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Diary of a Social Entrepreneur

Mon, 12/05/2011 - 1:04pm  |  NextBillion

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

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

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

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

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

Dr. Yunus Inspires Students to Create Social Businesses

Fri, 12/02/2011 - 2:08pm  |  NextBillion

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

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

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

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

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

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

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

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

Can Venture Capital Save The World?

Thu, 12/01/2011 - 4:46pm  |  NextBillion

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

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

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

Four Companies Announce New Ventures to Promote Clean Energy

Thu, 12/01/2011 - 3:40pm  |  NextBillion

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

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

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

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

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

Grads Do 'Good' for a Profit

Thu, 12/01/2011 - 3:31pm  |  NextBillion

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

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

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

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

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

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

Wed, 11/30/2011 - 2:32pm  |  NextBillion

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

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

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

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

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

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

Social Enterprises See Funding Dip, but Investors Still Upbeat

Wed, 11/30/2011 - 1:56pm  |  NextBillion

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

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

The investment tracker based its data on announced deals.

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

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

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

Tata PE Buys 10% in Ginger Hotels

Wed, 11/30/2011 - 1:49pm  |  NextBillion

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

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

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

Caterpillar Foundation Partners With Water.org to Expand WaterCredit in India, Indonesia

Tue, 11/29/2011 - 5:03pm  |  NextBillion

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

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

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

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

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

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

Tue, 11/29/2011 - 3:40pm  |  NextBillion

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

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

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

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

HSBC Invests £4m in Big Issue Invest Social Enterprise Fund

Tue, 11/29/2011 - 3:34pm  |  NextBillion

Big Issue Invest has edged closer to its £10m target for its Social Enterprise Investment Fund, with HSBC Bank investing £4m, bringing the total committed capital to £8m.

Big Issue Invest (BII) is now seeking to raise a further £2m to complete its £10m target by the March 2012. The Social Enterprise Investment fund aims to provide creatively structured, medium-term growth capital to social enterprises that have the potential to have a significant social impact, and provide a financial return target in excess of 5 per cent to investors.

The total committed capital into the fund has now reached £8m and comprises initial investments from Deutsche Bank, The Esmée Fairbairn Foundation, the National Endowment for Science, Technology and the Arts, the Ulster Community Investment Trust and Eric Lonergan, fund manager at M&G Investments.

To date, the Fund has invested £1.1m in four social enterprises and has approved a further three investments worth £1.4m.

The Fund is a close-ended limited partnership with Big Issue Social Investments Ltd, a wholly owned subsidiary of BII. CCLA is the FSA approved fund manager.

Richard Cole, global head of principal investments and private equity at HSBC, said:  "We believe that the Social Enterprise Investment Fund is an exciting and well executed initiative which will have an extremely positive impact on a number of UK-based social enterprise businesses. 

"There is an important role for banks to play within this area which encompasses their own corporate sustainability agendas. As part of our own agenda HSBC is delighted to be part of this initiative as an investor and whilst a pilot initiative for us we hope that this could be the start of a number of investments HSBC makes in this area."

Big Issue Invest has a long-term vision to become a social merchant bank providing a full range of finance for the social enterprise sector. 

Bringing Online Education to Mongolia, in Wireless Backpacks

Mon, 11/28/2011 - 3:11pm  |  NextBillion

As a turbulent snowstorm whips across the vast, desolate Mongolian grasslands, a group of schoolchildren huddle over laptops, their eyes transfixed as the sagacious Sal Khan works through Newtonian physics.

But Khan is only reaching these kids because of a bold initiative from another creative edupreneur: Neil Dsouza, age 27, cofounder of TeachAClass.org, a San Francisco-based nonprofit dedicated to enabling access to education in developing countries. Dsouza was previously an engineer at Cisco, where he helped develop the first 4G core routers for AT&T and eventually Verizon's mobile network.

Plenty of people have tried to tackle education in remote areas. The One Laptop Per Child (OLPC) project, for instance, has shipped millions of laptops to impoverished corners of the world. The impact has been faint, however, leading OLPC founder Nicholas Negroponte to recently propose a more radical approach: dropping tablets from helicopters to remote villages, "then go[ing] back a year later to see if the kids can read," he has declared.

