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Kiva: New Gateway of Loans for the Poor

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

The rise of social networking websites has created new opportunities for the poor to gain access to much needed credit. Kiva.org is pioneering a new way for entrepreneurs in the South to obtain for their businesses unsecured, no-interest financing from lenders worldwide. By just a click of the mouse a person anywhere in the world can lend as little as US $25 or more to aspiring entrepreneurs in developing countries.

Kiva, which means “agreement” or “unity” in Swahili, was founded by Matthew and Jessica Flannery after time spent in East Africa. They built upon the idea of Nobel Peace Prize Winner, Mohammud Yunus’ Grameen Bank but took it a step further by tapping into the resources of the web. It works by allowing potential lenders to search for an entrepreneur via the website. Each entrepreneur’s business idea is explained, a photo of the entrepreneur is posted and the amount of the loan they require and how much they have raised so far are clearly displayed. It is then a simple matter of the lenders using their credit cards to make a loan online. Kiva then transfers all the funds to their local partners (microfinance institutions) which, in turn, disburse the loans to each business. All entrepreneurs are screened for their trustworthiness and the viability of their business. Loans are usually between 6 to 12 months and lenders receive regular email journal updates from the business they sponsor. Gradually, the loan is paid back and the lender is returned the full value of the loan.

The process is so simple that one may ask, “Does this really work?” Take the story of Nicholas Kristof, columnist for the New York Times who recently accounted his experience with Kiva.org in his New York Times Op-Ed piece, “You, Too, Can Be a Banker to the Poor”. Through Kiva.org he chose two entrepreneurs, a baker and an owner of a TV repair shop in Afghanistan and lent them US $25 each instantly making himself a business partner with total strangers. He recently visited Afghanistan to see their progress and found two thriving businesses. Mr. Abdul Satar, the baker, borrowed a total of US $425 from a variety of lenders, Nicholas being one of them, and was able to open a second bakery with four employees. Mr. Abdul Saboor who runs a small TV repair shop now has a second shop with two new employees.

By harnessing a user friendly website to make instant cash loans, Kiva has come up with one of the simplest and most direct ways to help poor entrepreneurs who need start up capital. It was first tried out in Uganda about a year ago where partnerships were forged with local microfinance institutions that examined and evaluated each business before they were posted on the website. It has now attracted close to 18,000 lenders contributing an average of US $82.

“I believe the real solutions to poverty alleviation hinge on bringing capitalism and business to areas where there wasn’t business or where it wasn’t efficient,” co-founder Matthew Flannery told the New York Times. “This doesn’t have to be charity. You can partner with someone who’s halfway around the world.”

Published: April 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2022

Categories
Archive Development Challenges, South-South Solutions Newsletters

Old Adage Gets New Life

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

Education is recognized as critical for development and improving people’s lives. Universal primary education is a Millennium Development Goal and countries are now allocating more funds for primary education across the global South. However, the options available to youth after primary education are often very limited.

The World Bank estimates that only nine percent of youth in the developing world will be able to go to a university or benefit from higher education scholarships. For the vast majority of youth, getting a job is often the only viable option to securing a livelihood; but in most developing countries the number of formal sector jobs is low and the only option is self-employment. Acquiring relevant training and practical skills can be crucial to becoming successfully self-employed. But where will the training and skills come from and who will provide it and pay for it?

This dilemma is being addressed by the “self-sufficient schools” concept. The model combines entrepreneurship and vocational education through school-based businesses that blend training and revenue-generation. The principle is simple: entrepreneurship and entrepreneurial skills are taught by successful entrepreneurs.

The model is being pioneered in several countries and has been successfully applied by UK-based charity TeachAManToFish in Ghana and Paraguay, targeting rural youth from farming families through a network of 250 vocational experts and institutions in 45 countries. The approach promotes a model for making education both more relevant and financially sustainable in rural communities.

Self-sufficient schools share several characteristics: they produce and sell goods and services; they focus on developing an entrepreneurial culture; they make a direct connection between theory, practical work and financial reward; they encourage learning by doing; they strive to keep improving in order to remain economically competitive; students are encouraged to work cooperatively; and students receive support after graduating, often in the form of microfinance for their new businesses.

In the South American nation of Paraguay, the Fundacion Paraguaya – San Francisco Agricultural High School – run by an NGO committed to poverty reduction through supporting entrepreneurship – found that small-scale farmers not only knew how to produce food, they also knew how to make a prosperous living out of it when given the right tools. Taking over a school previously run by a religious order, the NGO had the opportunity to put the concept to the test.

The organization’s head, Martin Burt states, ”It is not a matter of knowing how to grow the crop, or raise the animal; it is a matter of how to make money and then how to be financially successful doing farming in poor countries.”

The Paraguayan school is half way through its five-year plan, and already is covering two thirds of its recurring costs from the production and sale of goods and services, including specialist cheeses.

Published: May 2007

Resources

  • A paper on the concept of self-sufficient schools: Click here
  • CIDA City Campus, Johannesburg, South Africa: CIDA is the country’s only “’free’, open-access, holistic, higher educational facility” and is “operated and managed by its students, from administration duties to facilities management. In addition every student is required to return to their rural schools and communities, during holidays, to teach what they have learnt.”
  • The First International Conference on Self-Sufficient Schools is being planned by TeachAManToFish. Expressions of interest are sought from all individuals and organizations interested in taking part in the conference. Email conference@teachamantofish.org.uk for more information.

