When Muhammad Yunus and the Grameen Bank received the Nobel Peace Prize in October 2006, one endeavor lifted into the limelight was Grameen Danone Foods Ltd. This was a pathbreaking collaborative enterprise, launched that year as a 50–50 joint venture between Groupe Danone — the US$16 billion multinational yogurt maker — and the Grameen companies Yunus had cofounded. Yunus called the joint venture a “social business,” which he said could be a pioneering model for a more humane form of capitalism. As Yunus explained in his book Creating a World without Poverty: Social Business and the Future of Capitalism (PublicAffairs, 2007), a social business is a profit-making company driven by a larger mission. It carries the energy and entrepreneurship of the private sector, raises capital through the market economy, and deals with “products, services, customers, markets, expenses, and revenues — but with the profit-maximization principle replaced by the social-benefit principle.”
The mission of Grameen Danone Foods is to bring affordable nutrition to malnourished children in Bangladesh with a fortified yogurt, under the brand name Shokti Doi (which means “yogurt for power” in Bengali, the country’s language). It began in October 2005, when Franck Riboud, the CEO of Groupe Danone, took Yunus to lunch in Paris. “We would like to find ways to help feed the poor,” said Riboud. Yunus suggested the revolutionary joint venture and proposed that a new structure be invented for it, a hybrid between nonprofit and for-profit.
Like a conventional business, Grameen Danone must recover its full costs from operations. Yet, like a nonprofit, it is driven by a cause rather than by profit. If all goes well, investors will receive only a token 1 percent annual dividend, with all other profits being plowed back into the business. The venture’s primary aim is to create social benefits for those whose lives the company touches. For example, the first Grameen Danone factory, which opened in November 2006, was deliberately built small, as a prototype for community-based plants that would provide jobs across Bangladesh. “It’s just a tiny little plant, but it has a big message,” said Yunus in a speech to the Global Alliance for Improved Nutrition, the nonprofit organization brought in to monitor the company’s impact on local health. “While we make money, we can also do good.” Riboud adds, “I’m deeply convinced that [humanity’s] future relies on our ability to explore and invent new business models and new types of business corporations.”
Yunus and Riboud are not alone in seeing the critical importance of instilling a purpose other than short-term profits at the core of corporate designs. In a celebrated January 2008 speech at the World Economic Forum, Bill Gates called for a new form of “creative capitalism.” And around the world — largely beneath the radar of mainstream awareness — alternative designs are being developed that, like Grameen Danone, seamlessly blend a central social mission with profitable operation. These include the burgeoning microfinance industry, emerging hybrids like nonprofit venture-capital firms, new architectures like Google.org that embody “for-profit philanthropy,” dual-class shareholding structures, employee-owned companies, the foundation-owned corporations of northern Europe, and a variety of cooperatives on every continent. These models vary enormously in size and mission, but they are significant for the same reason: Together, they represent an evolutionary step in the development of corporate structure.
Continue reading "Not Just for Profit"
(Thanks to Savitha Peri for the article suggestion!)
South Asia
Harish Hande's first installation of solar-powered lights in a rural Indian home was a stealth operation. The founder of Selco India, then a 26-year-old engineer, believed passionately that millions of Indians living in darkness at night could have their lives transformed by solar technology. But he needed a customer who could afford to pay the high up-front costs of solar lights and testify to their merits.
In September 1994 Mr Hande asked a wealthy betel nut farmer in the southern state of Karnataka for permission to install the lights in his house. The farmer, who had never heard of solar energy, refused. But Mr Hande sensed the farmer's elderly mother, who had listened attentively, was intrigued.
Continue reading "A Bright Idea that Helped India's Poor"
South Asia
Fighting Poverty - One Yoghurt at a Time
The Guardian — www.guardian.co.uk
Published on February 25, 2009
The west's beleaguered banking system could learn a thing or two from an illiterate Bangladeshi villager called Sobi Rani. She is a Grameen Lady, one of the thousands of grassroots activists who are the bedrock of the Grameen phenomenon, which, with nearly 30 businesses, is probably the largest financially viable social enterprise in the world. The cornerstone is the Grameen Bank, founded 33 years ago by Muhammad Yunus, superstar social entrepreneur and 2006 Nobel Peace Prize winner. The purpose today is the same as it ever was: to provide the landless poor of Bangladesh with real chances of working their way out of penury.
