Authored by: David Lehr

In "Making Better Investments at the Base of the Pyramid," Ted London of the University of Michigan points out that even though most ventures serving the world's poor have feel-good stories and data on milestones, most of them lack a systematic way to assess how well they're reaching the people they set out to serve.  Too often, the wrong indicators - milestones and tasks accomplished - are used, and these fail to capture the complete picture.  London argues that without understanding exactly whom their ventures benefit and how, managers cannot effectively build on the approaches that work, and avoid those that do not.

London has developed a more holistic approach - the Base of the Pyramid Impact Assessment Framework - that guides managers through a detailed look at the impact a BoP venture has on the economics, capabilities, and relationships of local buyers, local sellers, and local communities.  The framework identifies and examines negative as well as positive effects. 

Continue reading this story...

Authored by: David Lehr

Oxford business professor Linda Scott is trying to verify something that many BoP business models are based on: the idea that becoming an Avon lady could help poor women in developing nations get out poverty.  Her research in South Africa, which is not yet complete, indicates the Avon model might be what some need to get out of poverty; and in South Africa, Avon's approach seems more accessible and better matched to community interaction than does microfinance.

Avon was established in the USA in 1886 and today works in over 100 countries through more than 5.8 million independent sales reps.   Key to the Avon mission is empowering women to achieve economic independence by offering them a superior earnings opportunity as well as recognition, service and support - a mission statement echoed by many of the businesses discussed here at NextBillion, in particular those that have adopted a microfranchising or business-in-a-box approach.

Mainstream companies like Avon Products, Herbalife and Amway have built armies of part-time sales representatives selling everything from insurance plans to anti-aging creams. Those reps, in turn, are encouraged to recruit others and are promised that they will receive a portion of new enlistees' profits. The companies profit, at least in part, by collecting increased revenue and fees paid by new sales representatives.=

At the base of the pyramid, variations of this approach can be seen in Living Goods (Health Promoters) VisionSpring (Vision Entrepreneurs), Hindustan Lever (Shakti entrepreneurs), Grameen Phone (Village Phone Operators), Freedom From Hunger (Health Keepers) and many others.  Similarities with Avon include:

• reliance on a network of sales reps, often working only part-time
• a relatively small up-front investment to become a licensee (or franchisee)
• a majority of goods sold on consignment
• marketing that relies on word of mouth, and at least initially, tapping into the seller's network of family and friends.
• a personalized shopping experience of selling to peers, often within the buyer's home

In these models, women are the target market for franchisees, although, as with Avon, men are not off limits.  And like Avon, the BoP models also promote self-reliance and economic empowerment.

What is different among the BoP models, however, is their clear emphasis on protecting the entrepreneur from bad decisions and financial exposure through training, almost no emphasis on multi-level marketing, and a strong focus on products that have significant social value for their purchasers at prices generally affordable to the poor.  Products are often packaged in single serving quantities to meet cash flow needs, and BoP models also often have a microcredit component as well to help meet initial start-up or licensing costs.

As Avon and their counterparts focus increasingly on the developing nations, competition for the best sales reps and consumer's scarce dollars is certain to increase, as is the debate over whether those living on just a few dollars really need deodorant and beauty products 

It is this argument - that consumer products have limited social impact at the BoP - that tends to stir the passions of pundits, academics, activists and businesspeople.  However, if Scott's research findings are indicative, there are measurable social benefits from the sales of consumer products in low-income communities.  Are those benefits as great as providing healthcare or clean water, for example?  That is for the reader to decide.  But given a choice between having little or no access to services and having some access to basic services, Avon and their counterparts may be the right choice.

Authored by: David Lehr

The UN Millennium Development Goals (MDGs) set out clear and ambitious targets for reducing child and maternal mortality worldwide, but a growing shortage of healthcare workers and other economic and environmental trends have made achieving these goals by 2015 more and more unlikely. As mobile phone usage continues its explosive growth, mHealth, the use of mobile devices in health solutions, has the potential to revolutionize healthcare delivery in much of the developing world. mHealth includes a range of applications such as remote data collection, education and awareness, remote monitoring, communication and training for healthcare workers, disease and epidemic outbreak training, and diagnostic and treatment support.

