By Luis Alberto Moreno

The president of Inter-American Development Bank argues that achieving greater "financial democracy" is crucial for achieving greater inclusiveness, improving social cohesion, and generating broad-based growth.

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Economic development, according to the Inter-American Development Bank (IDB), is for people-for citizens. If the benefits of economic growth fail to reach a majority, in the long run there can be no development. Over the past 3 years, Latin America has enjoyed its strongest cycle of economic growth in nearly 30 years. Remarkably, this expansion has been accompanied by low inflation, falling fiscal deficits, and current-account surpluses, and it has occurred amid the most active electoral calendar in the region's recent history. But conditions for the majority of Latin Americans have not improved substantially. Calls for change are thus being heard again and again. Without change and real improvements in the people's well-being, the legitimacy of the development effort will continue to be called into question.

Development is a combination of good policies, both macro- and micro-economic. The development of regions such as Southeast Asia, for example, was based largely on the application of numerous microeconomic instruments, backed by stable macro frameworks. In Latin America, despite remarkable achievements at the macro level, we have often neglected the micro dimension of development; we have fallen short in creating and distributing opportunity. The region's per capita income has barely doubled over the past 45 years, whereas in South Korea it has increased 15-fold. Poverty and inequality ratios have been stagnant in Latin America, and a large proportion of our people still await the promised fruits of progress.

Going forward, we need to focus our attention on expanding opportunities at the base of the economic pyramid, which represents a large majority of Latin Americans. Few areas will be more important in this effort than building deeper, more inclusive financial markets.

The success of OLPC can no longer be judged against ­Negroponte's early predictions and plans, nor by the technical merits of the laptop itself. Peru is what matters now. When I was in Lima, OLPC's former chief technology officer, Mary Lou ­Jepsen (she has formed Pixel Qi, a startup dedicated to making even lower-cost displays for OLPC's computers and others), visited the education ministry to offer help and show staffers how to repair the machines. But she acknowledged that OLPC's future doesn't revolve around the hardware she helped bring about. "Laptops are easy; education is hard to transform," she said. "I don't even speak Spanish. How can I even start to transform primary education in Peru?"

In truth, she can't. But Peru now has a chance to help Rosario, Cecilia, Nilton, and 486,497 other kids--and, maybe, someday, the little girl on the traffic island in Lima.

Publicado por WBCSD-SNV Alliance

Ministros de finanzas, empresarios, banqueros, dirigentes de la sociedad civil, académicos, periodistas y destacados artistas latinoamericanos y caribeños participaron en la reunión anual del Banco Interamericano de Desarrollo (BID), que en esta ocasión se celebró en Miami del 4 al 8 de abril.

La Reunión Anual en Miami ofreció una serie de seminarios sobre temas económicos de la mayor relevancia, tales como energía, comercio y competitividad, pequeñas y medianas empresas y acceso al crédito, y crecimiento e inclusión social.

La Alianza WBCSD-SNV para Negocios Inclusivos presentó (descargue aquí la presentación en formato pdf) su trabajo en América Latina en el marco de un seminario el sábado 5 de abril. El mismo día, junto a la iniciativa del BID Oportunidades para la Mayoría, la Alianza fue el anfitrión de un almuerzo de trabajo alrededor del tema "Liderazgo y éxito en el próximo frente empresarial: Cómo satisfacer las necesidades desatendidas de 360 millones de personas".

By Elizabeth Malkin

VILLA DE VÁZQUEZ, Mexico - Carlos Danel and Carlos Labarthe turned a nonprofit that lent money to Mexico's poor into one of the country's most profitable banks.

But not all of their colleagues in the world of microlending - so named for the tiny loans it grants - are heaping praise on the co-executives of Compartamos. Some are vilifying them as "pawnbrokers" and "money lenders."

They are the center of a fractious debate: how far should microfinance go toward becoming big business?

At one end stand traditional microlenders, like the economist Muhammad Yunus, founder of the most famous microlender, the Grameen Bank, and winner of the 2006 Nobel Peace Prize. At the other are the Two Carloses, as they are widely known in this tight-knit world that gave them their start as starry-eyed idealists.

