NextBillion

As the food crisis in the Horn of Africa continues, so do the campaigns asking for support and donations. Some of the money raised goes on the purchase of ready-to-use therapeutic foods (RUTFs), small packets of a sticky, peanut butter-like paste, fortified with minerals and vitamins, that can reverse severe malnutrition within six weeks.  Products such as Plumpy'nut.

The vast majority of RUTFs are produced in the US or Europe, bought byaid agencies such as Unicef, and transported great distances to reach those in need. But a small group of social enterprises is questioning this business model, redesigning it with a more local footprint in mind.

Just this month, the Afri-Nut Company in Malawi announced it will begin processing peanuts for export to the UK, under a Fairtrade agreement, to use in sachets of Plumpy'nut.

Encouraging precedents have been set elsewhere. Dr Paul Farmer, a co-founder of the medical group Partners in Health, has been producing RUTFs in Haiti since 2006. This year, in an effort to ramp up production and make it a completely local sustainable enterprise, his organisation teamed up with the Abbott Fund to procure peanuts from local producers. They are processed at a facility operated by 60 Haitians, and distributed to malnourished children in the country. Valid Nutrition, led by humanitarian and nutritionist Steve Collins, has been doing similar work in Malawi, Ethiopia and Kenya, likewise applying a community-based approach to producing RUTFs.

Nonetheless, the current breakdown of RUTF procurements leans towards Europe and North America. Unicef, which buys 70% of all RUTFs globally each year, has typically obtained more than two-thirds of its supply from companies in Europe and the US, not least Nutriset, the pioneering French firm behind the patented Plumpy'nut product. According to its 2010 report, Unicef purchased nearly 930,000 cartons from suppliers in France and the US, in comparison with approximately 300,000 cartons from local sources. Being oil-based, not water-based, these RUTFs have a long shelf life and are resistant to bacteria, making them easy to ship long-distance.

Microfinance Banks in Lagos, under the auspices of the National Association of Microfinance Banks, Lagos State Chapter, NAMBLAG, have pledged to undertake a micro-housing project that will see them catering for the housing needs of a vast majority of the low income earners in the society.

Chairman of the Association, Mr. Olufemi Babajide, in his address to members in the report for the 2010 financial year, said the association plans to build 500 houses for the active poor with flexible and affordable repayment plan.

He disclosed that NAMBLAG has opened discussions with a financier that is willing to support the Micro Housing project.

Babajide said the project has been structured to ensure that the cost of constructing the houses will be affording and at little cost to beneficiaries.

According to him, beneficiaries of the housing project will be expected to make a monthly repayment of not more than N12,500 over a period of 20 years.

Speaking further, he lamented the dearth of funding support for microfinance banks in Lagos State, saying that the funds provided by the promoters and shareholders of Microfinance Banks are not adequate for the banks to increase their reach out to all the active poor that they intend providing banking services to.

Mumbai: At least 80% of microfinance institutions (MFIs) may have to shut down in the next two-three years because of tough new regulatory requirements laid down by the Reserve Bank of India (RBI) and a shortage of funds, industry executives warn.

For MFIs categorized as non-banking financial companies (NBFCs), which are run as for-profit organizations, the threat comes from RBI regulations pertaining to minimum funds, loan provisions and capital adequacy. The reluctance of commercial banks to give loans to MFIs, and interest rate and margin caps will decide the fate of smaller firms.

India has around 60 microlenders incorporated as NBFCs and nearly 300 run as not-for-profit bodies such as non-governmental organizations (NGOs), trusts and cooperative societies.

Out of this, nearly 50 NBFC-MFIs and around 200 not-for-profit microlenders may have to wind up their operations or consolidate into large entities beginning next year because they will not be able to comply with the norms stipulated by RBI, senior industry officials said.

"In my view, only around 10 of the NBFC-MFIs can survive post-April unless a special dispensation is given by RBI," says Mathew Titus, executive director of Sa-dhan, an association of microlenders.

In fact, the closures have already begun in Andhra Pradesh, which is the largest market for microfinance in India, accounting for more than a quarter of the Rs. 20,000 crore industry. An ordinance passed by the state government in October 2010, which later became a law, tightening regulation of microlenders threw the entire industry into a crisis.

Around 15 microlenders have already shut operations in the state, said Kishore Kumar Puli, managing director and chief executive of Hyderabad-based Trident Microfin Pvt. Ltd and the head of the Andhra Pradesh chapter of Microfinance Institutions Network (Mfin), an industry association.

