Archive for November, 2010
Power to the People
In this post, Robert Moore takes a closer look at the recently published IFMR Report “Power to the People,” and the challenges raised.
The IFMR Trust recently released a report along with the World Resources Institute on clean energy options for the base of the pyramid in India. A previous Villgro post described the impact this report should have on energy entrepreneurs and investors but the general BOP practitioner can learn a lot from this new research as well. The document starts from a Macro level view of the market potential and then goes into more detail about specific issues that certain companies face. All of the information paints a highly valuable picture of challenges at the BOP that we all can learn from.
One of the first things to note was the surprising variations in market size. Of the $2.11 billion estimated aggregate potential market for the four sectors studied in the report more than 96% of it was for Decentralized Renewable Energy Sources leaving only 1.2% for solar home systems ($27.39 million), 0.8% for Solar Lanterns ($18.58 million), and 1.1% for Energy-Efficient Cook stoves ($24.13 million). While every report’s numbers need to be taken with a grain of salt, seeing these low numbers should prompt BOP practitioners to try and understand the total market size potential for their own industry so as not to be blindsided by limited growth opportunities or high competition crowding that, if this report is correct, one can imagine will happen in this one.
Another benefit of this document is that it paints a picture of several businesses and the immediate challenges that they face. For example, one of the challenges discussed is the charitable distribution schemes that distort the local market. A real life example of this is how the free kerosene stoves and televisions promised by the Tamil Nadu has made the citizens there assume that the energy efficient cook stoves should be given to them for free as well creating a hard market for the energy efficient cook stove companies to enter as most of their customers are reluctant to pay for the product. This report is chalk full of other ideas like this that can quickly educate someone about what issues to look out for in the BOP.
A relevant issue that is pointed out in the document relates to incorrect assumptions that can be easily made in impact assessment and market acceptance. This particular situation reveals that some BOP energy companies might look more beneficial and feasible on the surface because they state their impact based on the assumed value of the fuel their clients are saving. You would figure there is no problem with this but while an energy efficient stove might have a significant reduction in the amount of fuel needed, it can’t automatically be assumed that it will be of value to the end user. This is because in many cases they get their fuel for free by just gathering biomass and burning it. When simple situations like these are illustrated throughout this document it becomes easier for one to imagine where there are incorrect assumptions about their own impact or market.
The rest of the report includes an overall introduction to India’s rural BOP clean energy market, the specific systems and products in place, and the roles of different players like NGOs and Governments. It is a great primer for their intended audience but also has a lot of insight that can be utilized across many sectors utilizing social innovation in India. You can view a copy of it here.
An Overview of Social VCs in India
In November, Indian business magazine, Business World published a detailed look at the Social Venture Capital landscape in India. The article covered several big players including Aavishkaar, Intellecap, Acumen Fund, Gray Matters Capital and others.
Read the entire article here.
Getting the Facts Right: Microfinance
Contributed by Robert Moore
The microfinance indutry in India has been through considerable upheaval recently, particularly in the southern Indian state of Andhra Pradesh. However, the movement was the first in India to take financial services to the underserved. The controversy has given rise to several misunderstandings of how the sector operates. Bindu Ananth and Nachiket Mor contribute their insights in an article on the IFMR blog.In it they tackle the question of high interest rates and suggest how it can be brought about, multiple borrowing and excessive client leverage, evergreening of loans as well as the issue of excessive credit discipline and coercsion
Read the entire article here.
The Bad and Good News About Evaluation
In this post Devyani Srinivasan writes about the usefulness of evaluation methodologies in understanding the usefulness of the work of social businesses. This post was first published on Devyani’s blog, Devyani Writes.
In an earlier post, I had critiqued the research methodologies of 2 surveys of social entrepreneurs, by Ashoka and Intellecap. Most of my suggestions for improvement were directed towards helping Ashoka and Intellecap better answer the question, “How representative are my results of a larger community (the universe) of social entrepreneurs?” However, at the end of the post I had also mentioned the concept of causation. Causation is important when trying to answer a different question, which is, “How likely is it that my results were caused by a particular intervention, rather than by something else?”
