Re: [GKD-DOTCOM] Can Technology and a Business Approach Make Globalization Work for the Poor?
Dear Colleagues, It would be good if we could agree on a few details. 1. The poor seem to cover a range of peoples. Some are so desperately poor that any kind of direct ownership, or even use, of ICT is impossible. 2. Simply because ownership or direct use of ICT is not relevant for a certain class of poor does not mean that the introduction of such technology into the proximate context of those people will not be helpful to their situation. It is not necessary for every citizen to become a doctor in order for the general state of health to rise with the introduction of some doctors and medical infrastructure. 3. If we want to discuss the *very* poor then ICT may not be very important; it may offer little in the way of short term improvements under any scenario. 4. If we want to discuss technology and business then we may be limited to discussing options which cannot reach the poorest people directly. We may be forced to deal with scenarios that necessarily involve the less poor or even the elite in any particular context. 5. Simply because #4 may be somewhat inevitable due to cost and skill shortages does not mean that ICT can't have a dramatic impact on the circumstances of the poor. For example, the introduction of telecommunications has clearly placed pressure on authoritarian political regimes. This is less true when the ownership and control of telecom is entirely in the hands of the state but it is clearly not necessary for a society to reach the point where everyone can afford a cell phone before liberalized telecom unleashes a torrential array of forces; most of which generate positive long term benefits for the poor. Outliers may muddy the statistics but they provide role models and more. Sure India is an outlier is many dimensions; it has enough poor people to rank low on lots of surveys; it has enough millionaire Ph.D.'s living in California to rank high on others. Big deal. It is a great role model. Nigerians are incredibly annoyed that India sells more software than they do and they can't quite figure out how that happened. South Africa may be so rich and powerful relative to most of Sub-Saharan Africa that it is hard to see how lessons from there can be applied elsewhere until you think globally and notice that there are already companies in SA that have out grown it and are seeking business opportunity in neighboring countries. Sure mega-centers attract capital and brainpower but they also aggregate resources as well, until a point where they inevitably overflow and seek opportunity elsewhere. One of the barriers to development across Sub-Saharan Africa is the inability of the individual countries to coordinate, so that from a business perspective the entire region can be addressed as a single economic opportunity. I think it is no surprise that satellite television and cellular networks are two businesses that have managed to grow pan-African footprints; because they can to some degree escape regulation, and they support business processes which are largely uninterested in artificial boundaries. Other industries will require more supportive governments before the good that they can do can migrate more easily. When we can get to a world with less artificial isolation then the poor will be less isolated as well. This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Bettina Hammerich and Jim Forster both make useful points. Of course, markets don't attend well to everything. But the core of providing useful services at prices people will pay--and the market discipline of listening to customers that Forster underscores--is a strength of the business approach, one that might be usefully incorporated further into development strategies even in very poor communities. I'd like to share some analysis that pertains to this question. We have been analyzing income structure in developing countries, using a cut-off of $6000 per household/y as a working definition of the level below which the bottom of the pyramid or poorly-served market exists. This is not absolute poverty, but it is still very low income, a few $ per day per person. In China, there are 286 million households below this cutoff with a collective income of $691 billion/y--67% of the total income in China. For India, the figures are 171 million households, $378 billion, 75% of the total income. Across some 18 countries, the BOP market has more than $1.7 trillion in income--about the size of Germany's GDP. This is a substantial market. From a number of detailed case studies, we can document that low-income households are willing to spend 4-7% of their income on communications and access to information (because it often substitutes for more expensive travel). Thus the potential ICT market in developing countries exceeds $100 billion per year, most of it larely untapped. The size of the market means that substantial investment to tap it might be warranted. It's dispersed character (much of it in rural areas) means that wireless systems may have an advantage in aggregating that demand up to commercially viable