Monthly Archives: October 2011

EKO India Financial Services Wins 2011 Tech Awards for Economic Development

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Eko India Financial Services India Recognized for Applying Technology to Benefit Humanity

Eko India Financial Services (Eko), was named as a laureate of The Tech Awards 2011, one of 15 global innovators recognized each year for applying technology to benefit humanity and spark global change. On October 20, 2011, The Tech Awards, a signature program of The Tech Museum, and presented by Applied Materials, Inc., selected Eko from among hundreds of nominations representing 54 countries as the winner of their Economic Development category, awarding them with the cash prize. (The two founders – Abhinav & Abhishek Sinha are on the righthand side of the video shot below, wearing purple for their category of Economic Development.)

Creation Investments CEO Patrick Fisher was on hand to congratulate Eko for their distinguished work.  Creation Investments Social Ventures Fund I is the only institutional investor in Eko, providing expansion capital for the growth and outreach of Eko.

Through its robust mobile-based platform and 1,700 agents, Eko provides its customers with basic banking, savings and payment services, along with merchant transactions, bill payment, and cash collection services.  Eko’s solution allows customers to open bank accounts, deposit, withdraw and remit money in real-time at the agent using number dialing from any mobile phone. Through its branchless banking service offering and integration with India’s largest banks, Eko empowers the unbanked in India to access financial services and transact with over 250 million bank accounts.  Eko has served over 1.3 million customers and processed $500 million USD in micro deposits,payments and remittances.

As a technology provider, Eko supports other Business Correspondents, including Microfinance Institutions (“MFIs”), extending their outreach and product offering.  Business Correspondents have used Eko’s solution due to its real-time connectivity to State Bank of India’s core banking system, the ubiquity of access, near zero start-up CAPEX, low client literacy requirements, and proven product design.

The Tech Awards: Technology Benefiting Humanity is one of the premier annual humanitarian awards programs in the world, recognizing technical solutions that benefit humanity and address the most critical issues facing our planet and its people. The awards program honors 15 scientists and innovators annually alongside the recipient of the Global Humanitarian Award. Laureates are selected by a prestigious panel of international judges organized by the Center for Science, Technology, and Society at Santa Clara University, and made up of Santa Clara University faculty as well as leaders from educational and research institutions, industry and the public sector around the world.

“The Tech Awards is an outstanding honor, recognizing individuals and organizations whose ideas and their execution are changing the world,” said Abhishek Sinha, Co-Founder and CEO, Eko. “We are ecstatic to receive this recognition at such a prestigious global platform. It is a proud moment for us to be amidst those recognized for their contributions, and we will continue to develop solutions that improve the overall well being of people worldwide.”

“The global challenges of the day have become increasingly strident, more deeply rooted,” said David Whitman, Vice President of Signature Programs at The Tech Museum. “Still, there is hope. These incredibly impressive Laureates have all proven to be equal to, or better than, the challenge to make the world a better place. By celebrating their accomplishments today, we are encouraging future innovators to work toward solutions to make the world healthier, safer and more sustainable.”

Established in 2000, The Tech Awards recognizes 15 Laureates in five universal categories: education, equality, environment, economic development and health. These laureates have developed new technological solutions or innovative ways to use existing technologies to significantly improve the lives of people around the world. One laureate in each category will receive a $50,000 cash prize during the annual Awards Gala in Santa Clara CA. on October 20.

This year, the laureates represent the truly global vision of the program, spanning countries such as India, Honduras and Ethiopia. Their work impacts people in many more countries worldwide.

The Tech Awards collaborates with humanitarian, educational, and business partners through global outreach efforts, giving people around the world the opportunity to benefit from the successful technologies recognized through The Tech Awards. The selected laureates’ projects address multiple humanitarian efforts including developing alternate ways to generate electricity, creating free educational tools, and improving literacy among children.

