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The Year of Controversial Giving

Tue, 01/03/2012 - 2:42pm  |  NextBillion

By Matthew Bishop and Michael Green

What does 2012 have in store for giving, especially the impact-driven approach to it we call "philanthrocapitalism"? Having peered into our philanthrocrystal ball, we see giving becoming more dangerous, more controversial, and more political, among other things, as philanthrocapitalists find themselves at the centre of some of the year's biggest news stories.

Here are our 10 predictions for the coming year:

BOI/UNDP: Nigeria’s household energy market worth $5.1b

Tue, 01/03/2012 - 11:45am  |  NextBillion

The Bank of Industry (BOI)and United Nations Development Programme (BOI/UNDP) partnership has identified the potential in investing in household energy through supplies of energy-efficient equipment and bulbs adding that the market is worths $5.1 billion.

The Project Manager, UNDP/BOI Access to Renewable Energy Project, Segun Adaju in his paper titled 'Investing in clean energy for the Base of the Pyramid (BOP) in Nigeria' presented at a forum in Lagos, said the BOP is the largest of the pyramid, but poorest socio-economic group, which in global terms, refer to the four billion people who live on less than $2 per day.

"The phrase "bottom of the pyramid (BOP)" is used in particular by people developing new models of doing business that deliberately target that demography, often using new technology. The BOP bottom of the pyramid has been seen as the biggest potential opportunity in the history of commerce. It makes up US$5 trillion global consumer market in local purchasing power, yet highly underserved."

More Corporate Companies Should Adopt Social Enterprise Ethos

Tue, 12/27/2011 - 12:28pm  |  NextBillion

Recent political and financial events have seen businesses retrench, dig in and attempt to ride out the storm. To many, this suggests that the corporate world is being indifferent to its social responsibility. Community projects are being curtailed and cash donations to charities drying up. The impact can only be detrimental.

As austerity measures deepen, are big businesses unwittingly contributing to social injustice? If so, who will fill the gap they are leaving?

In the UK, social entrepreneurs are often seen as the antithesis of corporate enterprise and tend to stand shoulder to shoulder with social justice issues. They strive to create new models that aim not only to deliver shareholder value (for social entrepreneurs are still business people after all), but also seek to share some of that value elsewhere. Today's social entrepreneurs look for alternative ways to run successful businesses that are not dependant on traditional power models. Wealth is considered as more than a healthy bank balance and value becomes more than just cash. The social entrepreneur ensures that some of the wealth their activity generates benefits the wider society.

Case studies: investing in bottom of pyramid

Thu, 12/22/2011 - 3:54pm  |  NextBillion

Dfid's role models for its new private sector approach in India include the US-based Acumen Fund, part of the Aspen Network of Development Entrepreneurs, the US Rockefeller Foundation and Mumbai-based Aavishkaar Investment.

Samridhi

Dfid has chosen the Small Industries Development Bank for India to channel investments to small enterprises, in its first private sector development programme in India.

Ethiopia Invests in Farmers to Achieve Country's Middle-income Ambitions

Wed, 12/21/2011 - 12:39pm  |  NextBillion

Fields of red sorghum in terraced fields that stretch into the distance are a common sight in the scenic mountains of eastern Ethiopia, giving a misleading impression of bountiful harvests despite this year's drought in the east Africa.

Farmers tie five or more tall sorghum stalks together so they support one another, and the red seeds at the top of the plant grow heavier as the plants ripen, giving them a triffid-like appearance. A common plant and an important staple crop for millions of poor Ethiopians, sorghum is ubiquitous in the region around Dire Dawa, 352km north-east of Addis Ababa, the capital.

Apple orchards are a more surprising presence. Dadi Yadete, a bearded 72-year-old, took a gamble three years ago and started growing apples, a fruit that he didn't know. Hesitant and doubtful initially, he planted 12 trees, but the experiment has paid off. Located 2,300 metres above sea level, these Ethiopian highlands enjoy a temperate climate, almost alpine, where apples can thrive.

Yadete, who has two wives and nine children, now has 70 flourishing apple trees on his small plot of land - about 0.5 hectares - where he also has a large avocado tree. He also grows barley, a few coffee bushes, sweet potato, green pepper and bright red hot chillies.

"Life was very difficult when I was trying to grow maize and barley," said Yadete. "I was producing nothing and I was receiving food aid, now I don't need food aid." He gets about $600 a year from the sale of his apples, and he owns four cows and two oxen, which makes him a relatively wealthy man.

Social Business: A More Sustainable Way to Help in Haiti?

Wed, 12/21/2011 - 12:36pm  |  NextBillion

Children dressed in school uniforms sit in rows listening to one of their classmates sing a song while snacks are passed around. Two years ago, before a devastating earthquake struck the island, they were in a different location in a building that has since been demolished on a nearby plot of land here in Léogâne, Haiti.

