NextBillion.net - Development Through Enterprise - TheNext4Billion - Comments

time is money, nothing new there

Michael Payne — Thu, 15 May 2008 16:28:32 -0500

I think the significance of the telecommunications infrastructure is that it drastically lowers the transaction costs for all kinds of activities. Not having to walk long distances is not about quality of life, it is income. If you are making a dollar a day and you don't have to spend a day walking into town and back, that's a dollar in your pocket. Obviously that's an oversimplification, but if someone doesn't have to take a day away from their labor or childcare responsibilities to investigate an opportunity they are much more likely to investigate it.

Supplying the equipment to make BOP farms successful

Paul Rigterink — Thu, 15 May 2008 14:34:55 -0500

I think AVINA could make a major contribution to helping BOP farmers if they would identify all the supplies that are needed by BOP farmers with 1-3 acres of land who wish to be successful with: Grain production (corn, soybeans, millet, sorghum, or rice), Production of vegetables, Fruit orchards, Fruit nurseries, Poultry production, Small animal production such as goats and pigs, or General purpose micro-farms. Peace Corps Volunteers, NGOs, and others could then identify if these supplies are available in the region in which they are working to determine if their farming projects will succeed. When I worked in rural community development in Cordaba Colombia I could not easily obtain the following supplies: micro-irrigation equipment, veterinary medicines, wire mesh fencing, fertilizer, pesticides and pesticide applicators, micro-loans, farming insurance, garden forks and hoes, chain saws, grindstones for sharpening machetes, appropriate seeds and nursery stock, etc. Most businesses fail because they are missing critical supplies. I believe that BOP farmers face the challenge of farming without adequate equipment and this often causes their farms to fail. BOP farmers in Colombia need more than micro-loans if they are to succeed.

Thresholds lower - disagregating access from ownership

Franz Gastler — Wed, 14 May 2008 22:22:43 -0500

Sagar makes exactly the point I was grappling with before: the blurring of the line between 'BOP consumption' and 'BOP production'. Lowering the threshold to get connected to information allows a productive consumption, which goes to Sagar's point about this being an unnecessary distinction here, as it would be also for water, energy, housing, healthcare and credit--all similarly productive consumption opportunities. On the other hand, wedding parties, Fair & Lovely, junk food, alcohol and tobacco would be typical expenditures where lowering barriers to buy at the BOP wouldn't do much for development, and the consumer/producer distinction would remain.

It is an integrated approach

Sagar Gubbi — Wed, 14 May 2008 13:58:33 -0500

Ryan, Your post rakes up the age-old "BoP as a consumer" vs. "BoP as a producer" debate. I think this debate is unnecessary and it is actually a false dichotomy, as described by Rob in this NextBillion post dated 2nd August 2007: dichotomy.... The "unmet needs" of the people at the BoP are not just for consumption. BoP needs also include the ones that can trigger or improve income generation. Telecom connectivity, for example, can meet both kinds of needs. Microfinance is another such example, wherein loans are offered to the BoP for consumption but they are actually intended to trigger income generation. We cannot develop the BoP as a producer without offering consumer products and services to it. Similarly, we cannot offer products/services to the BoP without enabling income generaition. What we need is an integrated approach wherein BoP is developed both as a consumer and as a producer simultaneously and Allen Hammond's Transformative Sector Strategies have the potential to achieve that. Regards, Sagar

Income Generation Needs to be the Primary Focus

Judith Hellerstein — Wed, 14 May 2008 12:24:58 -0500

Ryan Gunderson is correct, the correct question to ask is how do you help people raise their incomes so they can afford to meet their unmet needs?"

We need to ask how can policy help the poor to get onto, and stay on, a pathway out of poverty? One way of doing this is by connecting the poor to opportunities. The rural poor do not merely lack capabilities; they lack the means of connecting to growth. Sometimes the missing connection is physical, but often it is only part of the equation. Other forms of connection matter too: poor households have more difficulty in accessing credit and have no access or limited access to financial services and banks that offer credit. Access to credit for the poor is a major constraint to accessing opportunities, including problems associated with collateral, complicated procedures and the inability to use one’s repayment record as an asset.

Other important questions to ask are whether these models will accelerate expansion of access to financial services? Will they lead to a broader access to financial services among the un-banked, especially for poor people living in rural or remote rural areas?

What particular needs does this segment have and how can they be met? What are the barriers to full adoption? Why do some people accept, reject, or delay accepting or adding services?

These are all very important questions that should be asked so that we can get answers that can really solve the problem and provide us with better ways of increasing income generation and making sure that once we start down this path we make sure that the poor stay on the express lane out of poverty and remain there. Without significant work on income generation this will not work.

