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Ecuador Expanding Access to Microcredit for Low-Income Women

Thu, 12/08/2011 - 9:31am  |  NextBillion

Ecuador will expand access to microcredit, particularly among low-income women, through a $50 million loan approved by the Inter-American Development Bank (IDB) aimed at increasing employment opportunities and reducing poverty.

The National Program for Finance, Entrepreneurship, and Economic Solidarity (PNFPEES) will be the executing agency for the program, which will contribute to its strategy for fostering economic inclusion with particular emphasis on financing for women entrepreneurs.

"We expect that by 2015 the program will provide loans to approximately 25,000 microentrepreneurs," said Rosa Matilde Guerrero, IDB specialist."We also anticipate that these credits will lead to the creation of at least 5,000 new jobs over the next four years."

The program is intended to result in an 60 percent increase in credit available in districts with high levels of poverty, and at least 54 percent of the credit operations will benefit women microentrepreneurs.

Ecuador has seen a significant expansion in microfinance over the past eight years.The total loan portfolio of microfinance institutions has increased from $73.2 million to nearly $2.5 billion, an average annual growth of 405 percent.In addition, the total number of entrepreneurs served by this sector has expanded at an annual average of 232 percent over the same period, rising from about 60,000 to more than one million customers.

Microfinance Industry Going All Out to Regain Lost Glory with Women Power

Thu, 12/08/2011 - 9:29am  |  NextBillion

HYDERABAD/MUMBAI: Beleaguered microfinance industry is turning to women power to lift it out of the depths. The fairer sex is increasingly occupying the rank and file of recovery agents of lenders to the poor as the industry attempts to restore its past glory after charges of molestation and browbeating made it an unwanted child. "We will push the MFIs to have more women on rolls once the industry, currently in fire fighting mode, comes back to some kind of normalcy," said Alok Prasad, CEO, Microfinance Institutions Network, an industry lobby group.

"Imbalances need to be addressed to ensure more balanced gender dynamics, which should in turn offer positive results." Twenty seven-year-old Susheela is one of them. She didn't know in 2009 that she can succeed in a male-dominated microfinance recovery agents' force when she quit a children's rights organisation to join microfinance firm Basix. Today, she is one of those successful ones, though significantly minority , who are most sought after.

"Being a female, I am able to gel well with women borrowers and gender does offer an advantage in the changed scenario," says Susheela, a graduate in economics, history and political science. The preference for women agents is largely due to a view that domination of loan recovery operations by male agents was the key factor that led to the state blaming the entire industry for becoming a bully.

Africa Rising

Wed, 12/07/2011 - 1:33pm  |  NextBillion

THE shops are stacked six feet high with goods, the streets outside are jammed with customers and salespeople are sweating profusely under the onslaught. But this is not a high street during the Christmas-shopping season in the rich world. It is the Onitsha market in southern Nigeria, every day of the year. Many call it the world's biggest. Up to 3m people go there daily to buy rice and soap, computers and construction equipment. It is a hub for traders from the Gulf of Guinea, a region blighted by corruption, piracy, poverty and disease but also home to millions of highly motivated entrepreneurs and increasingly prosperous consumers.

Over the past decade six of the world's ten fastest-growing countries were African. In eight of the past ten years, Africa has grown faster than East Asia, including Japan. Even allowing for the knock-on effect of the northern hemisphere's slowdown, the IMF expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia.

The commodities boom is partly responsible. In 2000-08 around a quarter of Africa's growth came from higher revenues from natural resources. Favourable demography is another cause. With fertility rates crashing in Asia and Latin America, half of the increase in population over the next 40 years will be in Africa. But the growth also has a lot to do with the manufacturing and service economies that African countries are beginning to develop. The big question is whether Africa can keep that up if demand for commodities drops.

Frequent Flier Miles at the Base of the Pyramid

Wed, 12/07/2011 - 1:21pm  |  NextBillion

OK, so you are a cell-phone user in rural Nigeria or Zimbabwe, and your provider is Econet Wireless. You've been a customer for a while, so you've accumulated loyalty rewards, just like airline frequent flier points.  You live in a small hut in a village with no electricity, so you can't use your phone as much as you would like, because you can only charge it on market day at the district headquarters.