Growing up in Calcutta (now Kolkata) I saw poverty first hand, so I naturally admired my father's commitment to implementing social justice to helping the poor citizens. Dad's opposition to Prime Minister Indira Gandhi's economic and social policies landed him in jail during India's Emergency rule in 1975.

I moved to the United States in 1984 and experienced the benefits of capitalism. I watched with excitement India's move to globalization and hoped that this also would benefit the less fortunate. Like many, I've believed that although the private sector can't solve the poverty problem, poverty can't be solved without the private sector.

However, I became disillusioned with the efforts made by existing corporate and individual wealth to have a sustainable impact on poverty. I remember a brief, discouraging conversation with Mother Teresa in a year before her death in 1997 about the role of the private sector in poverty alleviation.

A group of volunteer engineers are finishing the design for a home-brewed wind turbine that will bring electricity to off-the-grid Guatemalan villages by this summer.

The turbine is undergoing its final tweaks. Next Sunday, the prototype will undergo its next-to-last build before Fleming and another volunteer head down to the Guatemalan manufacturing facility, XelaTeco, with the building plans in hand.

The engineering team had to make their design simple enough that it could be assembled from cheap and widely available components. As a result, their plans call for building the turbine out of hard plastic (or canvas) bolted on to a steel-tube structure. The rotor, which creates mechanical energy from the movement of the blades, runs into an alternator (actually a cheap DC motor running in reverse), which converts the mechanical energy into electricity.

No sólo el cartón y el papel son reciclables. Eso lo saben bien los cartoneros, que acceden a la telefonía celular a través de aparatos reciclados con una financiación especial que les permite usar un servicio que de otro modo les resultaría inaccesible.

Ellos son parte del 70% de la población de América Latina que gana menos de u$s3.000 por año, es decir no más de u$s8,2 por día, pero que aún así son consumidores activos y esperan acceder a bienes y servicios como cualquier otro segmento.

Aunque los ingresos medios por cliente son muy pequeños, los negocios con la llamada “Base de la pirámide” mueven al menos 5 billones de dólares por año en todo el mundo según el World Resources Institute (WRI), el think-tank norteamericano que estudia cómo mejorar la vida de los ciudadanos y cuidar el medio ambiente.

Frente a mercados altamente saturados –caníbales en algunos rubros-, la base de la pirámide (BOP, por sus siglas en inglés) representa una alternativa válida para muchas empresas que pueden conciliar dos objetivos: hacer el bien y enriquecerse.

SETTLE down at one of São Paulo's sushi bars and before long you will overhear a discussion about a start-up business making energy from obscure weeds, or some other bright idea for relieving members of the country's growing middle class of their disposable income. A field study of this kind displays a strong sample bias, but the point is clear: Brazil does not lack go-getters. Yet according to a more thorough survey backed by the International Finance Corporation (IFC), a sister organisation of the World Bank, Brazilian entrepreneurs are a strikingly different breed to their peers in Russia and China.

Overall, some 82% of entrepreneurs in all three countries came from families with at least one other entrepreneur. They also tended to be taller than the average. But there the similarities end. In particular, Brazilian entrepreneurs seem to have a much lower appetite for risk.

 

Summary:  Even critics of Hugo Chávez tend to concede that he has made helping the poor his top priority. But in fact, Chávez's government has not done any more to fight poverty than past Venezuelan governments, and his much-heralded social programs have had little effect. A close look at the evidence reveals just how much Chávez's "revolution" has hurt Venezuela's economy -- and that the poor are hurting most of all.

FRANCISCO RODRÍGUEZ, Assistant Professor of Economics and Latin American Studies at Wesleyan University, was Chief Economist of the Venezuelan National Assembly from 2000 to 2004.

With a presentation entitled "Selling to the Poor: a 100-Year Success Story," Mr. Salinas shared some of the entrepreneurial and social development opportunities of businesses that focus on low-income consumers, a market referred to by University of Michigan Business School Professor C.K. Prahalad as the "Bottom of the Pyramid."

"The best solution to the problem of poverty is to create wealth," argued Mr. Salinas. "We need to look for new entrepreneurial solutions to old problems," he added.

Suena políticamente incorrecto, pero quizá la manera más efectiva de luchar contra la pobreza sea convertir en ‘clientes' a los más desfavorecidos. Por su parte, las empresas que lo consigan descubrirán un mercado de 4.000 millones de personas.

