Microfinance and beyond...

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Kiva.org, the world's first microlending website announced today its entry into the education field by offering a pilot for student microloans in 3 countries. So beginning today anyone can make a loan starting at USD 25 to students that are selected by Kiva's first 3 education field partners; Fundacion Paraguaya (Paraguay) IMPRO (Bolivia) and Ameen s.a.l. (Lebanon). Kiva.org an innovative social enterprise created a movement to connect people around the world through lending to alleviate poverty. In only 5 years, Kiva.org has provided over USD 160 mn in loans to 415,000 microentrepreneurs around the world and these loans (which are as little as USD 25) have come from close to half a million lenders spread in 206 countries!

"The pilot was born as a natural extension of Kiva's mission to connect people, through lending, to alleviate poverty. Kiva Student Microloans give recipients the opportunity to gain new knowledge and skills through higher education or vocational training. As a result, these individuals will be better positioned to find jobs, support their families and grow their communities -- and ultimately make a real difference in the relief of global poverty." (source: Kivablog)

(Disclosure: the author is in the management team and in charge of social investment management at Socential)
Socential, a Swiss start-up has launched an online platform to connect social investors to social entrepreneurs projects aiming to empower system changing solutions to the world's social problems. The platform was launched as a pilot in January this year featuring Swiss social entrepreneur's projects and the latest release this April has featured projects from the internationally acclaimed social entrepreneur Bunker Roy from Barefoot College.

On February 8th we visited the offices of the Room to Read in Laos and the Napheui Primary School (90 minutes by car from Vientianne) which we supported to build with some help from our friends in Switzerland. Walking up towards the school building and hearing the children either reading out loud, responding to questions posed by the teachers, or just simply giggling made us smile. By the way, the school building has 6 rooms – 5 classrooms and a library. In Laos, primary school takes 5 years.
Even though we knew that Room to Read works effectively together with the community and the local government, actually seeing how the stakeholders collaborate was a great experience. We were received like “dignitaries” by students, local government officials and senior representatives of the village.

Some statistics that we got from the village chief’s presentation: The population of the village is 891, there are 140 families, 104 children attend “our” primary school. Officially, 57 girls, the rest boys. (p.s. it felt like there were quite a few more girls than boys at least on the day we visited) We are extremely happy that we could be part of such a wonderful project. See more pictures of the visit.

A number of studies and articles have been appearing since last year questioning the impact of microcredit - microfinance. One of the most recent reports "Does Microcredit Really Help Poor People?" written by the seasoned microfinance expert Richard Rosenberg provides an excellent overview of the studies and his view on this subject. According to this report the claim in doubt is whether microfinance (or the microloans) is the cause for the economic improvement (increase in income and consumption, moving people out of poverty) as well as positive impact in health, education and social empowerment. The problem being that scientific testing of the impact of microcredit is very difficult (and therefore proving the claims are difficult). Rosenberg ends the report with the following words;

"Small one-time subsidies - leverage large multiples of unsubsidized funds - producing sustainable delivery year after year of highly valued services that help hundered of millions of people - keep their consumption stable, finance major expenses, and cope with shocks - despite incomes that are low, irregular, and unreliable.

All and all isn't this a pretty impressive value proposition, even if we eventually find out that microfinance doesn't raise income the way some of its proponents have claimed?"

In retrospect, it is very likely that in the past years the rising popularity of microfinance and its impact had become over-blown. Proponents of microfinance (including this author), in their quest of raising awareness of this powerful and effective tool to improve the life of the BOP, have been too enthusiastic and most likely also helped create the overhyped state. So the recent critical articles are deflating the overly high expectations that were built on microfinance and its impact. This is a healthy sign. I thank David Roodman and his excellent open-book blog which has been providing a critical view on the many issues surrounding the impact of microfinance.