From the 25th to the 28th of October I attended the Evaluation Conclave 2010 in Delhi, where I had the chance to explore these issues further. In an evaluation context, it’s often the word attribution, rather than causation, that is used. Attribution is an issue at many levels. I’ll try to illustrate this using a hypothetical example of a social enterprise.
This social enterprise produces insecticide-treated bed nets. Orders for the bed nets are placed through a microfinance institution, and the bed nets are delivered to customers through kirana stores (corner shops). The social enterprise requires funds for its social marketing campaigns, to cover costs until it reaches break-even, and to develop talent within the organization. It is able to find donors to meet each of these needs.
An evaluation is conducted of the social enterprise, and it is found that incidences of malaria have decreased in the households in which customers have bought bed nets. The donor that funded the talent development program wants to know how its money contributed to the reduction in malaria. However, it is not possible to isolate talent development from the rest of the organization, as the people developed through this program contribute to social marketing, production and all other aspects of the enterprise.
What all three donors can agree on is that they want to know to what extent the reduction in malaria can be attributed to the bed nets. While it’s easy to assume that bed nets resulted in a reduction in malaria, this may not be the case. For example, the government could have embarked on a mosquito eradication program, and sprayed the villages in which the bed nets were also sold.
How do we find out the extent to which the reduction in malaria can be attributed to the bed nets? The strongest evaluation designs that answer this question should have two characteristics. The first is that they should include both the project group, and comparison (non-equivalent control) group. The second is that both groups should be “observed” at both the start and end of the project. If time and budget permit, both groups can also be “observed” during implementation of the project and after it has been operating for some time.
What is it about these evaluation designs that make them appropriate for the social enterprise in the example?
- The project group is “observed” both at the start and at the end of the project. In our example, the project group is households that have bought bed nets. A figure for the incidence of malaria at the end of the project is meaningless if we do not know what the incidence of malaria was at the beginning. The only exception is if the incidence of malaria is 0. However, since this would require all the bed nets sold to be in perfect condition, to be used all the time, and by all members of the family, this is highly unlikely to be the case.
- There is a comparison (non-equivalent control) group, which is also “observed” at the start and end of the project. Even if the incidence of malaria has reduced in our project group, how do we know that this was due to the bed nets and not other factors? The answer is by selecting a comparison (non-equivalent control) group. This group should comprise of households that did not buy the bed nets, but are as similar as possible to the households which bought bed nets. This will enable the evaluator to compare whether malaria declined at a similar rate in the project group and comparison group. If it did, then it is likely that malaria declined due to factors other than the bed nets.
The bad news about evaluation is that it can be quite complicated to successfully meet the criteria for a strong evaluation design. The good news is that between strong and weak evaluation designs, there are a range of options that are frequently adequate. These options are summarized in this overview of Real World Evaluation, a book by Michael Bamberger, Jim Rugh and Linda Mabry. I was lucky enough to attend a workshop that spanned two days, and was facilitated by Jim Rugh, at the Conclave. Based on what I learned at the workshop, I’m going to propose my own design to evaluate the social enterprise in my example above.
If you remember, orders for the bed nets are placed through a microfinance institution (MFI). The social enterprise is still building its distribution network, and has only reached the kirana shops in one geographical area. However, it asks the MFI to aggregate orders from all of the geographical areas in which it has a presence. The customers who have ordered the bed nets, but whom the social enterprise’s distribution network has not reached as yet, will serve as the comparison group.
It is important for the evaluation design that the comparison group also comprises of clients of the MFI. This is because it is likely that MFI clients are more enterprising than other members of their communities. It is possible that even without bed nets, they have devised other solutions to avoid getting bitten by mosquitoes. Therefore, in order to understand whether it is bed nets that have made the difference, the households where bed nets were bought must be compared to other enterprising households, and not to the average population.
The “observation” of the project and comparison groups at the start of the project can come in part from the MFI’s records, as they are likely to have already collected a lot of data on their clients. Any additional data that needs to be collected can be done at the time that orders for the bed nets are placed, before they have been bought and have had the chance to have an effect.
