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At the William Davidson Institute, we recently completed the first Goldman Sachs Entrepreneurship Certificate Program in Rwanda, which is part of Goldman Sach's 10,000 Women Initiative. Goldman Sachs started this program with the overall goals of "increasing the number of underserved women receiving a business and management education and improving the quality and capacity of business and management education around the world."

Specifically, WDI's certificate program targeted 30 women entrepreneurs in Rwanda who were either starting or scaling up a business. Though I was not involved in implementing the program, I recently had a chance to sit in on a presentation from one of my colleagues, Sharolyn Arnett, who was heavily involved. 

During the presentation, one point that kept coming up was the difference in perspectives on  entrepreneurship between people living in developing countries like Rwanda and people living in developed countries like the U.S. 

For those of us living in developed countries, the idea of entrepreneurship is very romantic and idealistic. It's often thought of in the vein of "Making your dreams come true!" and "You can change the world!"  I would almost go so far as to say that entrepreneurship as we know it in the developed world is a luxury. (Not that this is bad or anything.  This is just the form that entrepreneurship takes in very rich and stable countries.) 

Not so in the developing world.  The motivation for entrepreneurship in the developing world is often for survival, not business opportunity.  An interesting point made in the Global Entrepreneurship Monitor in 2006 was that "early-stage entrepreneurial activity is generally higher in those countries with lower levels of GDP." Why is this? The report further elaborates that many in the developing world "are pushed into entrepreneurship because all other options for work are either absent or unsatisfactory (necessity entrepreneurs)."  

In light of the global recession, we from the developed world are getting a slight glimpse of what entrepreneurship means to people in the developing world like Rwanda. Today, many people across the U.S. are forced into entrepreneurship because they have lost their jobs; entrepreneurship has become a means to pay the bills. 

With all this being said, it's so important that we think about entrepreneurship in the developing world though the correct lens. In a previous post, I mentioned that one of the best things that we from the developed world can do for the poor is help cultivate an entrepreneurial environment for them.  To do so, we must first acknowledge that entrepreneurship has a significantly different meaning and purpose in the developing world than in the developed world. By having this correct perspective, we will be able to better support the local entrepreneurial spirit - and ultimately make a greater impact.  

In an Associated Press article posted yesterday, Qualcomm announced its backing of a videogame startup targeting BoP markets.  I heard about it in an e-mail from my father, who wrote under the subject line "tacky! tacky! tacky!".

While my first instinct was to agree with his assessment, I've been thinking about it more and more.  No, video games are not basic goods and services, nor do they have much of a "development" impact if you're looking to NextBillion.net for your development-through-enterprise news coverage. 

But the very idea of selling a new product (modern videogame consoles) into an underserved market (the approximately 800 million people making $7 to $10 per day) is the definition of a bottom-of-the-pyramid strategic approach, at least as defined by C.K. Prahalad.

Then again, if I keep writing about videogames, I'll open myself up to criticism from Aneel Karnani, who has rightfully pointed out that simply selling things to poor people does not necessarily improve those people's lives.

The bottom of the pyramid concept is not black and white; nor is the next billion (as a market, a business strategy or a term).  It's foolish to lump drip irrigation systems (positive development impact) in the same pile as videogame consoles (negligible development impact).  But it's also dishonest not to celebrate Qualcomm's move here - they see an underserved market and look at poor people as customers, not aid recipients.

One step at a time, right?

Before the end of 2008, I explained in one of my posts how improving gender equality could reduce poverty and stimulate growth. Back then I was puzzled to see that barely any business development initiatives had tried to improve women’s status (Karthik Raman’s Source for Change was one of the few exceptions) – especially considering the potential latent demand in female oriented educational programs or health care.

In this post I would like to point out how this demand is set to increase in the next few years. This may be one of the biggest untapped BoP opportunities from the point of view of the profits to be made and the social value that the involved businesses could generate.

Family preference of boys over girls in developing countries is often expressed through higher mortality rates in young girls and lower investments in the girl’s human capital (lower school enrollment, nutrition or immunization rates). Son preference has been argued to be a consequence of conditions in rural societies in which inheritance systems pass assets to sons, inter-generational insurance in which sons care for the parents in the old age, and a job market which offers higher salaries to men than women.