This book introduces innovative social/business models that provide sustainable solutions to the problem of poverty and portrays the insipiring people behind them.You can find an update on microfinance, BOP (base of the pyramid) initiatives, and microfranchising all which are improving the lives of the 4 billion people living at the BOP. VisionSpring, an innovative social microfranchising enterprise with the mission to reduce poverty and generate opportunity through the sale of affordable reading glasses is featured as a model case. The aim of this book was to share my insights on 1) how the business and social worlds have been converging, setting the stage for these innovative models to emerge, 2) how these models, together with the advent of Web 2.0, are creating a strong and positive movement towards a more responsible, sustainable and kinder world and 3) how all of us could make a difference.
This book is the updated English version of the German book that was published last year. I used lulu.com to publish this and I can recommend it.

Room to Read (RtR), a social enterprise that has been providing educational opportunities in a sustainable way in the developing world has been selected as the Financial Times seasonal appeal for 2009-2010. This is not about microfinance but RtR is an amazing organization that I have followed and featured in January 2007. Last year thanks to the sponsorship of many of my friends we supported RtR to build a school in Laos. We were impressed by the management lead by John Wood who designed a scalable and sustainable model (by partnering with the local communities) to provide education to the world's poor children by building schools and libraries, girls' education programs (10 year scholarships) and local language publishing programs. In less than a decade since inception RtR has built 832 schools, 7526 libraries, awarded 8786 girls scholarships, published 334 local language books and distributed 6 million books, benefitting 3.1 miliion children. John initiated RtR with a vision to provide educational access and opportunity to 10 million children in the developing world. Looks like he will reach his goal earlier than he thought. FT carried a full page article in today's edition describing the achievements and goals of RtR. Congratulations to John and the whole team of RtR !

On Oct 31st, Kiva lender loans surpassed the USD 100 million mark! Congratulations to the Kiva team especially Matt and Premal for achieving this milestone. That is a lot of 25 dollar bits. I went back to check my first entry on Kiva when I congratulated them on getting their 501(c) status which was in Sept 2006 . Kiva has achieved so much in 4 years inspiring more than half a miilion people in the world to get engaged to empower people in developing countries.

“Impact investments aim to solve social or environmental challenges while generating financial profit. Impact investing includes investment that range from producing a return of principal capital to offering market-rate or even above-market financial returns. Although impact investing could be categorized as a type of “social responsible investing” (SRI) it contrasts with negative screening which focuses primarily on avoiding investments in “bad” or “harmful” companies -impact investors actively seek to place capital in businesses and funds that can harness the positive power of enterprise.” (source:based on GIIN)
I first heard this expression in spring 2008 at the Skoll Forum in Oxford described by Antony Bugg-Levine of the Rockefeller Foundation. (I thought I finally found the proper word to describe what I do, I am an impact investment advisor) A year later at the 2009 Skoll Forum, the Monitor Institute presented an excellent report titled Investing for Social and Environmental IMPACT and also A. Bugg-Levine announced that the Global Impact Investment Network (GIIN) was being formed. In Sept at the SOCAP 2009 in San Francisco one could confirm that “impact investing” had become the widely accepted expression by the rapidly growing social capital investment industry. On Sept 25th 2009, GIIN was officially launched and announced its 25 founding members of the GIIN Investor’s Council at the Clinton Global Initiative. A recent article in the Economist also profiles impact investing.
Over the past few years many new expressions have been created to describe investing for social and environmental impact and financial return. These include double or triple bottom line investing, blended value investing and BOP investing. Needless to say microfinance investments is one of the leading and successful examples of this type of investment. All these expressions are valid in their own right; however, it confuses the investors and makes it difficult to build the market mechanisms for this nascent industry to efficiently grow. It is great that we now have a clear terminology and definition and an institution such as GIIN which is dedicated to increasing the effectiveness of impact investing. Other great initiatives in this area include The Global Social Investment Exchange (GSIX) and Nexii, the electronic transactions and communication platform for the social and environmental markets.