Re Paul Rigterink

Allen Hammond — Wed, 14 May 2008 11:18:11 -0500

Paul Rigterink's comment is fascinating and adds a deep insight to the potential of micro-pharmacy model. Since agriculture is still the abiding livelihood and critical to household food budgets in rural areas, simple means of improving animal husbandry can be important. His suggestion that micro-pharmacies, a pharmaceutical distribution infrastructure, could also serve to distribute veterinary medicines and animal care knowledge makes a lot of sense to me. It also shows the value of the distribution platform—that it can be leveraged to meet other needs, and that it can boost incomes as well as save lives. —Al Hammond

Really...

Franz Gastler — Wed, 14 May 2008 09:15:06 -0500

Allow me to take a stab at this one. I'm sorry to be so blunt, but really the equation is rather simple. Information is money. Where access to information is monopolized by the few (e.g., moneylenders, slumlords, intermediaries in commodity agriculture, government procurers and functionaries), the bargaining position of the 'BOP' chap is severely hindered.

Restricting his or her access to information by default or design results in what Alex Nicholls at Oxford describes here as the poverty penalty: ‘[K]ey conditions … are notably absent in rural agricultural societies in many developing countries…’--Perfect market information, Perfect access to markets and credit, Ability to switch production techniques and outputs in response to market information. (Please see Chris Beshouri's great McKinsey Quarterly article: 'A grassroots approach to emerging markets business', ITC's famous e-Choupal, and its countless imitators).
TWO EXAMPLES: 1)I'm writing to you right now from Khan Market in Delhi, having paid Rs 80 (US$8 at PPP) for a coffee in order to get internet access (electricity outages and shaky broadband infra have cut my apt connection today)--that's one example that's close to home for me.
2) I need to send $400 to the states to someone who paid for a plane ticket after my credit card was pick-pocketed at the Pushkar Camel Fair. The banks want $30 on each side for a wire transfer.. After much badgering and comments like, 'This is 2008, right?' 'You're telling me this is how Indian businesspeople transfer money?', I was finally made privy to the information that I could just buy travelers cheques for $4 (which I would then courier for free through my employer).
(*Note: this is why the "Hawala" system of transferring money--which to the uninitiated would seem like entering the narcotics trade--proliferates even today among the rich; see also Basix cell-phone transfers and many others on NextBillion).
Thought experiment: My motorcycle is at the mechanic today, so I'm traveling via autorickshaw. If you don't live in Delhi, and wanted to take a rickshaw from Navjeevan Vihar in S. Delhi to Khan Market, how much would you pay? How would you determine an anchor price? How much time would you waste bargaining? How much is that time worth? What's the aggregated cost? Would you: a) wing it, b) call a friend, c) know about the rickshaw police line staffed by a call centre to make bargaining effortless, d) check the exact km on mapmyindia.com, or e) do as I did, and having done all the rest at some previous point in time, just hop in, bark out the destination in Hindi, drop two notes at the end and ask for the exact change again in Hindi.
Information is money, the utility of which increases exponentially with lower incomes.

I second your post, and then some.

Ellie Skeele — Wed, 14 May 2008 03:04:57 -0500

As a Nepal-based, serial social entrepreneur I'm often dumbfounded by the attitude that BoP is about a big, new market for products and services. BoP is not a market. It's people, people with little to no money. Yes, they want improved quality of life – health care, access to ICT – but they need money to buy these things. We must focus first and foremost on sources of livelihood and job creation. The rest of it feels a bit like a pyramid scheme to me. I am working to create a nettle textile industry in Nepal that has the potential to generate income for tens, possibly even hundreds of thousands of families. When we’ve accomplished this, only then will they be able to afford the goodies that money can buy, however reasonably priced they are. Right now subsistence farmers can only look and wonder. They cannot buy. I agree – show me the money!

