Follow-up from Session 4

Here are two of the enterprises Prof Bugg-Levine mentioned in class:

Nuru Lights

and One Earth Designs.

And here's the May 2010 New Yorker profile of development economist Esther Duflo. If you can't get this link to work, you can also get The New Yorker through Lexis-Nexis, which we can access thru the Watson Library homepage.

Resources to find midterm topic

To identify an organization or idea to profile for your midterm paper, below are a list of links that can quickly help you identify interesting business innovations. You may be frustrated at the relatively sparse detail that is often available on these organizations. Do the best you can to find the data you need to assess the business viability and development impact of the innovation; where you cannot find additional information be explicit in the paper about what more you would want to know to make an assessment, how you would efficiently gather the information and how different results from the new information would affirm or refute your hypotheses about the innovation.

• UN's Growing Inclusive Markets program has a resource center that includes case studies on business innovations sortable by country and theme.
• Changemakers ran a competition on Leveraging Business for Social Change that should have many relevant examples. Their G-20 Finance Challenge also has some enterprises profiled that would be relevant.
• The NextBillion website that WRI runs (as part of the program that includes the market sizing data we looked at in class) is a comprehensive place for dicsussions and descriptions of businesses.
• Many of the fund managers and non-profits who work in this space also describe specific investee companies in their reports and onlines. You can either profile an investee company, or the fund as a business innovation itself. Good places to start would be SEAF, E&Co. (especially if you're interested in clean energy and development), Acumen, IGNIA ,Root Capital, Grassroots Business Fund, GroFin, Business Partners, Actis (larger-scale, more commercial business opportunities). The development finance institutions (World Bank, IFC, Norfund, FMO, etc.) all have websites with some anecdotal examples of investee companies and social and financial impact reporting.

If you find additional online resources that are useful in your search, please post here so we can all know about them.

--Prof. Bugg-Levine

Midterm and Final Dates

Midterm paper due: Friday Oct 29

Final project description due: Wednesday Nov 17 (note: not Wed Nov 10)

Final report due: Friday Dec 17 (note: not Wednesday Dec 15).

Pls also note, the syllabus is wrong about the maximum size of teams for the final report: It's five students, not four.

Can't Get Enough Compartamos?

Check out this 2006 New Yorker piece on MFI, which has a good chunk on Compartamos (if you can't get the link to work, you can also get The New Yorker on Lexis-Nexis, which we can access thru the Watson Library homepage).

And here's a brief wrapup of what's happened since the IPO:

Compartamos’ profits have continued to skyrocket since its April 2007 IPO. In July, the bank said its second-quarter profit rose 46% to $37.3 million from 2009. Return on equity rose as well, increasing to 42.3% in the quarter from 41.3%. Analysts credited the success, in part, to continuing customer growth, as the number of active Compartamos clients rose 23.4% to 1.63 million at the end of June. Compartamos’ comparatively recession-proof customers – low-income borrowers and small business owners engaged in pursuits such as craft manufacturing and food vending – also helped shield the bank from the Mexican economy’s 6.5% contraction in 2009. Default rates rose in the second quarter by more than 20% but, at just 2.2% of the bank’s loan portfolio, remain low. Now, Compartamos and other Mexican banks stand to benefit from a recovery slated to push Mexico’s economic growth up to around 5% this year.

Compartamos remains a behemoth in the Mexican microfinance sector, with a market share of just over 50%. Among its closest domestic competitors: Finsol, Fincomun and Financiera Independencia. Compartamos’ flagship product – Credit for Women, which offers 16-week loans exclusively to groups of 12-50 women – continues to dominate the bank’s business, accounting for some 75% of its loan portfolio and 89% of its clients. Critics continue to charge that Compartamos gouges its customers with interest rates averaging around 85%, compared to a global microfinance average of 26%. Bank officials say the fact that Mexican loans are much smaller than loans in other countries means Compatamos' rates have to be higher. Compartamos’ relatively high financing costs also contribute; the bank is working on launching a deposit program to diversify its funding base, which is currently comprised of its own capital, long-term debt and Mexican development-bank loans.