Key sponsors supporting The Tech Awards include Applied Materials, Inc., Intel Corporation, Nokia, Microsoft, Swanson Foundation, Flextronics, Polycom, Skoll Foundation, KPMG, Ernst & Young, Accenture, eBay, Qatalyst, Google, Wells Fargo, Xilinx, American Airlines, Ogilvy Public Relations Worldwide, Bain & Company, NBC11, San Jose Mercury News, Forbes, Stanford Social Innovation Review, TIME, Xfinity, MEMC Electronic Materials, Brassfield Estate Winery, Hilton San Jose, Convention Plaza Hotel, and Hayward Quartz Technology.

For more information about The Tech Awards, visit The Tech Awards

The Bet – Yunus Video on Microfinance

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An excellent 7 minute video giving color and scope to the process, social impact, and sustainability of microfinance. From our friends at Kikim Media. Great work!

Skoll – The Bet from Kikim Media on Vimeo.

Salvation for the world’s most utterly failed state depends more on private enterprise than international aid –

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Hope is four-legged and woolly

Oct 15th 2011 | BERBERA AND BOSSASO | from the print edition The Economist



WHERE there are beasts, there is life, goes a saying in Somalia. Half of its people depend on livestock for their survival. This year they will export record numbers of animals. That seems improbable given that a famine is raging in south Somalia, which has seen over a million animals die of hunger and thirst. But the grazing in other parts of Somalia, especially the north, has been excellent and demand for livestock from abroad has never been higher. After banning Somali sheep and goats for many years, for allegedly being diseased, Jeddah in Saudi Arabia has once again declared them welcome.

For the first time since the collapse of Somalia as a unitary state in 1991, Saudi and Lebanese traders have ventured into the local livestock markets. Goats are mainly exported to Mecca for the annual haj pilgrimage. The UN’s Food and Agriculture Organisation estimates that $250m-worth of animals will leave the port of Berbera and its more ramshackle rival, Bossaso, in the seven weeks before the haj in early November.

In the livestock market in Hargeisa, capital of the semi-autonomous region of Somaliland, sweaty goatherds press in on Adan Ahmed Deria, a trader. Hundreds of camels are being loaded onto lorries. Mr Deria nods to show that the price is fixed. “God willing,” he says, “I will buy 800,000 goats and sheep this year.” That is $52m of business, in cash, in a country where the economy has apparently collapsed.



Trade is set to grow further. Saudi Arabia wants to double its livestock imports from Somalia by 2013. The herders face fierce competition from Georgia, China and Paraguay, but halal butchers value the quality of Somali animals, which are raised by nomadic Muslims.

Somalis have hardly begun to tap the value of their animals. With about $50m in international help they could invest in watering stations, encourage communities to cure animal skins, make soap from bone marrow and fashion buttons from camel bone. They might also usefully improve transport by, say, building bridges over rivers prone to flooding, which would cut out rapacious middlemen.

Though the region suffers from rampant piracy, it mainly affects international shipping rather than locals. Last month pirates captured a livestock ship in the waters off Bossaso; they were killed within hours by irate traders and herders. Meanwhile, hijacked foreign freighters litter the coastline undisturbed.

As parts of the economy grow, Somalis increasingly look to the diaspora for loans. Its members are prominent in gold and metal markets across Africa. Many excel at moving goods and money around. The once thriving fishing industry would be helped by investment in refrigerators, as would frankincense cultivation, which employs 10% of the workers in Puntland, a breakaway region in the north.

None of this is to deny that the situation in south Somalia—the country’s breadbasket—is anything other than dire. UN figures yet to be published suggest that 80,000 people may already have died as a result of the famine. More are certain to follow them to the grave. According to Somali aid workers from the hungriest areas, the situation is bad but improving. Forecasts for the coming rains are promising. Showers have already arrived in some places. Recovery will be a struggle, but apocalypse looks less likely now.

An American celebrity campaign, entitled “F— famine”, emphasises that famines are man-made. That is unhelpfully vague but not necessarily wrong. In Somalia famine results from the strictures imposed by the al-Qaeda-linked Shabab militia, which controls large parts of the south. A drought has strained the entire region. But Kenya and Ethiopia have dealt with it much better than the ignorant and petty Shabab. They have been kicked out of Mogadishu, Somalia’s ruined seaside capital, by African Union (AU) troops paid by America and the European Union.