En tiempos de globalización, no hay pieza más codiciada por una multinacional que descubrir un nuevo mercado. Para muchos, es posible que no haya que rebuscar tanto para encontrarlo y, de paso, ayudar en la lucha contra la pobreza y el subdesarrollo. Simplemente, bastaría con mirar a la base de la pirámide de la población mundial, es decir, a los 4.000 millones de personas con una renta inferior a los 1.500 dólares anuales, lo que equivale a que sobreviven con menos de cuatro dólares al día.

Tradicionalmente, el mercado de la base de la pirámide no ha sido tenido en cuenta como una oportunidad de negocio para las empresas, sobre todo para las multinacionales. La jornada Cómo hacer negocios en la base de la pirámide, organizada por la Fundación Compromiso Empresarial y Accenture, intentó evidenciar lo que se puede perder, tanto empresarialmente, como en ayuda al desarrollo, si nos olvidamos de este mercado.

Según Robert Katz, analista del World Resources Institute, hay tres verdades evidentes en este ámbito: "La dignidad es algo más importante para el ser humano que su nivel de riqueza; la solidaridad y las ayudas tradicionales no solucionarán el problema de la pobreza, al igual que tampoco lo conseguirán los mercados por sí solos".

La solución ofrecida por Katz es un camino intermedio: "Existe una relación positiva entre la creación de empresas y la disminución de los niveles de pobreza", asegura.

(Para la versión en español de este artículo, véase el comunicado de prensa del BID)

The Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB) today announced approval of financing for two non-reimbursable technical cooperation projects in Peru and Ecuador, totaling US$1.6 million and US$1.5 million, respectively. Both projects will target inclusive business development at the base of the economic pyramid in order to boost income and employment levels for the low-income population. The two projects will incorporate low-income entrepreneurs into the value chain of private-sector enterprises.

More than 5,250 micro and small enterprises in Peru will receive technical assistance and training enabling them to participate in the value chains of seven anchor businesses committed to the project. Beneficiaries in Ecuador will include more than 4,850 micro and small enterprises that will be incorporated into the value chains of seven other anchor businesses.

The executing agencies for the projects will be the Peru and Ecuador offices of SNV Netherlands Development Organisation. Country counterpart financing will total about a million dollars for each country.

By Richard Shaffer

It is, as Intel's press release put it, "one of the most remote inhabited places on earth." Parintins, Brazil, is on the outskirts of nowhere. The closest highway ends in óbidos, a day or two downriver. So in 2006, when Intel wirelessly connected the Amazon city to the rest of the online world, chairman Craig Barrett promised that the venture would "bring the expertise of specialists, sophisticated medical imaging, and the world's libraries to a community reachable only by airplane or boat."

The city's "digital makeover" was widely reported, publicizing Intel's billion-dollar, five-year World Ahead Program. The message: Intel is doing good, improving the health and education of the poor around the globe. But Intel's corporate benevolence is also a shrewd investment. Revenue from the United States and Europe has been declining, so the company is nurturing its next crop of customers in Parintins and nearly 200 other places in the developing world. The World Ahead Program is very much about building Intel's future markets.

The initial public offering in April that earned $467 million for the owners of a Mexican lender to the poor, Banco Compartamos (BMOSF), provoked a passionate protest from nonprofit traditionalists around the world. Veteran development experts have argued for years that commercialized microlending inevitably means favoring investors ahead of vulnerable borrowers. "They're money lenders. They're not microcredit," says Muhammad Yunus, who won the Nobel Peace Prize in 2006 for his pioneering work in extending credit to the working poor in Bangladesh.

The debate over capitalism's incursion into microlending, while certain to continue, has the ring of an ideological squabble.

Muhammad Yunus, who won the Nobel Peace Prize in 2006 for his pioneering work in extending credit to the working poor in Bangladesh, is aghast at the business strategies employed by a onetime charitable microlender that has become Mexico's most profitable bank, Banco Compartamos (BMOSF).

"They're absolutely on the wrong track," says Yunus. "Their priorities are screwed up."

Diametrical Views of Microlending

During a telephone interview from his office in the Bangladesh capital, Dhaka, the Vanderbilt University-trained economist—famous for creating a model for making small, affordable loans to the working poor—complained about the spreading commercialization of his work.