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Africa Not Fit For Print; The 'Light' Side Of The 'Dark' Continent

Fri, 01/13/2012 - 3:12pm  |  NextBillion

A Chinese, Latin American, and North American student are sitting in a classroom. The teacher pulls out a map of Africa, and asks 'tell me what you see". The Chinese student speaks of opportunity and business; South African steel, Congolese minerals, and Angolan oil to power his country's growth, and an endless list of future contracts for Chinese-built roads, bridges, and infrastructure to link the continent. The American reflects on Darfur, the Rwandan Genocide, thatched-roof villages, famine, Bono, Madonna, nonprofit work, and starving children. The Latin American student draws parallels in a tragic reflection of the worst parts of his own country; nefarious warlords, corruption, and poverty.

Who is right, and who is wrong? No one. And everyone. The complexity of this mighty and expansive continent can hardly be confined to a single narrative. Over one billion people. 54 independent states (as recognized by the UN). Nearly 3,000 languages. And as remarkably diverse as the continent is, so too should be the stories that emerge from it.

As I stepped through doorway of my concrete apartment in Nairobi, Kenya the other morning, I had the strange feeling I'd done something terribly wrong. I had just returned from two weeks traveling by local transport -- bus, boat, motorcycle, and foot -- through the eastern Democratic Republic of the Congo, and as it happens, had an incredible, inspiring, and uplifting time.

Before you barrage me with your criticisms, and claim perhaps I'm blind, insensitive, ignorant, or arrogant for eliciting pleasure from my time in the D.R.C., let me explain myself.

The journey went hard against the grain of the typical Congo narrative; I did not pay a single bribe. Immigration officials turned out to be the friendliest and most helpful bunch I met. No men with AK-47s kidnapped me. I spent Christmas day hunting with Mbuti pygmies in the world's second largest rainforest, swimming in crocodile-infested rivers with their children. I met with grassroots NGOs and social entrepreneurs that were changing communities and bringing hope. I encountered warm smiles, and generous hospitality. I saw a beautiful, untold side of the country.

Investing in Impact: Making the Case for Patient Capital

Fri, 01/13/2012 - 2:52pm  |  NextBillion

Case study highlights challenges facing the nascent social investing sector and explores ways to face them.

ANN ARBOR, Mich.-Social investing. Impact Investing. Patient capital.

That the idea itself has more than one name underscores the challenges facing an industry that seeks to invest in and grow companies that measure wealth both by profit and the ability to solve social problems.

This relatively new sector in the venture capital world is trying to redefine the very mission of capitalism. The idea is that for-profit companies should be judged by more than one bottom line.

But who defines those more intangible bottom lines? How do investment firms discover startups worthy of investment? How does social investing raise funds when it's still in a no-man's-land between philanthropy and traditional venture capital?

Those questions are probed through the lens of San Francisco-based impactne investing firm Good Capital in the case study Good Capital and the Emergence of the Social Capital MarketSupervised by finance professor Gautam Kaul and written by Lauren Foukes, BBA '06/MBA '12, the case won fourth place in the 2011 NextBillion Case Writing Competition.

Social investing is a relatively new idea, especially in the United States, and those involved in the industry have to lay the foundation for their own ecosystem, says Kaul, the John C. and Sally S. Morley Professor of Finance. Leading experts need to set standards-especially on how to measure and value social impact-and need to establish a regulatory framework in the U.S., where the law usually favors the primacy of shareholder value.

Haiti Embarks on Economic Recovery Plan with Help from Private Sector

Thu, 01/12/2012 - 2:59pm  |  NextBillion

Much of the media coverage of Haiti's post-earthquake rehabilitation has focused on the role played by the international community and aid donors. But on the second anniversary of the earthquake, the island's narrative may be slowly shifting from one of aid dependency to one of proactive self-help. The government is embarking on a multipronged initiative to combat cholera, permanently rehouse the displaced people, improve infrastructure, and stimulate the economy through a drive on job creation.

Haiti's new prime minister, Garry Conille, said the government's main focus will be to join with private sector partners to address key economic and infrastructure needs to kickstart the economy. "We clearly understand that aid alone will not develop this country [so] we're creating a lot of incentives for the private sector to come in and invest," he said.