But now you can get a big discount on a solar lantern, or if you have enough Bonus Points, a rooftop home solar system from Econet -- electricity has become an added feature of cell phone service.  But the wrinkle is that having electricity enables you to use your cell phone when you want to, instead of hoarding a charge -- so Econet can afford to discount the price of the lantern or home solar system dramatically, so that even the poorest cell phone customer can afford it.

The leader behind this model -- loyalty rewards that enable cell phone users to get clean solar electricity in remote villages -- is Strive Masiyiwa.

And today Econet launched its latest initiative, an affordable Home Solar Station, electricity in a box, which enables a poor family to electrify without paying the upfront costs of solar power -- they just pay for the electricity as they use it, thanks to a "slave sim card," which bills their cell phone account for each kilowatt hour, but at a rate low enough that even if the lights are left on all day the monthly bill is only a dollar, far less than poor families currently pay for candles or kerosene.

The basic Home Solar Station has four LED lights, a rooftop solar cell whose size varies on the household size, and an outlet which can be used to charge a cell phone, run a fan, or power a small computer.  Larger versions can actually power a television which Econet is designing for this low voltage market. Masiyiwa is crystal clear.  His business is not selling handsets, or solar panels -- it's selling airtime, or in the case of the Home Solar Station electron time. Customer loyalty is his holy grail -- and how better to obtain that loyalty than to provide his cell phone customers with light, fans, and electrical charging capacity in their own homes, however humble.  (The systems are designed for the basic informal urban slum dwelling, the kind that fills the slums of Lagos or Harare  -- or for rural huts. He'll also offer much larger systems for middle-class customers.  This is power for everyone.)

It's a radical notion, and if he has the economics right, will transform the lives not only of his customers, but potentially of all 1.2 billion of the world's population who are currently denied light and electricity.  Econet will license its technology to other cell-phone providers, and if the model takes off, competitors are sure to spring up.

Mining Proves a Test of Mettle for Peru's Ambitions of Economic Development

Wed, 12/07/2011 - 1:17pm  |  NextBillion

The resignation of Peru's deputy environment minister amid violent protests against the country's largest ever mining project has highlighted how weak institutions, unable to ensure decisions are made on the basis of robust information, undermine green policymaking in Latin America.

José de Echave quit in late November, calling environmental impact studies on the $4.8bn (£3.1bn) Minas Conga open-cast gold and copper mine, located in the northern Cajamarca region, "weak, outdated and lacking in credibility".

The move exposed divisions within the administration of President Ollanta Humala indicative of the difficulties faced by left-of-centre governments in resource-rich countries. Balancing economic development based on foreign investment with environmental protection is far from easy.

After days of violent protests, and following De Echave's resignation, the US-based Newmont Mining Corporation - the majority partner in the joint venture, together with Minera Yanacocha, behind the Conga plans - said it was halting construction in an effort to ease tensions. But CEO Richard O'Brien indicated that the company, which is South America's largest gold producer, remains committed to the project.

At issue is the impact on the local watershed, as Yanacocha plans to divert water from four mountain lakes into new reservoirs to enable mining to proceed. Protests have been led by local farmers and residents concerned about the impact on the underground drainage network and natural water harvesting system. Cajamarca is Peru's leading dairy and livestock region.

Citi Micro Entrepreneur Awards 2011 Honors Individual Enterprise

Tue, 12/06/2011 - 4:11pm  |  NextBillion

The Citi Micro Entrepreneur Awards 2011 recognized nine micro entrepreneurs and a community owned enterprise at a ceremony presided over by Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India. The Citi Micro Entrepreneur Awards 2011 received over 800 applications from 77 nominating organizations. There were 74 % women nominations and four new categories introduced - youth, green, innovative and community owned enterprise.

The 2011 awards took into account geographical, socio-economic nuances and highlighted innovative, youth and green entrepreneurs for the first time. The national winner for the individual micro entrepreneur is Charulata Swain. Awards were also given to individual micro entrepreneurs on a regional basis. The winner for the south region is P.Madan, for west is Godavari Shankar Satpute, for north is Nazma Bano, for east is Padmini Jena and for northeast Karabi Rajbonshi.

The youth entrepreneur award was given to Sumaiya Khatun. The green entrepreneur award was awarded to Gakanan Bhaurao Bhasme and the innovative entrepreneur award was awarded to W. Memi Devi. Lastly, the winner of the community owned enterprise is SADHNA, a mutual benefit trust.

