Blog

In my recent reading about inclusive business models I have come across a few major reports that offer the same advice to large companies - transform your business strategy to include the base of the economic pyramid (BoP) as consumers, producers and entrepreneurs and therefore profit from a largely untapped market while having a lasting social impact. 

Some of these reports -The World Economic Forum's "Next Billions" Reports, KPMG's "Sustainable Insight" Report (2008) and "Growing Inclusive Markets: Creating Value for All" - also emphasize the need for multi-stakeholder partnerships in order to achieve successful inclusive business models.  Companies should partner with local actors such as civil society organizations (CSOs), local entrepreneurs and community members in order to accurately develop products and services for the poor. These partners provide local market knowledge, potential distribution channels and local legitimacy to help big business successfully engage BoP communities. Companies are also advised to work with CSOs, the government and other businesses to "combine their capacities" to effectively include the poor in their business strategy.

Continue reading this article

For those of you who read the print version of BusinessWeek, you know that Jack and Susan Welch write a weekly column on the last page. This week's article is "Corporate Social Responsibility in a Recession" or his edgier online title "Giving in Unforgiving Times." It's a good primer on corporate social responsibility (CSR), which they categorize nto three types:

• Donating money, products or services
• Community involvement
• CSR as a corporate strategy

Its conclusion essentially states the obvious: in tough times companies will likely have to cut back their CSR activities, just as they will have to streamline other areas of business.

But what caught my eye is the calling out of CSR as a specific corporate strategy. The cynical view of CSR is that large corporations do it just to make themselves look good, or to help in some way to improve revenue growth or the bottom line. The opposite is what you read on the company CSR reports or web pages, like this one:

"By working with others, we are finding opportunities to apply our technology and expertise to help tackle some of the world's greatest challenges-from climate change and water conservation to education quality and the digital divide. Paul Otellini, CEO letter, Corporate Responsibility Report 2008. Growing a profitable business AND doing good in the world do not have to be mutually exclusive. I learned this by experience: by starting a business group that developed products that will help bridge the digital divide."

CSR has to be part of a larger corporate strategy that will support the core business (creating and delivering products and services that will bring tremendous growth and profitability). Many large, successful technology companies do that today. About a week ago, this announcement went over the wires:

"The Intel Foundation today announced top winners of the world's largest pre- college science fair, the Intel International Science and Engineering Fair (Intel ISEF), a program of Society for Science & the Public. Tara Adiseshan, 14, of Charlottesville, Va.; Li Boynton, 17, of Houston; and Olivia Schwob, 16, of Boston were selected from 1,563 young scientists from 56 countries, regions and territories for their commitment to innovation and science. Each received a $50,000 scholarship from the Intel Foundation. This year, a record number of 1,563 high school students from over 50 countries representing 1,226 projects will be competing for nearly $4 million in awards and scholarships. Intel International Science and Engineering Fair Finalists are selected annually from more than 550 affiliated fairs around the world."

Continue reading this article

A few weeks I had a great opportunity to visit Brazil, as part of a research project currently underway at New Ventures, aimed at benchmarking clean energy solutions for the base of the pyramid.

My host this time around was the team of IDEAAS, one of the most interesting and widely documented organizations in the social entrepreneurship for energy access arena, thanks to the leadership and vision of founder Fabio Rosa and the recognitions granted to him by organizations like Ashoka, Schwab Foundation, the Tech Museum Awards in Silicon Valley, Lemelson Foundation and Banco Itau in Brazil, among others.

IDEAAS works develops a wide variety of projects throughout Brazil, which may be classified under three main streams of activity: energy access (bringing energy to off grid homes through solar systems that provide energy for lighting purposes as well as use of small appliances); efficient use of energy (promoting the use of renewable and clean technologies in activities that previously used dirtier and more expensive alternatives), and social entrepreneurship, promoting the advance of a new entrepreneurial class in clean energies through a Learning Center for renewable energies in Brazil.