But to those already on the ground, the idea of indiscriminately flinging equipment from the air and hoping for a positive educational outcome seems like a recipe for waste. OLPC has already donated over 7,000 laptops to Mongolia. When Dsouza arrived, he found many collecting dust on shelves. Some have not even seen the light of day, still unopened in shrink-wrapped boxes.

"Technology is starting to become a waste in developing countries," notes Dsouza. He points to startling findings from the World Bank's very own Independent Evaluation Group that "only 30 percent [of its projects worldwide] have achieved their objectives of implementing universal assess policies or increasing ICT [information and communications technologies] access for the poor or underserved areas."

It's not just due to misguided strategies like airlifting hardware, either, Dsouza says. Too many Western-driven programs have neglected to take into account geographical limitations and cultural differences-whether it's failing to realize the lack of basic IT infrastructure in developing countries, or assuming that everyone naturally understands the potential and use of computing devices.

Haunted by memories of piles of unused laptops, Dsouza devised an ingenious plan: Bring a chunk of the Internet's offerings to Mongolia. He packages content from Khan Academy, MIT open courseware, and other resources into portable, self-contained servers that can be wirelessly accessed by laptops and computers. These servers, which cost roughly $350 apiece, are small enough to fit in a backpack and need only a power outlet to boot up. Other laptops need only wireless capability and a browser that supports Flash to log on. What this creates, in essence, is a local intranet network-what Dsouza has dubbed an "Education Hotspot"-that allows users to access materials hosted on the server, even in areas so remote that Internet is either outrageously expensive or non-existent.

Rural Peru Gets Connected

Mon, 11/28/2011 - 3:09pm  |  NextBillion

The connection was not of crisp video quality, but the chorus of schoolchildren from San José de Huamaní, near Ica in the south, could be heard loud and clear: "Good morning," they chanted.

Hundreds of kilometres away, they were greeted with applause, through video link, by a brightly lit conference room full of Peruvian and European Union officials. They were meeting in Lima to announce the completion of an aid programme that is taking renewable energy and the internet to 130 rural communities in Peru.

With funding from the EU, the Euro-Solar programme is being rolled out across the eight poorest nations of Latin America, such as Peru, at a cost of €36m ($47.6m/£30.9m). The aim is to benefit more than 300,000 people whose communities are not connected to the electricity grid.

Via satellite linkup, the Lima audience heard live testimonies from four isolated villages about how they finally had electricity posts that powered a school and a convenience store, and they could now store vaccines, purify water, use computers and surf the web.

"There's more interaction from the kids," said Teresa Uribe, a teacher. She spoke from her classroom, surrounded by her pupils who were all hustling to get a view of the computer screen at their end. "They now want to learn more, thanks to this technology." She was happy, too, about the improvements to her school environment.

Each community was given solar panels and, in some cases, a back-up wind generator to produce its own renewable and clean energy. With the free EU kit, it could now run five laptop computers, a printer-scanner, a multimedia projector, an antenna for satellite internet connection, a refrigerator, a water purifier and a battery charger. Simple things such as charging a mobile phone or emailing medical lab tests to a central hospital could now be done.

Vodafone Increases Banking Options in Rural India with Mobile Service

Mon, 11/28/2011 - 3:06pm  |  NextBillion

Vodafone India and HDFC Bank have announced plans to launch a mobile banking service across the country next year after a successful trial period, according to an Economic Times article.

The service, which is called 'M-Paisa' (named after its monetary unit, the paisa), enables selected retailers to offer banking services to Vodafone customers, who are able to withdraw from or deposit to their HDFC account and transfer funds using their mobile device.

The initiative is currently up and running in Rajasthan, India's largest state, where a pilot allows HDFC customers to enjoy basic banking services at the 2,200 retailers that support the initiative across the state's 320 villages and 54 towns.

Following the successful trial, the service will be extended across the country through a phased roll-out during March and April 2012. The service supports only English currently, however the companies are planning to support a range of local languages that will significantly increase its potential.

M-Paisa is tipped to be particularly significant in regional areas that are under-serviced by banks, according to Rahul Bhagat, of HDFC Bank:

There are 6,00,000 habitations but only about 89,000 bank branches in the country, making access to banking services difficult in remote areas. We feel that Vodafone's significant distribution reach will provide customers the security of financial transaction offered by bank.



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