The awards program has grown to become a global initiative at Citi that acknowledges entrepreneurial skills and exemplifies the spirit of micro entrepreneurs who have overcome economic and social challenges to successfully build self-sustaining micro enterprises. It is also the first initiative to recognize the growing number of enterprises owned collectively by local communities in India.

Prince of Poverty Leaves Behind Questionable Legacy

Tue, 12/06/2011 - 4:09pm  |  NextBillion

Vikram Akula was the golden boy of microfinance when he launched his company SKS. How did things go so horribly wrong?.

The story of Vikram Akula is almost like a classic Greek tragedy with epic peaks, troughs and betrayals that could easily make up a Hollywood movie. Akula remains a controversial character, whose very name incites admiration and criticism in equal measure. Some say that he gave birth to the microfinance industry as we know it in India. Others say that his model of lending, pioneered by his company SKS Microfinance, gave birth to an almost unquenchable thirst for profit, driven by a business model that has no place in ameliorating the state of the poor in India. Regardless of how people feel, one thing remains clear: Microfinance will never be the same without him.

Around a week ago, SKS reported that Vikram Akula stepped down as Chairman of SKS in order to pursue a career in mobile banking. However, all indications suggest that there was something entirely different going on in the company. The seed of dissent at SKS became public, when last year Akula sacked CEO Suresh Gurumani, who was brought in SKS to give it a corporate identity. It is believed, Gurumani wanted to deviate from the traditional MFI model, and replicate a modern-day technology-driven retail banking structure in SKS.

To understand what was happening in SKS recently, one has to take a peek at data from Bombay Stock Exchange which reveals that as of September 2011, Indian promoters held just 11.55 per cent stake in the company, while foreign promoters held a 25.29 per cent stake. The public held 63.16 per cent. In other words, promoters have, in effect, little control over SKS on Monday. Data from SKS website shows that Akula has no shareholding as a promoter in SKS but still wanted to steer the ship that he had built from scratch. "The company was making huge losses, and investors were not getting returns as promised. They obviously didn't like Akula's intervention in running SKS, even when his stake was negligible, while he felt that the company's achievements were to his credits and its failures were someone else's fault," said an industry insider who prefers to remain anonymous.

Ultimately, the institutional investors whom Akula inducted into SKS with much fanfare, proved to be the Frankenstein's monster that ousted him. Sources say that Paresh Patel is the CEO of Sandstone Capital and Sumir Chadha, Managing Director of WestBridge formerly Sequoia Capital, both of whom are SKS board members, were the most vociferous against Akula in the last board meeting. (Both Patel and Chanda could not be reached for comments.) "The company needs a strategic redirection, and we will announce the plans soon," said Dilli Raj, Chief finance officer, SKS, as an explanation.

But the most trenchant-indeed vicious-critic of Akula is his ex-wife and co-founder of SKS, Malini Byanna who has accused him of a whole host of unsavoury practices related to SKS. Akula refused to talk to Business Standard, except to say, "I am legally advised that I am not in a position to discuss, comment on, or respond to your queries. Consequently, I regret my inability to respond to your questions beyond saying "I am unable to comment."

How could a 'golden boy' of a promising industry purportedly offering succour to the masses in the form of loans that sidestepped usurious moneylenders who held rural India to ransom, fall from grace so quickly?

Endeavor Takes Center Stage at Global Entrepreneurship Summit in Istanbul

Tue, 12/06/2011 - 4:05pm  |  NextBillion

ISTANBUL--(BUSINESS WIRE)--This week, more than 120 Endeavor network members have gathered in Istanbul to participate in the 2nd Global Entrepreneurship Summit (Dec 3-6), hosted by Turkish Prime Minister Recep Tayyip Erdogan. Along with U.S. Vice President Joe Biden, Endeavor Co-founder and CEO Linda Rottenberg delivered a keynote address which recognized the transformative potential of global High-Impact Entrepreneurship and combated 10 common entrepreneurial "myths."

In his own address, Biden cited two Endeavor Entrepreneurs-Alemşah Öztürk (41?29!) and Bedriye Hülya (b-fit)-as examples of Turkey's many visionaries helping the lead the entrepreneurial revolution in the region. Didem Altop, Managing Director of Endeavor Turkey, participated in an exclusive meeting with the Vice President and also spoke on two panels.