Jacqueline Novogratz is founder and CEO of Acumen Fund a very successful and fast growing nonprofit venture capital firm for the poor that invests in sustainable enterprises bringing healthcare, safe water, alternative energy, and housing to low income people in the developing world. She founded Acumen Fund in 2001 and by the end of 2008 this firm had approved more than $40 million on investments in 40 enterprises serving the poor, creating through these enterprises 23,000 jobs providing basic services like water and life saving malaria bed nets to millions of low income people around the world. Her book The Blue Sweater -Bridging the Gap between Rich and Poor in an Interconnected World-is an inspiring memoir of a woman who left a career in international banking to spend her life on a quest to understand global poverty and find powerful new ways of tackling it. Many important lessons can be learned just by following her heartbreaking and hilarious stories of starting a microfinance institution and a bakery in Rwanda. Also the book is packed with examples that teach us humility and that good intentions alone are not enough as described through some failed programs of traditional charity that have left the poor people in the same or worse conditions. One also learns about the Rwandan genocide through the stories of the survivors that Novogratz had worked with. The book is inspiring, educational, entertaining and a must read for everyone and especially for those who aspire to make a difference.

SolarAid is an innovative enterprise that aims to combat two of the major threats that humanity faces today; climate change and global poverty. They do so by providing clean renewable energy to the poorest people in the world. According to SolarAid about 2 billion people have no access to electricity-they rely on burning kerosene and wood which are highly toxic and expensive. SolarAid aims to replace these carbon-emitting products with solar power which is more economical and environmental friendly. Their projects include 1) Sunnymoney Micro-franchising (training microentrepreneurs in Kenya to assemble/repair and sell solar products that would reduce their dependency on harmful and expensive kerosene. 2) Solar powered water pumps- this project will test a new solar powered water pump, that will allow families to access clean water for drinking, washing and irrigation 3) electrifying Malawi communities with solar energy.
Although SolarAid is a relatively new venture it is worth keeping an eye on as they are in one of the most interesting areas tackling both poverty and renewable energy.

Prof. Yunus, Nobel Laurete and founder of Grameen Bank gave an inspiring lecture titled "A Framework for a better future: the promise of social business" on May 29th at the British Council. He continues to strongly promote the creation of social businesses as these can address and solve the problems of poverty, health care and environment. Prof. Yunus gave examples of social businesses he has been creating in Bangladesh. In addition to the well know Grameen- Danone (joint venture manufacturing affordable yoghurt full of micronutrients for children in Bangladesh) he mentioned Grameen-Veolia (Veolia is a French water company) creating small water treatment plants and BASF-Grameen which will be providing treated mosquito nets at very little cost. He also mentioned the eye hospitals and a healthcare program to create a nursing college as a social business. In the area of environment Grameen Shakti has been providing affordable solar home systems in Bangladesh for the poor.
Prof. Yunus call for social business is very timely as the current financial crisis is forcing us to think how can we improve or rebuild the financial system so that it is an inclusive system that would include the majority of the people. You can see the transcript and videos (youtube) of the lecture.

On April 23rd I visited the bakery of Luisa and Luis in Tecpán, Guatemala. Luisa is a client of Fafidess, a leading MFI in Guatemala that provides microcredits, training and technical assistance to groups of Guatemalan indigienous women with limited resources. My last visit was back in August 2005. The business has been growing steadily on the back of new acquisitions of institutional clients (hotels and restaurants in the area). Monthly sales have more than doubled from Q 16,000 to Q 35,000 (USD 2000 to USD 4375) during this period. There were two other areas where a lot of progress could be seen. As the business increased its clients to hotels and restaurants that need invoice, the bakery has slowly moved to the formal sector and now they hire an external accountant for bookkeeping. The other change which impressed me the most was on the education of the children. In 2005 Luisa's 3 older daughters: Angela, Rosy and Carmen (who were then 17,15 and 13) were helping at the bakery so they could only attend Saturday/Sunday school. Nelson the only boy at 9 years old was attending full time school and the youngest girl Sonia, 5 years old was at home. I had asked then Luisa if Sonia would be able to attend full time school next year. Luisa said maybe. During our current visit, Nelson and Sonia came back from school wearing their uniforms. Yes Sonia is now attending full time school. Furthermore, Angela, now 21 has finshed the weekend school and told me she wanted to enroll to University to study business administration! See photos of this visit.

