SOCAP 2010 took place in San Francisco on Oct 4-6. Over 1200 participants. Energetic, lively, sharing, innovative. Impact investments took center stage.Watch these amazing videos of Jacqueline Novogratz (Acumen Fund) Matt Flannery (Kiva) and many more http://video.socialcapitalmarkets.net/live-video-stream/ The first SOCAP Europe will take place in Amsterdam May 31-June 2, 2011.
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.
“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.
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.
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.
Barefoot College (registered as the Social Work and Research Center) was founded by Bunker Roy in 1971 in Tilonia, a small village 350km southwest of Dehli, India. The college follows the lifestyle of Ghandi and it is built by the poor, for the poor and managed by the poor. The college empowers the rural poor by assisting them to develop their capacities and skills so they can serve their own communities better which enhance their self confidence and self reliance. The college trains rural people who are illiterate or semiliterate to become barefoot educators, doctors, teachers, water engineers, solar engineers, architects, designers, hand pump mechanics and accountants to serve their communities while generating income. The college runs pre-schools and night schools that are taught by barefoot teachers. They have also been replicating its approach not only throughout India where 20 colleges have been established in 13 states but also around the world! Pictures of the visit.
Mr. Laxman Singh who has been working with the college for 20 years showed us around. In the older part of the campus where the activities were initiated in 1972, we visited the ladies assembling solar cooker stoves, children and women practicing in the internet learning room, the crafts center, and the living and training facilities for barefoot solar engineers. There is a 6-month training program for overseas rural women. Although it was Sunday morning we saw ladies from Malawi, Uganda, Ethiopia assembling solar lamps. These ladies go back to their respective countries after 6 months to electrify their villages. The new large campus that incorporates a hospital, administrative offices, meeting facilities, and the crafts shop was designed and built entirely by barefoot architects from 1986 and it was completed in 1989. We met Bhanwar Jat an illiterate farmer from Tilonia who was overseeing this whole project. Barefoot College is fully solar-electrified and all the roofs of the buildings in the campus are connected to collect rainwater in a huge 400,000- liter underground tank. This roof top rainwater harvesting system is a representative case of applying the traditional knowhow (as rural people have been harvesting rain water for centuries) and developing it as a viable and low cost way to provide drinking water and sanitation to rural communities.
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.
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.
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/
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.
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 business (corporate sector) and the social worlds are converging. We could call this a megatrend and it continues to gain momentum. One has seen this through microfinance where an effective development tool initially created in the social/NGO/NPO world have given birth to numerous microfinance institutions that have become sustainable and profitable. Microfinance now attracts funding/investment from both capital markets (commercial banks, asset managers, private investors) and foundations. Social entrepreneurs are also another major force behind this and no doubt that Microfranchising also links these two worlds.
One can also see it through the new partnerships between players of these two worlds especially as the multinational corporations and their executives team up with social activists and NGOs to market products to the 4 billion people at the base of the pyramid (BOP). C.K. Prahald, one of the leading advocates of BOP opportunities, has recently co-authored with Jeb Brugmann, a very interesting article in the February Harvard Business Review titled Cocreating Business’s New Social Compact. It is an excellent read (even if you have to pay for the copy to download) for those who are interested in these new partnerships. Many examples are cited including British Petroleum, Healthstore Foundation, and ICICI.
OneRoof, a social enterprise with a double bottom line has opened this year 18 stores in Mexico and India that deliver essential services to the rural poor. These stores are the pilot stores for the franchise model that OneRoof plans to launch starting from next year.
OneRoof’s is testing a unique delivery platform that provides people in rural communities access to nine essential services that taken together can help move people out of poverty. The nine essential services are: information and communication technologies (ICT), financial services (microfinance), education, energy, health, clean water, sanitation, agricultural technologies, and employment generation. The typical store starts by offering the central service, ICT, like an internet café and over time they expand on other services depending on the local demand and linkages formed by OneRoof with partners. An innovative for-profit social enterprise which is due to scale up through franchising!
One of the most impressive microfranchising businesses that I have encountered is managed by Scojo Foundation. There are 1.6bn people living in the developing world that need reading glasses, but only 5% have access to affordable options. Scojo is broadening the global access to reading glasses by training and equipping local entrepreneurs (they become the microfranchisees referred as vision entrepreneurs) so they can establish a new business of selling glasses.Scojo has already expanded their programs to 4 countries (El Salvador, Guatemala, India and Bangladesh) and the 5th country Mexico is about to start. One of the greatest achievements of Scojo is that they have been able to scale up by working through effective partnerships. The partnership with the microfinance institution BRAC in Bangladesh is a prime example. BRAC has more than 5 million clients. Scojo has started to train 60 of BRAC's community health workers.. this is scaling up. I just visited Scojo's operations in El Salvador and Guatemala as I intend to write a book on this subject.
"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"
If you thought of microfinance as an effective tool to eradicate poverty you will certainly be impressed by what the next step, MicroFranchising, could achieve. MicroFranchising is in short the replication of small businesses using proven operational methods. Not everyone is an entrepreneur (not in industrialized nations nor in developing countries) but there are many people that are willing to work hard and develop their skills. MicroFranchising will not only create microentrepreneurs but sustainable businesses and employment opportunities. This subject currently brings together a lot of different organizations; NGOs, foundations, microfinance related institutions, academia, social entrepreneurs, social and private investors and MNCs. The best resources on this subjet are BYU, The Academy for Creating Enterprises (ACE) and the reports written by Kirk Magleby. In terms of successful model cases of MicroFranchising I would recommend to read about Scojo Foundation, Grameen Village Phones, and CFW shops.