The Shabab are not yet defeated, but they have lost a lot of ground and support. The story of a 23-year-old farmer, Ahmed Mohammed, is typical. He fled his village of Bulamerer on the Shabelle river along with his heavily pregnant wife and one of their children. They left two other children behind in the village with Mr Mohammed’s mother and his teenage brothers and sisters. The family’s goats died of hunger. He fears his children might suffer the same fate. Still, he says he will not return home until the Shabab have gone.

The fighters take a third of the harvest as taxation, ban singing, whip the men to prayers, force the women to cover their faces, and violently break up any gathering of four or more people. The village school is run by the Shabab, but only those loyal to their cause are allowed to attend. Echoing the suggestion that the famine is at least in part man-made, Mr Mohammed claims he and others were denied access to river water for their crops.

Now on the defensive, the Shabab have taken actions as desperate as they are deadly. On October 4th they arranged a suicide bombing in Mogadishu which killed over 100 people. Most were students queuing up for scholarships to Turkey. The bomber, a teenager, recorded an interview before the attack in which he said of the victims, “They never think about the hereafter and about harassed Muslims.”

The target of the bombing was education—hope itself—but also the Transitional Federal Government. It is supported by the AU troops in the capital. The prime minister, Abdiweli Mohamed Ali, wants to finish off the Shabab and has said “this is the time to intervene” and that the “cowards” should not be allowed to regroup. An offensive led by the AU and transitional government troops this week hammered Shabab positions on the edge of Mogadishu. Publicly, donor countries say the government is the best bet to run the country. Privately, they lambast it. Sheikh Sharif Ahmed, the lacklustre president, has extended his mandate by delaying elections to next year, to nobody’s satisfaction. Venal and inept, his government surely needs to be replaced. But with what?

The International Crisis Group, a research and lobby group, argues that a “European style centralised state, based on Mogadishu, is almost certain to fail”. Somali elders talk of free-spirited nomads “vomiting up” orders made far away. Devolving power to towns and clans—the linchpin of Somali society—would be better. But that too is risky. South Somalia has several separatist groups and Puntland has at least three separatist insurgencies which result in almost daily assassinations of officials and an indefinite delay in potentially lucrative oil exploration. Somaliland in the far north is different again. Despite a dependency on qat, a mild stimulant imported from Ethiopia, which accounts for a third of imports, or $160m a year, it has a maturing government and four successful elections behind it. Many Western diplomats now think it deserves full independence. Ethiopia might agree. It needs a stable Somaliland to pipe gas from a newly found field in the east to the coast.

The non-Shabab parts of Somalia have every chance of seeing strong economic growth. The diaspora remits $1 billion or so a year. That could finance badly needed investments. Yet often the money comes with strings attached. Some benefactors engage in what is known as “PlayStation politics” in which they attempt, as in video games, to control affairs in their homeland remotely. Or pillage it: “Where there is money, there is funny,” says Abdiwahid Hersi, the director of Puntland fisheries.

Take the spiny lobster. Puntland used to catch 2,000 tonnes of these each year. But predatory fishing practices have destroyed stocks. Last year, the catch was only 167 tonnes. Next year, the spiny lobster may be gone forever. With it goes another chance for a better life in coastal communities tempted by piracy.

Further economic growth in northern Somalia is dependant on law enforcement—an unlikely prospect. A group of mercenaries is suspected of having landed a shipment of arms and equipment at Bossaso this month. Could they be paid to clear out pirate dens and save the spiny lobster? Somalis laugh at the thought.