The 6th Skoll Forum, a gathering of leading social entrepreneurs took place in Oxford on March 25-27th. Prominent figures of the social, corporate, policy, academic area engaged for 3 days in discussions and debates to accelerate, innovate and scale solutions for the world most pressing issues. This year the mood was slightly less euphoric due to the current crisis but one could feel an even stronger and powerful level of energy in the air as social entrepreneurs are becoming even more important players, in Jeff Skoll words, they are likely to come out of this crisis not as survivors but as leaders. He pointed out that social entrepreneurs are masters in leveraging; in producing results with limited resources, they have the abilitiy to do more with less, in choosing which assets can be most efficiently used to meet the objectives, also they maximize resources by collaborating. He could not have expressed it better. Many sessions can be watched in videos and also many blogs are available of the event. This year there were 9 Skoll Awardees. I was especially delighted to see Jordan Kassalow of VisionSpring, formerly Scojo who we have covered in this journal and in my recent book being one of them.

Last week while I was in Japan I picked up a book written by Safia Minney, a pioneer in fashionable and ecological fair trade. The book seems to be only available in Japanese but there is plenty of information on the web on Safia and People Tree, the fair trade company/brand she founded in 1995. People Tree (PT)works with more than 60 fashion and handicraft producers in 16 countries including India, Bangladesh, Peru and Kenya providing design and technical assistance based on traditional skills. PT sells their products through catalogue, internet, and also through 400 shops around Japan and 100 in Europe. Safia is an inpiring social entrepreneur that has been recognized by various organizations including the Schwab Foundation of Social Entrepreneurship where she was selected in 2004 as one of the world's "Outstanding Social Entrepreneurs". She has not only raised consumer awareness of poverty alleviation, ecology and fair trade but also has built a business of fashionable and ecological fair traded goods. PT's sales have surpassed 7.5 mn USD for 2006. Another remarkable social business, a win-win example.
Her blog is highly recommended and there is also a YouTube clip where Safia's presents People Tree in her own words, a presentation that she delivered in London in Sept 2008.

SoCap2008 , a conference designed to bring together the entrepreneurs who want to change the world and the capital that wants to make it happen took place this week Oct 13-15 in San Francisco. Unfortunately I could not attend this year but it is possible to follow some of the inspiring discussions through the many blogs available. Especially the team of nextbillion did a wonderful job covering the conference.

Hapinoy envisions to become the largest chain store (franchise) of small convenience stores (known as sari sari stores or variety stores in the Philippines). Their aim is to empower microentrepreneurs and help them grow their business. There are roughly 700,000 sari-sari stores in the Philippines and the idea is to convert some of these stores into Hapinoy branded stores. The microentrepreneurs who join this franchise will have access to microfinance (business loans) as well as training for standarized operating systems. Another benefit would be the opportunity to increase sales through new businesses and services brought in by Hapinoy through partnerships. Hapinoy works closely with MFIs (CARD-MRI, TSKI, Kasagana-ka, LMPC) and also partners with manufacturers and service providers (Nestle, Unilever, Colgate-Palmolive, Smart Communications etc).
Hapinoy is the first venture by MicroVentures Inc, a social business enterprise founded by Philippine leaders from the social development sector and the business sector. MicroVentures seeks for positive change in the Philippines through empowering microentrepreneurs and pushing the social business enterprise agenda believing that making profit and creating positive change can go hand in hand.
Hapinoy is a promising venture that one should keep an eye on. I learned about Hapinoy as I met Markus Dietrich who will be working for Hapinoy as a consultant based in Manila for one year starting this October.