The government aims to attract foreign direct investment through Haiti's forum on private sector investment, and entice corporate interest in the country with initiatives such as a 15-year tax holiday and generous subsidies for foreign businesses. It is also working with the Inter-American Development Bank (IDB) and USAid to develop Haiti's manufacturing industry - a venture that Conille believes has the potential to create thousands of jobs over the next 12 months.

Work has already begun on a 246-hectare industrial park by the South Korean apparel manufacturer Sae-A, which is keen to capitalise on Haiti's guaranteed duty-free access to US clothing markets. The $78m development in Haiti's North Corridor will provide 20,000 jobs and directly support the livelihoods of up to 120,000 people. As well as providing myriad opportunities for local entrepreneurship, the industrial park will also include a residential development with 5,000 homes.

Note From the Horn of Africa: Leveraging Mobile Technology to Link Somali Youth with Jobs

Thu, 01/12/2012 - 2:56pm  |  NextBillion

Read the news, and initial reports about the Horn of Africa1 are grim with famine and conflict dominating the headlines. But despite a food crisis and flare-ups of violence, key areas of the economy are growing steadily. Even in the face of limited infrastructure, large numbers of young Somalis are embracing new technology, especially mobile phones. In a single 5-year period, cell phone penetration in the region has jumped by 1,600 percent-an increase that outpaces neighboring Kenya and nearby Sudan.2

Leveraging this trend, mobile phone software venture Souktel has partnered with US-based NGO Education Development Center (EDC) to develop a cell phone-based job information service for youth, called JobMatch. The service is being implemented through funding from USAID as part of EDC's "Shaqodoon" project (which means "job seekers" in Somali). JobMatch aims to tackle youth unemployment by providing real-time, accurate information to youth about where work can be found. The service's underlying logic posits that youth unemployment is due not only to economic conditions, but also a lack of good resources to connect youth with employers. Across the Horn of Africa, web access is low, many communities don't receive newspapers, and social networks are limited. Through mobile technology, youth can leapfrog these obstacles and get regular access to employment information.

The technology itself is sophisticated, but easy to use. As part of training courses delivered by EDC and local NGO partners, young job seekers create "mini CVs" by answering a short series of questions via SMS (text message). These questions ask youth about their location, skills, experience, and more. At the same time, local employers (who learn about the service through EDC staff outreach) create "mini job ads" through a similar process. Both sets of information are uploaded from users' phones to a central database. Then, at any time, youth or employers can text "Match Me" to a 3-digit service hotline to receive an instant listing of all jobs or potential candidates that match the criteria in the mini CV or mini job ad. Once they are matched, employers and job seekers can contact each other directly, using contact details provided in the match message, to set up in-person job interviews.

Rebuilding Afghanistan's Villages, Rug by Rug

Thu, 01/12/2012 - 12:50pm  |  NextBillion

When Connie Duckworth flew into Kabul for the first time in 2003, the city below "looked like Berlin after World War II," she says. Since that visit with the U.S.-Afghan Women's Council-a non-partisan initiative tasked with supporting Afghan women-Duckworth has devoted her life and career to rebuilding Afghanistan, carpet by carpet. Duckworth founded ARZU, a nonprofit, artisanal rug company where every item produced and donation received helps pay the salary of local weavers and funds social programs to lift rural families out of crushing poverty.

Afghan women need all the help they can get. The combination of gender segregation, violence against women, limited access to health care, and extreme poverty make Afghanistan the worst place on earth to be a woman, according to a survey by the Thomson Reuters Foundation released this summer. And, lest we forget, it's ground zero for a war that just turned 10 years old.

The challenge of getting anything done in Afghanistan, particularly the rural areas where Duckworth chose to set up shop, is compounded by a lack of infrastructure, widespread corruption, and a lack of cooperation between religious and ethnic groups. "When we started there was no central bank," adds Duckworth. "You couldn't wire-transfer money into the country."

So if you can make it in Afghanistan, you can make it anywhere, she says. "I always have viewed community development and international development from a business perspective," says Duckworth, voicing an unsurprising mindset for a woman whose first career was a 20-year tour of duty at Goldman Sachs. Afghanistan is "a proxy for how can you innovate and experiment with new models to empower women globally...You have to develop local, small basic grassroots activity or you don't have a shot for peace."