Healthcare for BOP poultry stock

Paul Rigterink — Fri, 09 May 2008 10:36:04 -0500

As strange as it may sound, I believe that the sale of veterinary poultry medicines at the pharmacies described in this article can dramatically increase the health of personnel at the BOP. Backyard producers value chickens for their adaptability, contributions to the family’s income and general welfare, and for insect control and fertilizers in the garden. In most family flocks, chickens scavenge plant or food residues and insects around the home. With minimal care, family flocks can hatch and raise chicks, produce high-value meat, and supply eggs. Eggs can be a particularly important source of food for children with protein malnutrition who are between six months and three years of age. Live chickens sold for meat bring a good price and a primary source of income for poor farmers. Inexpensive disease control markedly increases the survival and productivity of a family poultry flock. The following four preventive practices, given every three months, will eliminate most health problems in poultry flocks: 1) Vaccination for Newcastle disease, 2) Deworming for roundworms and tapeworms, 3) Dusting under wings for irritating external parasites such as lice, and 4) Treatment for chronic respiratory disease to increase production. BOP personnel can easily raise up to 50 healthy chickens. To feed the chickens and obtain maximum profit on a small farm, BOP personnel can use: 1) Excess and/or unusual food crops, 2) Crop residues, 3) Household refuge and 4) Scavenger feed (e.g., weeds, seeds, insects, worms, etc). Once BOP personnel have met this “from 5 to 50 challenge”, they will be ready to move-on to learn the technology of “transitional” poultry systems of 200-300 birds and finally full commercial production of 500-10,000 birds.

BOP Deal flow

Munya — Tue, 06 May 2008 13:05:11 -0500

It certainly seems there's a tangible increase in public and private capital targeting the BOP. I look forward to reading more on your approach to scaling BOP strategies. When it comes to scaling BOP strategies in Africa, I think the main challenge is still the entrepreneur. They are undoubtedly the missing key in this region unlike India for example. Very few are able to develop their ideas into a bankable business proposal and tend to over value their sweat capital input, which seems to be a fairly common challenge in structuring seed stage investments. The progress might be slow but it's worth the effort, these are the pioneering years!

China & mobile social venture

Ludovic — Tue, 29 Apr 2008 21:25:23 -0500

Congrats to the NYT & NextBillion team / commnunity for all the good work done ! We animate here in China an ecosystem of Social Venture,via the Social Venture Forum (www.socialventureforum.com) - and last year organized a forum on "Harness the power of mobile toward Social Good" in China. For those interested to share, hereunder a link to the summary of the presentation: 2... Any idea, question, suggestion, am available at : Ludovic (at) kalibrio (dot) com

Indian BoP market

Rob Katz — Mon, 28 Apr 2008 09:22:05 -0500

SM - thank you for your comment and for taking a look at "The Next 4 Billion" report. I'll refer you to the methodology section of the report for a full explanation of the way we came to the size of each market. You have a valid point that the Indian demographics may show something slightly different. The key here is that we were attempting to create a universal standard that could be applied across countries. Nothing is perfect, and we are certainly open to new research and - even more - better data.

95% of india is NOT BOP!!!

SM — Mon, 28 Apr 2008 01:00:42 -0500

BOP may constitute a *significant %* of India's population, but to release a report that says over 95% of India's pop is BOP is pretty ridiculous-that too in 2007?! Pls refer to NCAER's research (or any other research firm for that matter) on the indian consumer demographics and you will see that the market is based on different segments wherein the middle classes are increasing very quickly and definitely constitutes anywhere b/w 50-350 million people depending on how you measure of course. I'm not sure how this ridiculous % was reached!

Hi

Bimal — Sun, 20 Apr 2008 07:24:33 -0500

Microsoft corporation is the best company and Bill gaets is the best person in the waorl He is the father of computer software I wnat to see greater then vista Bimal Rai kathmandu Nepal Software dremear

Serving the BoP from within

Jeff Mowatt — Tue, 04 Mar 2008 13:22:50 -0500

This was very much the case with an early adopter of a social business model which was delivered in Russia between 2000 and 2005 under the People-Centered Economic Development paradigm. It began with self-investment to deliver a proposal for microeconomic development, which identified local business opportunities and the need for a moral collateral based microcredit bank.

A resounding success with 98% repayment, women borrowers outnumbering men by a factor of 4:1 and 10,000 new enterprises. And yet, it is almost unheard of.

This is I believe do to the misconception that the origins of advocacy for business models applied to eradicate poverty came post 2004, when in fact they were delivered as a white paper to US government nearly a decade earlier.

As a participant here I have never been able to write about it, or persuade editors to examine it.

Since 2004 P-CED has been a UK based software business, with a development presence in Ukraine. Our activism and advocacy being funded by software sales and maintenance revenue.

Our efforts over the past 4 years in Ukraine have been in raising awareness of corruption and mistreatment of children in institutional care and the preparation of a microeconomic 'Marshall Plan' with a nil overall cost outcome based on leveraging business investment for a mix of more-than and less-than full cost recovery social components.

While presidential candidates compete in their advocacy for a 'Marshall Plan' against poverty, the only plan that is more than political rhetoric sits largely ignored.

All of the above will be found, presented openly on the website link embedded next to my name above.

I'm frequently astonished of the extent to which an organisation like ours can both pioneer and be excluded from the dialogue on successful models for development.

Jeff Mowatt P-CED - Economics for humanity