Like Rob mentioned in his post yesterday, I do think this is the year of ANDE. More precisely, I believe that thanks to forums like ANDE this will be a year in which companies and intermediaries serving low income markets will start to work in a more collaborative and coherent way, leveraging each other's innovations, successes and failures, and finding effective distribution mechanisms so that a more effective "knowledge brokerage" across boundaries is possible.

This may be the first step in building global supply chains for products aimed at low income markets, connecting the dots between existing supply (known to work at addressing specific needs) and existing demand. As far as the supply side is concerned, it is easy to see that most of the business models highlighted in BoP/ social enterprise literature, conferences and forums like this one are usually concerned with the design and commercialization of products and services that address very specific needs of the poor. Kickstart or IDE are examples in the case of irrigation. They have both developed products that work and serve their purpose in the context of small scale agriculture.

The quality and effectiveness of their products have been commented time and again; stats and success stories of their use abound. However, neither KickStart nor IDE have reached a truly global scale, the way, say, iPods have. Lack of demand for their products is not the reason, of course -- whether The Next 4 Billion or Aneel Karnani is right about the size of the markets at the base of the pyramid. Demand exists. The reason is that the marketing and distribution infrastructure to make a global reach and scale possible is not (yet) in place for the markets at the base of the pyramid. In other words there isn't someone that, like a retail outlet, aggregates products of several manufacturers (those that address needs like water management or energy or health), markets and makes them available and accessible to local communities.   

This is the opportunity that PowerMundo identified. Mike Callahan, its founder, traveled extensively through the poorest regions of Peru after learning that a vast portion of the population lacked electricity and/or used expensive, dirty and unhealthy fossil fuels for cooking and lighting.

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As I opened up my interview notes, Francisco pinged me over Skype.  His message was simple: I just have a feeling, 2009 is going to be the year of ANDE.  This has to be more than a coincidence, I thought.  After all, the interview notes I'd just clicked open were from a conversation with Randall Kempner – the incoming Executive Director of the Aspen Network for Development Entrepreneurs (ANDE, for short.)  Laughing, I wrote back to Francisco, telling him of his fortuitous timing.  He agreed that my interview with Randall was destined to be our first post in 2009.

It's more than timing; the development through enterprise sector is developing quickly.  I predict that the next 12 months will bring more formality and more cross-organization cooperation to our sector, as a range of funders, investors, entrepreneurs, intermediaries and research organizations work to take the base of the pyramid concept and turn it into an investible asset class.

A good first step towards this goal is creating the Aspen Network of Development Entrepreneurs, and hiring its first Executive Director.  The Aspen Network is basically a trade association for organizations like Acumen Fund, New Ventures, Agora Partnerships, E+Co, Technoserve, Root Capital and others working to help small and growing businesses take hold in low-income markets (full disclosure: NextBillion's sponsors, Acumen Fund and New Ventures, are members of ANDE).  Before taking his new job, Randall Kempner was Vice President for Regional Innovation at the Council of Competitiveness.  He has also worked for the OTF Group and before that, as a consultant with Monitor Group.  Randall graduated from the University of Texas at Austin with a M.B.A and an M.P.Aff.  He earned his Bachelor's degree in Government from Harvard University.

In our conversation, we discussed the role of innovation in economic development, how the Houston Astros broke Randall's heart in 2005, and just about everything in between.

Rob Katz, NextBillion.net: Who is Randall Kempner?

Randall Kempner, Aspen Network of Development Entrepreneurs: I'm a loud and proud Texan - a fifth generation Galvestonian.

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We're taking a few days away from research, writing, blogs and all the rest.  Back in 2009.  Until then...

It's the holiday season in the United States, which means many bloggers are talking about gifts, giving, philanthropy and the state of the world.  All this gift-blogging got me thinking about one of my favorite gifts (to give and to receive) - Kiva gift certificates.  If you need to pick up a last minute stocking stuffer, you could do a lot worse.  (Don't know Kiva?  We've written about them before, including interviews with founders Matt and Jessica, as well as a comparison between them and MicroPlace, a P2P microfinance competitor.)