NEW DELHI, DEC. 19: 

Hamid owns a grocery shack in a village. He travels about 80 km once in 15 days to get stuff to stock up his store. Every year his village gets flooded during the rains, leaving him with no earnings during that time.

But, one, small device has changed his life. After he got a mobile phone, Hamid does not need to travel 80 km and lug stuff for his store. He simply calls, places the order and gets stuff delivered. It costs him a bit for the cartage, but the amount of time and effort he saves has helped his business and family life. He says his earnings have gone up after he got the phone. The villagers, too, are happy as they can now place specific orders.

Hamid belongs to bottom of the pyramid (BoP) or the poor who earn less than $2 a day.

According to a 2011 study, "Teleuse@BOP4" by LIRNEasia, an ICT policy and regulation think tank active in the Asia Pacific region, while there has been a marked rise in mobile phone use by BoP persons in rural and urban India, Bangladesh, Pakistan, Sri Lanka, Indonesia and Thailand, unfortunately, the device's use is primarily restricted to making or receiving calls or SMSs. In some cases, it is also used as a substitute for radio or as a torch.

NON-VOICE USE

"It is more than a voice device, and mobile phone companies need to market those uses more vigorously. People should be made aware that they can use it productively as a business tool," says former Sri Lankan telecom regulator, Mr Rohan Samarajiva, CEO, LITNEasia, at the release of the study in Bangkok recently.

For example, a Thai woman who runs a laundry at home had to go door to door to collect clothes and deliver. After getting a mobile phone, she keeps in touch with her clients, and as business grew, she has arranged for delivery boys.

Vittana, the Seattle non-profit that's facilitating micro-loans to students in developing countries, has received a $250,000 grant from Google.

Others backing the organization include entrepreneurs Hadi and Ali Partovi; former Microsoft VP Mike Murray; Redfin CEO Glenn Kelman; BuddyTV co-founder Andy Liu; Founder's Co-op's Chris DeVore; TeachStreet CEO Dave Schappell and others.

Vittana founder Kushal Chakrabarti - a former Amazon.com employee - said that the organization is operating in "hyper-growth mode right now" with hundreds of students getting Vittana loans every month across four continents.

Vittana's education loans see a repayment rate of 99 percent, with Chakrabarti adding that education finance model is working by tripling one's earning power.

"We're honored by Google's recognition of Vittana's role in helping fight global poverty through education and technology," Chakrabarti said. "Google's innovation and mission make it a natural ally with Vittana: the world's information is rooted in knowledge and education, and Vittana's mission is to increase the world's access to education."

This marks the second Seattle area non-profit that Google has supported in recent weeks, following agrant that the search giant provided to Startup Weekend

When Gary Hattem and Asad Mahmood of Deutsche Bank AG closed the $15 million Eye Fund I in 2010, they completed what had become a more than five-year endeavor.

"When it started, the problems were conceptual. People were not ready for it," says Mahmood, a managing director who oversees $500 million in loans and investments. "The common perception was that bringing debt into hospitals that are serving the poor was not an acceptable way of doing things."

The Eye Fund is a social investment project that provides low-cost loans to eye-care hospitals in China, Nigeria and Paraguay. Patients with greater economic means pay more and subsidize care for poorer patients. The institutions produce enough cash to repay loans.

Many foundations and eye-care corporations were just not comfortable with the loan model.

Deutsche Bank has had a prior history in microfinance. In fact, the German bank has been engaged in microfinance and community development finance for more than 20 years.

In addition to Hattem, who is managing director of community development finance and president of philanthropic unit Deutsche Bank Americas Foundation, and Mahmood, the Eye Fund team includes fund manager Ben Midberry.

The Eye Fund has distinguished collaborators that include David Green from Ashoka, a global organization for social entrepreneurship, who is also a MacArthur fellow and a recipient of Helen Keller International's award for humanitarian work to prevent blindness. Green helped develop the Aravind Eye Hospital, an institution in southern India, and Auralab, which manufactures low-cost lenses used in cataract treatments and other medical products. He has also created solar power and general healthcare funds.

Another partner is the International Agency for the Prevention of Blindness, a group based in London working to eradicate the causes of avoidable blindness.

