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Samasource, Inveneo Included in Google $40M Grants

Wed, 12/14/2011 - 2:27pm  |  NextBillion

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.

  • Inveneo in San Francisco -- $2 million to spearhead rural broadband in Africa.
  • Samasource of San Francisco -- $1.25 million to help workers in the developing world handle bigger and more types of jobs, so they can employ more people.
  • Could Thinking Small Be The Next Big Thing in Agricultural Development?

    Wed, 12/14/2011 - 2:20pm  |  NextBillion

    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 Beginning for Microfinance in India?

    Wed, 12/14/2011 - 2:15pm  |  NextBillion

    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 Gets $4.2 Million Investment from Matrix Partners India

    Tue, 12/13/2011 - 2:48pm  |  NextBillion

    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."

    How to Make It in Africa? Unilever Listens to the Consumer

    Tue, 12/13/2011 - 2:45pm  |  NextBillion

    "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 Works with Intellecash

    Tue, 12/13/2011 - 2:42pm  |  NextBillion

    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."

    McKinsey Announces Winners in Social Innovation Video Contest

    Mon, 12/12/2011 - 2:59pm  |  NextBillion

    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 Beckons as the Next Pot of Gold for the Cellphone Telecoms Industry

    Mon, 12/12/2011 - 2:20pm  |  NextBillion

    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.

    Wise Ethical Investment Seeks Profit

    Mon, 12/12/2011 - 2:16pm  |  NextBillion

    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.

    Eyes Down for a More Revealing Insight into Economic Development

    Fri, 12/09/2011 - 2:05pm  |  NextBillion

    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.

    Global Microcredit Summit 2011 Report

    Fri, 12/09/2011 - 2:00pm  |  NextBillion

    Monday, November 14th 2011 saw the culmination of several years of delicate preparation in a packed conference centre in Valladolid, Spain. The fifth Global Microcredit Summit (held every few years - with regional conferences in between) kicked off in the magnificent Centro Cultural Miguel Delibes, with an opening ceremony full of music, pomp, and a great deal of gratitude - in the particular direction of Sam Daley-Harris, the outgoing Director of the Microcredit Summit Campaign.

    Queen Sofia of Spain has been an impressive and dedicated supporter of the microfinance sector since its early days. After welcomes to the city of Valladolid and the region of Castilla y Leon by the Mayor and Governor respectively, and an outline of Spain's development priorities by the Secretary of State for International Cooperation, Queen Sofia took the podium to declare open the fifth Global Microcredit Summit.

    Describing the summit "not just [as] a forum for debate, and for the exchange of experiences", it aims to promote "two basic goals": to enable about 175m families to reach basic financial services by 2015, and to get 100m of the poorest families on earth above the US$1/day income threshold.

    These objectives date from several years ago, and laudable as they are, it was clear from the offset - not to mention the plenary and workshop papers circulated in the weeks before - that the concerns of the industry have expanded to include other matters. The so-called 'crisis' in India (Andhra Pradesh in particular) continued to dominate the agenda, not just as a localised, acute issue in one of the largest microfinance markets in the world, but as a clarion call for the industry to wake up.

    The industry's 'father', as we are repeatedly informed, is Professor Yunus, who reiterated at the Opening Ceremony his vision of a sector that is anathema to profiteering (and probably to profit too), but painted a rosy picture of microfinance compared to the broken, mainstream financial sector. "Microcredit is a way of helping future generations...dark clouds are gathering [in the broader global economy] and they will not go away; they will create frustration and disappointment, a great deal of unemployment and tension [in the West]". Microfinance, he argued, by contrast "is a shining hope, creating light at the end of the tunnel".

    There must be plenty of light to follow, as it is an industry that was globally well represented. Roughly 1600 delegates were in attendance. Without seeing an actual breakdown, it was clear that Africa, Latin and Central America and the Indian subcontinent were well represented with practitioners. MIVs, commercial banks, analysts and donors made up most of the balance - with a surprisingly broad contingent of media present throughout the whole summit - evidence, perhaps, of the reputational hit the sector has taken in the last couple of years, and how microfinance has long since left behind the periphery of global finance. Having the Queen in attendance obviously helped, too.

    The Summit, as each before it, had a mixture of plenary sessions, workshops and associated sessions. Perhaps more than previously, however, there were dominant themes for each day.