Development and, in particular, urbanization, higher female education and labor force participation are expected to work against these pressures (Chung and Das Gupta, 2007). I recently came across a World Bank study (Filmer, Friedman and Schady, 2009) which explained how South Asian families are 7.8 percentage points more likely to have an additional child if they had no sons than if they had no daughters (because they so badly want a son that they keep on bearing children until they get one). Eastern Europe and Central Asia experience yet higher rates with the chances of having an additional child being 9.4 percentage points higher if the family has no sons than if it has no daughters. Notice that the more children a family has, the more disadvantaged a girl will be compared with a boy, because the family resources will be more thinly spread.

As a result of higher mortality rates, the trends in male/female sex ratios of children in many Asian countries have skyrocketed. We have all heard the stories about the Chinese and Indian countryside now facing a shortage of female population. It is often forgotten that this phenomenon was even bigger in South Korea.  Sex ratios were tilted in favor of men during the 1980s and the mid-1990s and thereafter declined so rapidly that by 2007 they were within the biologically normal range. Some of the effects are still felt, with many men often having to marry with Vietnamese or Chinese brides (who sometimes suffer isolation and abuse when settling in South Korea) due to the shortage of local women.

Extrapolating from the South Korean case another recent World Bank study (Das Gupta, Chung and Shuzhuo, 2009) has come to the conclusion that we may be about to see a similar fall in sex ratios in India and China. That is, there will be proportionally more young girls coming in the next decades in these two countries.

Why is this important? To put it simply because there is and will continue to be a growing number of girls and female adolescents with unmet gender-based needs. Latent demand will tend to be most important in the arenas of health care and education – and national and regional governments will most probably support businesses catering to these groups. Families will also be increasingly willing to spend in the wellbeing of their girls. BoP ventures targeting these demographic groups will soon discover that their market is growing very fast and is increasingly profitable – a dream for many businesspeople. In turn, this will generate a positive feedback effect, since female economic empowerment reduces poverty much more than male economic empowerment. This looks like a prospective market where BoP business initiatives have high chances of making a big splash.

If in some years you read a Wall Street Journal or a Financial Times article about how female birth rates have recently increased in Asia and how this has stimulated economic growth, remember where you read it first…!

Q: What's yellow, green and seen all over?

A: The bright yellow, solar-powered ambulances of Ziqitza Healthcare (1298), an ambulance company serving low-income customers in Mumbai and Kerala, India.

The solar ambulances are one of ten "Eco-Friendly Innovations" featured in a new photo essay on Forbes.com.  I was pleasantly surprised to find the essay stocked with stories of BoP technical (and business) innovation.  Also included:

• The Mighty Mitad, a durable $6 cooking disc used to make injera, the staple bread of an Ethiopian diet.  Reinforced with a steel band, the clay disc lasts years - a non-reinforced mitad often breaks after weeks or months.
• High-efficiency Rocket Box stoves, manufactured locally in Guatemala and sold for $150.  Sounds expensive, but a family Rocket Box pays for itself in less than a year, thanks to the wood ($25/month) saved.  Manufactured by XelaTeco with design assistance from NextBillion allies Appropriate Infrastructure Development Group.
• 3 drip-irrigation companies (Driptech, GEWP and Micro Drip) plus a super-efficient treadle pump (made by IDE-Myanmar), all of which help low-income farmers increase yields and bump up sales.

I'm often skeptical of media coverage with titles like "10 Eco-Friendly Innovations!" because too often, the reporters are sucked in by technical accomplishments and gloss over or ignore the business model (or lack thereof).  In this case, I was pleasantly surprised by the coverage - perhaps I should read Forbes.com more often - but only one or two of the ten in this photo essay seem to fall into the environmentally successful but commercially questionable camp.

Can you be green AND serve base of the pyramid markets?  If this photo essay is any indication, the answer is yes.