Ashoka's Changemakers and Citi have launched a competition titled " Banking on Social Change- Seeking Financial Solutions for All" to invite entrepreneurs from around the world to find and create innovative projects that will enable everyone to have access to financial services. Entries are accepted until October 1st.
Ashoka is a leading innovator for social change as it finds, fosters and connects the world's leading social entrepreneurs-men and women with system changing solutions for the world’s most urgent social problems. Changemakers, an initiative by Ashoka, has been building the first online "open source" community that co-creates and implements the best solutions for social problems through collaborative competitions. Changemakers hosts competitions on a wide spectrum of social problems where innovative solutions are desperately needed. The current competition was launched in mid-July and in the first 4 weeks 34 entries from 11 countries have been submitted. Anyone can view the entries, enter a discussion or nominate a project. If you would like to showcase your innovation, share your insights or simply learn about solutions go to Changemakers.

A lively debate has been sparked by Mike Edward's new book "Just Another Emperor-The Myths and Realities of Philanthrocapitalism" where he challenges the increasing use of business thinking in philanthropy and the current hype about it. It is in fact a controversial topic but certainly a healthy debate. I got to know about this topic as I follow Nextbillion where now the whole team is writing their comments on this subject.(highly recommended read). Also there is an on-line debate on this subject hosted by Global Philanthropy Forum. Here you can read comments from Matthew Bishop from the Economist who coined the word "philanthrocapitalism" and has written a book with Michael Green titled "Philanthrocapitalism: how the rich can save the world" coming out this fall.
I believe strongly that today there is a powerful movement of making the world a better place (the subject of my latest book) which has been accelerating due to the converging business (for-profit) and social (non-profit) worlds. Both worlds offer principles and methods in different areas that they ought to learn from each other. It is important to sort out what can be used most effectively from each world. I think that this is a timely debate and look forward to see the outcomes.

Where can one go to learn more about microfinance? Is there enough capacity (trained staff and managers) to cope with the explosive growth of the microfinance industry? Of course there is no limit (only one's own time) as to how much one can learn through the internet (ie CGAP, mixmarket, microfinance gateway or the UNDP Microfinance Distance Learning Program) but, there are also an increasing number of institutions that offer training programs around the world.

For programs/courses: Boulder Institute of Microfinance(creating a platform for dialogue and critical thinking in microfinance), Microfinance Center (programs for practitioners in Eastern and Central Europe), School of Applied Microfinance (provides 2 week training courses for MFIs in East Africa), Harvard Business School & Accion Program on Strategic Leadership for Microfinance (executive education for directors of MFIs), and Frankfurt School of Finance and Management which runs the Micro Banking Summer Academy. One excellent institution, Microfinance Management Institute (MFMI) is building a community to foster development of human resources for the microfinance industry through the creation of learning tools and programs. They also provide courses for funders as well as integrating microfinance courses into the curricula of premier graduate management programs in developing countries.

If one's interest is to get familiar with microfinance by going to the field there are many microfinance institutions that provide visitors programs. I have visited 2 of these which were excellent. BRI in Indonesia and BRAC in Bangladesh.

For international conferences the easiest way to see these are on the website of the microcapital, the top newsletter of microfinance investments.
So don't wait if you want to learn more about microfinance get started now!

On April 16th, I visited Aravind Eye Hospital in Pondicherry one of the 5 eye hospitals of Aravind Eye Care Systems (AECS). AECS was founded in 1976 by the late Dr. Venkataswamy (Dr. V) with the mission to eliminate needless blindness by providing compassionate and high quality eye care.AECS today is not only the world largest eye care facility but the world leader in eye care delivery. It encompasses 5 hospitals, a manufacturing center for ophthalmic products (Aurolab), an international research foundation (Aravind Medical Research Foundation) and a resource and training center (LAICO). During the 12 month period to March 2007 AECS treated 2.3 million outpatients and performed 270,444 surgeries. AECS is a profitable institutions although only 40% of the patients pay between US$ 50-300 for catarat surgeries while 60% are non-paying patients.
I was taking part on Unltd Learning Journey 2008 visiting social entrepreneurs in Southern India and although this was not part of the official program it was great that I could visit one of the institutions that I respect so much and have featured in my new book (see entry below). Renjith who is a manager for out-patients organized an efficient visit so that we could have an overview of how patients (both paying and non-paying patients) were examined and treated. We also had a chance to talk to Dr. Ravindran (picture above), the Chief Medical Officer about Aravind expansion plans. Aravind is busy expanding and replicating its model due to the many inquiries and requests from many places both in India and abroad. Yunus Muhammad is opening this month the first Grameen Eye Hospital in Bangladesh modeled after the Aravind Eye Hospital.