Now these youngsters and their families are getting another chance with the help of an innovative antipoverty effort that combines business tactics with social goals.

Such new approaches are much needed in Haiti. Even before a devastating 7.0-magnitude earthquake hit the country in 2010, it faced profound structural issues: ineffective government, widespread poverty, and little educational opportunity.

Only half the children in Haiti actually start school, and just 1 percent complete their education through the secondary level. One of the biggest obstacles is the cost, since public education is not the norm and the average family lives on less than $2 a day.

At the Henri Christophe School in Léogâne, the epicenter of the 2010 earthquake, paying the costs of administrators, teachers, teacher training, school uniforms, and facilities falls largely to charities or to families of the students, many of whom lost loved ones and their livelihoods in the earthquake.

On a recent trip to Haiti, I watched how Haiti Partners, a nonprofit group, supports the Henri Christophe School and six other schools in Haiti with money and training programs. This year, it has forged a partnership with the Grameen Creative Lab to help these seven schools create a more sustainable source of revenue than charity or family tuition payments: They are creating social businesses that will create money to cover education costs.

Grameen Creative Lab is a project of the Yunus Centre, which is led by the Nobel Peace Prize recipient Muhammad Yunus, and is supported by the Clinton Global Initiative. These high-powered backers have helped gather $4-million from a handful of investors. The money goes to Haitians who need small loans to run and start social businesses.

ICT Vital in War Against Poverty

Tue, 12/20/2011 - 1:49pm  |  NextBillion

THE application of Information Communication Technology (ICT) in gathering, analysing and disseminating market information to businesses and agricultural producers has been cited as a significant strategy in poverty reduction.

The Deputy Permanent Secretary in the Ministry of Industry, Trade and Marketing, Dr Shaban Mwinjaka, made the remark in Dar es Salaam over the weekend while opening a stakeholders' meeting on Management Information Systems (MIS) Strategy, operational Framework and prototypes.

"Export led economic growth that provides significant reduction in poverty is only possible if the majority of small and medium scale businesses and agricultural producers have access to market information coupled with the capacity to utilise it," said Dr Mwinjaka.

Having accurate and accessible market information is essential even in situations whereby some fundamentals like poor infrastructure are considered as key constraints to economic growth, he explained.

For example, market information can quantify the costs and prices for the producers and manufacturers to help them determine market trends, he said and added that the state of market information in Tanzania currently lags the overall objective for the provision of timely, accurate and cost effective statistics to both public and private sectors.

He lamented the fact that Information was scattered, isolated and not easily accessible despite the fact that poverty remains a major problem, especially in rural communities where most of the farming takes place.

Inability to access market information even in good harvest seasons continued to bar farmers from enjoying premium prices for their products. Since the analytical capacity in both public and private sectors is limited regardless of the size of the firm, the MIS must integrate with the existing value addition chain and business development services if it is to be widely adopted and eliminate obstacles for small and medium enterprises as well as producers.

The Sticky Challenge Facing Africa

Tue, 12/20/2011 - 1:46pm  |  NextBillion

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

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

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

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

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

Microfinance Banks to Construct 500 Houses

Mon, 12/19/2011 - 2:57pm  |  NextBillion

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

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

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

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

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

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

Majority of Indian MFIs May Have to Shut Shop

Mon, 12/19/2011 - 2:54pm  |  NextBillion

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

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

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

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

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

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

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

‘More Poor People Own Mobile Phones, But Productive Use Still a Far Cry'

Mon, 12/19/2011 - 2:50pm  |  NextBillion

NEW DELHI, DEC. 19: 

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

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

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

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

NON-VOICE USE

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

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

Google Joins Seattle Angels to Bankroll Vittana

Fri, 12/16/2011 - 1:29pm  |  NextBillion

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

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

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

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

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

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

Social Entrepreneurs: Gary Hattem and Asad Mahmood

Fri, 12/16/2011 - 1:26pm  |  NextBillion

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

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

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

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

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

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

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

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

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

Mobile Banking to Transform Nigeria's Economy, says GT Bank Boss

Fri, 12/16/2011 - 1:22pm  |  NextBillion

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

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

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

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

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

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

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

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

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

Why a New 'Avatar' of Innovation is Necessary in Emerging Economies

Thu, 12/15/2011 - 2:56pm  |  NextBillion

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

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

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

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

Ending Africa's Hungry Season: How Family Farms Are Driving Development

Thu, 12/15/2011 - 1:54pm  |  NextBillion

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

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

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

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

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

New Legal Structures for 'Social Entrepreneurs'

Thu, 12/15/2011 - 1:49pm  |  NextBillion

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

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

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

Here's an overview:

L3C

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

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

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

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

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

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.



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