Let me go a bit farther into detail showing you, through pictures, what IDEAAS is all about. I began my trip at the main office of IDEAAS in Porto Alegre, the capital of Rio Grande do Sul, the southernmost state in Brazil. From the main office, IDEAAS oversees its different projects and tracks the performance of and payments coming from each of the close to 260 installations running so far. IDEAAS staff does so through a software specifically designed for that purpose, as well as detailed information sheets that indicate the precise location and details of each and every client.  

Next stop was Santo Antonio da Patrulha, where IDEAAS' Learning Center in Renewable Energies is located. Fabio welcomed us with a tour of the different technologies installed (solar, wind and small hydro), which provide most of the energy for the house that will serve as a training location for up and coming clean energy entrepreneurs in Brazil. Below are some pictures of Fabio Rosa, IDEAAS's solar panels, a small wind turbine manufactured by Enersud and the small hydro system installed at the Center.

Aside from seeing the technologies at work, Rosa envisions that visitors have access to information and frameworks to make sound decisions when choosing the technologies and business models required to bring energy to a given off grid area. This model (the Learning Center as an incubator for new energy entrepreneurs) will be replicable on an international level, and Mr. Rosa is actively pursuing partnerships to establish it in countries outside of Brazil.

After the visit to the Learning Center, we took off and went farthersouth to visit two of IDEAAS current customers, who serve as examples of the services it is able to provide: energy access at the household level and energy efficiency products, through which users replace dirtier and costlier alternatives. Higor Renck, a project manager with IDEAAS, did a great job guiding me through the entire trip.

Higor appears in the picture below, together with one of IDEAAS' first customers in the Luz Agora project, which brings energy to off-the-grid households through solar energy kits.

IDEAAS' home kits consist of a set of solar panels (mounted on the roof in the picture below), a set of batteries, a charge controller (manufactured by IDEAAS) and a set of LED lightbulbs. They may also include dedicated connections for appliances.

Having visited the installation of the Luz Agora project, Higor and I drove farther south to the city of Sao Jose do Norte, where IDEAAS is currently implementing a flagship project called Fasol do Sol (or Sun Lighthouse). The goal of the project is making solar energy a viable alternative to replace the kerosene lamps currently used by shrimp farmers to attract their catch during the nights. Shrimp farming is one of the main economic activities in the region, and IDEAAS technology has the potential to serve the same use as kerosene while reducing the total lighting cost by more than 50% throughout the season. The kerosene expenses are replaced by a monthly leasing fee paid to IDEAAS by the farmers, which includes access to equipment and maintenance services as needed.  

For this year's fishing season (the first with IDEAAS's presence in this community) only one farmer agreed to switch to solar technology in the municipality of Sao Jose do Norte. The early adopter was our host in this leg of the visit and graciously told us how everybody else called him "crazy" at the beginning of the season. Now, with almost a full season behind him and strong numbers to back his decision, many other families are interested in switching to solar lanterns to do their fishing. 

IDEAAS installed its solar panels in his boat (to provide lighting to the two farmers living in it during the season) as well as on its fishing nets (which are a good 40 minutes away from the shore, by boat) where the lamps are needed during the nights. Higor, from IDEAAS, also joined us in this leg and his closeness to all of IDEAAS customers striked me throughout the trip. It reminded me that the presence of such community leaders is a key factor of for trust building and success in ventures involving technology adoption amongst low income communities. 

These belong in museums", explained "El Gordo" (our host), holding an old kerosene lamp that has been replaced by solar-powered LED lamps, as shown below. Not only are IDEAAS' lamps cheaper and safer (they are not made out of glass, for instance) but they also turn on and off automatically depending on the presence or absence of sunlight.

When we turned around to come back, our host adjusted the position of his panel to take advantage of every single ray of sunlight available. "Gotta take advantage of every minute in the day", he said. 

Three days after my visit, the community of fishermen was set to meet with the goals of assessing how many new families were potentially interested in switching to IDEAA's technology for the next season. 