With the financing, the partners aim to increase the number of eye surgeries at the three hospitals by 150% within seven years.

The Managing Director and Chief Executive Officer of Guaranty Trust Bank Plc (GTBank), Mr. Segun Agbaje said Wednesday  that the introduction of the mobile money- a mobile payment and remittance services, into the country would bring about positive transformation of payment system in the economy.

Agbaje said this at the official launch of the bank's  mobile money product, in partnership with MTN.

He explained that the innovation was as a prompt step towards financial inclusion, which the Central Bank of Nigeria (CBN) and the bankers' committee had been driving.

He described mobile money as a veritable vehicle for attaining the country's payment system for vision 2020, which was targeted mainly at taking banking to the country's huge unbanked population and the rural areas.

Agbaje who also argued that Nigeria still had about 30 million unbanked population, insisted that the services of mobile money would contribute significantly to the growth of  Nigeria's  Gross Domestic Product (GDP).

The GTBank boss maintained that the partnership, was targeted at ensuring that the bank plays a  dominant role in the  industry,  adding that there was need for the service providers to make sure that mobile money works in the country,  for other neighbouring countries to emulate.

"We will do everything we can to make sure that this project succeeds, it will help grow the economy because Nigeria mobile money is different from that of other parts of the world and will help take money to the unbanked while the rest of the world would also adopt this model," he said.

Chief Executive Officer MTN Nigeria, Brett Goschen, said that mobile money service would drastically change the face of communication and financial services in the country and provide a whole new and exciting experience to its numerous customers.

He said: "Not only will mobile money take banking to the previously unbanked but it also opens up a wide range of benefits and values added services to the banked sector including corporate, small and medium scale enterprises (SMEs). For MTN, Mobile Money represents another opportunity to bring additional added value services to our over 40 million and growing subscriber base."

In the past stripped down versions of products designed for developed economies were positioned as a low cost and cheap alternative in the emerging markets. This will no longer be a successful strategy. This bitter truth has been realized by many global vendors servicing the developing economies. I can vouch for this fact as I live in an emerging market (India) and understand the nuances of these developing countries.

Today's mantra is to carry out focused R&D efforts targeted at creating products that are specially designed and adapted to the emerging economies. The needs of the these markets are different and so are the price points and value expectations of their consumers. The design of a product that gives full value to the consumer in an emerging market and serves his needs requires a different thought process altogether. I have bounced this idea among my engineer friends as well as end users in various walks of life and they cannot agree more.

The approach mentioned above needs innovations and inventions in core technology areas such as material sciences, electronics, fluid mechanics, power systems and the like. Consider the example of the Nano car developed by TATA motors which required multiple innovations in technology as well as cross-functional teams working on different engineering disciplines to come together to solve complex issues and provide solutions while at the same time meeting the targeted price point.

I believe that the key is to provide a reasonably good solution that meets all the basic needs of the consumer that is affordable and at the same time seen as a quality product - not a low-end stripped-down version. TATA motors calls this discipline "frugal engineering," which is an art as much as science.

In rural sub-Saharan Africa, most people are farmers, and for part of the year, they go hungry.

It's called the hungry season. I encountered it when I lived in a farming community in Malawi for two years as a Peace Corps volunteer. Families in my village subsisted off of the maize and beans that they harvested, but there was only one growing season, and making stocks last an entire year was difficult. Imagine growing all of your family's food for an entire year using just a hoe, seeds you saved from the year before, and a one acre plot of nutrient-depleted soil.

In 2005, a business student named Andrew Youn visited villages in western Kenya that undergo a hungry season. Youn had already graduated from Yale magna cum laude and he was about to earn his MBA.  He met two farmers who were next-door neighbors in the village of Bungoma. "One was yielding two tons of food per acre and her family was thriving," he says. "Her neighbor was yielding four times less, she had lost a child, and she was badly off. The only difference was seed, fertilizer, and training." 

Many people with good intentions waltz into Africa thinking they have a cure-all for complex problems, but Youn did not approach development with a smug attitude. He just had an idea he wanted to test: What happens when you provide a complete "bundle" of goods and services to struggling farmers, including improved seed, fertilizer, credit, training, and market facilitation? He decided to try it out, and founded the organization One Acre Fund. In 2006, the group's first year of operation, Youn and his colleagues served 300 families. They've now reached 75,000 families in Kenya, Rwanda, and Burundi, and have started a pilot program in Ghana, their "entry point into West Africa."