ARZU's approach has enabled the organization to grow from 30 to 700 weavers-spread  across 13 villages, two religious sects, and four ethnic groups-in just seven years. The core principal of ARZU is a family's subscription to a "social contract." The family of every woman weaver working for ARZU must agree to send its kids to school full-time. Heads of households must allow their wives to attend ARZU's literacy classes for two hours a day. In exchange for compliance, workers receive a living wage and the chance at a 50 percent bonus for high-quality work.

Training and Mentoring Give Boost to Uganda Clean Cookstoves Producers

Wed, 01/11/2012 - 4:01pm  |  NextBillion

A five-year programme rewards entrepreneurship across East Africa by supporting micro-businesses to establish energy services and create employment opportunities in rural areas.

Willy Bamwenyena, 25, stands out as a young resourceful entrepreneur, who has been able to identify the energy gap in his community, in rural Uganda, and turned the need into a business opportunity. The GVEP-led Developing Energy Enterprise Project (DEEP) has boosted his business - and that of hundreds of other entrepreneurs across East Africa - to make and sell energy efficient cook-stoves.  

Willy's firewood burning stoves are made from locally available materials such anthill soil and clay. The stoves are popular with many householders in Sissa, and up to 90% now own one. A key reason behind their success is that they are affordable and more energy efficient compared to the traditional 3-stone fireplace. In the long run, stove-owners save money that would have been spent buying firewood; and time - spent drying or collecting firewood. The stoves also reduce indoor air pollution considerably, hence decreasing the chronic health illnesses associated with the emission of harmful fumes from open fires.

Spotting this was a profitable opportunity, Willy started making stoves for his neighbours, initially borrowing tools from his friends. His ability to make use of social capital to get his business off the ground attracted the interest of the DEEP's staff, who were recruiting enterprising young people in his area.

His entrepreneurial spirit was nurtured by members of the GVEP Uganda team who invited Willy to receive extra training and guidance on how to expand his business. "I wanted to make more income for myself, create more jobs for others, so I jumped at the opportunity to attend the training sessions", says Willy. 

Waste Ventures Gives India's Waste Pickers Access to Carbon Markets

Wed, 01/11/2012 - 3:23pm  |  NextBillion

Urban India generates 40 million tons of rubbish each year, a figure that is growing by more than two million tons ever year. Just 25 percent of that rubbish is collected by government contractors and there is little recycling; the rest is dumped and left to rot, producing methane, which is 23 times more harmful to us than carbon dioxide.

Waste Ventures is a social enterprise aims to build a model in waste management that empowers the waste collectors, gives them financial benefit and has a positive impact on the environment. It was founded by social entrepreneur Parag Gupta, who previously worked at the Schwab Foundation for Social Entrepreneurship.

The business has both a non-profit (Waste Ventures) and a for-profit (Waste Capital Partners) division. First of all it is focusing on creating waste picker cooperatives -- business units owned and operated by the waste pickers themselves who go door to door to collect people's and companies' waste. Waste Capital Partners finds investment to feed into Waste Ventures. Waste Ventures takes a minority stake in each of the cooperative businesses in return for mentorship.

Next, Waste Ventures offers these companies incubation, including training in processing waste, learning to compost the organic material, which makes up around 50 percent of the total urban trash. The resulting bio-fertiliser can be sold to rural farms (currently biofertiliser production in India only meets 1.5 percent of the demand).The composting process helps to save 60 kg of CO2 per ton of organic waste.

Help (Businessweek) Find America's Most Promising Social Entrepreneurs

Wed, 01/11/2012 - 3:18pm  |  NextBillion

We're kicking off our search for businesses to profile in our fourth annual roundup of America's most promising social entrepreneurs. The idea is to find and report on business ventures that advance a social or environmental mission and aim to turn a profit. We're asking readers to suggest candidates using the form at the bottom of this post.

Interest in social enterprise has grown in recent years. The movement has given rise to a slew of investors, incubators, networking groups, and other organizations dedicated to helping mission-driven entrepreneurs succeed. Policymakers, too, are recognizing approaches that combine business methods with social missions. Seven states have passed laws creating new legal structures that give companies more leeway to consider social and environmental missions over financial returns.