What's next for IDEAAS?  

In spite of their success in becoming a reference for rural electrification in Brazil and worldwide, IDEAAS faces challenges related to government policies in Brazil and strategic questions related to the true scale potential and profit motive of its operation. In effect, the federal government in Brazil recently announced an agressive initiative to bring "energy to all" in Brazil, through traditional centralized generation systems. Although that's great news in its own right, it leaves no space or private sector solutions like IDEAAS, unless utilities decide to partner with them in the purpose of reaching remote areas like the state of Amazonia in the far north of the country.

As far as the profit motive, IDEAAS is moving towards incorporating a for profit model that allows its approach to scale and its clean energy solutions to be adopted not only at the BoP level but in other segments of the economy as well. The new company will not entirely replace the work of IDEAAS, however. Its work as an NGO will still be crucial in areas like community development, public policy advocacy and, most importantly, the development of the Learning Center concept, which, in my view, has the potential to drive significant scale in this space by creating a "one stop shop" for clean energy BoP approaches and potentially incubating new entrepreneurial models for the provision of energy in remote areas.

The construction site for the Learning Center in Santo Antonio da Patrulha appears in the picture below. I look forward to updating it with a new one once construction is completed, and also to sharing how the model continues to develop and replicates in other countries.     

Thanks to Fabio Rosa and the whole IDEAAS team for their hospitality during these days of learning in the south of Brazil. 

The lack of access to land and housing property rights has been deemed as one of the main obstacles to wealth creation and economic growth amongst low income populations. This is the area of focus of a project currently piloted by various private sector actors in Ghana, aimed at creating conditions under which assets can be financially leveraged by those in search of microcredits and other services.

Frank Pichel and Joseph Okyere wrote about this initiative and won the 2^nd Prize at the recent Bop Essay Competition organized by the BoP Learning Lab's base of the pyramid essay competition. I recently spoke to Frank Pichel and learned more about his and Joseph's motivations to enter the competition as well as the prospects for their future and that of the project.      

NextBillion.net: Tell the audience a little about yourself - where you come from, your educational/professional background, etc.

Frank Pichel: I studied international business in the U.S. and have worked with with International Land Systems for about 4 years.  Joseph, who wrote the essay with me, works for Opportunity International Savings and Loan of Ghana.  

NextBillion.net: When/where did you first hear about the idea of market-based approaches to poverty alleviation?

Frank Pichel: As someone with an education focused more on business than development, market-based approaches have always seemed to be more sustainable.  Now, with a bit more experience in the development industry, it is more and more clear that development projects are often times quick fixes, and within a year or so of a project wrap up, the situation can quickly revert to its original form. 

NextBillion.net: What was your inspiration to write this essay?

Frank Pichel: My colleagues and I felt that we were doing something unique and with potential, so we welcomed the opportunity to have development professionals review and give feedback on the program.

NextBillion.net: Is there a particular author or article that you consider "must-read" for the BoP community?

Frank Pichel: There is both a book and an article that I recommend to people interested in the relationship between property rights and development.  The book is of course The Mystery of Capital by Hernando de Soto, and it goes a long way in revealing the tie between secure property rights and the ability to leverage assets financially. 

We don't look at our program as merely assisting people financially, however. An article from the Wall Street Journal by Matt Moffett (Nov. 9, 2005) best illustrates how security of ownership can lead to pride in ownership and affect people socially in many ways - from investing in home improvements, to landscaping, to having the security to devote time to education as opposed to constantly feel as if you must guard your turf. 

NextBillion.net: What was the most challenging part of the essay contest?

Frank Pichel: Without a doubt, trying to capture the details of the project and the problems of an incredibly complex land framework in Ghana, as well as the program's effect on citizens, while limited to so few words.

NextBillion.net: What's next for the initiative you wrote about and for you as a professional?