Why the fast growth? One Acre Fund's help can triple a farmer's harvest from a half a ton of maize per acre to one and a half tons. The farmers must pay back their loan to One Acre, but even after doing so, they typically double their profits, an estimate director of policy and outreach Stephanie Hanson says is "quite conservative" because they base the estimate on the harvest price, the lowest price of the year. Each year, the One Acre Fund uses data from a randomized study of 2,500 farmers to measure impact. Funders like the Skoll Foundation for Social Entrepreneurship have spent hundreds of hours vetting their work as well.

You may have noticed the emerging class of "social entrepreneurs" who are creating companies that seek profit but also are devoted to a social purpose, to create long term, sustainable value.

But, until recently, social entrepreneurs would find themselves in the position of choosing whether to organize either as a for-profit company or a nonprofit organization. The problem was that sometimes a company would be too much of a business to be a nonprofit. Yet, it also might be too mission-driven to be a for-profit.Social entrepreneurs believe a business can be a part of the solution to some of the world's greatest challenges. It's this kind of thinking that has given rise to such mission-driven companies as Better World Books, TOMS Shoes, D-Light Design and Warby Parker, to name a few.

Fortunately, there are a few innovative legal structures designed for entrepreneurs who are driven as much by mission as money. The cost of using one of these new legal structures will vary depending on lawyer fees, but generally those fees shouldn't exceed more than $10,000 for a start-up with fewer than 10 employees.

Here's an overview:

L3C

Ideal for: companies that want to blend traditional capital with "philanthropic" capital, such as from foundations

Available to start-ups in: Vermont, Michigan, Wyoming, Utah, Illinois, North Carolina, Louisiana, Maine and soon in Rhode Island.

The Low Profit Limited Liability Company is a new class of LLC for mission-driven companies.

An L3C offers the same liability protection and pass-through taxation as an LLC. But it must be organized primarily for a charitable purpose - and secondarily for profit. Unlike a traditional nonprofit, it may distribute its profits to owners.

The L3C is designed to attract both traditional investment and a very specific type of philanthropic money called Program Related Investments (PRI). PRI is capital - in the form of equity or debt - from a foundation to a for-profit company that is doing work in line with the charitable purpose of the foundation.

In its biggest single-day contribution ever, Google (GOOG) on Wednesday announced it has handed out $40 million to battle slavery, promote education and make technology more accessible worldwide, with nearly a fourth of the money going to Bay Area organizations.

"The causes we are supporting are issues we've been committed to for a long time, particularly education," said company spokeswoman Kate Hurowitz, noting that about $9 million is being awarded to a dozen Bay Area groups. "It's really something the company cares a lot about from the top level."

Altogether, she said, the search giant has contributed $115 million this year.

Part of the $40 million is to promote the teaching of science, technology, engineering and math, and especially to improve the educational levels of girls in developing nations. The rest is designed to empower people through technology and includes $11.5 million to groups working to curb slavery or other forms of human trafficking.

In India, every street corner has small shops displaying colourful strips of 1 rupee (about 1p) shampoo sachets, or stacks of mini soap bars. Creative marketing has even brought these sachets to isolated villages, draped on the back of camels.

Hindustan Unilever was behind this "adapting to the poor" approach. Realising their soaps and shampoos were too expensive for poor people, they repackaged them into small, affordable sachets. These were initially sold door-to-door by "shakti ladies", who received microcredit to become small entrepreneurs. The 1 rupee range is now a significant part of the company's revenues and stimulates a healthy network of small retailers.

Given that most smallholder farmers do not reach their maximum yield potential - in Africa, for instance, yields are only 20% of their potential and could be increased as much as threefold if farmers had access to existing technologies - could the widescale success of shampoos be translated to agricultural development? Solving the current food crisis is not necessarily about inventing new technologies. It could be about new marketing or dissemination approaches that give smallholder farmers better access to existing solutions.

I asked some of the companies at the World Agricultural Forum in Brussels, which ran from 28 November to 1 December, if the mini-pack revolution could help smallholder farmers get better quality and variety of seeds and fertilisers to improve yields.

