Gestiones. Guillermina Hernandez, the director of a community kitchen in a poverty and conflict-affected area said, "being part of a Microfinance Organization or Cooperative provides people with more than just financial means to better themselves, but gives them trust to become part of something in a place where people are constantly in danger, and empowers them to follow their dreams."

According to the panelists and conference-goers, Colombia needs to work on improving its regulatory framework to make it more supportive of microfinance, making it easier for international support to enter the country, promoting competition in the microfinance sector and ensuring that client protection standards are built in to the sector.

There is still a lot of work to be done. The conference provided an opportunity to reflect about the role of government, non-governmental organizations and private sector players in the construction of a peaceful society, something we all have a role and a stake in.

Sankalp (English translation: Pledge or Determination) is a South Asia Social Enterprise and Investment Forum with the primary goal of bringing together various stakeholders sharing a common conviction that capital should be invested to create multiple bottom-line returns (financial, social and environmental) and not exclusively financial (profit-maximizing) or social (philanthropic) returns.

Sankalp 2009 is an effort to discover, connect and support the most investible social MSMEs (Micro, Small and Medium enterprises) operating in agriculture, energy, education, healthcare and "scalable models".  Organized by the India Development Gateway and sponsored by the Rockefeller Foundation, Rural Innovations Network, NABARD and Aavishkaar, this promises to be a high-profile forum for the latest generation of base of the pyramid companies in South Asia.

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I recently had the chance to work on a case study with Late Lawson, Director of Economic Development for CARE, and Professor Ted London at the Ross School of Business at the University of Michigan. The case study centers on CARE considering how to best incorporate an explicit market-based approach to poverty alleviation within its portfolio of poverty alleviation activities.
 
In 2005, CARE started a three-year pilot initiative in Central America to assess whether revenue-generating ventures could provide large-scale, sustainable, and scalable poverty alleviation outcomes, as well as an opportunity to generate excess revenues for the organization itself. One of the primary catalysts for CARE to move in this direction was CARE’s experience in microfinance. In 1998, CARE had founded EDYFICAR, a microfinance institution in Peru. The MFI quickly became a business leader in the country, providing thousands of low-income families with access to much needed capital.

During the three-year pilot project, CARE started or supported many social ventures, primarily co-ops in the agricultural sector. Many of the ventures, however, had become overly dependent on CARE for support and struggled to find a path towards financial and operational independence. Furthermore, the ventures did not seem to offer any prospect of generating revenues for CARE. Part of what contributed to these problems was that CARE had not developed a systematic approach to helping ventures reach maturity.  As a result, many in CARE felt that the organization lacked the skills and culture necessary to do this work well. There were some, though, that still felt that revenue-generating projects were an effective complementary strategy that could yield sustainable and scalable poverty alleviation in the long-run.

This tension is common to many large intermediary organizations that are trying to adopt a market-based approach to poverty alleviation. One of the reasons for this is that many of the organizations that jumped onto the BoP band-wagon did so without understanding all the factors involved with implementing such as strategy. And understandingly so. The BoP approach is relatively new to the poverty alleviation scene and does not yet have extensive research and study behind it.

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Are there really enough profits to make telcos want to focus on the bottom of the pyramid?  A new report, released last Monday by the technology market research firm BDA, suggests the answer is no.

Before we consider the case closed, let's take a closer look.  After all, telecommunications companies have been some of the more successful firms when it comes to focusing on the base of the pyramid.  Again and again, we read about big players like Vodafone, Motorola, Hutchinson-Essar, Bharti, MTN, Celtel, Telmex, etc. and their down-market profit strategies.  Smaller domestic companies, like Smart and Globe in the Philippines or Grameen Telecom in Bangladesh, also owe much (if not all) of their growth to bottom of the pyramid strategies.

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Position: Senior Portfolio Fellow

Location: New York

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Position: Community Manager

Location: Washington, DC or San Francisco, CA

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As it should be clear by now to our frequent and not so frequent readers, the BoP is potentially a huge market. Within this potential market there are different segments depending on who products are directed to, which needs they address, or what income and educational levels the target customer has. Depending on the target geographic area, BoP members may face totally different needs and constraints.

Another important differentiating feature of BoP communities are the violence levels they face. For example, it could be argued that the Indian BoP is exposed to comparatively less violence than Colombian BoP. As I pointed out in a previous post, this is important because BoP communities are especially vulnerable to violence and crime. It has been shown that younger, lower income and less educated men are more at risk of being homicide victims, while women and their children are most affected by forced displacement (Moser, 1999).

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