While definitions of social entrepreneurship vary, for purposes of this roundup, we are searching for for-profit, scalable companies that exist to solve societal problems. We want businesses with social missions baked into their operations, not tacked on as extras. We want companies that can demonstrate results, both in the marketplace and in their missions. That means we'll only consider companies that will disclose their annual revenues. We're seeking for-profit companies based in the U.S., doing business here or abroad, that meet these criteria.

Submit your company or another you know of using the form here. We'll take suggestions through Feb. 9. Know that there is no need to submit the same company more than once. This spring, we'll post profiles of the 25 our reporters and editors find most promising. Then we'll ask you to vote for the one you find most promising, and announce the five that get the most votes. (For a look at last year's roundup, flip through this slide show.)

What is Social Innovation? [Video]

Tue, 01/10/2012 - 2:42pm  |  NextBillion

30 Second MBA featuring Yasmina Zaidman, Director of Communications, Acumen Fund.

Social Entrepreneurship: 1 Approach to Higher Ed Bubble Bust

Tue, 01/10/2012 - 2:34pm  |  NextBillion

Economists are not alone in their worry of an impending higher education bubble bust. Given the drastic increase in cost and decrease in relevance of a college degree over the past decades,Ashoka U Exchange participants - faculty and students across disciplines, administrators and social entrepreneurs - are united in their conviction that cosmetic changes to their institutions are not enough.

Co-hosted by Ashoka, the world's largest association of social entrepreneurs, and Arizona State University, Ashoka will bring together more than 100 colleges and universities from 15 countries to disuss the "so what?" of higher education for an event at ASU, Feb. 10-11.

In debates on the higher education crisis, there has been much talk of the need to cut costs. However, in a world of accelerated change, we can't afford not to educate the next generation of leaders to effectively address the world's daunting social and environmental challenges. Social entrepreneurship education is one approach, gaining rapidly in popularity.

Interest in social entrepreneurship has experienced a mostly quiet, but dramatic growth in higher education over the past few years. Ashoka U Exchange participants see disruptive innovation as an opportunity for colleges and universities to become more entrepreneurial, identifying ways to leverage the entire spectrum of institutional resources for social impact, and creating a world-changing educational experience that makes a difference. Participants come to share new educational methodologies and strategies to catalyze universities as drivers of global social change.

Kenya Has Mobile Health App Fever

Tue, 01/10/2012 - 2:26pm  |  NextBillion

Mobile health platforms are fast emerging in Kenya, where one startup's newly launched mobile health platform is attracting nearly 1,000 downloads daily, and the dominant telecom, Safaricom, has forged a partnership that will give its 18 million subscribers access to doctors.

A World Bank official sees significant promise from such efforts, pointing to the fact that 50 percent of all Kenyan banking is already done on mobile phones-suggesting that the population is ready to go mobile with health care, too.

"In terms of providing basic services through mobile phones on the continent, Kenya is in the lead in many ways, and showing the way," says Elizabeth Ashbourne, director of global health information forums at the World Bank in Washington, D.C. "Local applications in the health space are absolutely frontier activities."

Many Kenyans have serious health problems; for example, according to the World Health Organization, more than 30 percent of children under age five show stunted growth. At present, only 7,000 doctors serve a nation of 40 million people. But Kenya is rich in mobile phones, with 25 million subscribers (Africa has more than 600 million of them).

The new app, called MedAfrica-available for smart phones and less powerful feature phones-is the product of Shimba Technologies, a Nairobi-based company founded by two locally educated entrepreneurs, Stephen Kyalo and Keziah Mumo, with $100,000 in seed money from a European VC.

Selling Organs to Pay Off Debt: Microfinance Needs Reforms

Mon, 01/09/2012 - 3:06pm  |  NextBillion

When Muhammad Yunus won a Nobel Peace Prize in 2006 for his work on microfinance with theGrameen Bank in Bangladesh, he would have been mortified to know that a version of his model would one day force his country's poor into the organ trade.

At the time, microfinance (particularly the practice of giving small loans to the unsalaried poor with low to no collateral) was revered for its ability to "do good while doing well." In other words, it enabled people to escape poverty while turning a profit.

