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We just heard from the E4SI folks that they have started accepting applications to select their third batch of fellows.

Engineers for Social Impact E4SI (which we covered here and was started by former Nextbillion staff writer Nitin Rao) is a unique fellowship opportunity for Indian youth from some of the most prestigious technical schools to spend their summers working in dynamic responsible businesses. These include renewable energy companies, such as SELCO that provide sustainable energy solutions, to the rural homes and businesses. My two personal favorites over the last couple of months:

• Husk Power Systems, which provides energy to thousands of homes in Bihar using micro power plants that makes use of discarded rice husk and has some big names backing it and;
• Sarvajal, which is a Piramal backed startup providing pure water at just 25p per litre to the BoP. 

Visit this page to see the complete list of partening enterprises. E4SI fellowships promise to be highly e ntrepreneurial as it combines the best of consulting, technology, and social innovation. 

Apart from the fellowship, the fellows gather together for an orientation session to interact amongst themselves as well as with industry representatives. Past speakers have included business leaders such as Gurcharan Das (ex CEO P&G India turned author), Harish Hande (CEO, SELCO), Laura Parkin (Co-Founder, Wadhwani Foundation & NEN), and representatives from Acumen Fund, Unitus, Ashoka, SONG Advisors (a Soros, Omidyar, and Google.org Investment Fund) and IFMR Trust.

The competition is tough but the reward is something worth fighting for.

If you're sold to the idea of comitting 8 weeks or more of your time this summer to any one ofthese champion enterprises, then head over to the registration page.

Deadline for submitting your application is the 7th of March 2010. 

This past week saw a fantastic Tech4Society conference take place in Hyderabad, India, focused on the worthy goal of how to build systems that maximize the social value of technology.  When I came to understand the thrust of the conference in this way, I became that much more enthusiastic about it.  This is a particularly valuable approach to take because while technology is often conceived in a relative vacuum, imagined with a very specific audience or market in mind, it of course exists within a broader context.  From Google's business decisions vis a vis China to the countless simple low-cost improvements to basic tools used globally like more efficient cookstoves or drip irrigation, the systems in which technology is used and propagated determine more of its impact than any particular aspect of its design.  A good example of the sensitivity of technology interacting with business models and human proclivities is here.

I was not, unfortunately, in Hyderabad, but I followed the Twitter feed from the conference, #tech4soc, which you can still peruse.  Not surprisingly, a popular topic was scale, because it is difficult for technology to make an impact if it doesn't get out of the garage in which it's put together, and systems for scale are essential.  But building systems for scaling technology deployment requires a very different set of skills than building a technology, and the tweets I caught included discussion of this need for organizational change by technology companies that hope to reach any modicum of real market penetration.

You can read full coverage of this uniquely oriented conference on Tech4Society's blog and the website of the Lemelson Foundation.

Two recent reports that caught my eye:

• The 2009/2010 Beyond Grey Pinstripes report from the Aspen Business and Society Program (a report initiated in the past by Next Billion managing partner World Resources Institute) came out recently, highlighting what's behind the hype when it comes to business school curricula and courses on social and environmental topics.  Lots of schools talk a good game, but who's actually got the content to back it up?  Topping the global ranking by Aspen's measurement is the Schulich School of Business at York University in Canada, followed by the Ross School at Michigan (wonder if Next Billion managing partner the William Davidson Institute has anything to do with it?), the Yale School of Management, and the Stanford Graduate School of Business. 
• To follow on my post from last week on mobile money, I've finally gotten the chance to look at a scenario analysis done by CGAP and the UK's Department for International Development (DFID) for "branchless banking" looking out to 2020.  This is from November 2009, but should still be relevant giving it's intended to look ahead for ten years still.

Many BoP ventures are beginning to think hard about metrics, more so than ever before. There has been much written recently about the importance of measuring impact and the large number of new tools and frameworks that have emerged, including many posts here on NextBillion which can be found by searching "metrics." These posts, along with many other continuing conversations in the field are helping us all navigate the same questions around collecting meaningful metrics.

Measuring outputs and reiterating anecdotes isn't sufficient in order to truly evaluate an intervention's impact. Measuring outputs only indicates how well an organization implements what it has set out to do.  This is certainly important for donors, who want to know how and where their funds have been used. But what if this implementation is wasting resources, or actually making the situation worse? It's impossible to tell by only evaluating data on outputs.

Take the example of mosquito bed nets. By measuring number of nets distributed by an organization to a population (an output), you don't know how or if the population is using the nets. The nets could still be in their packaging or being used as fishing net. I'm not saying ventures shouldn't measure outputs, but there is no point measuring them unless they also consider the outcomes - the broader impact on their target population such as the influences of bed nets on  locals income, education, health and relationships.