Frank Pichel: We are currently looking at ways to expand the program throughout Ghana and hopefully turn it into something we can devote ourselves to on a full time basis.

For the past four months I've been researching and learning about market-based solutions for access to energy for low-income communities. I've come across everything from energy efficient cookstoves to rural cooperatives that have the potential to replicate and serve billions of people.  Most exciting for me are the models that connect slum residents to power and gas grids.  Maybe I'm a city kid at heart, but I was thrilled to learn just how much there is to hope for in slum energy connections.

The picture most people know of slums is shacks, open drains, crowded lanes, and tangles of wires on teetering poles.  Utilities have grown resigned to sizeable non-technical losses, and this stolen power drives up the price that formal customers pay.  Slum residents live with dangerous connections, and most people receive unreliable energy at a higher price per unit than more wealthy customers.  

Today more than 1b people live in slums, and this number grows by 500k every week. A solution to grid connections will provide safe, reliable energy to poor residents, and a remarkably well-tested and profitable business to those willing to take up the challenge.

We learned over the course of the investigation that enterprises in Casablanca, Buenos Aires, Khartoum, and Bogotá have connected poor residents profitably, and to the great satisfaction of their new customers. These businesses are financially viable and deliver significant social impact for their clients.  They do this by:

• Leveraging the power of organized residents
• Employing pre-pay technology to reduce losses and increase 
• Building complementary businesses based on payment history

LYDEC, a joint project of GDF Suez and EDF, connected 75% of slum residents in Casablanca legally to the electricity grid.  This solution was designed and managed by end-users.  Community representatives manage metering and payment for a block of 20 people.  If one bill is late the whole block is disconnected, and currently 98% of bills are paid on time.  Moreover, connected slums enjoyed 17% increase in commercial activity, at about the same price as an informal connection.  Provivienda, in Buenos Aires, built a community trust fund to bring piped cooking gas to poor communities. Provivienda's gas lines increased real income by 7%, decreased respiratory illness by 30%, and created community organization and understanding that can be used to tackle other shared problems.

Continue reading this article

Greetings from Delhi, where tomorrow I will attend the Emerging Markets, Emerging Models conference convened by the Monitor Group.  If you have not yet heard of Monitor's eponymous report, I urge you to take the time to read it.  Staff writer Allen Hammond agrees, calling it "a must read!"

Why is it a must read - and why is there a whole conference about it?  First and foremost, credit goes to Monitor and its Inclusive Markets group.  Led by Ashish Karamchandani, they've done a thorough job investigating more than 300 market-based approaches to poverty alleviation around the world, most of them based here in India.  With such a large sample size at their disposal, the Inclusive Markets team then turned its attention to pattern recognition and actionable next steps - just the approach you would expect from a top-flight consulting firm.

The result is a thorough but easy to read report breaking down "bottom of the pyramid" myths and confirming some key truths about working with low-income consumers and producers. 

Tomorrow's conference - which continues on Tuesday - will convene the report's authors and subject matter to discuss the latest trends in market-based approaches to poverty here in India.  It should be less academic and less political than most conferences, which I'm looking forward to.  Monitor didn't publish much information about the event on it's web site; I'll do my best to capture the spirit and proceedings tomorrow and Tuesday and report back here.

Finally, if you'll be at tomorrow's event, be sure to seek me out!

Kumar Vijay Mishra is a radar research scientist currently pursuing research and graduate studies in Colorado State University.  He is also an amateur writer, with a secret ambition of publishing a short-story collection, and likes volunteering for social causes that interest him creatively.  Recently, Vijay combined his interest in social causes with his writing ambitions to enter the BOP Learning Lab’s base of the pyramid essay competition with an essay entitled Promoting Sanitation, Empowering Communities.  Vijay and co-author Amit Gupta took 3rd place in the competition; more importantly, they took a great step to get the word out about improved sanitation in India and the role of market-based approaches to this massive problem.

Earlier this week, I had the opportunity to speak with Vijay, who shared some thoughts on his essay and the sanitation problem facing India and other countries around the world.