Compartamos is now one of five microfinance companies to have publicly listed shares. The other four are Bank Rykat of Indonesia, BRAC Bank of Bangladesh, Equity Bank of Kenya, and SKS Microfinance of India, which saw its shares rise 10.5% on its first day of trading last month. The microfinance industry itself is becoming a big-money player. In 2008, the sector attracted $14.8 billion in foreign capital, up 24% from the previous year. For the first time, the majority of the money came from private investors – including pension schemes and private-equity funds – rather than governments, according to the World Bank.

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Adapting technology to reach poor customers

Special Session: Profiting from the Poor? A Discussion on Microfinance IPOs

Finally! The stage is set at the 2010 CGI meeting in NY.
Yunus vs. the "IPOs" and WWB in the middle to serve as a buffer while each side prepares its response. The long heated argument has come to an end... or not

Video Link

Not sure if these are Akula's exact words but I got the message that: Grameen got the ball rolling and if it wasn't for them, Microfinance wouldn't be what it is today. But, companies like SKS are today's needed evolution of the Microfinance model in order to continue increasing the amount of credit available to poor people

Very interested to hear your views as there are definitely many points to counter my argument, and I believe that we actually need to constantly re-asses the direction of Microfinance in order for it to continue effectively alleviating poverty.

Best,
Pepe

Hey all -

Here's the full Monitor "Emerging Markets, Emerging Models" report, which Mike Kubzansky mentioned yesterday. Lots of other interesting stuff in the Monitor Inclusive Markets archives, including Mike's Dec 09 piece on MFI networks, if you're inclined to poke around.

After hearing about IGNIA from Alvaro Rodriguez Arregui yesterday, you might want to check out a new livemint piece featuring SONG Investment Advisors. SONG, which like IGNIA counts Omidyar Network among its major backers, is a venture capital fund focusing on economic development in India.

Happy reading.

Compartamos Qs

Aid versus business: what’s the best way to fight poverty?

There is an interesting and relevant debate currently taking place on FT.com's blog – Aid versus business: what’s the best way to fight poverty?

The following URL will direct you to a short summary article from which you can click on the varying opinions and arguments mentioned within the article.

http://blogs.ft.com/beyond-brics/2010/09/21/aid-versus-business-how-best-to-fight-poverty/

Hope you find this helpful. I did.

Mobile phones without handsets

Check out the latest edition of springwise for some cool business innovation ideas - including the cloud phone service (handset not required) for rural users in Sub-Saharan Africa and South Asia.

Article on innovations in distributing electricity to poor customers

Interseting article on NURU, a company that sells kits that enables people to generate electricity from bicycling for lights (and now cell-phone charging). Quite a few of the seven basic business models identified in the Monitor report are at play in making this work.

Gini coefficient

Hi guys,


FYI here is some data on the Gini coefficient for various countries. There's also a link to the 2009 UN Development Report and an excel file if you want to download the data. Enjoy!

http://www.pressrun.net/weblog/2010/07/gini-coefficient-income-gap-in-singapore-and-elsewhere.html

Follow-up from Session 2

Hi all,

As a follow-up to the data I showed in class, if you are interested in sector- and region-specific data on "bottom-of-the-pyramid" spending patterns, you can access all the data and chapters of the Next 4 Billion report. (Twill be helpful for some of your midterms and final papers.) The same project has subsequently spun out an influential blog NextBillion.net that provides a wide range of stories and perspectives on social enterprise and development (though with a definite "good news" tilt to it!).

As I mentioned in class, this Wednesday Mike Kubzansky from Monitor will spend the first half of class going over the Emerging Markets, Emerging Models research in India that you have read and sharing what his team is learning about the differences conducting similar research in Africa (these findings are unpublished). The second half of the class Alvaro Rodriguez, the co-founder of the $102MM venture capital IGNIA Fund, will describe the opportunties he sees to provide basic services to poor customers profitably. He will be joined by Ignia Board member and Compartamos Banco co-founder Carlos Denel. We will discuss the legendary and controversial Compartamos IPO in depth in Week 4 but hope to get a preview from Alvaro (who is also Compartamos Board chair) and Carlos next week.

Meet Gordon Gekko's Grandchildren

Hey guys,

This article is a bit outdated but definitely one of my favorites and I feel like its quite relevant to what we have seen in the last couple of classes. It might seem a bit 101 for some of you who have taken a deep dive in the social enterprise/international development field, but I am happy that the language and examples are a bit basic since I guess a lot of WSJ readers have probably never read about this approach to business before.