Editor's note: Guest blogger Nick Pearson is a member of Acumen Fund's Portfolio team.  He is currently based in East Africa, where he focuses on the water sector.  Nick holds a MBA from the Haas School of Business at the University of California-Berkeley.

This cost analysis hangs on a wall at in the Osembe Primary School, a concrete block building surrounded by rice fields not far from Lake Victoria.

It was created by the members of the school Health Club, a group of precocious young kids I would love to see become interns in Acumen’s Nairobi office someday. It is not hard to imagine these kids making the leap from “Simple Mathematics” to Acumen’s BACO analysis.

Osembe is part of a multi-year study run by CARE and several other organizations to evaluate the impact of providing sanitation and clean water in schools. Schools like Osembe receive new pit latrines, storage containers and chlorine to purify their well water. There is considerable evidence that clean water and good latrines in schools dramatically improve child health and school attendance (a factor of both reduced illness and better privacy: a large percentage of girls drop out when they hit puberty for the simple reason that they don’t have a private latrine to use for hygiene). And yet fewer than 30% of primary schools in Kenya have proper latrine facilities or access to clean water. If you had limited resources to spend on improving water access, schools would be a smart place to start.

The trick from Acumen’s perspective is that most of our investments rely on provision of goods and services to customers who can pay for them. But what about school children? The Osembe poster demonstrates a solid grasp of economics and an obvious appreciation for the service, but how can we expect kids to pay for clean water?

Let’s set aside the most obvious solution – government funding – which is how schools are funded in most of the world. In Kenya, the government provides each primary school $13 per student per year to cover all facilities, staff, books, and everything else. (Meanwhile a single member of parliament is paid about the same amount that the budget allocates to 40 primary schools.) Since the government is not stepping up, organizations like Acumen need to find other approaches to deliver these services to the 18,000 public primary schools in Kenya.

As our Nairobi office explores the water sector here for investments, we have seen several business models that can help expand water and sanitation access to schools. Here are two examples:

• Outside of Nairobi, several organizations have installed community water kiosks at schools, which provide the water free to students but charge a fee to the surrounding community. The fee is approximately 3.75 cents per 20 liter jerrycan, similar to the 3 to 6 cents that Acumen investees WaterHealth International and EPGL charge per 20 liter jerrycan in India, and affordable to low-income communities. Schools already have a built-in management structure to help run the kiosks, and the model and pricing can be tweaked so that the revenues cover operating costs of the system (and potentially capital expenditures too).
• A company called Manna Energy is building small community water treatment plants and toilet facilities in Rwanda and placing them at schools. The resources are provided free to the school and surrounding villagers, but the company is setting up a creative carbon finance scheme where they receive and sell carbon credits for offsetting firewood that would otherwise be burned to boil water.

Before we left the Osembe primary school, each of the visitors was called to introduce himself to the assembled kids, who were lined up in a big semi-circle marked by small bushes – the equivalent of the gym bleachers where we gather for morning assembly in the States.

“Good morning!” I said when it was my turn.

“Good morning teacher!” they chorused in the call-and-response fashion common here.

“I am visiting from America. Do you know who the president of America is?”

(Laughter) “Barack Obama!” These kids are from the Luo tribe, like Obama’s father, and he is a local hero. They know more about our President than most American kids do.

“I’m sorry President Obama couldn’t join us today, but I do know for a fact that he treats his drinking water just like you do.”

The kids laughed again, recognizing that this was a stretch. Our drinking water in the States is indeed chlorinated like the water in Osembe’s storage containers. But they know very well that our President doesn’t have to draw it from a well, carry the jerrycan to school, fill a big storage drum, and dose it with liquid chlorine himself. It was encouraging to see the value these children place on clean water.

But they, and millions of students like them, will only have access to it if we can find sustainable models to pay for that service in schools. Clean water and good health will help get these kids through school, into college, and hopefully someday applying their “Simple Mathematics” skills to Acumen investments.

A little more than a year ago I made a decision and accepted an offer to come to Washington and work for a project -this website- I had long been fond of. Doing so has exceded my expectations in many ways. It has opened doors, sparked ideas and provided me with opportunities I'm deeply greatful for. The best part of this year has been and continues to be being able to meet wonderful entrepreneurs, obsessed with changing the world. Learning about how they intend to do so is the part I enjoy the most about my work.