Most experts seem to agree that it makes intuitive sense to measure outcomes.  Well why aren't more organizations measuring outcomes? Based on observations and conversations we've had with numerous organizations, I've come up with three different reasons that highlight the underlying constraints:

1. Confusion - Many organizations don't know where or how to start. This is mostly a result of lack of time dedicated to impact assessment at an organization. There is plenty of information out there on how to measure outcomes.
2. Uncertainty - Organizations don't know what their outcomes will be, and they are nervous about hearing anything other than positive news. However, you can't improve without understanding your weak points!  The development community as a whole needs to emphasize and reward learning from mistakes. Ultimately, this will benefit everyone.
3. Apathy - Some program managers won't do it until they are forced, and instead will continue using anecdotes and outputs in attempts to show their influence in alleviating poverty. As the attention around impact investing grows, soon these organizations will be "forced" by donors to measure outcomes. As more take the step to measuring outcomes, it will soon become the norm.

It will be interesting to see how these organizations evolve their thinking and action as the pressure to measure metrics increases both from funders and other organizations doing so. At the same time even some of the organizations currently measuring outcomes end up frustrated and without quality data due to poor methodology. At WDI we have developed a robust and straightforward data collection process for collecting impact data at the project level. My next post will focus on recapping outcomes from our upcoming BoP Impact Assessment Workshop which will share our framework and data collection process with participants.

I look forward to exploring the area of metrics, sharing our latest thinking at WDI, and continuing the conversation around metrics with you all. 

Editor's Note: This post is Part 3 of a 6-part series exploring new business models for linking small farmers to global markets being analyzed through an international collaborative effort that can be read about here.  Read an introductory post, catch up on part 1 part 2, and find out more about our work with the Center for International Tropical Agriculture at CIAT's blog.

In our last post we remarked how chain-wide collaboration was essential to creating shared goals amongst chain actors and  to making real progress towards small farmer inclusion.  Interdependency between chain actors appears key for weathering risk, meeting new standards of quality, complying with regulations, and promoting innovation and increased product value. This post explores the issue of transparency in chain governance, and the role it plays in meeting expectations, standards and commitments to buy and sell  volumes of a certain grade, as well as equitable processes of risk management across a supply chain with multiple participants. 

Transparent Chain Governance

Governance refers to the setting, monitoring, and enforcement of formal and informal rules along the value chain. Governance patterns in global value chains vary, and global-scale industrial organization affects not only the fortunes of firms and the structure of industries, but also how and why countries advance -or fail to do so-  in the global economy (Gereffi, Humphrey, Strugeon, 2005).

Continue reading this article

Even before I fully knew what mobile money was, I could tell it was going to be huge. One look at the size of immigrant remittance flows that have become the largest source of funds flowing into many developing economies (and are more stable than FDI), and you can tell that innovative ways to move money with lower transaction costs would quickly find scale.

Add to this the cumulative economic turnover at the base of the pyramid - 4 billion people without bank accounts and often any non-cash monetary instruments - and innovative ways to store money and make payments loom even larger.

Estimates for the size of the mobile money market range from $27 to $202 billion within 4 years. So I'm not the only one who thinks this will be big but doesn't know how big.

To get a handle on all this buzz and walk through what mobile payments really look like, I sat down for a tutorial with Ben Lyon of FrontlineSMS Credit while he was in the Bay Area to speak at Google. As someone accustomed to debit cards and PayPal and the like, I had to take a step back to get a feel for what the ability to send and receive money through a mobile phone - or really, a SIM card - means for someone with no other easy way to move money or convert cash into electronic form.

Continue reading this article

When my co-worker Moses Lee at the William Davidson Institute asked me to write a blog post about my experience last year as a Kiva Fellow in Bolivia, I did not even know where to start or what to encompass. Living and breathing Kiva for three months implied me getting involved with microfinance in every sense-with laypeople that l end in hopes of making an impact, the energetic brains at the Kiva headquarters, the ambitious executives at the local microfinance institution, the underrated loan officers that work tirelessly to overcome the many obstacles in lending to the poor, the proud and driven borrowers themselves, and, equally importantly, the other Kiva Fellows that constantly collaborated on best practices, supported each other, and shared an excited, passionate energy online. Each of these interactions supplied me with so many different types of insights and inspirations that I did not know what I would even attempt to communicate to NextBillion.

