Microfinance and Education: A win-win partnership

There is a Chinese proverb that goes something like this: if you want to plan for a year, plant a rice field, if you want to plan for ten years, plant a tree and if you want to plan for the future, educate your child. Microfinance is addressing the 1-10 year scenario which is pretty great. But last year, at the Tech Awards (http://www.techawards.org/) I heard of a business model innovation - a partnership - that addresses the future. It is a combination microfinance plus education model. In this model, women who receive loans are encouraged to send their children to a partner education NGO for "free" or at a subsidised rate. The partner institutions decide how the finances are shared (the interest payments) for optimal sustainability of both organisations. This is a win-win model where the women are encouraged to make a go of the business, (education is a social benefit - unquantifiable through standard metrics), microfinace institutions have to do less policing about the use of their funds and education NGO gets students who's parents care.
Countries with severe poverty are also plagued with prejudice against women, poor health among children and a growing opportunity gap between the rich and the poor. UNESCO proclaimed September 8 as International Literacy Day in 1965 to highlight the role of education in addressing these issues but while its importance is universally acknowledged, the deployment of quality education in developing economies has proved unsuccessful. This is also true for India where, in spite of a great rise in economic stature of the nation in recent years, the literacy divide is as great as it was prior to the IT boom. The success stories of opportunity inclusion come from the microfinance sector. So wouldn't it be nice if we could leverage the success of the microfinance model to do more? Like maybe provide quality education to those left behind bythe current system?

Microfinance for Beggars?

Yesterday at SCU's event "Transformative Changes Through Science and Technology: The Role for Social Benefit Entrepreneurs" honoring the 2008 Tech Laureates I heard something new. It has made me change my mind. (In the interest of full disclosure, I hereby state that not much changes my mind these days).
Here is the story: I am just back in the US after six weeks in India. A common sight in India is women and children at stop lights- begging. There used to be a time when I would give some change but I have stopped doing it now; doesn't giving them money encourage them? Not much has changed over the years except now they often carry tissue boxes, balloons, magazines, hats, toys etc. to sell. Where did they get the money to buy the stuff? Some tiny children offer entertainment in the from of headstands or juggling or something. "The goods must be stolen; they are just an excuse for begging - whatever" I think. I look away. I can do nothing about this. I feel rotten for a while till I get over it.
Yesterday, I heard Mohammed Yunus talk about Grameen's new program in Dhaka, Bangladesh - "loans to beggars". He thought - why not do something for the beggar? and that's how the program started. They find a beggar and ask one question - at what time in your life did you become a beggar? And then they gave him/her an idea - continue begging, but why not carry some small article to sell- give their "customer" a choice - so as to speak - buy or give charity. If the beggar agreed, they gave an interest free loan with no time set for repayment. Whenever they are read to repay, they can come back to repay. That he said was key. Enablement- a person who tries cannot fail. In fact, they said - take your time to repay. To keep their own costs low, Grameen provides no other service, just trusting the person to come back. Loan amount is $15 flat. So far there is $100K in the program and 11,000 people are not begging anymore. Most others are only part-time beggars and some are successful entrepreneurs.
So next time I am stopped at a light in New Delhi - I will roll down my car window. I may not be in a position to start a loan program but I can buy a box of tissues. Who knows? It might make a difference. Why had I never thought about this before? Why did I assume the goods were stolen? The kids wanted to trick me?
Why? Becuse I still have a lot to learn.

Looking for Some Capital- Tech Laureates

Annually, the Tech Museum in San Jose hosts tech laureates award where the best of the best "humanitarians with business plans" are recognised. This year, as every year since 2001, people with mind boggling innovations with a potential to eradicate poverty, solve the renewable energy crisis, bring education to all, not to mention make healthcare affordable and accessible were recognised and honored. Everybody who is anybody in the field of social entrepreneurship awaits this event. A quick look at the website told me that so far 175 of these incredible innovations have been recognised. But, here is the big BUT why has poverty been increasing at the global level? Why are we still deploying fossil fuel based solutions for electricity production? Why are these innovations reserved for the poor who can't pay? I wish I knew the answer! I attended the day long seminar at Santa Clara University today (Technology for Humanity) where the tech laureates, foundations and representatives of multinationals talked about the difficulty of scaling socially motivated businesses. With the billions of dollars being invested in all sorts of tech businesses (Tesla Motors raised something like $100M for a 100K electric car) how do we get capital providers to take more risk in socially motivated businesses? Can we think of it as R&D for social impact? R&D that will eventually pay off not just socially but also financially? Can social entrepreneurs band together - sort of like mergers- instead of each one being individually heroic? http://www.techawards.org/laureates/