On January 24th at the WEF in Davos, Bill Gates made a call on "creative capitalism" a new system that "would have a twin mission: making profits and also improving lives for those who don't fully benefit from market forces." He pointed out that "To make the system sustainable, we need to use profit incentives whenever we can. At the same time, profits are not always possible when business tries to serve the very poor. In such cases there needs to be another market incentive- and that incentive is recognition... In markets where profits are not possible, recognition is a proxy; where profits are possible, recognition is an added incentive.The challenge is to design a system where market incentives including profits and recognition, drive the change" He cited examples like Bono's RED Campaign which has generated in 18 months $50mn for the Global Fund to Fitght AIDS TB and Malaria, a Dutch company which holds the rights to a cholera vaccine that retains the rights in the developed world but shares those rights with manufacturers in the developing world, and a new law in the USA whereby drug companies that develop a new treatment for a neglected disease like malaria or TB can get a priority review from the FDA for another product they have made. He called on businesses, governments and the non-profit world on to take up on projects that works both to generate profit and solve the world's inequities.
This is a great call on what is also referred as BOP businesses and "double or triple bottom line businesses" and the work done by many social entrepreneurs. The new name is good and easy to understand. The best part is the potential impact of this call as it comes from one of the most powerful business leaders and one of the most influential philanthropist of today. The webcast of this speech is available from the WEF site.
An exciting area of growth is mobile banking as it is accelerating the outreach of financial services at the BOP. The increasing use and diffusion rate of mobile telephony in developing countries is creating low cost alternatives for people to make deposits, remittances and payments. Smart Money and Globe’s G-Cash in the Philippines, Wizzit in South Africa and M-Pesa in Kenya are some of the innovative mobile transaction systems. Africa has witnessed a spectacular growth in mobile phone subscriptions from 15.3mn in 2000 to 198mn in 2006. The penetration rate in this period soared from 1.97% in 2000 to 21.48% in 2006! (Penetration rate of fixed lines in the same period went from 2.48% to 3.09%). CGAP is covering this area with a slightly broader scope. They have published very interesting notes on “branchless banking” which they define as “the delivery of financial services outside conventional bank branches using information and communications technologies and non-bank retail agents (merchants, supermarkets, post offices)”. The notes published so far cover India, Kenya and Pakistan. Mobile banking/branchless banking is a hot topic for 2008.