The Real World Evaluation book uses terms such as during, upon completion of, and after the project. In the case of a social enterprise, it is more likely that the evaluation will be of an ongoing business, than of a project that has a start, middle and end. However, as one of Paul Polak’s principles of Designing for the Other 90 Percent is that the design should pay for itself in the first year, one year may be a suitable duration to designate as the project period.
Of course, in this case I have chosen the business model of the social enterprise so that it lends itself to a strong evaluation design. Designing evaluations for actual social enterprises will be less easy. However, I hope my example demonstrates that while difficult, designing a strong, or at least adequate, evaluation is not impossible, and that practical solutions can be found to real world constraints.
Finally, there are some instances in which attribution may either not be possible or not necessary. As I discussed earlier, it may not be possible to attribute the effects of a talent development program within a social enterprise to a reduction in malaria. One example of where attribution may not be necessary is in the evaluation of a sector. Returning to our example, let us assume that an epidemic hits the Asian continent. The government is not prepared for this epidemic. Therefore, in the year the epidemic hits, while all of the government’s planned health programs are successful, the health of the population decreases overall.
In such an event, the overall trend in the health of the population may not be discovered through evaluations of individual interventions or organizations. In a sectoral review, positing an entire nation as a project group and another nation as a comparison group may not be meaningful.
While the example of the epidemic may seem dramatic and unlikely, at the Conclave there was an interesting exchange between a representative of the Rockefeller Foundation and the Asian Development Bank on whether donors should, in addition to evaluating the interventions that they fund, evaluate whole sectors as well. However, sectoral evaluations are likely to be quite expensive, complicated, and therefore rare. For the vast majority of evaluations, issues of attribution and comparison will remain important.
Addressing the Needs of Rural Populations
In this paper, Joseph Thomas, Chief Technology Officer at Villgro discusses some of the challenges of early-stage technology development for BoP markets.
Rural development endeavours have gone through many changes over the past 40 years. The first of these were the appropriate technology groups that believed in the use of local resources and skills to build sustainable technology solutions for problems faced by rural communities. The number of institutions in the world operating under the rubric of “appropriate technology” grew from a handful in the early 1970s, to over five hundred by 1977, to an estimated one thousand by 1980. In the 1980s there was a convergence of the approaches of the AT movement and participatory technology assessment.
Many practitioners of Appropriate Technology tried to establish dissemination models for innovations without enterprises. Enterprises where viewed with suspicion as their mandate was not one of social good but of profit. However these practitioners held a belief that demonstrating a successful innovation in a small locality would be sufficient. They further believed that there would be immediate adoption across geographies and governments. When these adoptions did not take place, these practitioners created small enterprises under the banner of “income generating technologies”. It was quickly realized that these had very positive local impacts but did/could not scale. Often the local enterprise succeeded due to the passion of one person.
In this paper we will discuss those problems and some of the technologies that are at the laboratory stage that have the potential to solve them. The sectors of digital infrastructure (IT), energy, healthcare, enterprise, and natural resource management will be covered here.
Read the entire article here.
Notes from the field: Observations from DNE Network’s operations in Thanjavur
Contributed by Robert Moore
Siddharth Tata was invited by IFMR to take a hard look at DNE’s (Dairy Network Enterprise) Dairy Healthcare and Productivity Services Delivery Model in Thanjavur and tell them about things they needed to watch out for. His
comments include financial sustainability, the capacity of MFI partners, and importance of communication.
Read Tata’s entire post on the IFMR blog, here.
Simply Fly: Chapter 2
Devyani Srinivasan continues her review of “Simply Fly,” by Captain Gopinath, the founder of Air Deccan, India’s first low-cost airline. The book promises to hold some interesting lessons for social enterprises looking to work with the BOP. This month Devyani presents a review of Chapter 2.