"The timing is right for this Summit," says Linda Rottenberg. "From the debt crisis in Europe to the wave of revolutions in the Middle East, the world is clamoring for new solutions. What we at Endeavor call 'high-impact' entrepreneurs remain an important driver of growth: they generate wealth and opportunity, create high-value jobs, and serve as inspirational role models for the next generation. Together, they foster a culture of 'thinking big,' where young people grow up learning to take risks and innovate."

Rottenberg continues: "It is fitting that this Summit is being held in Turkey, which has become an extraordinary hub of innovation and a catalyst for entrepreneurship in growth markets around the globe. Increasingly, the world is looking to Turkey as an example of a successful ecosystem of entrepreneurship-with a growing network of mentors, investors, and role models."

Should Philanthropies Operate Like Businesses?

Mon, 12/05/2011 - 2:01pm  |  NextBillion

It's your money, and you're willing to give some of it away to a worthy cause. But you want to see results. Measurable progress toward agreed-upon goals. Regular proof that your investment is achieving maximum impact. That's the way businesses operate, and charities should be no different.

That's one way to look at it, anyway.

Others argue that things work differently in the world of nonprofits and social change. Tackling some of society's biggest problems is unlikely to produce anything like the steady, chartable path of progress that investors require. And that's simply something donors have to live with if they want to help those most in need.

So what should you expect of your charities? Businesslike efficiency? Or something more intangible, less-easily defined?

Charles R. Bronfman and Jeffrey R. Solomon, chairman and president, respectively, of the Andrea and Charles Bronfman Philanthropies, favor businesslike thinking. Michael Edwards, a distinguished senior fellow at Demos, a social issues think tank, argues that social values should take precedence.

Yes: Good Intentions Aren't Enough

By Charles R. Bronfman and Jeffrey R. Solomon

There are many people who, like Bill Gates, have the vision and the discipline to be great philanthropists. They may not be standing on the same platform as Mr. Gates, but they use the same playbook.

Or at least they should.

Because Mr. Gates understands what any donor, large or small, should understand: that to have a sustained and strategic impact, philanthropy must be conducted like business-with discipline, strategy and a strong focus on outcomes. Organizations receiving your support should be as accountable to you as a company's board is to its shareholders. You are a stakeholder. And that means, above all else, that you have to know your return on investment.

Africa Can Make Significant Progress Towards the MDGs

Mon, 12/05/2011 - 1:44pm  |  NextBillion

Most African countries may not achieve all the MDG targets by 2015. What matters more is that they all make significant progress in all areas of the MDGs and sustain, or even accelerate, this progress in accordance with their national conditions.

Arguably, the political and economic conditions in Africa in 2011 are a lot better than they were in 2000 (the year of the Millennium Declaration), or even 1990, the base year of the MDGs. With exceptions, economies are a lot more robust, many more countries are ruled by electoral democracies, and the quality of elections is getting better. Civil society is maturing and more complex, buoyed by a growing youthful, educated and eager middle class armed with new organising and communications tools. There are massive opportunities for both political and social progress.

One such opportunity lies in fostering true democratic accountability, in which those entrusted with power are held to account in the form of the delivery of tangible benefits, especially basic services, through the effective use of tax revenues collected equitably and efficiently from those who entrust them with the power - the citizens. Parliaments and parliamentarians are crucial to ensuring that this trust is upheld as they intercede between the executive and the people.

This accountability is sustained only when those entrusting power maintain an active interaction at multiple levels with those they elect. The quality of the interaction between the elected representatives and organised citizenry largely determines the quality of democracy and its impact on the material conditions of the people. It goes without saying that the achievement of the MDGs in Africa will be more than guaranteed when we successfully catalyse and channel active citizen-state interaction and civil society-parliament engagement generally.

Diary of a Social Entrepreneur

Mon, 12/05/2011 - 12:04pm  |  NextBillion

Asister organization of the World Economic Forum, the Schwab Foundation has been awarding social entrepreneurs in South-East Asia for five years. It chose Neelam Chhiber of Industree Crafts Foundation as the India Social Entrepreneur of the Year 2011 in partnership with the Jubilant Bhartia Foundation (the foundation is the social wing of the Jubilant Bhartia Group, whose promoters are closely related to those of HT Media Ltd​, which publishes Mint.)