Meet Gordon Gekko's Grandchildren

World Toilet Summit 2010

Note the pitch: 2.6 billion people in the world without sanitation = major market opportunity.

Energy in the Developing World

The fact that 25% of the world's population still lacks access to electricity is spurring lots of innovation. Check out this Economist feature on new ways of delivering energy to poor people.

Survey Questions for Session 3

Echoing Green fellowship applications now open

In case you are interested, the application process for 2011 Echoing Green Fellowships will be open Oct. 12-Nov. 12. This is a highly-regarded Felowship with strong brand value and networking opportunities in addition to a $60,000 stipend for start-up organizations taking innovative approaches to addressing social issues. This past year many of the winners are running for-profit social enterprises. CBS grad (and former Business Innovations TA!) David del Ser Bartolome is a current Fellow for his start-up company Frogtek. If you do apply please let me know as I know the CEO of Echoing Green and a few Board members

Almost 1 billion people in the world are hungry

A new report by the UN food agency (FAO) estimates that 925 million people around the world are chronically hungry, the first time in 15 years that number has decreased (after a rapid rise in chronic hunger in 2008 when basic food prices increased ~40% around the world). This includes only people who are hungry every day (rather than at some times of the year). Here's the New York Times story on this report.

Mango crates in Haiti - aka the challenges of implementing business innovations in a developing country

Hey all - A friend told me about this excellent This American Life episode on the challenges of running a business in Haiti (and, by implication, in other developing countries where aid is ample but progress unclear). This American Life, for those who don't know, is a weekly hour-long public radio program. The link above lets you stream the program for free or download it for 99 cents (you'll need iTunes for the second option). The whole program's good, but the first half hour is especially relevant. Enjoy.

Culture, politics and business-led development

Interesting New York Times article this week on the contrasting interplay between culture, politics and entrepreneuralism in North and South India. While I do not find explanations of development that focus exlcusively on race, tribe, religion, etc. to be analytically useful (or morally acceptable) this article touches on the undeniable importance of these factors when they intersect with politics, education and resource allocation. Especially in the US, we are tyically uncomfortable having honest discussions about these issues (and the role of gender)--we will have to overcome these discomforts if we are to understand how best to use business as an engine for promoting pro-poor development.
--Prof. Bugg-Levine

Hi folks,

Here are some of the links Prof Bugg-Levine mentioned in class yesterday, as well as a link to a cool development-oriented fund and a quick primer on posting to the blog.

First, Gapminder's Human Development Trends presentation, which we saw in class. This page lets you download the presentation to your Mac or PC.

Second, the Gapminder 2010 World Map, also in both Mac and PC versions.

Third, Prof Bugg-Levine recommends you check out the Grassroots Business Fund, which provides investment capital and capacity building to businesses in several developing countries. You can read their Fall 2010 newsletter here and join their mailing list here.

Fourth, we really envision this blog as a discussion hub for everyone in the class. To that end, I'll be sending everyone an invitation to become a blog author, so you'll be free to post relevant links etc whenever you'd like. If you see a cool international development article somewhere, for instance, you won't need to go through Prof. Bugg-Levine or me, but can instead go ahead and post it directly to the blog.

Posting is easy. After you've accepted the invitation to become an author (and set up a Gmail account, if you dont already have one), you'll see "New Post" in the upper right-hand corner of the screen when you're on the blog homepage. That'll take you to a text box where you can add the post's title and content. If you want to embed a link, first ensure you're in the "Edit HTML" tab of the text box (as opposed to the "Compose" tab). Then highlight the text you'd like to hyperlink, click on the third icon from the left on the dashboard (the green globe with what looks to me like a little gray halo), add your link, and click "OK". You can check whether it worked by clicking "Preview". Pls holler with any questions.

Finally, we've posted the second set of survey questions below. Please remember that the deadline for submitting answers is Tuesday Sept. 14 at 10am.