NextBillion.net: Tell the audience a little about yourself - where you come from, your educational/professional background.

Vijay Mishra:  I was raised in central India.  For university, I attended NIT Hamirpur, in Himachal Pradesh.  Following university, I took a job as a research scientist first in Pune, then Bangalore.  In fall 2007, I moved to the United States for graduate school at Colorado State University - I research weather radars.  Personally, I'm interested in creative writing and volunteering for social causes, which is why this whole essay contest appealed to me.  Over the years, I've done a lot of institutional volunteering in school and work related to helping poor individuals.

NextBillion.net: When and where did you first hear about the idea of market-based approaches to poverty alleviation?

Vijay Mishra: In my hometown, I visited lots of surrounding villages - there is no sanitation at all.  After those visits, my interest was piqued, which led me to start reading about the issues around sanitation.  I learned first about Sulabh International, an Indian NGO promoting santiation.  They've set up lots of public toilets across India.  But reading was not enough - I needed to see it for myself.  It wasn't clear from articles how having a toilet actually makes a difference.

NextBillion.net: What was your inspiration to write this essay?

Vijay Mishra: I was inspired by Sulabh International, but the missing pieces there led me to read more and more articles as well.  Interestingly, Sulabh is working with a cross-subsidy model that allows community members to pay less and visitors to pay more.  Here's the market at work, I thought - but Amit and I wanted to explore it further.

NextBillion.net: Is there a particular author or article that you consider "must-read" for the BoP community?

Vijay Mishra: I recommend the recent "Romanticizing the Poor" debate between Karnani and Prahalad and Hammond.  It is good to see the discussion here about poor people and choices...of course, I see people making good (and bad) choices all the time, so neither party is totally "right" but it is good to get the discussion out there.

NextBillion.net: What was the most challenging part of the essay contest?

Vijay Mishra: It was difficult to prove that market based approaches to sanitation could actually be profitable.  We were always driving ourselves to think - is this really profitable?  When government used to sanction funds for these programs, and even other donors, they didn't work out very well.  So researching how and when work like this can be profitable.

NextBillion.net: What's next for the initiatives you wrote about?

Vijay Mishra: First, we need to understand what "improved sanitation" means.  I think it means having a flushing toilet.  Half of the world's open defecators live in India...this is not just about wiping out open defecation, it's about getting access to real facilities, flushing toilets.  Currently, this program is only in big cities - but what about smaller towns?  We need to make sure we are taking this model to small towns.

NextBillion.net: What's next for you as a professional?

Vijay Mishra: I'm continuing as a scientist and with the work I am doing - it's not BoP related.  But on the social side, I am going to focus more and more on BoP ideas as my volunteer focus.

NextBillion.net: What does the BoP sector as a whole - as a community - need to do to support companies like the one you profiled?

Vijay Mishra: There needs to be community involvement by the local customers - free is not really free.  When something is given for free, it falls victim to neglect and there's no sense of ownership.  Second, there's a need to involve the local community in the project as laborers, and as administrators - esepcially women.

Yesterday I heard former US President Bill Clinton, Coca-Cola CEO Muhtar Kent, and Archer Daniels Midland CEO Patricia Woertz talk about ways big companies can "create value for business and society" on a panel moderated by Brookings Institution Vice President and former UNDP Administrator Kemal Derviş.  The panel was hosted by Brookings and the Clinton Global Initiative here in Washington DC.

This was my first time seeing Clinton speak in real life, which was interesting.  The guy could probably dictate a book with little to no editing required.  But it was also interesting to hear exactly what was said - and what wasn't.

Given the heat Coke and ADM have gotten for their environmental impacts over the years, and Clinton's public position on climate change, the panelists spent quite a bit of time talking about sustainability.  For example, Coca-Cola's Kent shared the company's progress against its goal of water neutrality by 2020. The speakers' visions for sustainability spilled over into the social and economic realms as well.  For instance, ADM's Woertz talked about a new program, Strong Roots, that will help developing country farmers improve their productivity and put needed infrastructure in place. 