In 2010, microfinance euphoria was dampened when aggressive money collectors drove more than 30 Indian farmers to suicide to escape their debt. Although regulations followed that outlawed such practices, last summer's revelations of Bangladeshis selling kidneys to pay off loans highlight deeper flaws in microfinance's traditional approach, and show once again that giving loans to the poor sometimes just exacerbates their plight.

Fortunately, governments and microfinance institutions are taking steps to reform the industry and provide the impoverished with a variety of financial services, including savings options, which better meet their needs. These institutions' ability to continue those improvements will not only determine microfinance's future but the well-being of aspiring households around the world.

The desperation caused by debt in Bangladesh makes the need for change even more urgent. When Selina Akter from Berendy village took out loans to start a vegetable farming business, she couldn't have imagined what it would cost her to pay them back. When her business went through a bad streak, Ms. Akter was unable to meet the required payments and had to take additional loans from another microfinance nongovernmental organization. All told, she amassed 400,000 taka ($5,280) in debt.

As first reported by the GlobalPost in October 2011, to get out from under her loans, Akter had surgery. The 25-year old Bangladeshi received 220,000 taka ($2,676) for her kidney. To cover the rest of her loans, her husband, father-in-law and brother-in-law chipped in. By selling their kidneys. Experts estimate that the Akter family is just one of the many in Bangladesh who get caught up in a "web of loans," with 250-300 people selling their organs each year for quick cash.

Create Scope for Women to Flourish in Business: Analysts

Mon, 01/09/2012 - 3:01pm  |  NextBillion

Women entrepreneurs in South Asia are failing to flourish due to shortage of funds, difficulty in marketing, social constraints and non-participation in decision-making, analysts said yesterday amid calls for governments and private sectors to change the scenario.

Women are treated as second-class citizens in the region while their contribution to the economy is totally overlooked, they said.

The comments came at a discussion on "Women Leadership" on the second and concluding day of the South Asia Entrepreneurs' Convention LEAD 2012 at Sonargaon Hotel in Dhaka.

The Saarc Chamber of Commerce and Industry and the Federation of Bangladesh Chambers of Commerce and Industry co-organised the event, themed "Youth in rising South Asia: promises and dreams".

Speaking as the chief guest, Foreign Minister Dipu Moni said democratic institutions were of paramount importance in securing the fundamental rights of women and providing them with mechanisms for full economic, political and civic participation.

Although women are often engaged in entrepreneurial activities, they face numerous barriers that deter them from developing their enterprises, scaling up, and creating jobs for others, she said.

The minister said one big problem is that women's enterprises are often informal while in many countries women play a dominant role in informal economies.

She emphasised bringing "informal businesswomen" into the formal sector where they can build on their productive assets and have access to state institutions and public services and that there must be adequate incentives and minimal barriers to formalisation.

Statistics show that women entrepreneurs account for less than 10 percent of the total entrepreneurs in developing economies, including South Asian countries, whereas the figure is about 25 percent in advanced economies.

Coming Up, Job Plan Scheme for Urban Poor

Mon, 01/09/2012 - 2:57pm  |  NextBillion

The UPA government, which launched schemes providing employment opportunities for the rural poor during its two term in power, is now targeting the urban poor, majority of whom are slum dwellers.    With an eye on the 2014 Parliamentary election, the Centre plans to launchthe National Urban Livelihood Mission (NULM), which will create job opportunities for the urban poor, during the 12th Plan. The housing and urban poverty alleviation ministry, which has proposed the scheme, has sought a Rs 20,000-crore budget to roll out the programme.

The UPA government had in 2006 launched its flagship Mahatma Gandhi National Rural Employment Generation Scheme targeting the rural poor and had also rolled out the National Rural Livelihood Mission, a massive self-empowerment programme focusing on rural women, last year.

According to the ministry data, 93 million urban residents are estimated to be slum dwellers. "With the number of urban poor growing, a need was felt for a specific employment generating scheme targeting the urban poor," a ministry official said.

Officials said the programme will focus on providing wage employment opportunities and skill development to the urban poor so that they are gainfully employed. "Skill development will be the key to enhancement in productivity of this segment," a note by the ministry states.  