Over the last two weeks I've been able to reconnect with some of those people I've met and I'd like to share some reflections about their work and, most importantly, about the decisions they have made to make their visions happen and become the change they want to see in the world. Today I'll write a few lines about one of them, my friend Rose Shuman, and over the weekend I hope to jot down some additional ones about others I've recently had the opportunity to spend time with and see in action, turning their visions into tangible change. 

Interested in technology and its impact on society, Rose tried hard to get an interview with Google.org until she did, about two years ago. Sitting in her hotel room in Palo Alto the night before, she nervously prepared herself to hopefully impress the group in charge of evaluating her candidacy with a really smart idea. That's when she came up with the question of whether the Internet and information could be brought to those least able to access it the way you or I are doing right now. The next day she walked into the interview she articulated the still vague vision of a box through which illiterate people would be able to ask questions and listen to the answers, as long as they were available online. 

Rose ultimately didn't get the job but the Google folks loved the idea and encouraged her to explore it further. She did and the pilot became a project that was later called Question Box. I've written about it before, and so has Boing Boing. 

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Editor's note: Guest blogger Aden Van Noppen is a senior at Brown University where she studies International Development. She is also an intern for Acumen Fund, where she works to develop programs that teach college students about private sector solutions to poverty. Aden was formerly an intern for Dalberg Global Development Advisors, where she worked on the development of the Aspen Network of Development Entrepreneurs.

Young people today are not protesting or rioting—instead, we are proclaiming ourselves social entrepreneurs and actively searching for the best models to address poverty.  This movement is brewing on campuses across the country and the world, including my own, and Acumen Fund wants to help us develop the skills and knowledge we need to pioneer new approaches to poverty alleviation.

In response to growing interest among college students in social enterprise, and the potential we have demonstrated to lead social change, Acumen Fund wants to find ways to work with us.  To start, Acumen is hosting a Student Leaders Workshop in New York City from May 28-30th to share their knowledge and collaborate with those of us who feel passionate about finding and communicating entrepreneurial ways of addressing poverty.

This workshop is an opportunity for students to gain skills and knowledge about enterprise development and social venture capital, and just as importantly, to communicate with Acumen about how to build meaningful partnerships with young people.  The students who participate will return to their campuses in the fall with the opportunity to spread this movement amongst their peers.

If you are a leader for social enterprise on your campus, we want you to apply!  If you believe that business and investment are powerful tools for poverty alleviation, we want you to apply!  If you want to learn from Acumen Fund and members of Acumen’s community in an intimate setting, and then share what you learn with others, we want you to apply!

If you think Acumen Fund will hold your hand and help you find a dream job in the social sector after graduation, or want to add a cool brand name to your resume, this is not for you.  Changing how the world approaches poverty is a big job and the people I have been working with at Acumen Fund are looking for real leaders who want to roll up their sleeves to challenge the status quo.  If that sounds like you, we are looking forward to hearing from you.

Click here to find out more about the workshop and how to apply.  Hope to see you in New York City this May!

The "Impact of Base of the Pyramid Ventures" conference will be held November 16-18, 2009 in Delft, the Netherlands.  The organizers have just released a call for papers.  Abstracts are due May 15; full papers are due July 15.

Today, there is little dispute that poverty is one of the most pressing global problems calling for innovative solutions and market-based approaches. The so-called Base of the Pyramid strategy (BoP) is a novel approach involving the private sector to help alleviate poverty by serving these markets in ways responsive to their needs by providing access to knowledge and technology in an economically profitable way. In this process, a balance between social-, ecological-, and economic sustainability needs to be strived for (People-Planet-Profit). A number of BoP initiatives have been undertaken during the past years, often with impact claimed on the lives of those at BoP – local producers, sellers and buyers as well as the community. But have these ventures really achieved the sustainability impact initially envisioned and reach the poor  on a large scale effectively? The main question this Conference is addressing is:

How to define, measure, and optimize towards enduring value creation of BoP ventures?