Industree Crafts Foundation is a hybrid, not-for-profit set-up that has adopted India's skilled artisan community and resolved to help it move up the value chain. It incubates grass-root communities so that they become owners and entrepreneurs themselves, in charge of their own destinies. Apart from production, Industree's retail branch, Mother Earth, helps market the products these artisans create. So far, Industree has changed the lives of more than 10,000 artisans living below the poverty line. Chhiber pinpoints milestones in her career that helped her make the shift to social entrepreneur.

1986:I finished my product design course from the National Institute of Design, Ahmedabad, and jumped into the deep end of work life. I worked across categories like wood, metal and ceramic. I spent three years working on a stone crafts project where we documented stone crafts in 14 states. My interest was in the indigenous arts and crafts of India, so I started working as a consultant with various craft organizations like the Handicrafts and Handlooms Exports Corporation of India Ltd, and the UP Export Corporation.

What I learnt in my initial years was that the link between consumer and producer needs to be stronger. It all lacked effective merchandising and I felt that that could only be brought about by a private company. The co-founder of Industree, Gita Ram, who works with the Crafts Council of India, advised as much too.

1994: I had been working with various government agencies for almost eight years but realized that none of the designs really translated into saleable products. So Gita and I founded Industree Crafts Pvt. Ltd, a for-profit entity with a focus on domestic retail and export.

Dr. Yunus Inspires Students to Create Social Businesses

Fri, 12/02/2011 - 1:08pm  |  NextBillion

Nobel prize winner Muhammad Yunus brought to Georgia his vision for students to create businesses that would help alleviate some of the state's most intractable social problems.

And the visit has prompted the University System of Georgia to establish a fund to help finance student-inspired projects inspired by Dr. Yunus' social business model.

The fund was launched as a result of an economic development conference including 38 student teams from the system's 35 universities and colleges that competed for the most creative social business project.

Titled "Social Business and Microcredit," the conference was organized by the university system and held at the Georgia Institute of Technology's Ferst Center on Oct. 17 with 1,200 students and other participants attending.

It was inspired by the work of Nobel Prize recipient Muhammad Yunus, who pioneered the concept of providing small loans to people in poverty designed to encourage entrepreneurial activity, a concept now widely known as microcredit.

Dr. Yunus, who was the featured speaker at the conference, described the origins of his concept that social problems can be solved through business models providing a minimum profit to the business in order to sustain a project.

He said that he didn't want the students to think of their social business projects as an academic exercise, but rather as a way of solving difficult social problems such as domestic violence, adult illiteracy, unemployment and housing.

"This is your age, this is your time," he told the students. "You are the most powerful generation in the entire history of mankind." Their challenge, he added, would be to harness the ongoing technological developments to socially useful ends.

Can Venture Capital Save The World?

Thu, 12/01/2011 - 3:46pm  |  NextBillion

Bahawalpur in eastern Pakistan is known for magnificent palaces built during the British Raj, but in the dusty part of town where most of the 400,000 residents actually live, four dozen farmers have gathered in the decidedly unpalatial concrete building that houses the local branch of the National Rural Support Programme Bank. Their darkened, sun-creased faces testify to the toll of tilling soil in one of the hotter places on Earth (at 11 a.m. in mid-June it's ­already heading toward 105 degrees); many twist their hair into head scarves, and all don cotton ­tunics known as kurta.

Suddenly the front door swings open and a tall woman with piercing blue eyes and brownish blonde hair struts in, dressed in a red tunic and baggy pants. Accompanied by the bank's president, Rashid Bajwa, Jacqueline Novogratz whips out her red notebook and gets down to business. "What kind of livestock do you have?" she asks one client. "How many male calves? How much money are you saving at the bank? What do you do with that cash?" An hour later, the notebook now filled with minute details of how, exactly, the farmers intend to pay back their loans, as well as whether their daughters go to school and what they want their children to do when they grow up, Novogratz walks out of the bank, satisfied. "I'm feeling optimistic about rural Pakistan," she tells me, as a pickup truck, loaded with field hands, rumbles past a mosque. "Farmers are making good money."