There's another way to give Kiva, but it won't fit in a stocking: you can give yourself.  That's right: if you're looking to get involved in microfinance very personally, Kiva has a Fellowship program that allows volunteers to spend anywhere from 10 weeks to a year working for a microfinance organization.  According to their web site:

The Kiva Fellows Program offers individuals a rare opportunity to travel abroad and witness firsthand the impact and realities of microfinance, by working directly with a host microfinance institution (MFI). The Kiva Fellow is an unpaid, volunteer based position designed to increase Kiva's impact and to offer participants a unique insider experience. Past participants have found the fellowship to be a great first step in a career in microfinance or international development.

All the details are available on their web site.  I've been keeping my eye on the Kiva Fellows program for the past few months, especially as the financial crisis unfolded here in New York.  I wondered, what are all these newly-unemployed finance pros going to do with their time?  Maybe some of them are going to want to give back - but how?  A Kiva Fellowship is a good place to start.

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Position: Research Associate / Consultant

Location: Home based with two missions to New York

Time frame: 1 January 2009 - 31 April 2009

Organization: Growing Inclusive Markets Initiative, United Nations Development Programme.  The UNDP Growing Inclusive Markets Initiative seeks to create understanding and awareness about how doing business with the poor can be good for poor people and good for business. During its first stage, the initiative studied 50 business solutions that successfully create mutual value between business and the poor. The insights were captured in the report 'Creating Value for All – Strategies for Doing Business with the Poor', which has been launched in more than 20 countries since July 2008.

The goal of the second stage of the Growing Inclusive Markets Initiative is to identify successful business models that are good for the poor, the planet and profit and to understand their real and potential impact. The initiative will operate as a multi-stakeholder dialogue of experts in the field of sustainable business and development. These will include practitioners from business associations, multilateral institutions, civil society organizations as well as academics from leading research institutions.

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A couple of friends of mine have already asked me "So what if a couple of banks go bankrupt? Who cares about bad mortgages? What is all the big deal about?" It is hard to explain in few words why the financial sector is so vital in modern economies, when countries are as strongly connected by trade ties as it is currently the case.

Probably the best way to explain its importance is by thinking of the economy as a machine and the financial sector as a lubricant. The financial sector's role is to efficiently allocate capital from savers to investors.  Financial markets lubricate the rest of the economy's productive activities.  Thanks to this lubrication, the economy is able to "work harder" and make fuller use of all the cogs in its machinery. If financial markets stop functioning, then the machine would not be able to work as efficiently as before, because it would lack the lubrication needed to keep full speed. This is in a nutshell why Washington has bailed out the financial sector, without even thinking about it, but appears much less willing to help the collapsing US automobile manufactures.

A second important aspect to take into account of financial markets is that banks are strongly connected to each other. If GM closes down tomorrow, other surviving businesses, such as Toyota, will probably benefit. However, in financial markets, if one financial agent, for example a bank, suffers, due to the interdependencies in the system, many other banks will suffer too. If one bank fails, other banks will tend to fail as well. This domino effect is something characteristic of industries with businesses which are tightly connected with each other and strongly dependent of each other's actions.

As financial markets have grown increasingly global, the allocation of capital from savers to investors has become global. As a consequence of the US financial crisis, BoP markets will probably suffer in the coming year.

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I recently read an article titled Negroponte - missionary not manufacturer, in which the author makes the argument that, well, Nicholas Negroponte - founder and Chairman of the One Laptop Per Child project - is a missionary, not a manufacturer. I think this is a very interesting point and caused me to ponder the definition of success.

Negroponte has been pilloried in the press, blogosphere and by analysts around the world, and even to an extent by me. You can see this in a three part blog posting that I wrote that starts here.

While some of the criticism may be valid, if you actually change the perspective of how you view his role ... from someone that is trying to manufacture and sell millions of laptops, to someone that has a vision of a computer as a key tool for accelerating learning and technology adoption, then his cause would be seen in a different light. And that is exactly why the world embraced him in 2005 when he first introduced his OLPC project.

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Guest blogger David Auerbach works on strategic growth projects for Endeavor, a global organization that supports high-impact entrepreneurs.  He is a 2003 graduate of Yale University.