levels. And it means that the market opportunity is for services (including the infrastructure and device cost) that cost $50-$300 per household per year. That in turn means a strong advantage for shared use models or other approaches that spread network and device costs over a large number of users or concentrate them in local entrepreneurs serving pre-paid or pay-per-use customers, as well as for services that can be bought in increments of a few cents up to a few dollars. Not surprisingly, we find that most of the successful models we have documented in case studies have one or more of these characteristics. A few examples, some well-known, others perhaps less so. GrameenPhone's rural village phones generate an average of $96/m each--they are very profitable. Smart Telecommunications in the Philippines has built a profitable cellular phone business with over 14 million customers on the strength of selling pre-paid text-messaging units to low income customers at units as small as $.03. They use a network of some 500,000 local entrepreneurs to sell those units; the business grew 40 % last year. ITC's e-choupal network in India reaches 4 million poor farmers via an Internet-connected PC network, more than recouping the cost of the system by savings on the price of the grain it buys over the network and other sources of value. Similar imbedded systems can be found in health care, education, and banking enterprises aimed at BOP markets. We do not believe that these examples, and others we have documented, though limited, are unique or due to special circumstances. The underlying business models are quite robust and, we believe, replicable; indeed, the GrameenPhone model is now being successfully adapted to Uganda, and many of the elements of the ITC model are being adapted by Pride Africa to Kenya. So we conclude that there is enormous untapped scope for market-driven ICT services that confer significant benefits on the customers and communities served. Allen L. Hammond Vice President for Innovation Special Projects World Resources Institute 10 G Street NE Washington, DC 20002 USA V (202) 729- F (202) 729-7775 [EMAIL PROTECTED] www.wri.org www.digitaldividend.org This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear GKD Members, I would like to add to Meddie's comments with a couple of things that have worked well for us in Guatemala. I would also like to describe a dilemma I am going through on the issue of profitability in a NGO. With the help of USAID/AED/EDC and World Learning, we have set up 28 school-based telecenters, all of which are sustainable (so far) and almost all are putting social service over profits. The two principles that we have applied are: 1. Select partner implementors that are really dedicated to serving the community. In our case, most centers have been given to community-run schools, but a couple of others have been small, local NGOs. 2. Let the partners cover all recurrent operating costs from the outset and some of the start-up costs. This scares off many potential partners, but has served as a good filter to ensure that the partner schools have the economic base and administrative capacity to sustain the center. When we find a partner that responds well to both of these principles, the result is a telecenter that instinctively finds a happy balance between keeping the center sustainable and providing needed community services. These centers compete fairly with the small local entrepeneurs who set up private Internet cafes. The schools have the advantage of a captive user base while the entrepeneurs have lower overhead and better capacity to respond to local demands in terms of services and scheduling. We accept this competition as inevitable and healthy because it keeps everyone on their toes. In the end, the consumer wins. While I feel comfortable with the above-stated model at the local level, I am struggling a bit with the ethics and reality of whether a mid-sized local NGO should build its sustainability off end users. For example, some people have suggested that our NGO could create a franchise scheme where our partner centers could pay us a fee for which we would provide ongoing technical and administrative support. It is certainly solid as a business plan, although I wonder about our capacity to provide quality services at a low enough cost. Regarding ethics, I would not feel comfortable knowing that my salary is coming directly from the pockets of the rural poor we are trying to help. Yet, if we are not able to offer those services, the telecenters end up paying private companies for that assistance. So, maybe I am wrong in my thinking and that this scheme would really be a win-win. Our NGO is doing its best to be transparent, so that any profits obtained should truly be channeled back to our target population. I would welcome testimony from anyone or any organization that has gone through these types of growing pains. Thanks, Andy Andrew E. Lieberman Presidente (Nab'e Eqanel) Asociacion Ajb'atz' Enlace Quiche 5a. Calle 3-42, Zona 5 Sta. Cruz del Quiche, Guatemala Tel. y Fax: (502) 7755-4801, 7755-0810 [EMAIL PROTECTED] www.enlacequiche.org.gt Para recursos y noticias sobre educacion bilingue intercultural en Guatemala, visite: www.ebiguatemala.org This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Blurring Corporate and NGO Lines
