Other new models of philanthropy are even more closely linked to the business world. Last year, the Soros Economic Development Fund, Google’s philanthropic arm, and the Omidyar Network unveiled a $17m fund to invest in small and medium enterprises (SMEs) in India.
SMEs are an important engine for economic growth and job creation but are sorely lacking in India due, in part, to a lack of the financing needed to scale up. Reuben Abraham, senior adviser to the fund based in Hyderabad, met with George Soros in 2006 and said the billionaire financier “was intrigued by SMEs”.
The fund looks beyond India’s traditional investment sectors of IT and telecoms to invest between $500,000 and $3.5m in a variety of neglected but essential sectors, such as urban waste disposal and worker training for emerging industries such as retail, hospitality and healthcare.
“Every inefficiency you see in the country is a potential way to make money,” said Mr Abraham.
Foreign Aid and Bad Government: Helping Entrepreneurs is the Right Approach
Wall Street Journal — online.wsj.com
Published on January 30, 2009
By IQBAL Z. QUADIR
Barack Obama has talked a lot about changing the way America relates to the world, and few areas are as ripe for reform as our policies on foreign aid. They have contributed to economic stagnation in poor countries and deprived America of large export markets. Entrepreneurship, not aid, is essential to rejuvenate markets in the developing world and, in turn, help America prosper.
During the Cold War, the U.S. instituted a policy of sending money to governments in poor countries to buy their political loyalty. While studies show that sending aid to foreign governments creates allegiance, it does not lead to economic progress. Instead, it makes governments in poor countries dependent on the U.S. rather than their citizens' taxes.
Base of the Pyramid Innovations Offer Growth Opportunities for Business and Communities
World Economic Forum Press Release — www.weforum.org
Published on January 30, 2009
Davos-Klosters, Switzerland, 30 January 2009
Despite the economic downturn, companies can find growth opportunities among the 3.7 billion people at the "base of the pyramid" (BOP) by adopting innovative strategies that benefit local communities, according to two reports released today by the World Economic Forum. The companion reports, entitled The Next Billions, present examples of successful BOP business ventures based on a year-long survey - drawn from consultation with over 150 business leaders and stakeholders, and a review of over 200 case studies. The reports were developed by the Forum in partnership with The Boston Consulting Group and with support from the Bill & Melinda Gates Foundation.
One report, entitled The Next Billions: Unleashing Business Potential in Untapped Markets, outlines business strategies for effectively engaging the BOP across all industry sectors, noting the potential of a market that has seen 8% growth rates in recent years. The other, entitled The Next Billions: Business Strategies to Enhance Food Value Chains and Empower the Poor, focuses on business models along the food value chain - from agricultural production through food processing, retailing and consumption. Food value chains provide the main source of economic activity for 70% of the BOP, and capture the majority of spending (over US$ 1.3 trillion per year on food).
Capital Flows to Developing World at Risk of Collapse
Financial Times — www.ft.com
Published on January 28, 2009
Capital flows to emerging markets are in danger of collapsing this year as the financial crisis in advanced economies risks choking off the supply of credit to the developing world, an association of large banks warned on Tuesday.
The Institute for International Finance forecasts net private sector capital flows to emerging markets will be no more than $165bn (€125bn, £116bn) this year, less than half the $466bn inflow in 2008 and only one fifth of the amount sent in the peak year of 2007.
IF USER demand were the sole driver of innovation, the biomass cooking stove would be one of the most sophisticated devices in the world. Depending on which development agency you ask, between two-and-a-half and three billion people—nearly half the world’s population—use a stove every day, in conjunction with solid fuel such as wood, dung or coal. Yet in many parts of the world the stove has barely progressed beyond the Stone Age.
The World Health Organisation (WHO) estimates that toxic emissions from cooking stoves are responsible for causing 1.6m premature deaths a year, half of them among children under five years old. In China 83m people will die from lung cancer and respiratory disease over the next 25 years, according to a recent report from Harvard University. Research from the University of California, Berkeley, on stoves in India, Guatemala and Mexico has found links between indoor air-pollution from stoves and increased incidence of pneumonia, cataracts and tuberculosis.
India: The Fastest Growing Telecom Market
Trading Markets — www.tradingmarkets.com
Published on January 26, 2009
India has emerged as the fastest growing telecom market in the world, attracting not just global service providers like Britian-based Vodafone but also big handset manufacturers like Finland's Nokia that not too long ago was reluctant to make an entry because of low volumes. For a country that stood at the bottom of the pyramid in terms of telecom penetration a decade ago, 2008 was a watershed when India's subscriber base topped 350 million users to make its network the second largest in the world after China, displacing the US.