In Chapter 2, Gopinath fights in the Bangladesh Liberation War, is posted on the Sino-Indian border and then in Thiruvananthapuram in Kerala, South India, and then leaves the army and decides to become a farmer. Gopinath says that he went through an emotional-spiritual crisis while on the Sino-Indian border, that triggered his desire to leave the army. However, the reader is given few details on what this emotional-spiritual crisis is.
For me, Gopinath’s decision to leave the army is related to his resentment and hatred of regimentation, which I mentioned in my last post on Simply Fly. In Chapter 1 Gopinath says that when he first enrolled in the Sainik School he lived in a tent, and that, “the tent became a recurring motif in my later life and I kept going back to tents.” The tent seems to be a symbol of the life free from regimentation that Gopinath desires. At the end of Chapter 2, he makes a decision to try to farm the largely barren land that his father receives from the government, in compensation for the farmland that they were going to lose for a dam. Gopinath says that:
…I unrolled a reed mat in front of the tent and then spread a cotton durree (the thick, home-spun ethnic Indian mat) across it. I lay there in silence that evening, observing the stars in the sky, satisfied that I had at last found my true calling in life. I was exhausted from the travel and the toils of the evening, but at peace with myself.
The second tension that I identified in the first chapter, between equality and hierarchy, is also present throughout Chapter 2. It is vividly described in an incident when a general attends an army dinner in Thiruvananthapuram. According to army tradition, the officers pay for the food and beverages bill of a general, even if they drink expensive liquor. However, Gopinath felt this practice was unfair and, in consultation with his Brigadier, decided that the general would be served Indian whisky and rum, rather than Scotch.
Once Gopinath decides to become a farmer, he again demonstrates his sensitivity to inequality. He makes an agreement with a Dalit boy; Raju that they will take turns farming and cooking equally. Although Gopinath does not make this explicit, it seems that by doing so, he is freeing Raju from the bonded labor that he was trapped in, because his father had borrowed money from a few households in the village.
Shakti Pirakudhu
Shakti Pirakudhu is a feature film my Director Usha Rajeswari, that is the story of a woman in Madurai who seeks success by setting up her own enterprise. The film is based on conversations with self help groups around Madurai, and was originally made as a training manual for an MFI. Robert Moore shares his thoughts on the film, and how it is has been received.
Recently a screening of the film Shakti Pirakudhu was held in Bangalore followed by a chat with the Director Usha Rajeswari.
The creation of the film stemmed from Usha’s experience as a documentary film maker and a request from Madura Microfinance to create a training film for their self help groups. Eventually it was decided that the film would become a feature film instead of just for training.
The impact of this film as a training video seems to meet its mark as the audience of village women recalled a lot of the film from seeing one of the first cuts. Additionally it sounds like the plan is to show the village women only one clip at a time so it will be easier for them to process and utilize the learning in each clip.
The impact of this film outside of a training video will probably be determined by its distribution. There were a lot of BOP professionals at the screening so if more screenings are made available in certain cities and marketed to that demographic it is sure to gain an audience. As a film outside of a villager or BOP professional training video it could strike a chord with a normal audience because even the sound engineer at a screening was driven to tears and was inspired to treat his wife better after seeing the film.
One of the interesting aspects of the film was the types of problems that it addresses and the way they are overcome by the protagonist. As Madura Microfinance describes frequent reasons for their clients’ failure: “It was not that these women lacked intelligence, but rather their aspirations and success were circumscribed by a lack of education and exposure to the world beyond their villages. They were also constrained by a fatalistic mindset.”
The film didn’t just describe the problem but also prescribed a solution, showing how the protagonist started taking things into her own hands after being scolded by the local school teacher of how she can’t blame her failures on the outside world but she has to take responsibility herself. It was also humorous the way the film depicts the villagers’ annoyance with a different character who flaunts the fact that she has an MBA and that she thinks she knows everything about business.
Since this film is intended to train villagers in the Madura Microfinance company one can trust that the scenarios are accurate and relevant to the BOP. Because of this the film can be considered not only a great education for the villagers it was meant to train but also an education for the BOP professionals who want to get a better grasp of the real market issues and how they are being overcome today.