NULM will have four components - building community institutions like self help groups and their federations, employment through skills training and placement, capacity building and training and self employment programme.

Micro-loans Helping Solar Power Take Hold in India

Fri, 01/06/2012 - 4:26pm  |  NextBillion

In Chemangala, in southern India, silk farmer H.B. Manjunath walks into a back room of a dark thatched roof cabin, flips on a light switch and watches as the cool light illuminates hundreds of milky white silkworms crawling in a wooden box full of mulberry leaves.

The worms need the crispy leaves to survive and spin their silk cocoons, but they'll only do it when there's continuous light. Manjunath said that used to be very hard to come by.

"We had four or five hours of unscheduled power cuts every day," Manjunath said. "Sometimes, we would not have it at all."

But that changed when Manjunath took out a small loan from his local bank to pay for a single solar panel and batteries to store the electricity they generate. The 120-watt system generates enough power to illuminate the silkworms for three hours a day. Manjunath's not worried even if he doesn't have grid power for 24 hours.

"The solar works for us," he said.

Manjunath's bank loan was part of an effort in the southern state of Karnataka to promote affordable solar lighting in rural areas, part of a larger national movement. India's government hopes to boost renewable sources of energy and install 20,000 megawatts of solar generating capacity over the next decade, to help fill a huge power gap in the country.

About 500 million people don't have electricity in the country today. That's nearly half the population. And even places that are hooked to the grid face frequent blackouts.

Dr. Harish Hande, founder of the Bangalore-based solar company SELCO, said the need for energy is urgent, and not just so people can run their businesses or light their homes.

"It's very important from a governance point of view, India's social stability point of view, that we need to provide basic needs," Hande said.

India's economy is booming, but conventional sources of electricity just haven't been able to keep up with the growth in demand in India. That's one reason Hande spent years trying to convince local banks in Karnataka to offer small loans to rural families for renewable energy systems. In recognition of his efforts, Hande recently was awarded the prestigious Magsaysay Award, sometimes called the Asian Nobel prize.

Hande said solar lighting can have a profound emotional impact on the poor.

Do Designers Actually Exploit The Poor While Trying To Do Good? Jan Chipchase Responds

Fri, 01/06/2012 - 4:21pm  |  NextBillion

Recently, at the PopTech Conference in Camden, Maine, Jan Chipchase, Frog's all-star field researcher, was giving a presentation on his travels in search of novel design solutions when a person in the audience lobbed a pointed question: "What is your motivation? Why do you do this?" When Chipchase began to respond, the audience member interrupted and asked again, "No, what is your motivation?" The follow-up hanging in the air was, "How do you sleep at night?"

As the back and forth continued, the hostility became more palpable. The audience grew quiet and unsettled. Were Chipchase and those doing similar work really helping those in developing countries by creating better products for them? What if, instead, they were simply scraping local communities for big ideas and then riding them to big profits?

Whether you're a fan of design research in the field--or more sympathetic to that audience member--you can't gloss over the issue. Who is the best poised to bring innovation to the developing world? Big corporations that are already rich? Or people living in the countries themselves? Do big corporations bring better standards of living, or simply sugared water and useless doodads?

Chipchase didn't respond directly to the question at the time, but later he sat down with Co.Design and addressed the topic more specifically: "It doesn't take much effort to find something about globalization to be incensed about: Starbucks squeezing out your neighborhood coffee shop from the prime location; riots in Indonesia triggered by a stock market crash in Wall Street impacting oil subsidies. Coke logos being painted onto remote pristine mountain ranges. Make no mistake: Big companies, governments, organizations, agencies need watching, need to be held to account, and in many markets hold a disproportionate amount of power." But Chipchase has thought long and hard about these issues, and has a sophisticated view informed by millions of miles traveled. He believes that if those in the West aren't working with the emerging markets they're developing for, the products suffer and people lose out. If we don't design for these markets, then the alternative for them is usually no design at all--and that means no designs solving their specific problems, and no economic might to prove their standing in the wider economy.