At the end of the day, I just knew that I wanted to communicate the energy that every one of those interactions lent me. No matter how conversant (or not) the people at any given level were about the processes, difficulties, and possibilities of microfinance, I was struck by the way that a giant multitude of very different people had come together for something that, in fact, was functioning well and impacting thousands of lives across the globe. When one is only a tiny part of a movement, it is extremely easy to doubt its real and potential impact.  What allows this particular chain of people to shake the earth and create real change is simply their understanding that their small part of the link is not just valuable, but indispensable to the whole. They are all driven by the realization that the "whole" sums down to the simple concept of a vegetable seller's ability to feed her children or a seamstress' chance to leave her abusive husband and be self-sufficient, which they deem important enough to tackle the various difficulties one encounters when trying to create change at the base of the pyramid.

For those that are not familiar with Kiva, it is a person-to-person micro-lending website on which anyone can lend as little as $25 to an entrepreneur in the developing world. Kiva loans have a 98% repayment rate with 0% interest, but the lenders do receive a summary of the impact of the loan (a "Journal" update) on the entrepreneur's business and quality of life. These Journal entries are fundamental to the Kiva model because they take the place of the interest a lender would receive on a loan, instead providing them with the satisfaction of having had a positive impact on another individual. That is not to say that there is no interest charged to the entrepreneurs. After a lender sends their money by PayPal to Kiva, Kiva funds the microfinance institution, which charges interest to its borrowers. Kiva currently has 108 partner microfinance institutions (MFIs) in 52 countries.

Fundación Agrocapital, the MFI with which I worked in Bolivia, charges 30% interest on most micro-loans, which the institution uses to sustain and expand their own operations, repaying only the principal amount back to Kiva to be disbursed back to lenders. Though this may seem like a high interest rate, in the world of microfinance it is relatively standard. Microfinance institutions must cover many extra costs that a mainstream financial institution does not have to, like compensation for the time and money involved in travelling to borrowers' homes in far-flung locations. In addition, these interest rates are much lower than the entrepreneurs' alternative: borrowing from local moneylenders or "loan sharks" for rates up to 150%! Many women I spoke with were grateful to have access to capital at a manageable interest rate.  

With this model, Kiva revolutionized capital flows to MFIs around the world because for the first time, there are hundreds of small capital streams supporting many credible MFIs around the world, as opposed to in the past, when there were infrequent, very large investments producing a bottleneck effect in just a few localized MFIs. Kiva monitors their partner MFIs' administrative capacities and restricts its funding limits accordingly in order to avoid bottlenecks. Kiva recognizes itself as an administrative burden as well, since loan officers must write borrower profiles (a personal synopsis of the borrower and her business) and periodic Journal updates, and therefore sends Kiva Fellows to partner institutions in order to assist with administrative tasks and implement sustainable and efficient processes at the MFI in working with Kiva.

That is how I was given the opportunity to speak with hundreds of borrowers in Bolivia about their experience with micro-loans. The women and men I interviewed for Journal updates had a variety of businesses, the most common being ambulatory clothing/cosmetics/food sales, market stalls (more expensive), small stores (even more expensive), and small "cocinas," or simple lunch or dinner joints outside of their homes. The majority of the borrowers were positive about its effects; the micro-loans had allowed them to incrementally keep growing their businesses.

Most borrowers started out with very small businesses, and after a series of loans had grown their businesses substantially. The borrowing process works like this: borrowers take out short-term (think 6 months) loans to buy capital, they pay back the whole loan, and then take out another, usually slightly larger amount to buy even more capital. The borrowers normally go through a series of loans before one can see the impact on their businesses, but the businesses do grow substantially, and the majority of borrowers I spoke with had a more stable economic situation after a few years because of the micro-loans.

Stay tuned for personal stories of the driven, assiduous Bolivian borrowers and their innovative businesses. 

The date for submitting intention to compete forms for the first annual NextBillion Case Writing Competition has come and gone.  At the onset, the editors and I were unsure of how many people would submit."I'd be happy if we got ten," I told the Rob and Francisco.

Well, I'm pleased to let the NextBillion community know that we more than doubled that number with over 20 submissions from teams all over the world!  We had submissions from Washington University in St. Louis, Xavier Institute of Management, Dehlhi Technological University, Indian Institute of Management Bangalore, Tufts University, Colorado State University, University of Houston, York University, Syracuse University, and New York University - just to name a few.

Topics covered scaling BoP ventures (and questioning the need for it), assessing the impact of microfinance in Latin America, the effectiveness of using American youth to fundraise for ventures in East Africa, public/private partnerships, the role of MNCs at the BoP, and so on.