By David Auerbach

High-Impact Entrepreneurs – those running high-growth, innovative businesses – are important drivers of economic growth in emerging economies. Endeavor, a non-profit with operations in 11 countries, supports these entrepreneurs by providing access to mentors, strategic advice, managerial talent and inspiration. In turn, these entrepreneurs – who come from a wide range of industries such as architecture, meat-processing and IT – create wealth and good jobs in their economies.

As the economic crisis continues to be felt around the world, Endeavor conducted a survey of 92 portfolio companies from Argentina, Brazil, Chile, Colombia, Jordan, Mexico, South Africa, Turkey and Uruguay. Endeavor asked about how the entrepreneurs had been affected so far by the crisis and what they foresaw happening in 2009. Three general trends emerged:

It’s going to be tough this year and next:

The results showed that 85% of Endeavor Entrepreneurs are already feeling the effects of the crisis:

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Position: Consultant

Location: Nyanza Province, Kenya

Organization: The Safe Water and AIDS Project (SWAP) is an organization that provides women with HIV/AIDS a range of services (counseling, emotional support, paralegal assistance, health and nutrition education) as well as income generating activities.  SWAP also provides support to AIDS orphans.

Description: SWAP has received significant financial support; the Rotary Club of Atlanta and Rotary District 9200 of Kenya began supporting SWAP over 3 years ago with the goal of reducing waterborne disease and providing SWAP members with the means of earning much needed income.  In this program, local SWAP groups are trained about safe water, health, and good business practices, and are offered the opportunity to obtain microcredit.  The women become "Avon Ladies" for health, selling WaterGuard, PUR, modified clay pots, insecticide treated bednets, condoms, protein fortified flour, skin antiseptic, birth control pills, and other products, and keep a small commission.  This project enables the women to improve the health of their neighbors while earning money to support their families.  There are approximately 400 SWAP groups, mainly women, who sell health products throughout Nyanza Province.  Promotion and marketing of the products primarily occurs by word of mouth through the various group members in their respective communities.

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Editor's note: Guest video blogger Karthik Janakiraman is an Acumen Fund Fellow. This year, Karthik is working with Global Easy Water Products (GEWP), an company in India providing poor farmers with access to affordable micro-drip irrigation solutions. He will develop a production, inventory and logistics plan, while also building and refining GEWP's export strategy.

Before joining Acumen Fund, Karthik was a Senior Engineering Manager at Applied Materials in Santa Clara, California, responsible for new product development. He has been awarded five patents in the area of semiconductor design. Karthik holds a Master of Science degree in Mechanical Engineering from the University of Michigan.

Video blog by Karthik Janakiraman

During my first week in Aurangabad, I went to the agricultural fields and met a few customers of GEWP. One of them in particular, stood out. This short video captures my thoughts and impressions on that meeting.



This post first appeared on the Acumen Fund Fellows blog.

Following is the second of a Two-Part Series written by guest blogger Ryan Gunderson after a recent trip to rural Zambia.

Ryan is a business professional with Medtronic, the world's leading medical technology company.  He earned a bachelor's degree from Brigham Young University and an MBA from the University of Michigan's Ross School of Business. He writes about sustainable, scalable solutions to end global poverty on his blog Riches For Good and is actively pursuing his goal to help 1 million people out of poverty during his lifetime.

By Ryan Gunderson

I met Blessings and Francis in October 2008 when I visited the church they both attend in Lusaka, Zambia.  Although some 90 people were in attendance, Blessings and Francis stood out to me for the obvious reason that they were the only two speakers in the main meeting that day. Before Sunday school I introduced myself to all who were present, and I told them I was traveling with a non-governmental organization (NGO) and would be visiting rural farmers in Zambia to help them increase their incomes. 

Intrigued by the purpose of my trip, Francis invited me to his house after church, and I gladly accepted.  Blessings separately invited me to his house; the three of us traveled to Francis' house, where we spoke for about an hour.  I'm pictured below with Blessings (suit) and Francis, and several members of Francis' family.

I shared my goal to help 1 million people out of poverty and asked Blessings and Francis for any suggestions.  They each shared their opinion that many people have ideas for small businesses, but they lack startup capital. 