This book introduces the new innovative social/business models that are making the world a better place and portrays the inspiring people behind them.
Starting with an update on microfinance, it covers other innovative market-oriented models such as base of the pyramid (BOP) businesses, social enterprises and microfranchises. These models together with microfinance are improving the lives of the 4 billion people living at the BOP. The last section covers in detail a remarkable example in this area, Scojo Foundation. Scojo is developing the market for affordable reading glasses at the BOP through microfranchising.The book provides the author's insights on 1) how the business (for-profit) and social (non-profit) worlds have been converging, setting the stage for these new models to emerge, 2) how these models, the people behind them, and the advent of Web 2.0, are creating a strong and positive movement towards a more responsible, sustainable and kinder world and 3) how all of us could make a difference.The book has been published in German language by rueffer and rub with the title >Kleiner Einsatz Grosse Wirkung. (Small input, big impact - thus,the red chilis of the cover) This book illustrates a giga trend, the powerful movement of making the world a better place.

The 5th Skoll World Forum for Social Entrepreneurship took place last week in Oxford. This powerful, inspiring forum led by Jeff Skoll and Sally Osberg celebrates and connects social entrepreneurs to the world and is making "social entrepreneurship" known to governments as well as businesses. This year's highlights were the speeches of Lord Anthony Giddens (climate change: opening plenary) former President Jimmy Carter (keynote: Skoll Awards Ceremony) and Paul Farmer and Al Gore (both in the closing plenary). There were 11 Skoll Awards given out this year and Kiva (Matt Flannery and Permal Shah) was one of them. This was the second year in the row that I attended Skoll Forum and it is an awesome experience to be 3 days in a place where you see over 700 people trying to make a world a better place. One of the ventures that I was very impressed about is E+Co which empowers local enterprises in developing countries by providing business services and financing so that these enterprises can deliver clean and affordable energy to households, businesses and communities. There are several sessions that are covered by video and are all highly recommended.

Goldman Sachs launched last week 10,000 WOMEN, an amazing initiative that will deliver business and management education to 10,000 underserved women predominantly in developing and emerging markets. Goldman Sachs will commit $100 million over the next 5 years (in addition to the time and expertise that the GS people will be dedicating on mentoring) to this initiative supporting partnerships between universities in the U.S. and Europe and business schools in emerging and developing economies. The initial partnerships are working on pragmatic, flexible and short term programs resulting in business and management certificates. Brown,Columbia, Harvard, Stanford, Cambridge, University of Michigan, and Wharton have already initiated academic partnerships with business schools in Africa and the Middle East for this program.

The initiative has two goals: increasing the number of underserved women receiving a business/management education and improving the quality and capacity of business/management education around the world. Expanding the entrepreneurial talent and managerial pool in developing and emerging economies -especially among women- is one of the most important means to reducing enequality and ensuring more shared economic growth. (Executive Summary)

It is a remarkable initiative addressing effectively one of the most difficult obstacles for sustainable economic growth. The initiative will provide many microentrepreneurs with the much needed business/management skills that would enable them to build and expand their businesses and thus, contribute significantly to the economic growth of their countries.
10,000 Women Fact Sheet
Press release

