Re: [GKD-DOTCOM] Can Technology and a Business Approach Make Globalization Work for the Poor?

2004-11-03 Thread Roland H. Alden
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

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.

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Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?

2004-11-03 Thread Al Hammond
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

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

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Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?

2004-11-03 Thread Andy Lieberman
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

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.


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
Para recursos y noticias sobre educacion bilingue intercultural en
Guatemala, visite:

This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative
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Re: [GKD-DOTCOM] Blurring Corporate and NGO Lines

2004-11-03 Thread Lee Thorn
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

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
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