South Asia
Sunil Jain: Top of the pyramid
Business Standard — www.business-standard.com
Published on January 22, 2009
Management guru CK Prahalad popularised the concept of the fortune at the bottom of the pyramid (BOP), and among others, the country's top mobile phone players seem to be taking this quite seriously given how they’re wooing BOP customers. It is, however, not quite clear how this strategy will pay off.
According to a study by consulting firm BDA with chamber of commerce Ficci, the top 9 per cent of mobile phone users in India contribute 29 per cent to industry’s revenues and 45 per cent of profits; the next 20 per cent of subscribers contribute 44 per cent to revenues and 40 per cent to profits.
The lower end of the pyramid — 71 per cent of subscribers — contributes a mere 27 per cent to revenues and an even smaller 15 per cent to profits. With the collapse in average revenues per user (Arpu) expected to be staved off only with the introduction of 3G services which are to be used by the top 12-13 per cent of users, the bulk of the profit will continue to come from high-end users. Given this reality, and with number portability around the corner, the real battle has to be for the top-end customers.
How Access to Information Can Tackle Poverty and Pollution
Huffington Post — www.huffingtonpost.com
Published on January 22, 2009
By Andy Posner
What I realized, then, is that the poor need access to information far more urgently than they need handouts and subsidies. Still, that's a risky statement to make, as many will argue that given a choice between, say, a cell phone and a meal, the vast majority of poor people will choose the meal. However, a fascinating NY Times article from last year titled 'Can the Cellphone Help End Global Poverty?,' argues that, given precisely that choice, most will choose the phone. The article cites a study by the World Resources Institute, a "Washington-based environmental research group [which] published a report with the International Finance Corporation entitled "The Next Four Billion." The fascinating study "looked at, among other things, how poor people living in developing countries spent their money" and found that:
even very poor families invested a significant amount of money in the I.C.T. category -- information-communication technology, which, according to Al Hammond, the study's principal author, can include money spent on computers or land-line phones, but in this segment of the population that's almost never the case. What they're buying, he says, are cellphones and airtime, usually in the form of prepaid cards. Even more telling is the finding that as a family's income grows -- from $1 per day to $4, for example -- their spending on I.C.T. increases faster than spending in any other category, including health, education and housing. "It's really quite striking," Hammond says. "What people are voting for with their pocketbooks, as soon as they have more money and even before their basic needs are met, is telecommunications."
Female Empowerment and the Promise of Microfinance
The News - Pakistan — www.thenews.com.pk
Published on January 22, 2009
By Roshaneh Zafar
Recently, I came across a quote from Edmund Burke, an Anglo-Irish statesman of the eighteenth century, “the only thing necessary for the triumph of evil is for good men (and women) to do nothing” (parentheses and emphasis, mine). The emphasis on “women” is obviously my attempt to remind us that we need to review Pakistan’s situation through a gender lens. Looking at the recent events in Pakistan, I feel, at times, that a malaise ñ a malaise of indifference - is beginning to creep into our psyche. This malaise is at the forefront of the multifarious problems we face as a society and as a nation.
However, all is not lost. There exist oases of hope in Pakistan like microfinance which can provide long-term financial choices and services to the poor. Microfinance is no panacea, however. It will not defeat global poverty by itself. Nonetheless, it is an important part of the solution. Microfinance provides a stable and sustainable source of income that enables microfinance clients to climb steadily out of poverty, while simultaneously providing better living conditions and opportunities for families. Microfinance borrowers take great pride in their ability to lift themselves out of poverty through their own agency (initiative). While a charitable donation can be helpful in the short run, it is hardly ever an ongoing source of financial support.
Financial Times Announces 4th Editon of Sustainable Banking Awards
Financial Times — www.ftconferences.com
Published on January 22, 2009
The Financial Times has launched the 2009 edition of the FT Sustainable Banking Awards, the leading awards recognising banks and other financial institutions for leadership and innovation in integrating social, environmental and corporate governance considerations into their operations.
Now in their fourth year, the awards-organised by the FT in partnership with IFC, a member of the World Bank Group-are all the more timely in light of the financial crisis, which has exposed flaws in traditional banking and investment models and intensified debate over the role of ethics and sustainability objectives in ensuring the financial industry's long-term health and competitiveness.