Does Microfinancing Really Work? A New Book Says No

Fri, 01/06/2012 - 4:16pm  |  NextBillion

Politicians from Washington to New Delhi have argued for years that giving tiny loans to poor people to help them start or expand their businesses is a sure-fire way to help millions improve their lot in life, and drastically reduce global poverty, especially among women. The idea has become such a central feature of foreign aid programs (USAID pours millions into such projects) that the microfinance industry has ballooned into a multi-billion-dollar business operating in virtually every country on the planet. The question is: Does it work?

Unfortunately, only sometimes. That's the conclusion of an exhaustive new study of programs across the world, published on Thursday, which details how many loans leave poor people even more desperate than before - or at least, barely improves their circumstances. "On current evidence, the best estimate of the average impact of microcredit on the poverty of clients is zero," writes David Roodman, author of the new book Due Diligence and a senior fellow at the Center for Global Development in Washington.

Roodman's assessment is far different from the enthusiasm microfinance programs have generated since the first institution, the Grameen Bank in Bangladesh, opened in 1976. The bank's founder Mohammad Yunus won the Nobel Peace Prize in 2006 and is probably the third world's most celebrated economist.

The reality which Roodman found is far more complex than Yunus's original idea that millions could be lifted out of poverty if they only had access to credit - something regular banks have always been loath to offer. Roodman gathered evidence over three years from hundreds of lenders and borrowers in microfinance institutions - some with loans as small as $2 - in part by blogging about the issue on the center's website, and then posting his book online, chapter by chapter, as he wrote it, generating a furious global debate about the issue.

With his book now finally published in full, the findings are sobering. Although microfinance organizations have earned a reputation among U.S. and European aid agencies for having a remarkably high repayment rate on their loans - often a lot better than regular banks - Roodman found that some institutions' impressive repayment records come with a tragic price to borrowers.


Read more: http://www.time.com/time/world/article/0,8599,2103831,00.html#ixzz1ii9ToWG5

Intuit Taps Text Messages, Economics To Boost Farmer Incomes In India

Thu, 01/05/2012 - 2:49pm  |  NextBillion

"How can technology help the places I grew up in?"

That's Deepa Bachu, describing her personal mission. Bachu was born in Bangalore, India, but spent a decade at Intuit's Mountain View headquarters developing flagship products like Quicken. She returned home several years ago, for family reasons, and after becoming the director of emerging market innovation at Intuit, set out to build products for many of the neighbors she grew up with. "It's so motivating," she says. "It's just so awesome."

If Quicken is the product she felt most passionately about stateside, then Fasal--which she developed in India--has certainly become the pride of her hometown. Fasal is a free SMS-based product that connects rural farmers with buyers and provides them with real-time price information. Roughly 70% of India's economy is tied to agriculture, but it's a market fraught with obstacles. "The problem is that farmers didn't know how to get the best price for their produce, nor what markets to go to and when," Bachu explains. "Nine times out of 10, farmers didn't know if they were actually getting a fair price. 'Wow,' we thought. 'This is a huge unmet need. Let's see if we can iterate and find a solution.'" The result is a service that has blossomed to more than 500,000 users who earn an average of 20% more income because of the technology.

But in 2008, Fasal was nothing more than a research project. Bachu and a small Intuit team were traveling in rural Karnataka when they first learned of the many pain points of doing business there. Identifying customer pain points is common practice at Intuit, but Bachu didn't anticipate the points being so painful. "We found some really scary stuff during our research," she recalls. "Farmers committing suicide, farmers living hand-to-mouth because they didn't have enough money, lots of waste. And remember, there is no access to refrigeration, so if you have perishable produce, if you're a farmer that grows any fruits or vegetables, what would happen is they would have to find a buyer before it perished. Four times out of 10, they were having to deeply discount their produce just to take some money home."

Bachu immersed herself in the lifestyle for two weeks, staying long days at rural farms and homes, and making trips to the mandi--or marketplace--with locals. It's was an anthropological approach to consumer research that Bachu says is core to Intuit's design principles. "Do you know the customer better than they know themselves?" she asked her team.