    IFC Stakes 18.9% Equity in ACCION

    Fri, 12/09/2011 - 1:56pm  |  NextBillion

    ACCION International, parent company of Accion Nigeria and a pioneer in global microfinance, has signed an agreement with IFC, a member of the World Bank Group focused exclusively on the private sector, in which IFC will invest approximately $1 million in ACCION's Chinese affiliate, ACCION Microfinance China (AMC).

    The investment will enable ACCION to strengthen the operations of AMC, which it launched in December 2009 in Chifeng Prefecture, Inner Mongolia, to deliver financial services to the region's working poor. IFC's investment of Chinese RMB 7 million represents an 18.9 per cent equity interest in AMC.

    In connection with its investment, IFC previously signed a cooperation agreement with ACCION to provide up to $1 million to finance a three-year technical assistance program for AMC.

    "IFC has been a valuable ACCION partner in many of our projects around the world," said Michael Schlein, president and CEO of ACCION.

    "We're pleased and honored to have its engagement and support as we continue to help create a microfinance industry in China, where ACCION is one of only a handful of foreign-owned organizations involved in the field."

    For Hyun-Chan Cho, IFC country manager for China and Mongolia, "we are committed to working with ACCION to help AMC expand access to finance for small businesses in Inner Mongolia and support the sustainable development of one of the least developed regions in China.

    "With our financing and advice, AMC is well positioned to become a leading microfinance institution in Inner Mongolia, benefiting thousands of small entrepreneurs."

    Chutes, Ladders, and Safety Nets: How Microinsurance Helps African Development

    Thu, 12/08/2011 - 10:37am  |  NextBillion

    James Abuh-Prah had owned a used electronics shop in a small market in Accra for 17 years before a flood took everything.

    It was late one night in October, and the torrential rains hadn't stopped for hours. "By 5 a.m. the water was up to my chest," he says. He had taken out a $2,400 loan from his bank, Opportunity International, to use as capital to buy used televisions, stereos, and other electronics. Now, everything was destroyed.

    It's like a game of Chutes and Ladders," says Richard Leftley, president and CEO of the U.K.-based MicroEnsure, a company devoted to serving the materially poor. The company embeds free or inexpensive insurance policies into products targeted at poor families-like loans, savings accounts, and pre-paid mobile phone credit.  Founded in 2005, MicroEnsure now has more than 3 million clients worldwide.

    If you are poor, you might take out a loan from a microfinance institution to start or expand a business. The loan is like a ladder, Leftley says. But if someone gets sick or a flood comes, you're back where you started, or sometimes worse off. That's the chute. Leftley was thinking about this cycle while talking with women in Zambia in 2001. It was then, he recalls, that "a light went off in my head: [the poor] need a safety net." They need insurance, he thought.

    Creating a safety net for millions of people is no easy task. How do you make insurance affordable enough that someone living on less than $4 a day can afford it? And once they can afford it, how do you convince them to buy it? In most of sub-Saharan Africa, insurance companies have poor reputations. Some prey on the poor by hiding extensive exclusions and policy conditions in the fine print, making illiterate clients especially vulnerable. Others give processors financial incentives to reject claims, MicroEnsure general manager Peter Gross says.

    In 2010, Ghanaian insurance companies paid out just two dollars in claims for every 10 dollars they earned in premiums, according to reports published in the Ghanaian Business & Financial Times. "You see the frustration on the face of a client when they come and in the end they are not going to get any money," says Leona Essiam, a MicroEnsure account executive who previously worked for another insurance company in Ghana. "The general perception about insurance is that is doesn't work here in Ghana."

    Because of the distrust around insurance, "we had to redesign [it], so that rather than it taking months or years [to pay out a claim], it takes a matter of days," Leftley says. While many life insurance companies exclude people with terminal conditions like HIV, MicroEnsure covers them. If someone dies, they don't need mountains of proof. And the policies are so simple, you could write down the terms "on a napkin," Gross says. "Most international insurance companies look at Africa and all they see is risk: famine, conflict, HIV/AIDS," Gross says. " Our people are in the markets every day. We know the risk is not that high."

    Ecuador Expanding Access to Microcredit for Low-Income Women

    Thu, 12/08/2011 - 10:31am  |  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 - 10:29am  |  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 - 2:33pm  |  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 - 2:21pm  |  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 - 2:17pm  |  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 - 5:11pm  |  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 - 5:09pm  |  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?



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