But with north Somalia recovering somewhat, while the south is mired in famine, one conclusion is inescapable. The Somalia of the past is gone. The southern breadbasket has fallen too far behind. Even though it may slowly be freed from extremist control, Mogadishu will only ever be the capital in name. The country’s economic centre of gravity has shifted to the Arab-facing north. Bossaso has grown from 50,000 to 1m people since 1991. Hargeisa has expanded even faster. The best hope for the south is that some of the dynamism spreads.

from the print edition | Middle East and Africa

Urban microfinance clients move out of poverty faster than rural

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Microfinance Focus, October 22, 2011: Rural microfinance clients are both poorer on average than urban clients and urban clients advance out of poverty at a relatively faster rate (26%) then rural clients (21%). These are the findings from a report released by Grameen Foundation that analyses the data collected by Grameen Koota using Progress out of Poverty Index (PPI).

Grameen Koota (GK) has analyzed the data for more than 48,000 clients who have at least two PPIs. The results show that poverty levels of GK clients with data from two PPIs have improved consistently across all poverty brackets for the duration of the loan. 23% of the clients who were below the $1.25/day/PPP line and 9% of the clients who were below the $2/day/PPP line during the first PPI dataset have moved above their respective poverty lines.

When PPIs were collected across loan cycles, it was found that poverty rates decreased with the increasing number of loan cycles and that a similar reduction in poverty rate occurred during each loan cycle. PPI data analysis cannot rationalize this finding, and there could be several reasons, such as clients benefiting from the loan or loans becoming larger to attract and retain relatively better off clients as the number of loan cycles increase. Therefore, further research is necessary to understand this finding more fully, the report says.

Grameen Koota financed pilot loans to fund the purchase of water/sanitation devices and more efficient cooking stoves. Based on the data from these clients’ PPIs, it was found that clients with loans for water and sanitation had lower poverty rates than general credit clients, and were able to move up the economic ladder in significant numbers.

Grameen Koota is a division of Grameen Financial Services Pvt. Ltd, a microfinance institution operating in India. It is the first fully certified user of Grameen Foundation’s PPI in India. In December 2008, GK began collecting the poverty status data of its clients using PPI. It collects PPI data from its clients at client intake, each time the client renews an income generating loan, and at drop-out, if the client leaves the MFI. Once collected, the PPI data is stored in the Mifos platform, which GK has tailored to meet its specific information needs.

Costs of MFI loans less than SHGs and Banks’ loans

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Microfinance Focus, October 12, 2011: Contradicting the widespread impression about high cost of MFI loans, findings of a study show that costs of borrowing loans from microfinance institutions are less compared to loans from SHGs and Banks.

Conducted by NCAER-CMCR (National Council for Applied Economic Research-Centre for Macro Consumer Research, India) and funded by MFIN (Microfinance Institutions Network), the report ‘Assessing the Effectiveness of Small Borrowing in India’ was released by Union Minister for Rural Development, Sri Jairam Ramesh in New Delhi on Monday.

According to the report findings, the cost of borrowing (weighted) for a single loan is highest for Banks (Rs. 1, 286 – Rs. 3, 481), followed by Self Help Groups (Rs. 104 – Rs. 750) and Microfinance Institutions (Rs. 54 – Rs. 278).

While the interest rate for MFI loans is much higher than that of formal sources and SHGs, the difference between the total costs of SHG and MFI loans becomes negligible if other costs are taken into consideration and the gap between formal and MFI loans narrows.

Other costs include wage loss due to time spent in getting the loan approved, cost of travel, money spent on food, etc. while travelling to the source of loan, charges paid for preparation of documents, additional charges (like stamp duty), payment of bribes and other charges (Insurance).

The report further highlights that a vast majority of MFI borrowers (87%) are unaware of the interest rate payable. However, borrowers of microfinance institutions do not end up paying higher interest rates due to lack of knowledge of interest rate. This is not the case with SHG loans where the borrowers who do not know about the chargeable interest actually end up paying more, the report claims.

The survey has not found any concrete evidence to show that MFIs contribute to indebtedness of the borrowers. Considering the loan size per unit household income as a measure of the household’s indebtedness, it was found that the indebtedness coefficients were much lower for the MFIs compared to the informal loans. Indebtedness is thus much more closely associated with informal loans than MFI ones.