Some already supply mini-packs. Like Bayer and BASF, Syngenta has developed small kits including mini packets of herbicide, pesticide and fertiliser designed for farmers with less than a hectare. The idea is that it's affordable for the smallholder farmer and will boost harvests sufficiently to provide a quick return on investment. Sometimes, mini-packs are also more economical and ecological as farmers tend to overuse products like fertiliser. The technique of precisely applying a small capful to the plant roots (microdosing) has been well researched by the International Crops Research Institute for the Semi-Arid Tropics(Icrisat) and found to increase yield significantly.

But smallholder agriculture faces many challenges. Different soil types, weather and water access are among several factors that mean simply supplying small kits is no panacea. Tailored advice is needed to help farmers make informed choices.

A new report on India's microfinance industry says that the troubles in Andhra Pradesh have been "one of the best things that could have happened to the sector."

Really? Looking back at a year of microfinance in India, words like "crisis," "collapse" and "catastrophe" seem more fitting - and it all started in Andhra Pradesh, a state that used to be India's microfinance hub. The decision by the local government to clamp down on collection practices last year spiraled into a crisis that the industry is struggling to recover from. Microfinance firms were criticized for their aggressive loan recovery methods and for overcharging costumers, sparking a nationwide backlash against the industry. The move in Andhra also choked their access to credit.

A "near-death experience" is how Alok Prasad, the head of Microfinance Institution Network, a leading industry body, described it. He was speaking in New Delhi earlier this week at a two-day annual summit on microfinance - an event at which the report was also released.

So where exactly is the good news? N. Srinivasan, the report's author, says it's bad - but not all bad. The troubles in Andhra served as the trigger the sector needed to grow more responsibly, he said in an interview on the sidelines of the event. The main lesson from the Andhra experience for microfinance institutions is that customers should come first, explained Mr. Srinivasan, who has been tracking the industry for several years.

While he criticized the Andhra government for imposing restrictions he described as excessive and politically-motivated, he said regulating the sector in the interest of borrowers was necessary, and welcomed the decision of India's central bank to step in. While he doesn't see the sector booming anytime soon, he is confident it will grow moderately. But to do this, the industry may have to change dramatically.

Waterlife India Private Ltd (Waterlife) has announced that it has received Rs 22 crore investment from Matrix Partners India. The company provides quality potable water solutions.

The Hyderabad-based company has installed safe water systems in more than 1,500 villages and urban areas covering more than a million people in a sustainable manner, a release said.

Intellecap was the sole advisor for this transaction.

The capital infusion would help Waterlife to expand. Having started from West Bengal and Uttar Pradesh, the company operates in six states now. "We are aware of Matrix's understanding of the water sector and hence to have them as our partner," said Mr Sudesh Menon, Managing Director of Waterlife.

Promoted by Mr Menon, Mr Mohan Ranboare and Mr Indranil Das in 2008, Waterlife raised around Rs 1 crore from Aavishkaar India Micro Venture Capital Fund to start its operations. It has diversified into water systems for apartments, institutions, purification and contamination removal units and water supply schemes and mobile water units.

Waterlife has won the prestigious Sankalp Award this year in the Health, Water and Sanitation category.

Mr Avinash Bajaj, Co-founder and Managing Director, Matrix India said, "We believe Waterlife with its innovative business model complemented by a high quality management team is set to emerge as a leader in the potable water segment."

"There is a growing realisation that the future of Africa is based around a consumer rather than mining. This is a consumer that has been under-served and over-charged," said Frank Braeken, Unilever executive vice-president for Africa at the High Growth Markets Summit at the end of September 2011.

But Braeken pointed out that consumers in Ghana spend just one fifth per capita on Unilever's products than their peers in South Africa. Kenyans spend even less, and those in Tanzania a smaller amount still. Thus for Mr Braeken there is a huge untapped source of consumers - most of whom are low-income, also known as Bottom of the Pyramid (BOP), consumers.Unilever, a consumer goods company, has over a century of experience on the continent and produces annual sales of more than 5 billion euros in Africa. The group employs 40,000 people in the region and has offices and factories in 40 locations. It can thus be deduced that Unilever "has made it in Africa"!

How we made it in Africa's Loraine Stander asked Frank Braeken how Unilever is reaching the BOP consumer.

What is Unilever's strategy to reach the BOP consumer?

Frank Braeken: Our strategy is to increase our social impact by ensuring that our products meet the needs of people everywhere for balanced nutrition, good hygiene and the confidence which comes from having clean clothes, clean hair and healthy skin. Unilever is strongly committed to serve the BOP in Africa and to this end many of our products are tailored to meet specific African consumer demand.