The purpose of this conference is to increase BoP knowledge on value creation and impact assessments by bringing together keynote speakers and delegates from business, academia, NGOs and the public sector. The conference will provide a platform to share conceptual and empirical evidences that address ways to better understand and increase the sustainability impacts of BoP ventures in terms of changes in economic, capacity, environmental and relational well-being.

More information on the conference is available on their web site.

Let's talk about pet peeves.  Don't you just hate it when you're having a great conversation, (you know, the type that you recount to your closest friends in excruciating detail) when someone wanders absent-mindedly into the mix?  Said interloper is clearly late to the party, but yet, here she is, shiny two cents unabashedly displayed.  

You've got me; I am guilty as charged.  I've emerged from nowhere to piggy-back on the conversation that Moses started last summer about talent at the BoP.  If you need a refresher you can find his original posts here,  here, and here. 

I would, however, like to add a slight twist to this "conversation cocktail".  When I think about visible entry points for BoP-focused MBAs, I can generate a list of the "usual suspects" rather quickly: Acumen Fund, Deshpande, Echoing Green, Endeavor, Kiva, TED, and most recently, d.light.  The obvious assessment of this list is that there are many BoP opportunities but some have more visibility than others.  Why?  Because there are many things to do, especially when you consider related topics like microfinance, market access, SME capacity building, supply chain management, and the like. 

But let's return to the original list for a moment.  What strikes me most about the opportunities at these organizations is their exclusivity-in the sense that they cull the "best of the best" through limited edition fellowships.  Just to be clear, I have no problem with the notion of wielding the power of the "best and brightest" to tackle the world's problems.  In fact, it's a rather poignant reversal of fortune; usually the least powerful members of society are stuck with the worst resources.  However, after the superstars are chosen, I wonder what happens to the "best of the rest" and the "rest of the rest."  Presumably, the folks who apply to these programs are smart, ambitious, values-driven, change makers in the making.  What I wonder is, "what happens to these people?"  Is their energy and enthusiasm lost or is it simply redirected?  How can we tell?  Do we care?

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President Obama and Secretary of State Hillary Clinton are fond of reminding the press that leaders should "never waste a good crisis." During times of upheaval, people are scared, but they're also willing to try something different. That applies in both the political and business worlds.

Renew LLC, was launched in the midst of upheaval. Incorporated two years ago because we saw an opportunity to grow small businesses in developing markets, Renew was designed to implement a set of new ideas about what investors who rethink their model can accomplish in markets largely "hidden" by their lack of structure. 

Of course, another sort of upheaval quickly followed. Just as Renew launched its on-the-ground operations in East Africa in November, global markets fell into disarray. The fallout is still falling out. In the meantime, Renew, one company among many in the burgeoning BOP/double bottom-line/social enterprise/pick-your-descriptor marketplace, is determined not to "waste" the present financial crisis. 

First, the basics: Renew is a social investment intermediary that sources SMEs for U.S.-based investors, conducts due diligence, manages the investment, and provides life of the investment consulting to support business growth and gauge social impact. In the strictest sense, those are its service offerings. But during the two years that the company has been working with investors and entrepreneurs, we've come to envision more than the addition of an investment intermediary to the marketplace. 

We see an opportunity to create a new set of expectations between capital and the entrepreneurs and managers who shape investment capital into enterprises that create value and generate return. We believe investors should be able to generate meaningful financial return and see sound governance at work when they deploy capital to SMEs in developing countries. And we believe that managers of these SMEs should hold themselves and their employees to the sort of ethical and operational standards that will allow them to compete globally in the 21st century.

We're not the only ones. Last summer, a group of 35 scholars and business executives assembled to lay out a road map for reinventing management to make it more relevant to a volatile world. (These findings comprise a February 2009 Harvard Business Review article titled "Moon Shots for Management.") The group, which included luminaries like C.K. Prahalad and others familiar to NextBillion.net readers, was inspired by a collective desire to help managers overcome what they call "ambition-deficit disorder. What, we asked ourselves, was management's equivalent to unpacking the human genome, inventing a cure for AIDS, or reversing global warming?"

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