Novogratz plays the role of auditor because, as CEO and founder of the Acumen Fund, helping people starts with financial due diligence. In April Acumen sank $1.9 million into the bank in exchange for an 18% stake, one small investment in a decadelong experiment in charitable giving. Instead of shoveling aid dollars to causes or governments that give away life-­sustaining goods and services, Acumen espouses investing money wisely in small-time entrepreneurs in the developing world who strive to solve problems, from mosquito netting to bottled water to affordable housing. It's a new twist on the old adage about teaching a man to fish, except that Novogratz wants to build an entire fish market.

Four Companies Announce New Ventures to Promote Clean Energy

Thu, 12/01/2011 - 2:40pm  |  NextBillion

New York, Durban, 28 November 2011-More than 12 million low-income people in Africa, Asia, and Latin America will gain access to clean energy following four companies' commitments made today to the Business Call to Action, a global leadership initiative that promotes sustainable economic and social development. The companies also expect to create approximately 42,000 environmentally sustainable job opportunities by 2016.

The pledges that range from expanding clean energy in more than 40 developing countries to promoting sustainable use of Amazon Rainforest fruits were made at the start of the 2011 United Nations Climate Change Convention in Durban in South Africa.

"Clean energy access is essential to building a healthier and more prosperous world.  We need to come together to find bold and bankable solutions that protect our planet and promote the welfare of all people. We need CEOs, investors, utility companies and renewable energy businesses," said Business Call to Action Acting Programme Manager Amanda Gardiner. "These pledges show the private sector's growing commitment to address such challenges by promoting alternative solutions to traditional infrastructure and boosting environmentally sustainable jobs."

United States-based juice company Sambazon committed to train 7,000 açaí-berry harvesters in the Brazilian Amazon Rainforest on organic, non-invasive harvesting principles and environmental management principles.  In addition to doubling current yields of the Amazon berry and increasing harvesters' earnings by 40 percent by 2016, the initiative is expected to preserve over 1.2 million hectares of forestland.

"As worldwide demand for açaí continues to rise, this initiative will help promote a sustainable value chain and ensure adequate supplies of organic fruit," said Ryan Black, CEO of Sambazon. "To date, Sambazon's supply chain has provided alternative livelihoods for over 2,500 people and ensures the sustainable use of 700,000 hectares of in the Brazilian Amazon."

Grads Do 'Good' for a Profit

Thu, 12/01/2011 - 2:31pm  |  NextBillion

At first blush, it looks as though M.B.A.s aren't doing much "good" upon graduation.

Despite the fact that students sign up en masse for social-entrepreneurship classes, intern at nonprofits and participate in charitable extracurricular activities, fewer than 5% of graduates from many top business schools take jobs in nonprofit organizations right out of school, with some institutions placing just 1% or 2% in the field. Even the Yale School of Management, which has built a reputation for creating nonprofit managers, sent just 9% of its class into that sector this year.

But these days, the numbers don't tell the whole story. Schools say that plenty of students are going on to do good works, just not in traditional nonprofit jobs. Instead, many students opt for social-responsibility positions at Fortune 500 companies or working at for-profit enterprises that explicitly address energy-access or economic-development issues.

The reasons are many. For one thing, most traditional nonprofits don't offer the financial security that finance or consulting jobs can provide, with nonprofits commonly offering starting salaries as much as 30% below those of their for-profit counterparts. Nor, say students, do they provide as clear a career path. Some also feel they might be able to make more of a difference at a bigger organization.

"The boundaries between the sectors are getting increasingly blurry," says Laura Moon, director of Harvard Business School's Social Enterprise Initiative. Though 3% of 2011 graduates accepted jobs in the nonprofit and government sectors, Ms. Moon says others are pursuing private-sector jobs that address global poverty, supply-chain issues and environmental or sustainability concerns, or other social needs.

China Raises Poverty Line: Is it Setting an Example for Poverty Alleviation?

Wed, 11/30/2011 - 1:32pm  |  NextBillion

China announced a new standard for defining poverty on Tuesday as it seeks to bridge the gap between the country's wealthier and poorer classes. The central authorities have decided to raise the poverty threshold to 2,300 yuan ($362), in terms of a farmer's annual net income, which marks an 80 percent rise from the 1,274 yuan standard in 2010. The 2010 figure was itself the result of marked revision; the standard was 206 yuan in 1986, before being raised to 1,067 yuan in 2008.

