The lessons of design innovation, scale efficiency, vendor networking can help in hundreds of challenges

By Ramesh Ramanathan

I am inspired by the story of the Tata Nano. Beyond its cute look or frugal engineering-driven price tag, I find it remarkable how team Tata pulled it off in just four years.

But the larger point is the inspirational lamp that the Tata Nano story lights. There are hundreds of challenges in India where the lessons of the Tata Nano can be applied—design innovation, scale efficiency, vendor networking and so on. I want to talk about three illustrative examples.

Banco Compartamos portrays itself as the gentler lender to Mexico's poor. Compartamos means "let's share," reflecting the philosophy of its founder, José Ignacio Avalos Hernández. The scion of a cosmetics business family, Avalos, 48, is a devout Catholic who in 1990 converted a nonprofit donating food and clothing to the deprived into one that made loans guaranteed by borrowers' neighbors.

Clients, mostly women, gather weekly in groups of 12 or more. They can borrow only for small businesses, not consumer purchases, and they agree to see that the creditor gets its money back, even if the group has to make up the difference when a member falters. Peer pressure substitutes for motorcycle-mounted collection agents.

In 2000, Compartamos sought greater scale by becoming a for-profit, which led to the founding of the bank in 2006.

By Rasheeda Bhagat

Even as we get ready to cheer the 20-K mark the BSE Sensex might once again breach sometime soon, and do a lot of back-slapping on how India continues to remain an investment destination of choice, details in the 2007 Human Development Report released on November 27, highlighting some stark realities, should sober us up.

On the Human Development Index (measured on achievements in terms of life expectancy, education and income), we rank a poor 128th, qualifying for the tag of ‘medium human development’. As expected, China is ahead of us, at 81st rank, Iran at 94 and Sri Lanka at 99. What should be no consolation at all is that we are barely 8 ranks above Pakistan, which has been on a long slide for many years now.

Below African nations

The fine-print has more bad news.

Sheila Dikshit, chief minister of the Indian capital territory of Delhi, looks neither fat nor nervous, but she was disarmingly frank this week about the difficulties of coping with an annual influx of half a million migrants into her metropolis of 16m.

“I’ve put on some weight merely because I want to drown my anxiety by eating,” she told a conference of the World Economic Forum and the Confederation of Indian Industry. If her administration did not meet the needs of Delhi’s inhabitants, she warned, one of the world’s largest cities would slide downhill. “Each one of them when they live in Delhi, they want more water, more power, they want more wages, more oil.”Her honesty was refreshing. It is slowly dawning on Indian policymakers that the country’s much-trumpeted “demographic dividend” – the population surge that will increase the workforce to 800m by 2016 and make India the world’s most populous nation – may turn out to be more of a threat than an opportunity.Who will create the jobs to absorb the net increase of 71m young people of working age over the next five years? Most are poorly educated and only a fraction will find regular work.

Here at GOOD, we're fortunate to work with some amazing nonprofit partners. But, to borrow a line from the indelible Reading Rainbow, "don't take our word for it." We caught up with Acumen Fund Founder and CEO Jacqueline Novogratz to learn about Acumen, finding solutions to global poverty, and what keeps her inspired.

What does a $20 donation do for the Acumen Fund?
It makes you a stakeholder in creating real solutions that begin by looking at poor people as individuals. Think about buying shares of stock in solutions that aren’t just about giving things away but instead are about making tools and technologies affordable and accessible enough for people to change their own lives. Twenty dollars is an inexpensive share in a future that includes all of us. I could talk about reducing the price of malaria nets, but I think we need to get away from "$10 will save a life" and other slogans that fit on a T-shirt. Instead, we need to build lasting solutions that fundamentally change the system so that everyone can thrive without having to be dependent forever on charity. We’re building companies that will help the poor – and bring in far more resources in than we invest – long after we are gone. And we believe that is at the essence of leadership.