Rob, Francisco, and I are thrilled by the response from the NextBillion community and look forward to reading the final cases, along with the judges, in April.  Good luck to everyone who submitted!

As announced in January (link), The William Davidson Institute (WDI) has joined the World Resources Institute and Acumen Fund as co-Managing Partners of the NextBillion.net site.  The Managing Partners set strategy, fund enhancements to the site, manage the site, and work together to grow the NextBillion community.

This post is intended to introduce WDI to the NextBillion community and to invite you to explore ways to engage with the Institute. 

WDI is a think tank located at the University of Michigan (UM) that focuses on business and policy issues in developing countries.  WDI was founded in 1992, just a few years after the fall of the Berlin Wall, because Bill Davidson wanted to help the countries of Central and Eastern Europe make the transition from central planning to market economies.  WDI's focus has always been on practical engagements (see below).  Today, WDI has about 30 employees and operates in five broad areas:

• Research -we do applied work on Base of the Pyramid, the Business of Health Care, the Globalization of Services (i.e. offshoring), and GreenLeap (i.e. how to commercialize green technologies) issues.

In each area, WDI focuses on practical research and engagement and works to build bridges between academic research and interesting organizations in the field.  Examples of this are Ted London's work on Impact Assessment (HBR article) or my book on Offshoring (link).

• Executive Education - we deliver Exec Ed programs in developing countries using faculty from UM and other leading schools.  In 2009, WDI delivered 44 programs in about 20 countries - including Brazil, Costa Rica, Croatia, Latvia, Mexico, Rwanda, Slovakia, Turkey, and many others. 
• Development Consulting Services - we organize and deliver capacity building projects for development agencies (USAID, the World Bank, etc) in developing countries. 

DCS has core competencies in six areas:  Higher Educational Development, Private Sector Development, Monitoring and Evaluation, Policy Reform, and Post-conflict Economic Growth. 

DCS currently manages a portfolio of 12 projects covering 12 countries - including Algeria, Benin, Cambodia, Guatemala, Jordan, Kazakhstan, Rwanda, Sri Lanka, the West Bank, and others. 

• Educational Outreach - we develop teaching materials (cases, videos, simulations, etc.) on business and policy issues.  WDI has established a leading position in the international business and BoP segments.  You can browse the case collection at GlobaLens.com.   For those of you who are teaching professionals, you can apply for "registered educator" status here.
• Supporting international activities at UM - includes a wide range of activities to encourage emerging market research and experiences by the Michigan community.  These include research grants, student projects, a speakers' series, support for faculty travel and research, etc.

As you can see, there is quite a bit of overlap with the interests of the NextBillion community.  You can find out more about WDI and its activities by downloading our semi-annual newsletter.

Many of the people at WDI (Ted London, Stu Hart, Heather Esper, Moses Lee, and myself, and others) are deeply involved in the "Development Though Enterprise" space.  We look forward to getting to know you all and creating interesting and productive engagements in the years ahead.  

Over the last two decades, models for livelihoods for the poor have come of age and many organizations have focused their efforts on reducing the vulnerability of marginalized communities. A lot of these activities have been through the efforts of NGOs, international funding agencies, and local organizations working in specific regions and with specific segments.

Though these models have been successful in creating employment, they haven't scaled to realize their true potential. One such example is of Chamba chappals where over 500 artisans make sturdy and beautifully designed footwear in their homes or small shops. Chamba chappals have long been known for their durability and exclusive designs, many of which are now being developed and sold by footwear manufacturers at exorbitant prices. Yet, in the absence of proper advertising and market linkages - critical to ensuring these organizations take advantage of existing market opportunities, the Chamba artisans are finding it increasingly difficult to make ends meet.

Before moving forward, it is important to define 'market linkage' for the benefit of all readers. This definition is my view-point on the topic and may vary from other definitions. A clear market linkage is comprised of  one or more organizations that facilitate end to end integration of the entire supply chain - mobilize the women, train them, provide necessary infrastructure, supply inputs, provide capacity building training, and buy-back the finished product.

In simpler terms, an established market linkage frees up the women workers so they need only concentrate on production or sales (in the case of micro-entrepreneurs) and earn their livelihood.

Though some organizations have successfully created market linkages and achieved scale, we as an industry have a long way to go. I have listed four models that can each be effective in creating organizations that are scalable and sustainable:

1) Community managed organizations - These organizations mobilize groups to come together towards a common economic activity. They provide various types of capacity building to provide the necessary functional and technical skills. High volumes ensure benefits in the form of better pricing, lower operational costs, and removal of intermediaries. One of the most successful models in India is that of 'Shree Mahila Gram Udyog' (Lijjat papad - thin crispy Indian wafer). The organization reaches 42,000 women in 72 branches across various states. Through the combined effort of all its members, Lijjat has achieved sales of over Rs.520 crores with exports itself exceeding Rs. 24 crores.