Braeken is known to emphasise: "What we need to do is much more listening to what the African consumer needs."

This credo is illustrated by a shop in Kenya's largest slum. The small shop is selling everyday necessities, that range from margarine and washing detergent to cooking fat and toothpaste. What is noticeable is that these goods are sold in small packages, known as low unit packs (LUPs), weighing from 45 grams to just four grams, and costing from as little as half a cent. Though all the goods are now sold in branded packaging, the shop owner has been selling the same items in similar small portions for decades to the low-income market. He bought big packs and then resold them in smaller portions to his customers. Unilever was one of the first companies that bought into this concept.

By establishing a brand through LUPs, allegiance would be formed as the consumer's purchasing power increases.

IFC, a member of the World Bank Group, is partnering with IntelleCash to help start-up microfinance institutions in low-income states of India respond better to the needs of their customers, promoting responsible microfinance while providing better client protection. 

IntelleCash is the first initiative in India to apply the principles of business franchising to the microfinance sector. Through the IntelleCash Network Program, it helps microfinance institutions get started and expand. IFC is working with IntelleCash to help microfinance institutions in India's northeastern states, the low-income states of Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, West Bengal, and in the western regions of Rajasthan and Gujarat, and the Vidharbha and Marathwada regions of Maharashtra. 

"We will work intensively in Bihar, Madhya Pradesh, Orissa and the north-eastern states, which are the high-priority states for the government of India," said Manoj Nambiar, CEO of Intellecash. "With IFC's support, we expect to expand significantly into rural and semi-urban areas where the need for microcredit is highest." 

The partnership comes at an opportune time, given the challenges of the microfinance sector in India. The reach of microfinance institutions in India remains low-most of India's population has limited access to financial services. IFC's support to IntelleCash will help new microfinance institutions emerge in underserved areas. It will also help build IntelleCash's capacity for balanced, client-focused growth. Once established, the effort could be replicated in Africa. 

"Since the recent microfinance crisis, IFC has been focused on investment and advisory services targeted at microfinance sector to expand outreach to low-income households in India," said Jennifer Isern, who leads IFC's Access to Finance business line in South Asia. "We would help IntelleCash to develop operational tools that can be used by new microfinance institutions to design demand-responsive microfinance services suitable for the clients."

Embrace

A one minute video about Embrace, a social enterprise that aims to help millions of vulnerable babies through a low cost infant warmer. Unlike traditional incubators that cost up to $20,000, the Embrace Infant Warmer costs less than 1% of this price. The device can work with or without electricity, has no moving parts, is portable and is safe and intuitive to use. You can find out more at embraceglobal.org.

Africa's lag in land-based telecoms infrastructure has propelled the continent directly into the mobile age, opening up unparalleled short-term growth prospects.

Sector players have seen growth especially in mobile Internet and banking services, as people use cellphone technology for lack of landlines or cable Internet.

"Africa is the last market to emerge. China's emerged, India's emerged. So where else outside Africa needs emerging? The growth opportunity is right here," said Nicolas Regisford, co-founder of Mi-Fone, a South African company that specializes in producing low-cost handsets.

Mobile subscribers in Africa have increased by 20 percent annually over the past five years and will reach more than 735 million by the end of next year, a study by global mobile operators association GSMA found last month.

"Africa is now the world's second-largest mobile market by connections after Asia, and the fastest growing mobile market in the world," according to the GSMA Africa Mobile Observatory 2011 report.

Industry players are equally excited over the commercial prospects posed by the continent's 1 billion people.

ENTRY-LEVEL PHONES

"Samsung is expecting revenue within Africa to amount US$15 billion, with the SADC [Southern African Development Community] region contributing about 25 percent of that figure, by 2015," said Gavin Clare, the company's representative in Zimbabwe.

This philosophy also drives Mi-Fone, which eyes the immense market of consumers seeking entry-level phones.

"The African person wants a mobile device which will be doing mobile payments and accessing the world wide Web. Right now, a lot of people cannot afford the smartphones that are flooding the market," Regisford said.

Ironically, this lack of traditional infrastructure, telecom and landline services, Internet penetration and broadband access, and banking services drives this growth in Africa, according to mobile systems expert Tomi Ahonen.