The panel was clear that corporate social investment programs like Strong Roots have the potential to create more enabling environments for development through enterprise.  The panelists also talked a lot about the need for partnership in such efforts.  In our increasingly interdependent world, Clinton advised corporate executives to ask themselves, "What do I have complete control over and where do I need a good government in place?  What can I do cheaper, faster, better if I work through an NGO?"

It wasn't as clear, however, on the extent to which big companies would or should drive development through enterprise themselves, through their own core business activities.  During the Q&A session, CEO of Light Years IP (and Ashoka Fellow) Ron Layton asked, "Are you going to hang onto your existing business models, or will you be able to adjust?" 

Kent responded to Layton's question by telling the story of Coca-Cola's Manual Distribution Center model, in which local entrepreneurs supply small-scale retailers in hard-to-reach, low-income urban markets.  The MDC business model originated in East Africa and there are now more than 2,500 MDCs employing more than 12,000 people and generating an estimated $500 million in revenues a year across the continent.  The company has committed to grow the number of MDCs in Africa by 1,300 to 2,000 - creating between 5,300 and 8,400 more jobs - by 2010. 

The well-done report Monitor released recently makes the point that, with the exception of those that engage the poor as suppliers, "new entrants and small enterprises are more likely than large corporations to lead the development of market-based solutions in low-end markets."  Large corporations aren't necessarily renowned, as a category, for their capacity to innovate.  So what's the scope for them to engage in development through enterprise?  

The mission pursued by Ziqitza Education is to ensure that the innovative, participative and efficient teaching methods used in some elite schools in India and internationally are made accessible to all schools and children. Ziqitza pursues its mission through two activities: managing private schools and distributing e-learning tools.

Working at the education startup has been a tough, yet very rewarding experience. Few other jobs would give me opportunity to work in as many different functions and understand how each specific area works. Working at Ziqitza Education helped me realize my hidden potential in building processes, managing resources and getting help from all possible sources. We were even incubated in the office of Dial 1298 for Ambulance - another startup - so my startup experience was enhanced by working side by side with another social enterprise that is growing and ready to scale.

As an Indian who grew up in the United States, being exposed to the cultural differences across states in India, and working directly with a team from Kerala, Rajasthan, and Maharashtra was a refreshing break from the homogeneity of corporate America.

Traveling through Rajasthan, Punjab and Delhi - being in the "rural India" that I have seen, heard and read about was real eye opener.  After meeting with school principals, teachers, students, and parents, I saw examples of how the education system worked and how it failed, met people from many different organizations who are trying to improve education in India, and those who are already making it happen. It helped me realize the opportunity and challenge that Ziqitza Education has to make a difference.

Recently, Ziqitza Education became a finalist at the Sankalp Social Enterprise & Investment Forum in the Emerging Growth Education for All category. This award was exciting, but more importantly the conference introduced me to a whole new world of organizations and people who believe in social enterprises and its impact. Many of the people I had a chance to meet where supportive and encouraging to the mission of Ziqitza Education.

The past three months has made me realize that the future of India lies in educating rural India. More children are enrolled in Indian schools today than at any previous time in the country’s history, but results are poor in terms of student drop-out rates and their ability to read and write. Surprisingly, it’s the younger generation that is recognizing the need and placing an importance on it. At Bhartiya Public School in Pilani, a small town in Rajasthan, we met with 3 students who shared their thoughts on education:

“Before we move to the big cities for work, we need to think about educating the kids from the villages” said a 2^nd Grader. “I wish we had mentors in our local area who have pursued different types of careers” said an 8^th Grader. “I want to improve my English and find people who can give me language training” said another.

Kids like these deserve a chance and hearing it firsthand from them has been the real motivating factor for me to be part of an organization that is trying to make a difference.