A recent announcement in February 2009 by the Rockefeller Foundation, United Nations Foundation and Vodafone Foundation to form the mHealth Alliance to facilitate global innovation and ensure maximum impact in the field of mobile health (mHealth) has drawn attention to this area. The Alliance will expand upon the mHealth initiatives of multiple organizations around the world.  It will also encourage the development of scalable, sustainable, and open-standard health solutions that can be made widely available while supporting projects and research focused on increasing opportunities for mobile health, particularly in emerging economies.

Continue reading this story...

Authored by: David Lehr

As I learn more about entrepreneurship and job creation efforts I am increasingly convinced that we need a broader range of tools than either microcredit or social venture funding typically offer.  Recently Agora Partnerships caught my eye when they and their founder Ben Powell were awarded a Draper Richards Fellowship.  Agora Partnerships has an integrated approach that "provides strategy and leadership assistance, networks, and access to capital to socially responsible small businesses with the potential to improve their communities and protect the environment."

Agora was founded in 2005 on the belief that economic development happens best when individuals are integrated into the formal economy and can avail themselves of the norms and protections that formalized laws and institutions provide; certainly a key factor in accessing capital.  (My favorite book on this general topic is the Mystery of Capital by Hernando de Soto). Making this happen, however, is none too easy and nascent entrepreneurs often need a lot of help to enter and succeed in the formal economy. 

According to Paul Davidson, Agora's Operations Manager in Nicaragua, access to good advice is as important as access to capital. For example, there are lots of hidden costs - such as the sheer cost of electricity in resource scarce Nicaragua - that entrepreneurs often don't pay enough attention to, masking the actual cost of certain products. In addition, many entrepreneurs there are afraid of outside investment and poorly understand the benefits that outside advisors can provide.  Onerous regulations and high business set-up costs don't make it any easier.  Agora's non-profit structure, coupled with a micro venture capital investment fund it sponsors, enables the organization  to serve a broad range of small business entrepreneurs from those that need assistance with business basics to those that have more strategic or operational challenges that are also ready for growth capital. 

Assistance can come from the Agora network of on the ground enterprise development managers, who charge relatively low or no fees, or it can come in giving an entrepreneur the financial consulting they need to make their case for a commercial investment, This non-profit / for-profit approach enables Agora to provide both strategy support and access to long term capital to companies too big for microfinance but too small to access traditional capital sources.  This integration should also lower the risks for both the non-profit and for-profit sides.

Among Agora's challenges are the difficulties of finding entrepreneurs that meet their criteria and the time and effort needed to build trust and openness with them.  It also takes time to create awareness of venture capital and build mindsets that welcome non-family partners; interestingly being headquartered in the US is helpful to Agora in building local trust.  The investment fund they manage enables Agora to put skin in the game but more importantly ties their success to the long-term successes of the businesses the fund invests in.  The long-term plan is to sell the fund's equity either back to the entrepreneur or to larger funds, and return any revenue to the non-profit to support their mission.

So far Agora has worked with 63 companies - with its fund investing in only a small portion of these - and promoted entrepreneurship to thousands of individuals in Nicaragua.  And while many enterprise development organizations have a very narrow focus, Agora is addressing three key constraints - managerial talent, access to markets, and access to finance - faced by entrepreneurs around the world.  Ultimately Ben and his team are thinking big - in addition to proving their model, expanding into other countries, and developing micro venture capital investments as an asset class, Agora also wants to change mindsets and increase public appreciation and celebration of entrepreneurs as heroes of development.

Position: Project Manager

Location: Ghana € Accra

Time frame: Full Time, Starting January 25, 2009

Organization: Grameen Technology Center.  The Grameen Technology Center, an initiative of the Grameen Foundation, focuses on technology that makes microfinance operations more efficient, creates income€generating opportunities for the rural poor and provides rural communities access to information and knowledge.