"As it happens, the global Internet industry believes that the future of Internet is mobile. The global telecom industry believes that the future of the telecom industry is mobile and the global money industry is starting to believe that the future of money is mobile," Ahonen said.

One case in point is Kenya, already the world's largest mobile financial services user in relation to its GDP. Almost 18 million Kenyans use their cellphones as a bank account to deposit or transfer money - contributing 8 percent of the GDP and several other African countries are following suit.

Like motherhood and apple pie, socially responsible investment warms most people's hearts. But during a two-year cycle trip across Africa, Swiss investment banker Klaus Tischhauser realized the SRI industry was failing in a key challenge-fighting poverty. Ten years on, the grassroots style of social investing he helped pioneer is wooing many wealthy investors

The rich are different, and not just because they have more money. Wealthy individuals often have a wider sense of responsibility toward society. Traditionally, this desire to do good is harnessed through philanthropy.

But a growing number are now turning to socially responsible investing, which marries social good with financial returns.

"These investors realize that there is no contradiction between ethical and financial performance," says Mr. Tischhauser, co-founder and chief executive of responsAbility Social Investments, an asset manager for social investment.

Despite the market turmoil, the wealthy have kept putting money into socially responsible investment. That is mainly because they can afford to take a long-term perspective, particularly if they have inherited wealth.In 2010, Europe's high-net-worth individuals-usually defined as people with at least $1 million in financial assets (excluding residences and consumer durables)-dedicated €729 billion, or around 11% of their wealth, to "sustainable" investing, according to Eurosif, a Paris-based research firm. That's an increase of 35% over the figure for 2008, even while such individuals' total assets under management shrank during that two-year period because of the global economic crisis.

"They aim to protect assets rather than chase returns, so short-term turbulence has less of an effect," says Anders Nordheim, Eurosif's head of research.

The trend, Mr. Nordheim says, is here to stay. By 2013, Eurosif predicts the share of HNWI assets allocated to sustainable investing will have risen to 15% or just below €1.2 trillion.

"There has definitely been a pick-up of interest in the SRI area," says Karina Litvack, head of governance and sustainable investment at F&C Investments, a U.K. fund manager whose SRI roots go back to the 19th century.

Clearly, one of the attractions of SRI for wealthy investors is the comfort in knowing their money is helping make the world a better place. "Part of our job is to tell our investors heart-warming stories so that they feel good," says Mr. Tischhauser. His firm has grown to manage $1 billion in assets and offers eight SRI products, covering themes such as microfinance, fair trade and small and medium-sized enterprise financing.

A group of people had just disrupted a baseball game by running naked across the field. After the disturbance, legendary player Yogi Berra was asked whether they were men or women. He replied: "I don't know. They had bags over their heads." That story illustrates what is perhaps the biggest issue in development economics today: the inability of many researchers to look in the right place when searching for answers.

I have just returned from east Africa, where change is stimulating the debate about the future of the continent. Yet, despite the optimism, I came back with some concerns. Important players still appear confused about what development strategies to recommend to low-income countries.

It was painful to sit in some meetings and observe foreign experts trying to assess whether the government had provided enough funding to "priority sectors" (defined very broadly as agriculture, education, health and infrastructure) to justify more external financing. It was equally frustrating to see these well-meaning people attempt to reach definitive conclusions about whether things were going in the right direction by analysing the number of reforms carried out to "improve the business climate". Watching them search for answers, I could not help but think of Berra's comment.

Vague notions of reform are meaningless in developing countries. What does a budget increase for the agriculture ministry reveal, exactly? A minister might simply have purchased a few more expensive cars for his staff, or his personal ranch. Why expect any low-income country with limited administrative capacity to simultaneously improve all the many "doing business" indicators every year? It is unrealistic to recommend an overwhelming laundry list of reforms that no government has the capacity to achieve. (By the way, China, Vietnam, and Brazil, which have been among the top-performing countries in the world for the past 20 years, are consistently ranked quite low when it comes to the ease of doing business; Brazil is 126th, Vietnam 98th, and China ranks 91st, behind such star economies as Kazakhstan, Azerbaijan, Belarus and Vanuatu.)

Unfortunately, development economics has not always been a trustworthy source for those policymakers who need a concrete blueprint for action. Decades of paradigm shifts, from grandiose project financing (interventionist policies) in the 60s and 70s, to structural adjustment (laissez-faire) in the 80s and 90s, have led to intellectual confusion and random economic policy.