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Attending the "VI Inter-American Conference on CSR: The Business of Inclusion" in Cartagena was a great opportunity to draw a parallel between the nascent BoP/ Development through Enterprise movement in Latin America and the one in the English-speaking world, which I've had the chance to dive deeper into in the course of this year.

Following is a brief summary of my impressions and three main takeaways from the conference.

1. Lots of "top down"; not as many "bottom up" approaches

Most of the Latin American examples of business activity tackling the problems of poverty still come from MNCs and big corporations, in general. In fact, most of the panels, sessions and exhibition stands at the conference featured big companies that are the usual suspects of BoP activity in these countries (think CEMEX, Codensa, Colcerámica, etc.)

It is thus understandable that the title of the conference blends the concepts of CSR and BoP activity. Slowly but steadily, CSR is being viewed as a stepping stone towards making low income markets part of the business strategy of corporations. However, the conversations about entrepreneurial solutions to the problems of poverty are still not as strong, which shows that the ecosystem of support for these ventures (investment funds, venture philanthropists, enterprise development organizations, etc.) is still in the process of formation and will hopefully learn from the path walked by its counterpart in countries like the United States or India.

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Following is the first of a Two-Part Series written by guest blogger Ryan Gunderson after a recent trip to rural Zambia.

Ryan is a business professional with Medtronic, the world's leading medical technology company.  He earned a bachelor's degree from Brigham Young University and an MBA from the University of Michigan's Ross School of Business. He writes about sustainable, scalable solutions to end global poverty on his blog Riches For Good and is actively pursuing his goal to help 1 million people out of poverty during his lifetime.

By Ryan Gunderson

Mr. Hakawale is a farmer who lives along the banks of the Magoye River with his family in rural Zambia.  Up until 1997, he cultivated a small plot of land, watering his crops by hand with a bucket.  When I visited Mr. Hakawale in October 2008 as a guest on IDE's annual board trip, he gave us all a great history lesson of irrigation on his farm, starting by holding up a rusted out metal bucket he used years ago, shown in the picture below.

In 1997, Mr. Hakawale met a representative of IDE (short for International Development Enterprises), a Colorado-based non-profit that has been helping rural farmers in the developing world to increase their incomes since the 1980s.

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"What's new in the base of the pyramid world?"  My colleague Omer had just returned from a week-long vacation to Santa Fe, New Mexico (he went for a film festival).  I was quiet, thinking about how to answer him.  Frankly, I didn't know where to start - there were a number of articles, reports, news updates and announcements that came to mind.

So, in honor of Omer's return to the office, and in recognition of the sheer quantity of activity in the base of the pyramid space, here's a quick roundup:

The Stanford Social Innovation Review is discussing much more than Romanticizing the Poor, Aneel Karnani's latest article criticizing BoP theory and practice.  In fact, the Winter 2009 edition of SSIR is full of other articles relevant to the NextBillion community:

• "Clean Sweep" - a profile of NextBillion ally E+Co, the green energy investment fund for the BoP;
• "Eyeing Talent" - its pun-tastic title gives away this article's subject: VisionSpring, the social enterprise working with Vision Entrepreneurs to get eyecare services to the BoP in 13 low-income countries around the world;

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There are two competing philosophies that, at first glance, seem to both provide value to the base of the pyramid (BoP) approach – competition and cooperation. In my mind, the BoP theory is as close as any to a "free-market" approach to development, as it promotes competition that will bring the best products and services to meet unmet demand. Competition is a part of a self-regulating market. It inhibits price-gouging, encourages multiple product and business model designs, and provides consumers with choice – all key tenants of the BoP philosophy.

However, as organizations working at the BoP compete, their focus can shift – from the customer to the competitor. If competition is not dealt with properly, it becomes a battle of resources and reputation, instead of a fight to serve the poor in the best way possible.

A similar phenomenon has plagued the NGO community over the years, and this is partially caused by serving two masters – the "client" on the ground and the "donor" (agency, charity, government) in the developed markets. Were the NGO community unconcerned about serving the latter, we would probably not see as many fancy websites or media releases – but the truth of the matter is that we need both constituencies.

I am not saying that we do not need BoP organizations to engage in competition on the ground, but rather that from what I have seen that is not where the battle has been waged.

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