Thanks! J

Survey Questions for Session 2

Questions from Gapminder data

As we mentioned in class, you might enjoy playing around with the Gapminder data. Specifically, check out the country-specific development trajectories. In class we saw why health matters for development by looking at the case of Swaziland.
A few others we did not have time to cover but that you might find interesting:
Why political context matters for development? Check out the last 50 years for Kenya, Congo and Vietnman. What do think explains the gains and losses in these cases?
Why political systems matter for development? Check out the different trajectories that India and China have been on. What do you think explains why one country can have substantial health gains without great increases in income and others do not?
I mentioned Equatorial Guinea: why do you think their GDP/capita has improved so radically? Do you think this data shows that the typical person in Equatorial Guinea is better off than 20 years ago? If not, why not?

Please feel free to post responses to any of these questions on the blog. Also, let us know if you have found other countries that provide better examples for understanding these questions or other questions that you think this data allows us to explore about the context in which development does (or does not) happen. We will discuss the most interesting responses in class next week.

--Prof. Bugg-Levine

Follow-up from first week

Business Innovations students:

Thanks for an exciting first session--I know we covered a lot but hope you found it as excited as I did.

For next week, we will be turning to the question of "how can we create viable business models that support development by delivering basic services affordably at scale to poor people who currently lack access to them?" This concept of the "bottom-of-the-pyramid" customer was first popularized by Prof. CK Prahalad in 2004. The required readings include a short essay that captures this thinking. The Monitor Group took this concept one step further with a ground-breaking report last year examining what was really working (and not) in scaling these approaches in India. Part of the report is also required reading for next week. The co-author of that report, Mike Kubzansky, will come to class on Sept. 22 (not next week as we had planned in the syllabus) to discuss these findings and new (unpublished) research his team has conducted this year in Africa on the same topic.

For next week we will not have any outside speakers -- instead we will recap the main concepts from Week 1, discuss data that "gets below the mean" in understanding the "bottom-of-the-pyramid" market, and then focus the second half of the class on the Patrimonio Hoy case.

I look forward to seeing you all next Wednesday.

Prof. Bugg-Levine

Welcome note from Prof. Bugg-Levine

Business Innovation students:

I look forward to meeting you all on Wednesday afternoon and to kicking off what should be a great semester. We have provocative and inspiring ideas and examples to cover together about a topic that gets both more timely and more sophisticated all the time. I look forward to discussing these with you and for all of us to learn from your diverse and experiences.

As noted in the syllabus, the topic of business and development naturally lends itself to provocative conversations about what we care most about and how we can apply our skills to achieve it. To facilitate this interaction, we have set up this blog. In addition to encouraging you to post interesting articles, links or videos you see or ideas you have related to our coursework, we will also use the blog to post weekly questions on the required readings that I will use as the basis for navigating the following session. Your timely answer to these questions is both very helpful in setting up the class discussions and measured as part of your class participation grade. These questions will rarely take more than a few minutes to answer but offer an invaluable pulse of your perspective on the course material. We will post questions on the day after each session and need answers by 10 a.m. Tuesday morning of the following week so that we have time to collate and analyze them before the Wednesday afternoon session.

The first questions are already on this blog – you’ll find the survey in the entry that follows this post. We do have a few required readings for the first session (though you need not read them before answering the blog questions). The readings are all relatively short but set the context for the course. Since you won’t get your coursebooks before Wednesday, we are posting links to the readings here. They are:

• Case Study: this is a brief write-up on one business innovation to revive a domestic cashew processing industry in Mozambique. This is background to a role-play exercise we will conduct on Wednesday.

• UNDP Report: Read Ch 1-2 (~20 pages) of this report (and more if you are particularly interested). This was a breakthrough report for one of the most important development agencies to acknowledge the potential in private sector and business-led development approaches and touches on many themes we will find later in the course.

• Philanthrocapitalism--a counter-point to the "good news" you will read elsewhere about the role of the private sector in development. This attack on business-oriented charity and development work caused quite a stir when it came out in 2008.

• Global Monitoring report: Introduction--this is the World's Bank annual overview of the global economy. It provides important context for the beginning of our discussion about the relative gains and pains experienced by poor countries during the recent commodities boom and global economic crisis.

Joellen Perry, our TA, will be able to answer any questions you have on course logistics. If you want to contact me directly, email me at antonybugglevine@gmail.com though I am not always able to answer immediately.

I look forward to seeing you on Wednesday,

Prof. Bugg-Levine

Survey Questions for Session 1