Dear Colleagues, I find the discussion fascinating. I am learning. Thank you all that have shared and that have written me privately. I, for one, am overcome by the question of the alleviation of poverty in all its facets and am especially overwhelmed by questions about urban poverty. I know in the U.S. where I consulted for many years with urban anti-poverty programs, the programs that in my experience worked best in the U.S. were small in scale and often took either: 1) an old-fashioned, 19th century social work model, that is, the facilitator worked with each person on her/his own particular case, meeting the person whole person to whole person and taking on problems one-by-one; or 2) used Saul Alinsky-style organizing practices and confronted en masse the local powers that be, which were sometimes multi-nationals themselves. The most remembered Alinsky-style organizing was done in Rochester, New York. The church-coalition-led mass organization confronted Kodak, the biggest company in the community at the time. I know similar organizing has been going on for years in the riverside slums of Bangkok led by my friend, Fr. Joe Maier and others. The work we did in Vietnam Veterans Against the War was very influenced by Saul Alinsky. There are some interesting and ambitious pieces of work going on in urban areas using IT, but there are other people on this list that can speak to these in a much more informed way than I can. Suffice it to say that in Alinsky-style organizing a) the poor own their organizations; b) things are done nonviolently; and c) no non-violent tactic - or useful tool - is ignored. I am currently more interested in rural poverty and I spoke to one part of Jhai's efforts, the Jhai PC and communication system, in an earlier email. I am particularly interested in last centimeter solutions. In the Jhai PC and communication system case, farmers and their families have come up with three ways to make money (a key thing for them - a good friend once told me each day he must catch a fish - he takes as long as it takes - if he cannot catch a fish, his family is hungry): 1. by beating the closest middle man by finding out the price for their commodities (rice, woven goods) in the local market town by using the VoIP phone to a family member in that town. (There is data on this from InfoDev developed by a project in Senegal using WAP-enhanced cell phones). 2. by developing a local, sit-on-the-ground-and-sell-your-goods market in one village for use by five villages (thus, increasing the multiplier effect in the area), developing it through use of VoIP phones among women in the slower rainy season). 3. by trading with their relatives overseas in such a way that both their relatives and they make money, rather than their relatives sending them remittances. For example, they send a piece of woven goods to America where their cousin sells it in the diaspora for $80. Rather than sending $20 remittance that month, the cousin keeps $20 ($40 up) and sends $60 to the goods owner (who normally would have gotten $10 from the merchant coming through the village). This is family capitalism in its purest form. I would also like to contribute to this discussion by responding to some things that Sam Lanfranco brought up: The core problem for most NGOs is access to resources. The solution, in most cases, is to seek resources from the haves to help/work with the have not's. There are only three ways for NGOs to get resources: 1) seek them as donations; 2) seek them as contracted program/project funds; or 3) act like a business and grow them from revenues. We at Jhai Foundation have some experience with all of these, but perhaps most useful is our experience with business and the 'growing' of revenues. Before I start, I would like to point out that we have never 'cherry-picked' our projects. We work with very poor people, usually people who have no electricity, landlines, nor cell phone connectivity. I can only give you examples from my own experience. I will showcase our coffee project. As a matter of fact, we just spun off our coffee business to a cooperate we helped develop. This makes me very happy. We have developed many relationships over the course of this experiment. We have a relationships with: a) IFC (World Bank) which is helping pay, I think, for organic and fair trade certification work b) a local wet processor, who is becoming a leader of the new cooperative c) a local dry processor who will now have a direct relationship with the new cooperative d) a local exporter who will now have a direct relationship with the new cooperative e) with an importer who both our friend, the roaster, Thanksgiving Coffee, also has a relationship with and who is helping us develop relationships on behalf of the cooperative with other roasters, and who pays the cooperative four times what they were previously getting f) with a roaster who gives us a donation for every pound he sells