Muhammad Yunus, Nobel Peace Price winner, in his continuing fight to make poverty history promotes a new type of enterprise which has as its objective to make a difference. These social business enterprises will be self sustainable, in his words “no loss, no dividend enterprises”. He refers to two types of such enterprises one having investors like the latest joint venture between Grameen and Danone, an enterprise providing fortified yoghurt to malnourished children. Investors will get their capital back, but, profits will be injected back to the company to continue to achieve its objective. The second type of social business enterprise is a for-profit model but owned by the poor such as Grameen Bank.This book goes in depth explaining his "Next Big Idea" social businesses and also present some ideas on how corporations and individuals can take part in achieving a "world without poverty". It is inspirational and of course uplifting. Highly recommended. Past related entry on this topic, "Muhammad Yunus promotes social businesses"http://www.microfinance.ws/weblog/2006/12/

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.

On October 24th, MicroPlace launched its web site that allows people to invest as little as $100 in microfinance. More precisely, people can purchase investment notes with returns ranging from 1.5 to 3.0% that are issued to a particular microfinance institution. This is great news as this provides another option for people to participate in supporting microentrepreneurs worldwide. So now in addition to Kiva which allows people to support microentrepreneurs with a loan (you get capital back but no interest) you have MicroPlace where you can make money from these loans "doing good, doing well". This news has been covered by Businessweek, Reuters, Fortune etc but the best article out is by Rob Katz of nextbillion titled "Kiva vs. MicroPlace-What is the difference?" an excellent read. Kudos for Calvert Foundation, which is the first issuer for MicroPlace. Calvert has been offering for the past 10 years community investment notes including those that went to fund microfinance institutions and these notes were offered to the public at large. One of the very few choices that have existed but now their efforts can be inmensely scaled!

One request to MicroPlace/ebay and to the microfinance investment community. Kiva is a non-profit so everyone can participate but investments in MicroPlace is only available for US investors (US residents). I am aware of the constraints in the investment world but can we/someone make a platform or several platforms for investments so that everyone can invest?

On July 18th, Nelson Mandela launched the Global Elders, a group of leaders that will contribute their wisdom, independent leadership and integrity to tackle some of the world toughest problems. The founding members of this group are Desmond Tutu, Graça Machel, Koffi Annan, Jimmy Carter, Li Zhaoxing, Mary Robinson, Muhammad Yunus, Ela Bhatt and Gro Harlem Brundtland. The Elders was an idea conceived by Richard Branson and Peter Gabriel. In a recent article of Businessweek, Richard Branson explains "Peter Gabriel and I started a journey with Nelson Mandela several years back when we felt the world was rapidly becoming a global village, yet we had no advisers who were driven by what 's best for humanity rather than what's best for the military, the economy, or a political group.We hope this group will become the elders of our global village and play a role in alleviating human suffering." Mandela in his speech said "The Elders can speak freely and boldly, working both publicly and behind the scenes on whatever actions need to be taken. Together we will work to support courage where there is fear, foster agreement where there is conflict and inspire hope where there is despair."
It is an impressive group of doers and also backed by powerful entrepreneurs. We are living in an unprecedented point in time when huge problems can be tackled and solved as there is the willingness, the funds, the ideas and the people that can do it. If you want to share your thoughts on the role of the Global Elders click here.

MICROFRANCHISING: Creating Wealth at the Bottom of the Pyramid, the first major publication on this subject, is now available. (Edward Elgar Publishing). This edited volume comprising 13 chapters and 18 authors introduces the concept of microfranchising and discusses how this business model can be effectively used for poverty alleviation. Different models of microfranchising are reviewed and specific case studies are highlighted to show how it has worked and is working in different parts of the world. Also the advantages as well as potential problems and pitfalls of microfranchising are discussed. My contribution was on the subject of "Microfranchise Funding" (Chapter 12).
If there is one thing I could hope for is that the price for this book would be a bit lower so more people can afford to buy it and read it.