The microfinance bank, which has provided the equivalent of billions of US dollars in small loans to millions of people with no collateral, is built upon a precious resource that our ruined western banks have long ago abandoned - trust.
I would love to round up the CEOs of these banks and push them in front of Rani so that she could explain the secret of sustaining a profitable banking business that has the respect and love of its customers. She "gets" the basics of successful banking - unlike the banking executives in Britain and elsewhere who have been accused of leading their firms to the brink of extinction and their industry into contempt.
Yunus is scathing about a global banking industry now kept afloat by taxpayers' money: "They don't mind writing off a trillion dollars in a sub-prime crisis, but they still shy away from lending $100 to a poor woman, despite the fact that such loans have a near 100% repayment record."
Grameen's latest joint venture in social business is with Danone, the French multinational company. The idea for a food-based enterprise was hatched when Yunus met Danone chief executive Franck Riboud in Paris in October 2005. Although the $1m Danone put up to build a factory was small beer, both parties have a lot at stake in terms of reputation.
When French football star Zinedine Zidane opened the factory a year later, Grameen Danone Foods (GDF) had an ambitious goal: to manufacture a micro-nutrient "power yoghurt" called Shokti Doi in a purpose-built, state-of-the art factory - solar-powered, of course - that provided jobs for local unemployed people. Sales were to be driven by the bank's foot soldiers, the Grameen Ladies, such as Rani, who would take the yoghurt door to door in the villages and make a little money on each pot they sold.
As always with any business venture, social or otherwise, reality didn't match the originators' glorious vision. A sharp rise in the price of milk pushed the retail price up well beyond the pockets of poor villagers. The Grameen Ladies had little incentive and sales slumped. Rani left her uniform hanging on the door. And, as if that wasn't enough, the target customers, the undernourished children of the villages around Bogra, didn't like the taste of the yoghurt.
Danone threw some of the best people from its Paris laboratories and marketing departments at the problems. A new managing director - Wahidum Nabi, who had many years of experience in marketing and sales, much of it with ICI in Britain - was recruited to improve the business. The recipe was changed. A marketing drive was started in Dhaka, the capital, to sell the yoghurt at a higher price so as to allow Rani to charge less in the villages.
Continue reading "Liam Black finds a lesson for British business in Bangladesh looking at initiatives of multinationals and villagers cooperating to fight poverty"
Sub-Saharan Africa
A Company Prospers by Saving Poor People's Lives
New York Times — www.nytimes.com
Published on February 24, 2009
It all started with mosquito nets. Or, no, with guinea worm filters. Or, before that, with a million yards of wool in the mountains of Sweden.
Or, taken back another generation, to uniforms for hotel and supermarket workers.
There are plenty of charitable foundations and public agencies devoted to helping the world’s poor, many with instantly recognizable names like Unicef or the Gates Foundation.
But private companies with that as their sole focus are rare. Even the best-known is not remotely a household name: Vestergaard-Frandsen.
Its products are in use in refugee camps and disaster areas all over the third world: PermaNet, a mosquito net impregnated with insecticide; ZeroFly, a tent tarp that kills flies; and the LifeStraw, a filter worn around the neck that makes filthy water safe to drink.
Some are not only life-saving but even beautiful. The turquoise and navy blue LifeStraw is in museum design collections.
“Vestergaard is just different from other companies we work with,” said Kevin Starace, malaria adviser for the United Nations Foundation. “They think of the end user as a consumer rather than as a patient or a victim.”
For example, he said, they have added a cellphone pocket to their bed nets, and make window curtains that kill bugs.
The company, begun in Denmark 51 years ago to make work uniforms, is now run by Mikkel Vestergaard-Frandsen, the grandson of the founder.
After finishing high school in 1991, he said, he had “no interest in growing the market for men’s shirts.” Instead, he went backpacking through India and Africa, entertaining thoughts of going to Kuwait to fight the oil-field fires set during the gulf war.
Stranded in Egypt, he met two Nigerians who told him he could make good money in their country importing used cars from Europe.
“When you’re 19, you don’t have much of a business plan,” he said. “So I ended up in Lagos, selling cars and truck engines and buses.”