The Information and Communication Technologies Innovation (ICT Innovation) Program of the Grameen Technology Center works with a range of partners to develop, test and deploy sustainable and scalable solutions using widely available mobile phones. It is also exploring the potential of new technologies toextend the reach of information and knowledge to improve lives and livelihoods and examining the ways mobile phones can increase the quality and quantity of healthcare services.

The ICT Innovation Program of the Grameen Technology Center is working with the Bill and Melinda Gates Foundation to increase the quality and quantity of healthcare services provided to women and children in Ghana through the identification and pilot testing of scalable mobile phone based applications. This project will develop and pilot test mobile phone based health applications in the Dangbe West district of Ghana. One application will use mobile phones to feed detailed community€level health information into the District Health Information Management System (DHIMS), saving nurse time and increasing the level of detail available at the district level.

Other applications will be identified through Ethnographic Research and a Needs Assessment Survey and prioritized in partnership with key players from the Ghanaian Health System and Community Health System.

The project manager will be directly responsible for the on€the€ground implementation of the project in Ghana. You will provide strategic and operational leadership of our efforts by working closely with arange of partners, managing local resources, guiding several types of research, tracking and reporting results and recommending overall strategy. In this high profile position you will develop applications with the objective of improving health outcomes, measure their impact and ultimately scale them to other countries.

Specific Responsibilities Include:
• Define pilot applications that have the potential to scale with measurable impact
• Guide needs assessment research and survey Ghanaian health sector
• Evaluate technology currently in place within healthcare system
• Gain deep understanding of complementary initiatives, global trends in application usage and learning from related experiences and incorporate into implementation strategy
• Develop recommendations for applications to implement
• Prepare market requirement and product requirement documents
• Identify and engage partners to develop and deploy applications

Continue reading this story...

Energy poverty in the developing world is a complex and ongoing problem with serious impacts on health, economic growth, and the overall environment.  The impact on the poor is particularly felt in their day to day needs for cooking fuel – much of it coming from either oil or gas - or from the decreasing availability of freely collected fuels such as firewood or its derivative, charcoal.  

Growing price volatility for these products has created shortages of fuel and increasing uncertainty around meeting basic needs.  Indoor pollution from smoke contributes to health problems such as cardiovascular and respiratory diseases, cancers and eye diseases, and of course there are ongoing risks or burns and fire from unstable cooking pots and stoves. 

As I have learned more about these issues and cooking fuel in particular, I was surprised at both just how complex they are and the number of organizations trying to find "better stove solutions," including giants such as the FAO, Oxfam, and Shell Foundation  to much smaller organizations such as Mayan Families, The Escorts Foundation, Envirofit, and the Chimp-n-Sea Wildlife Conservation Fund.

Continue reading this story...

"If people don't have a job, they don't have hope. And if you don't have hope, what do you really have?" (George Roberts of Kohlberg, Kravis Roberts & Co., the founder of REDF)

Recently Jocelyn Wyatt and I were fortunate to have Carla Javits, the President of REDF (originally named the Roberts Enterprise Development Fund), as a guest speaker in our class at Berekely's Haas School of Business.  REDF is a nonprofit based in San Francisco that creates job opportunities and pathways to employment for people with significant barriers to work.  It was also one of the first organizations to embrace the venture philanthropy approach, serving as both a model for others in this field, notably Acumen Fund, and a testing ground for Jed Emerson's ideas on measuring social returns.

Continue reading this story...

This fall, Jocelyn Wyatt and I taught a seven week course at the Haas School of Business at UC Berkeley, which spanned the worlds of philanthropy, business and many of the way points in between. We were both Acumen Fund Fellows (class of 2007) and as part of our post-Fellowship goals each of us wanted to find a way to get teaching experience and also share what had learned over the past several years. 

As good luck would have it, our next steps took us to San Francisco a year ago (David via Mercy Corps and Jocelyn via IDEO) and through one of the student leaders we met at the Global Social Venture Competition, we were asked to teach a one-credit course held for two hours each Thursday.

Continue reading this story...

Continue reading this story...

Continue reading this story...