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2022

Categories
Archive Development Challenges, South-South Solutions Newsletters

New Battery Back-up Technology Targeting Developing Countries and Remote Regions

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

Africa’s greater global engagement and economic growth in the past few years has started to draw attention back towards the continent’s dearth of reliable power sources and inadequate power infrastructure. While demand grows at a fast pace, sadly political instability and lack of security in many countries scares off foreign investors and multinational companies who could help to expand capacity. This leaves people running small enterprises and organisations – especially in rural areas – significantly neglected. According to Zandile Mjoli, senior general manager for resources and strategy at South African utility Eskom, two-thirds of Africa’s 700 million people live in rural areas, and less than 10 per cent of the rural population has access to electricity. Each one per cent increase in available power will increase GDP by an estimated two to three per cent.

The extent of the looming crisis in 2007 can be seen in the problems of the Southern African Power Pool, which coordinates power production and trade in the Southern African Development Community (SADC). It predicts an energy shortfall in 2007 that will force countries like South Africa and Mozambique, which have provided about 40 percent of Zimbabwe’s power requirements for example, to scale down on exports in order to meet rising demand from their own domestic markets.

Plug Power is a research and development company in the US specializing in clean, reliable energy products for areas where power supply is unreliable or non-existent. It uses fuel cell technology to build back-up power supplies for telecommunications, utilities and uninterruptible power supply needs like refrigerators and medical supplies. It is now targeting Africa with its new GenCore back-up fuel cell system using ultra capacitor technology, basically the mechanism by which the fuel cell stores electricity. It is specifically built for remote regions with severe climates where the limited lifespan of a battery and harsh weather conditions can lead to power supply disruptions.

Fuel cells use chemicals to create electricity and heat similar to batteries, but when hydrogen is used, they only produce clean water as a by-product. Most importantly for those working in development, it provides a continuous power supply as long as the fuel is provided. Plug Power’s system allows for hydrogen to be taken from multiple sources to power the cells.

Published: January 2007

Website: http://www.plugpower.com/

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2022

Categories
Archive Development Challenges, South-South Solutions Newsletters

Saving Water to Make Money

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

The world’s water supplies are running low, and according to the World Health Organisation (WHO), four out of every 10 people are already affected. But despite the gloomy reality of this problem, entrepreneurs in the South are rising to the challenge to save water.

“The situation is getting worse due to population growth, urbanisation and increased domestic and industrial water use,” said WHO’s Director-General, Dr Margaret Chan. While the WHO has adopted the theme ‘Coping with Water Scarcity’ for this year, every year more than 1.6 million people die from lack of access to safe water and sanitation. Ninety percent of these deaths are children under the age of five.

The health consequences of water scarcity include diarrhoeal diseases such as cholera, typhoid fever, salmonellosis, other gastrointestinal viruses, and dysentery.

One unnecessary waste of water is car washing. The number of cars in developing countries is growing fast, with a 27 per cent increase in sales in China this year, and South America overtaking Asia as the world’s fastest-growing regional vehicle market (Global Auto Report). And all these cars will be washed, wasting this precious resource.

The large informal car washing market in Brazil has long been known for paying low wages and avoiding taxes. On top of this they also waste water. Lots and lots of water. In Brazil, 28.5 per cent of the population (41.8 million people) do not have access to public water or wastewater services. And 60 per cent do not have adequate sanitation (Brazilian Institute of Applied Economic Research).

Started in 1994, Drywash uses a locally available Brazilian organic carnauba wax to clean cars without using water. Drywash has also developed a line of cleaning products that cleans every part of a car without the need for water. They estimate they have saved 450 million litres of water in their first 10 years of operation. From the start, they set out to change the status quo and run a business that “thinks like a big corporation,” said its international partner, Tiago Aguiar.

To do this, Drywash’s management team focused on operating an efficient and professional business. When Brazil’s government passed strict laws against informal selling of products, Drywash was well positioned to benefit, with companies preferring to work with a legal business. Customers have also been attracted to Drywash because they know the service is consistent and to a high standard. Drywash made US $2.7 million in 2005.

Drywash prides itself on operating “on the books”, and paying taxes. They are also ambitious, and have expanded outside Brazil and into other services.

And they don’t just do private cars: they also clean private jets, with Drywash Air. They have also expanded into Mexico, Portugal and Australia, on top of 50 Brazilian franchises. They also want to enter the US market.

In China, Landwasher toilets is tackling the growing problem of providing flush toilets to the country’s 1.32 billion people. As its founder Wu Hao told the World Resources Institute (www.nextbillion.net), “Assuming all of our country uses water-flushing toilets, not even the Changjiang and the Yellow Rive will be enough.”

Formed six years ago, it has patented a process using a special agent and sterilisation to dispose of human waste without using water, and very little electricity.

Hao graduated from Beijing University’s Physics Department and developed management experience working in manufacturing, securities investment and corporate management.

“On a personal level, I love the natural environment… I can’t endure the large scale waste and damage to the environment caused by the process of construction in China.”

Landwasher has seen its sales grow to 40 million Yuan (US $5.2 million), and has six sales offices covering 27 provinces.

Landwasher has just been awarded a contract to provide portable toilets to the 2008 Olympics in Beijing.

Published: September 2007

Resources

  • World Water Council: Established in 1996, the World Water Council promotes awareness and builds political commitment to trigger action on critical water issues.
  • Water Supply and Sanitation Collaborative Council: Works on sustainable sanitation, hygiene and water services to all people, with special attention to the underserved poor.
  • The Stratus Group is a Brazilian fund looking for sustainable SMEs in Brazil’s high-growth green sectors.

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2022