But the chaos of a coup in 1993 sent him back to Denmark.
Continue reading "A Company Prospers by Saving Poor People's Lives"
IFC invests $15M in WaterHealth for filtration in rural India
Cleantech.com — www.cleantech.com
Published on February 19, 2009
Irvine, Calif.-based WaterHealth International [1] is planning to install water purification and disinfection systems for 600 communities across India, funded by a $15 million project finance round from International Finance Corp. [2] this week.
IFC, a division of the World Bank, has previously invested equity in WaterHealth International to grow the business. But this new cash infusion will allow WaterHealth to quadruple the number of decentralized units up and running in Indian communities, said Tralance Addy, CEO of WaterHealth International.
"India has 600,000 villages that would fall into this category where we would want to improve the water conditions," Addy told the Cleantech Group today. "So 600 is a drop in the bucket."
South Asia
Rural India Snaps Up Mobile Phones
The Wall Street Journal — online.wsj.com
Published on February 11, 2009
By Eric Bellman
In the village of Karanehalli, a cluster of simple homes around an intersection of two dirt roads about 40 miles from India's high-tech capital of Bangalore, Farmer K.T. Srinivasa doesn't have a toilet for his home or a tractor for his field. But when a red and white cellular tower sprouted in his village, he splurged on a cellphone.
While the way his family threshes rice -- crushing it with a massive stone roller -- hasn't changed for generations, his phone has changed the way he farms. He uses it to decide when to plant and harvest by calling other farmers, to get the best prices for his rice, coconuts and jasmine by calling wholesalers, and to save hours of time waiting on the road for deliveries and pickups that rarely come on time.
"Life is much better with the cellphone," he said from his rice paddy in the shadow of the new tower. "I bring it with me to the fields and anyone can reach me here."Even amid the global economic slowdown, one Indian industry continues to boom: selling cellphones to the rural poor.
How to count the invisibles?
Christian Science Monitor — features.csmonitor.com
Published on February 09, 2009
On a visit to a poor neighborhood, or favela, in Rio de Janeiro several years ago, Melanie Edwards asked how many people lived there. She heard estimates from 5,000 to 60,000. No one really knew.
They were “invisible,” just a small part of the 1 billion people around the world who are off the grid, lacking birth certificates, driver’s licenses, or voter registration cards. “They have nothing to show that they exist in the world,” Ms. Edwards says.
That information gap poses threats to both these people and everyone else. Without accurate data, governments and aid groups lack the ability to reach them effectively. At the same time, problems that might spread from these areas, such as epidemics, are likely to go undetected longer. Even businesses that would like to reach these people with helpful products and services are hampered by a dearth of knowledge about their specific needs.
South Asia
India to Follow $2,000 Car with $20 Laptop
The Financial Times — www.ft.com
Published on February 05, 2009
The project, backed by New Delhi, would considerably undercut the so-called "$100 laptop", otherwise known as the Children's Machine or XO, that was designed by the Massachusetts Institute of Technology of the US.
The Children's Machine, which received a cool reception in India, is the centrepiece of the One Laptop Per Child charity initiative launched by Nicholas Negroponte, the computer scientist and former director of MIT's Media Lab. Intel launched a similar product, called Classmate, in response.
India's $20 laptop would also undercut the EeePC, made by Taiwan's Asustek. The EeePC was the first ultra-cheap, scaled-down laptop (a new category known as a netbook) launched worldwide through commercial channels. It does not have a hard drive and sells for $200-$400.
Experiments Bring Internet to Remote African Villages
New York Times — mobile.nytimes.com
Published on February 02, 2009
By CHRIS NICHOLSON
Published: ENTASOPIA, Kenya - The road from Nairobi winds 100 miles to this town deep in Masai country. The asphalt gives way to sand and dust, until finally it is just a dirt track climbing over broken hills and plunging back to desert flats. The going is slow. The outpost, with about 4,000 inhabitants, is at the end of that road and beyond the reach of power lines. It has no bank, no post office, few cars and little infrastructure. Newspapers arrive in a bundle every three or four weeks. At night, most people light kerosene lamps and candles in their houses or fires in their huts and go to bed early, except for the farmers guarding crops against elephants and buffalo.