There were, officially, 27 million rural poor in China in 2010. The new definition of the poverty line will see an astronomical increase in that figure, with 128 million people set to qualify for government subsidies, according to experts. The government is already battling high inflation and food prices have hit double-digit growth, meaning that increasing numbers of low-income families are struggling to make ends meet.

"The extraordinary achievements China has made in poverty alleviation have contributed to promoting economic development, political stability, ethnic unity, border security and social harmony, as well as the global anti-poverty drive," President Hu Jintao stated, while speaking at a national poverty alleviation meeting Tuesday at the Great Hall of the People in Beijing. 

"By 2020, our general target is to ensure the nation's impoverished will no longer need to worry about food and clothing," he said, adding that "the annual net income growth of the farmers in poverty-stricken regions will be higher than the national average by 2020. Public services for them will also near the national level."

China's spending on poverty reduction increased from 12.75 billion yuan in 2001 to 34.93 billion yuan in 2010, representing an average annual growth rate of 11.9 percent. In addition, China has released its outline for poverty reduction and development for the next 10 years.

"China has lifted hundreds of millions of its own citizens out of poverty," said UK International Development Secretary Andrew Mitchell. "We are hugely respectful of what China has done and what China has achieved for its own people."

Social Enterprises See Funding Dip, but Investors Still Upbeat

Wed, 11/30/2011 - 12:56pm  |  NextBillion

The value of investments in India's social enterprises has fallen by around 7% this year as investors struggle to identify companies that not only cater to the bottom of the pyramid by offering products and services at the right price points, but also provide sustainable returns for investors.

Excluding microfinance institutions (MFIs), the investor-backed six social enterprises have put in $21.6 million (around Rs.112.5 crore) this year so far, compared with eight such investments worth $23.3 million in the same period a year ago, according to data from VCCEdge, which tracks venture capital (VC) and private equity (PE) activity in the country.

The investment tracker based its data on announced deals.

Social enterprises, which refer to both for-profit and not-for-profit companies that cater to people who live on less than $2 per day, facilitate inclusive growth. Hence, the fall in the number of deals is of concern.

Investors are cautious now, said Anuj Sharma, who manages investments for social investment fund Ennovent, adding that initially there was euphoria about this segment and a few quick investments took place. "People are now realizing that making quick deals was not the right approach. They are now taking time looking for the right kind of deals." While there are a few good companies available, valuations are high, making investors reluctant to write cheques, Sharma said.

Investors, however, stress that their interest in these companies continues and more investments will be seen in the next six months as a bigger corpus has been raised and funds that were earlier focused on MFIs have now broadened their investment spectrum. Investors say there are huge investment opportunities in social enterprises. Moreover, the base of the economic pyramid in India representing the masses is a market in excess of $1.2 trillion, according to a study by the International Finance Corporation​ and World Resources Institute​.

Tata PE Buys 10% in Ginger Hotels

Wed, 11/30/2011 - 12:49pm  |  NextBillion

MUMBAI: Tata Capital's private equity fund has acquired a 10% stake in Roots Corporation, which runs budget hotel chain Ginger. The stake-purchase in Ginger was completed by the $550 million Tata Opportunities Fund and it marks the one-year-old fund's debut investment, said sources familiar with the matter.

Tata Opportunities Fund, spearheaded by Mukund Rajan, is a third party private equity fund in which several global institutions are investors. The deal had valued the loss- making Ginger Hotels at around Rs 1,000 crore, sources added. Tata Opportunities Fund is the largest ticket-sized fund within Tata Capital's private equity franchise that includes a healthcare fund and an innovation fund. It had a final close of $550 million in September this year. A final tranche of $100 million was raised during the last quarter.

Roots Corporation, an arm of Indian Hotels Company (Taj hotels) entered into budget hotels through the launch of Ginger in June 2004. The country's first smart basics hotels concept was developed in association with renowned corporate strategy thinker C K Prahalad. Sources explained that Taj's move to bring in a financial investor in Roots Corporation was to deleverage its balance sheet. The seven-year-old Ginger chain is yet to make money. It recorded a loss of Rs 8.8 crore on a turnover of Rs 78 crore in 2010-11.