"Intuit began brainstorming a slew of solutions, from eBay-like buyer-seller connections to voice-based systems for providing market information. But the solution that made the most sense in terms of simplicity and scale required nothing more than an SMS-based mobile phone. Think of Fasal as a basic supply-and-demand calculator. Farmers can register for the service by calling a toll-free number. A Fasal agent will then capture a profile of that farmer with simple questions: Where are you based? What crop are you farming? How much of that crop have you planted? How many acres? On what dates was the crop filled? Do you own a vehicle? It takes only 20 to 30 minutes before farmers can start receiving personalized messages from the service. "If you are a carrot farmer in a particular area, we're able to figure out when you're ready to harvest, and start sending you price information [by SMS], calculate how much supply we think you'll have, and then connect you with a buyer or mandi agent that we think will pay you fair price," Bachu says.

Essentially, Fasal facilitates the relationship between sellers and buyers, whether through finding marketplaces or determining market rates. The algorithm at work under Fasal's hood was far from easy to create, and is still being refined. "The truth is we cannot precisely forecast what a farmer's supplies will be. There's so many things that can go wrong," Bachu acknowledges. "If there's a disease onslaught or the weather patterns messed with the supply, say. We have to take into consideration all of these possible things that could go wrong--we don't know which seller sold to which buyer, for example. The big difference in developing markets and emerging economies is that, in the U.S., a cauliflower is $2 pretty much throughout the year. In India, the price fluctuates like crazy because of the supply and demand equation. We tried to take advantage of all of the information we have, to project out a possible supply, then we can connect it up with demand.

Exclusive: Michael & Susan Dell Foundation Invests In Mobile Payments Platform BASIX Sub-K

Thu, 01/05/2012 - 1:56pm  |  NextBillion

BASIX Sub-K iTransactions Limited, a mobile payments platform promoted by Vijay Mahajan's BASIX Group, has raised an undisclosed amount of equity investment from Michael & Susan Dell Foundation. Sub-K provides residents of rural, urban and semi-urban areas with a mobile technology based transactional platform for access to services like banking, NREGA, utility payments, prepaid mobile pop-ups and others.

This is done through a network called basic convenience outlets (BCO) operated by Sub-K agents. Sub-K appoints service providers/banks at one end and BCOs at the other.

Sub-K, which means less than 1,000 as also 'for everyone' in Hindi, tries to offer a financial solution encompassing accessibility(BCO to be located within 1,000 meters from customer), affordability(within a cost of 1,000 paisa or Rs 10 per transaction) and outreach(each BCO is expected to serve up to 1,000 customers).

The organisation raised the undisclosed amount sometime in 2011, though the exact date could not be ascertained.

Started in 1996, BASIX is one of India's largest development group focusing on financial inclusion at the bottom of the pyramid. It has promoted Bhartiya Samruddhi Finance Ltd, India's oldest microfinance institution which is currently going through a loan recast process.

DLF Foundation and Laurus Edutech Sign An MOU to Setup Over 18 Centres Jointly in First Phase

Thu, 01/05/2012 - 1:51pm  |  NextBillion

New Delhi, Delhi, January 5, 2012 /India PRwire/ -- In a significant development, Laurus Edutech- A leading skill Development Company signed a MoU with the DLF Foundation, the philanthropic arm of DLF Limited. DLF Foundation has launched a programme called DLF Life where LIFE stands for Learning Initiatives for Employment. As part of the LIFE Program and MoU, DLF Foundation and Laurus Edutech will set up joint centres. These centres which are spread out pan-India, will primarily focus on skilling the under privileged students and then further assist them with providing employment opportunities.

DLF Foundation provides structure and focus to the ongoing social responsibility initiatives of the DLF Limited Company. Registered under the laws of India, the Foundation has been formed with an express mission of empowering communities and creating opportunities for the underprivileged in areas of education, training and health. Since its inception, several rural Education, Training, Health and Environment initiatives have been taken by the Foundation

Speaking on the occasion Mr. Srinivas Rao Cheedella, Managing Director of Laurus Edutech said- "We are happy to be associated with DLF Foundation and help implement its initiatives under the LIFE Program. It is a privilege to be working with one of the biggest names of the construction industry. The centres to be operated in the brand name "DLF LIFE Skill India" will roll out most of the programs including services like retail, computers etc. The services are hardcore engineering focused like electrical, plumber, fitter, welder, auto mechanic, etc. and target the bottom end of the pyramid students."



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