It has been a unique, tough & exhilarating experience, one that has made me a better human being and also open doors to new relationships, friendships and collaboration to whole set of people that I would never have otherwise had the pleasure to meet, greet and work with

Last night I had the pleasure of attending a book discussion for Portfolios of the Poor: How the World’s Poor Live on $2 a Day, written by Daryl Collins, Jonathan Morduch, Stuart Rutherford and Orlanda Ruthven.  The event was presented by the Financial Access Institute (FAI) and Africa House and took place on the campus of New York University.  The discussion was led by Jonathan Morduch - Co-author, Portfolios of the Poor, Professor of Public Policy and Economics, NYU and Managing Director, Financial Access Initiative and Daryl Collins - Co-author, Portfolios of the Poor, Senior Associate, Bankable Frontier Associates.  Other participants included  Rogan Kersh - Associate Dean, NYU Wagner School of Public Service; Matthew Bishop - Chief Business Writer/American Business Editor, The Economist; Bill Easterly - Professor of Economics, NYU, author of The White Man’s Burden; and Yaw Nyarko - Professor of Economics, NYU, Director of Africa House.

The recently released book focuses on methodology and new ways of thinking about the bottom billion. They focused on roughly 300 urban and rural households in Bangladesh, India and South Africa over the course of one year.

Often times in the development community the bottom billion is thought of in terms of aggregate statistics without much attention given to the individuals and their day to day lives.   The goal of the authors was to find a happy medium between aggregate data/statistics and individual anthropological research.  What they developed as a result were Financial Diaries, which give a basic overview of every financial transaction made and service used over the studied timeframe.

Through the use of Financial Diaries, the researchers meticulously tracked every detail of their subjects’ financial lives by interviewing them bi-weekly for one year using metrics of the portfolio management world, including cash flow and income statement analysis.  While gathering evidence, they discovered that it took approximately six interviews with each respondent to develop the trust required to obtain accurate data and account for margins of error.  This is in interesting implication for research that is often times based on one interview. Their analysis approached households as start-up organizations and adjusted their research using these metrics.

There are many assumptions that people tend to make when trying to solve the problem of poverty: that people live hand-to-mouth, do not plan for the future, and do not save.  This book refutes those broad based assumptions through concrete examples.  In South Africa, many of those interviewed participated in locally run savings clubs, an informal but powerful commitment to save that operates outside of the established financial institutions available to them.  Families in Bangladesh were shown to juggle a variety of ‘financial’ service products including shopkeeper credit, saving with a money guard, interest free loans from neighbors and family, and remittances to home villages among others. 

These examples are used to back up some of the major lessons of the book; to understand that those living on $2 a day maintain financial lives because they are poor not in spite of being poor.  The main conclusion of the book was presented as the poor suffer from the irregularity and instability of their incomes.  One of the best ways to alleviate this problem would be to offer better financial services including more options for those living with the volatility of these income streams. 

If you were to look at a chart of their weekly/monthly income it will average out to this number of $2 per day, but with many peaks and valleys that need the help of financial services to smooth out these bumps.  This is the area of the market being underserved and offers significant opportunity for improvement.

The end of the presentation was enhanced by a few remarks from distinguished invited guests Matthew Bishop, Bill Easterly, and Yaw Nyarko.  All three men commented on how the book was able to cut through a lot of the hype surrounding micro-finance and really present the view of what the people living in these conditions actually want.  Bill Easterly made the point that the conventional views of micro-finance are generally insufficient and that a more accurate term would be micro-credit because many of the loans are used for day to day living expense purposes rather than entrepreneurship.   This extension of credit is vital to these communities however it counters the theory that micro-finance can be a panacea used to alleviate poverty.

The evening provided a thought provoking discussion and can be used as starting point for new dialogue in the development and public policy communities concerning how best to improve the lives of those living on $2 per day.  I look forward to reading the book and determining how my own reflections fit in with the interpretations presented at this event.