Caterpillar Foundation Partners With to Expand WaterCredit in India, Indonesia

Tue, 11/29/2011 - 4:03pm  |  NextBillion

PEORIA, Ill., Nov. 29, 2011 /PRNewswire/ -- Caterpillar Inc. (NYSE: CAT) today announced that the Caterpillar Foundation and announced a $3 million partnership to reach more than 218,000 people with clean water and sanitation over the next three years. The program will support a significant expansion of's WaterCredit activities in India, and also fund a market assessment to explore the launch of WaterCredit in Indonesia for the first time. WaterCredit facilitates small loans for water and sanitation access for people living in poverty without access to these most basic necessities. A successful, market-based solution, WaterCredit is accelerating large-scale, sustainable progress against the water and sanitation crisis.

"We are honored to be working with the Caterpillar Foundation on this high-impact program," said Chief Executive Officer and Co-Founder Gary White. "Because of Caterpillar's generous support, we will reach more people with clean water and sanitation, at a faster rate, and at a decreasing philanthropic cost-per-person. Furthermore, we will also be able to attract divergent sources of capital to support lending in the water and sanitation sector in South Asia."

"The Caterpillar Foundation supports a number of basic human needs programs in areas where Caterpillar has a presence," said Caterpillar Corporate Public Affairs Director Jim Baumgartner. "The sustainability of's model is really what drew us to WaterCredit. This program will provide clean water and sanitation facilities to thousands of families in India, but the cycle of progress will continue as the loans are repaid and these funds are provided to others in need."

The Caterpillar Foundation grant will support two WaterCredit programs in India. This includes the expansion of a Revolving Loan Fund managed by one of's local partners in Bangalore to provide an additional 8,000 households (about 38,400 people) with access to micro-loans for clean water and sanitation. Through this financial model, once a loan is repaid, it is then re-lent to the next person in need. The Caterpillar grant will also support's work with its existing microfinance partners in Bangalore and Tamil Nadu, India. It will facilitate WaterCredit loans for sanitation purposes, enabling more than 180,000 residents to gain access to hygienic sanitation facilities such as household toilets. Finally, the Caterpillar Foundation grant will fund an initial market assessment in Indonesia by the team to assess and lay the groundwork for the launch of WaterCredit in Indonesia. 

Since 2008, and its partners in India have used the power of WaterCredit to impact twice the number of people than could have been reached using other, more traditional approaches, all while reducing the philanthropic cost per person served by nearly 50 percent.'s program with the Caterpillar Foundation builds on this solid success.

How a Classic Model of Social Commerce Can Teach the World How to Save

Tue, 11/29/2011 - 2:40pm  |  NextBillion

In a dusty hallway in Mumbai's Dharavi slum, two women barter used clothes for pots and pans. The going rate today is ten pieces of used clothing for one new tin pot.

This is the informal economy, growing as the world's population continues to urbanise in mega-cities like Mumbai and São Paulo. In Mumbai, where 60% of residents live in slums, activity in the informal economy, from bartering to neighborhood savings groups to co-ops, rivals the scale of the formal economy of retail stores, banks and taxes. The scale of this endeavor has not gone unnoticed by the corporate sector, and companies are beginning to embrace this population as a future market for their goods and services. But more important than what they buy is what they can teach about building highly integrated neighborhood economies.

Shabana Begum smiles shyly as she opens the door to her small home in the Dharavi slum. Dirty water pools in the meter-wide lane that passes her door. Laughing children rush past towards a pick-up game of cricket. Her two older children proudly show off their impeccably neat 40sqm home, as Shabana describes the savings group she's been a part of for the last three years. Savings groups, pioneered in slums like this one and spread throughout the world by the organisation Slumdwellers International, are the backbone of a neighborhood support system that provides these communities services that the government and corporate world does not provide.

Shabana saves 100 rupees a day (about $2) through her savings group. Her husband, a rickshaw driver, earns 500 rupees a day. There are twenty families in this group. A volunteer representative comes by her home each day to collect her contribution. Saving 1/5 of your income is no small feat. When I ask her how she is able to save that much she says, "My husband makes a good living, I'm able to save it easily. It's important to save every day." She pauses, "And I've not had to take one withdrawal from it yet."

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