By Roben Farzad

It isn't easy for Masoud Alikhani to check on his investment. The Iranian-born Briton owns a facility in Mozambique that turns jatropha, a hardy, drought-resistant plant, into biodiesel. An October visit starts with an 11-hour flight from London, his home base, to Johannesburg. From there he jumps into a four-seat Piper Seneca II for a wobbly three-hour flight to Maputo, Mozambique's capital, during which one of the passengers, this writer, gets violently ill. On landing at Maputo's airport, where soldiers stand guard on the roof, Alikhani spends an hour wading through the bureaucratic muck of visa clearance and immunization checks. Then it's back on the plane for a 90-minute flight along the Indian Ocean coast to the province of Inhambane. At the 7-Eleven-size airport there, Alikhani is met by his brother and business partner, Said, for a 90-minute drive past wayward livestock and random brush fires to the village of Inhassune. At the end of a long dirt road, on a vast tract of reclaimed scrubland, sits the Alikhanis' massive biofuel complex. They try to visit every two months.

The brothers are among a growing cadre of intrepid investors looking for treasure in the 30-plus sub-Saharan African nations stretching from Mauritania and Somalia in the north to the continent's southern tip. There's no blueprint for this kind of investing: The best opportunities must be dreamed up and then created from scratch. The Alikhanis saw upside in a fallow cotton plantation. In Nigeria, U.S.-based private equity firm Emerging Capital Partners last year helped acquire an abandoned factory in hopes of supplying the continent with desperately needed fertilizer. South Africa-based microlender Blue Financial Services, energized by an investment from Wall Street last year, now has 171 branches in nine countries, with offices opening soon in Rwanda, Cameroon, Swaziland, and elsewhere. All told, at least $2.6 billion in private equity deals have been struck this year in the region (excluding more-developed South Africa), nearly seven times the 2005 figure.

This is the investing world's final frontier, so undeveloped and impoverished that it makes other extreme emerging markets like Colombia and Vietnam seem like marvels of modernity.

Acumen Fund, a leading catalyst for sustainable, scalable solutions addressing poverty in South Asia and East Africa, announced today that it has been honored with the 2008 Fast Company/Monitor Group Social Capitalist Award. The award recognizes outstanding organizations whose social impact and organizational effectiveness make them unrivaled leaders of social entrepreneurship.

"Acumen Fund is proud to be honored by Fast Company and the Monitor Group as a leader in providing market-oriented approaches to overcoming the challenges associated with global poverty," said Acumen Fund CEO Jacqueline Novogratz. "Acumen Fund is committed to identifying and supporting local entrepreneurs who bring affordable water, healthcare, housing, and energy to the world's poor, and we are excited about the prospects for change as we continue to expand our operations and impact around the globe."

By Otaviano Canuto

Thomas Trebat was right when he remarked here yesterday "an enormous share of the Latin American wealth generated in recent years has piled up in the hands of a privileged few that may or may not be playing a useful role in turning the present boom into self-sustained economic growth". Ultimately, the current cyclical upswing will mean more than collecting low-hanging fruits only to the extent that it is accompanied by institutional changes leading to sustainable patterns of capital accumulation and productivity growth, what will necessary require a departure from the historical rent-seeking traits of capitalism in the region. However, while Tom searched for answers to the questions he posed by looking at the top of the pyramid of income distribution – e.g. whether globally competitive high-value brands, products and companies are emerging in the region – I would rather suggest that, in the current Latin American context, the bottom of the pyramid is the best place to look for yardsticks regarding progress and sustainable growth.

Good News from the Bottom

Let me start by highlighting some news that may certainly raise the hope that the current boom will yield at least some long-bearing fruits. I refer to the lower income concentration and poverty incidence that have come hand-in-hand with the low-inflation-cum-higher-growth experience of the latter years. In the case of the two largest economies in the region, which between them add up to more than 50% of the region’s 560 million people, as The Economist observed: "the incomes of the poor are rising faster than those of the rich in Brazil (where income inequality is at its least extreme for a generation) and in Mexico.

Nobel laureate Prof Muhammad Yunus has asked for major reforms in the World Bank saying the multilateral development bank has not been successful in achieving its main goal of poverty alleviation.

"The world has gone through so many changes over the last few decades, but the World Bank remains static since its establishment about 60 years ago. It needs reforms and there should be a rethink of its policies," Yunus told reporters after a meeting with visiting WB President Robert Zoellick at his Grameen Bank's Headquarters in Mirpur yesterday.

"Within the present structure, World Bank country offices are working like post offices," Yunus said, adding the offices wait for directives from the headquarters and implement those.

Food, home, services in low-income areas cost residents a $2,800 'poverty premium'