Moreover, the survey discovered that only about 11 percent of the borrowers had multiple loans of which 21 percent involved a loan from MFIs. This means, the multiple loans attributable to MFIs is only about 2 percent of all the loans.

The report reveals that the MFI loans – ranging from 16,000 to Rs 20,000 – are used mainly for asset creation and the borrowers are mainly women. The highest percentage of MFIs loans was in fact used for business promotion (45%) and only 3 percent was used for paying off existing debt.

The study by NCAER-CMCR, done on a pan India basis, based on a sample of over 10, 000 small borrowers across five clusters (Kolkata, Lucknow, Chennai, Hyderabad, Jaipur) was conducted under the leadership of Dr. Rajat Kathuria, Prof. IMI and Consultant ICRIER.

Making money in pursuit of social good – Financial Times

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By Michele Giddens

“Investors as a whole will find it hard to maintain healthy financial returns if faced with accelerating climate change and ecosystem collapse,” according to the recent report Sustainable Economy in 2040, published by Forum for the Future, a non-profit organisation working for a sustainable future. The study comes at the end of a decade in which increasing numbers of investors are recognising that in order to maintain their position as wealth creators and to generate financial returns over the long term, they must play a role in building a sustainable economy.

This emerging trend turns on its head the traditional interpretation of fiduciary duty that the investment manager’s singular responsibility is to look after the financial interests of the beneficiary. A sole focus on financial returns often overlooks social and environmental considerations entirely, in the belief that they might adversely affect financial returns.

This does not have to be the case. Financial returns and social or environmental impact do not have to be mutually exclusive concepts. Indeed, investing in businesses with a positive social or environmental impact can produce superior financial returns and actually help to fulfil the fiduciary’s primary duty.

In the current environment of low to negative growth and budgetary challenges, there is an opportunity for fiduciary managers to take a new approach and seek growth and value creation rather than just risk reduction. Capital directed towards areas where there are strong and pressing social or environmental needs that must be met, such as health and wellbeing, education, and the environment, can offer growth opportunities which are otherwise hard to find in the current economic climate. Furthermore, they are underwritten by long-term trends and so may be less correlated to the economic cycle.

Take health and wellbeing for example, where trends include increased costs of healthcare, growing unemployment, an ageing population and rising levels of obesity. These drivers create an opportunity for investors to make a positive change as well as a profit. One example is The Gym, a low-cost gym operator that aims to bring affordable gyms to more consumers across the UK. It began operations in 2008 with one site. With backing and support from Bridges Ventures since inception, it has now grown to a chain with more than 80,000 members – up to 40 per cent of whom have never been to a gym before – and is opening new sites every few months. The business addresses an important social need among traditionally excluded groups and strong potential returns are being built for the investors in Bridges Ventures’ Funds which include pension funds and private investors.

Other examples are emerging worldwide across different asset classes. The International Finance Fund for Immunisation used tiered finance to raise $3bn in AAA-rated bond offerings. It is estimated this money has prevented 3.4m premature deaths, through raising vaccine coverage in 70 of the world’s poorest countries. At the same time, it has provided investors with improved returns over sovereign bonds.

In Africa, frontier markets investor TLG Capital invested in sub-Saharan Africa’s first WHO good manufacturing practices certified pharmaceutical plant outside of South Africa, manufacturing generic anti-retroviral and anti-malarial drugs in partnership with local Ugandan entrepreneurs and Cipla, the Indian pharmaceuticals giant. The company has shown consistent growth and is on course to increase its capacity threefold – providing both affordable treatment for millions of Africans and strong returns for its investors. At present, the plant can produce 6m tablets a day.

Looking through the lens of social and/or environmental sustainability allows investors to spot pockets of growth in an otherwise flat economy and thus generate financial returns that can attract all types of investor, including pension funds and others with fiduciary responsibility.

Although the past decade has seen a significant rise in institutional investment in funds with a dual purpose of financial and social or environmental impact, fiduciary managers remain sceptical of investing money into projects with a dual objective. A change of mindset is required.

Michele Giddens, executive director, Bridges Ventures