2) Corporate tie-ups - These models could include institutions (like microfinance, NGOs, and the like) that mobilize women for a livelihood activity and companies that provide the market linkages. Notable among these is Indian tobacco company's (ITC) collaboration with 'self employed women's association' (SEWA) - one of India's largest membership organizations for women workers in the informal sector. SEWA mobilizes rural women and brings them together in the production of agarbattis (incense sticks). ITC supports these organizations in setting up units, training women, providing raw materials, and buying-back the finished product. Another interesting model is that of Fabindia.

3) Collaborative model - Considering the array of activities involved from mobilizing people to selling the output, there is an opportunity for multiple players to participate in a market linkage. These models include different organizations playing different roles to ensure a beginning to end integration. I haven't been able to come across any such successful models that have achieved scale.

4) Women entrepreneurs- There are organizations with inclusive business models that have created micro-entrepreneurs. Women in these organizations act as sales and marketing agents. Some of successful models are 'The Village Phone' - grameen phone's initiative and 'VisionSpring', among others.

Through these models, organizations like ITC, Lijjat papad and Gujarat cooperative milk marketing federation (Amul) have successfully created livelihood opportunities for thousands of women - creating employment opportunities in rural and urban areas while also creating wealth. They provide constant support through their strong marketing reach, technical training, and quality process - resulting in standardized and high quality products. These micro-enterprises provide the women with a livelihood that could be carried out within their homes, at their own time and convenience. Though it varies from product to product, these micro-entrepreneurs earn anywhere between Rs. 800 to Rs. 3000/month - which is significant considering that most of these women are otherwise unemployed and their husbands are unskilled laborers.

We as an industry must create more robust market linkages which once successful hold tremendous potential for large scale impact.

If you know of other organizations which provide a large scale livelihood with a market linkage, please indicate that in the comments section.

A recurring theme in romantic novels and movies is that you travel all over the world to finally find what you were searching for, right where you began. Could it be that the answer to malnutrition and self sustaining communities be a plant which has been growing in their back yard for all this time? This might be the case with Moringa Oleifera, often dubbed as the Miracle Tree, often discussed as being a savior of vulnerable communities especially in Africa and South Asia.

The plant, which grows in dry soils in tropical lands, is known primarily for the exceptional nutritional value of its leaves. Lowell Fuglie who has been researching abut the uses of Moringa for over a decade (and used to work for the Church World Service) says "Gram for gram, Moringa leaves contain three times the iron of spinach, four times the vitamin A of carrots, seven times the Vitamin C of oranges, three times the potassium of bananas, and four times the calcium and twice the protein of milk" (a much larger list can be obtained here). "Nutritionally, you can't beat it." he adds.

But it doesn't end here; Moringa Oleifera is known to be a really good water purifier, plant growth enhancer, biofuel (abstract only), and has plenty of medicinal uses.  These address some of the most pressing issues faced at the BoP today: Enegry, water scarcity & agricultural yield and most importantly malnutrition. All this being said, one would expect entrepreneurs to jump at this opportunity and capitalize upon it. A Moringa-based idea submitted to the Ashoka's Nutrition Competition was even adjudged as an early winner. However, we don't see any major players trying to create an industry based on this wonder plant. Why so?

The opportunities and challenges in the commercialization of Moringa have been summed up well by in a paper written by J P Sutherland, who was involved with a biotech startup called Optima Environment SA based in Switzerland. He cites lack of extensive research, skepticism from the scientific community, barriers to entry in the form of government regulations as well as poor marketing as some of the factors which constraint the commercialization of Moringa products such as oil, water coagulants and packaged food. He emphasizes that if entrepreneurs can find a way to improve the extraction process, moringa oil has a potential to become a useful source of fuel (both industrial as well as domestic) in the years to come. However, it's also up to the venture capitalists in the agro-health sector to realize it's importance as a life saving plant and encourage investments in this domain. 

What's really fascinating about this plant is that it is locally available in areas that need it most. The tropical nations provide the temperature and soil requirements that is suitable for its growth.  Every part of the plant, be it the stems, the leaves, the pods are useful in one way or the other. Even if it takes time to commercialize it on a large scale, I can see this as a useful community run venture to meet the nutrient needs of villages that are struggling to meet their requirements.