The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid is a timely and valuable contribution by the team of WRI (Allen L. Hammond, William J. Kramer, Robert S. Katz, Julia T. Tran, Courtland Walker). This reports gives a detailed economic portrait of the BOP based on recorded incomes and expenditures and an overview of sector-specific business strategies from successful enterprises operating in the BOP markets. It is full of data and information that is needed for the private sector which is currently increasing its engagement to this large segment.

The Skoll World Forum on Social Entrepreneurship starting tomorrow(March 27-29) is a leading gathering for changemakers around the globe attracting over 700 people from over 40 countries.
This forum is organized by The Skoll Centre of Social Entrepreneurship at Said Business School, University of Oxford in partnership with the Skoll Foundation. The Forum attracts an international community of outstanding practitioners and thought leaders in social entrepreneurship to set the future agenda for visionaries who want to transform society.
Speakers featured this year include: Jeff Skoll, the founder of Skoll Foundation, Muhammad Yunus founder of Grameen Bank, Peter Gabriel, musician, activist and cofounder of Witness, Larry Brillant, Executive Director of Google.org Bill Drayton, founder of Ashoka, Fazle Abed, founder of BRAC,and Ashok Khosla.
The Skoll Foundation invests in social entrepreneurs through the Skoll Awards; it connects them through their online community Social Edge. It also celebrates social entrepreneurs by enabling filmmakers and journalists to produce works that tell the stories of individual social entrepreneurs to promote large-scale public awareness on social entrepreneurship.
The theme this year is enabling social innovation. The 10 leading social entrepreneurs which will be receiving the Skoll Award this year are Escuela Nueva Foundation, Friends-International, Global Footprint Network, Gram Vikas, Kashf Foundation, Free The Children, Manchester Bidwell Corporation, Marine Stewardship Council, Verité, and YouthBuild USA.
You can follow the forum or see the latest newsletter of Skoll for more detailed information on the 2007 Awards.

Kiva, the first web-based p2p business making it possible for anyone to lend to a specific microentrepreneur in the developing world -empowering them to lift themselves out of poverty- has been given the official status as a nonprofit, or 501(c)3 (Kiva's article) One can choose a business/microentrepreneur and start making loans from US 25 dollars using a PC and a Paypal account. I sincerely congratulate Jessica and Matthew Flannery for their terrific work in making Kiva what it is today. I have been following Kiva from last year and it has been fascinating to see how it has grown exponentially from a website showing one MFI in Uganda and a small list of microentrepreneurs to a major portal connecting people to microentrepreneurs from around the globe by partnering with numerous MFIs. Business Week ran an article on Kiva this summer with a spot-on title. An Ebay for Microfinance.

Empowering people is one of the main benefits of microfinance and microfranchising. While promoting this area I had the opportunity to meet in the past years a number of extraordinary people that have been making huge contributions on “empowering people”.
Bill Drayton and Hernando de Soto are two of such amazing people.

Bill Drayton founded Ashoka, a citizen organization that identifies, supports and invests in social entrepreneurs-extraordinary individuals with unprecedented ideas to solve large-scale social problems. Ashoka Fellows (leading social entrepreneurs selected by Ashoka) are supported by stipends so they can focus in their project and are also supported through guidance and networking to a larger community. They are more than 1700 Fellows worldwide making necessary and needed changes for the society. I strongly recommend anyone interested to see the short video on their home page.

Hernando de Soto, one of the most respected and influential economists, founded ILD (The Institute for Liberty and Democracy) in Peru. Hernando’s thesis on why capitalism does not work in the majority of countries is grounded on the lack of a comprehensive and usable rule of law and property rights in most countries. His seminal work “The Mystery of Capital” explains his concept and the ILD has received requests from the political leadership of some 30 countries around the world.

"Realizing Property Rights" (Swiss Human Rights Book Volume 1) a book edited by Hernando de Soto and Francis Cheneval is now out (Publisher: Rüffer & Rub). This book deals with property rights as human rights seen from different cultural and historical contexts and from different thematic angles. It has been an honour for me to have been able to contribute a chapter for this book titled "Microcredit, MicroFranchising and Women Entrepreneurs"