Mainstreaming Microfinance: Malegam Report and Artoo

Lately, the micro-finance industry reports have been squarely in two opposing camps: unconscionable profiteers or saviours for stimulating the economy for the poorest of poor. If nothing else, the Malegam report, as an official, publicly available document from India, shifts the conversation from sensationalist news items to promote informed debate. Additionally, having regulations (such as the 24% cap on interest rates, 25K rupee limit on loan size, max 2 lenders for 1 client etc) outlined in the report, mainstreams a  capital procurement instrument for the poor - a population not served by traditional capital markets.The debate is no longer whether micro-finance works or not- the debate is how to make it work better for the client as well as the lender. While many practitioners view the report favourably, some may argue otherwise; that the Malegam restrictions favor the bigger MFIs or that the industry will no longer be self-sustaining or that the restrictions are unenforceable. I think the report is a fantastic development irrespective of the specifics of the debate because it brings micro-finance into the mainstream.

In addition to all the analyses you can read for yourself (google or follow link above) I have another point to make- The report, with its concrete guidelines will spur technology innovation in bringing down the cost of transactions. IT hardware as well as software exits to bring transparency which reduces corruption and automation to reduce cost/transaction (of the large number of small loans MFI must deal with that raise their costs) but so far the MFI industry has been somewhat tech-averse - it increases risk to take a technology and market risk at the same time after all. With industry benchmarks to follow I believe entrepreneurs as well as established MFIs will be motivated to enlist technology to develop applications specif to the MFI industry.
For a specific example of "technology to the rescue" check out the initial results of start-up Artoo. Sameer Segal, founder of Artoo writes "we truly believe we can help MFIs bring their OER down to meet the new requirements".
Mainstreaming micro-finance will also allow the industry to open up new product offerings (e.g. savings accounts) that further benefit both client and lender.

BASES Bootcamp: Apps due Feb 1

Be part of one of the nation's most selective national entrepreneurship conferences, held in conjunction by the Business Association of Stanford Entrepreneurial Students (BASES) and Princeton University's Business Today (BT).

The BASES - BT National Entrepreneurship Bootcamp is an all-expenses-paid trip to Stanford University, including food, lodging, and travel for 110 student delegates. We are committed to a conference focused on bringing together students with brilliant ideas from universities around the nation with founders, entrepreneurs, and venture capitalists for an intensive learning experience. We are looking for students with ideas in web/software, biotech, cleantech, social entrepreneurship, etc.
Applicants will be evaluated on the basis of the idea they would like to bring in to develop into reality throughout the conference, and on the potential we feel they have to become outstanding entrepreneurs (see application for more details). We welcome any highly motivated student to apply, regardless of prior experiences.
Held April 7-10, 2011 at Stanford University, this event will feature small-group workshops, keynote addresses, panels, and more — all hosted by the top entrepreneurially-minded people in Silicon Valley and beyond. At the end of the event, participants will have the opportunity to present their business idea in a competitive format. Because the focus of our conference is on applied entrepreneurship, we are looking for undergraduate and graduate students who have the potential to begin transforming their fantastic startup idea into a successful venture.
Applications close on February 1, 2011. Decisions will be emailed to applicants by March 1, 2011. Email all questions to ebootcamp@bases.stanford.edu. Apply now at bases.stanford.edu/e-bootcamp!
Best,
Ruby Lee & Brian Reiser
E-Bootcamp 2011 Co-Directors

Giving feels good: Message from Boond

Christmas and New Year are the most festive times of the year and the moments when we remember all our near and dear ones. It is a time to share the warmth and make others know that you care and remember.

This year we at Boond decided to make this sharing of warmth and happiness a little easier and inclusive through our `Boond with Christmas` webpage.
http://www.boond.net/boond_christmas.php

From this site you can send your friends and family anywhere in the world Christmas and New Year cards, 2011 calendars and nice ethnic gifts (made by rural artisans supported by our partners www.eyaas.com), and the best part is that all you have to do is choose and give us the recipients address since we will pack, ship and lick the envelopes for you. And better still is that all the proceeds from your order will go towards our Boond campaign for sending Boond Development Kits to Ladakh (rather than a big office building and a know all receptionist). So this means that you will not just share the happiness of the season with your friends and family who you send the gifts but also with those who are spending a dark and cold Christmas in a remote part of India.
Merry Christmas & A Happy New Year
Russ (Cofounder Boond- a social enterprise with a powerful business model)

The Microfinance Debate: What would you do?

Minimum information and maximum media coverage has created the monster microfinance debate: greedy bloodsucking bankers or saviours of the world?.
I am particularly troubled by the fervor and timing of this debate because Diwali/Christmas/New Year is when, motivated by a spirit of thankfulness and/or spirit of saving on taxes, we do our annual bit of charitable giving. How will you give this year? The Financial Times (thank you FT) article Microfinance: small loan, big snag is a nuanced view with data from many countries. Microfinance is still about lending to people with no collateral; where traditional banking did not lend. That has not changed. What has changed is the desire to scale- more capital to benefit more poor people; while the majority of microfinance institutions, still led by dedicated entrepreneurs, stay true to the mission, different elements (in India, e.g. it is corrupt politicians worried about losing votes if the poor benefit from entrepreneurship who have garnered much media attention) have taken advantage of the situation. This does not mean that sustainability (double bottom line- do good and do well) is inherently impossible. Another FT article Perhaps microfinance isn’t such a big deal after all presents the strategy on how to deal with the pangs of going mainstream. fly under the radar- Just lets tone it down- lets not call microfinance the way to solve every problem - its just banking after all.
How will you donate this year? Whether it is Kiva or Microplace some other form of lending - I urge you to do your own homework - it is complicated and I personally do not know a single greedy bloodsucking banker in the microfinance realm.

Gurgaon gone berserk

When it comes to new buildings Gurgaon, the pride of India Inc., has gone berserk. Berserk, in itself is not a bad thing, but berserk using proven to be unsound, financially, ecologically and carbon creating technologies, that even the developed world is eyeing askance is just plain "herd mentality". In my 8th floor high-rise flat, uninterrupted power is guaranteed. Actually its not uninterrupted- it comes back within a few seconds every time it goes off- ten times a day. How? At exorbitant cost from diesel fuelled generators. Gurgaon where basics like water, sewage, roads get scarcer every year, is sprouting malls and high-rises at a blistering pace. So when I walked into the spanking new T3 terminal at New Delhi airport, my heart did a tailspin. On the one hand it is nice to land in world class looking airport. On the other I wondered how they did it? Is it following my Gurgaon flat model?
The Director of Center for Science and Environment, Ms. Sunita Narain writing on the new T3 Terminal at New Delhi, in Times of India [19.11.2010] writes that the airport symbolises what we are doing wrong. I hope every architect, builder and bank in India reads this article. India must "think sustainable" for its own benefit. Eco-friendly is not just about using CFL lights or more efficient air-conditioners. First, it is about design to consume less to begin with. Second it is about using renewable energy. Technology exists for both and even if at this time the technology is expensive its pay-back for India, where energy costs are highest in the world, is attractive.
Besides the exorbitant cost of running the building (it has its own power station), the building is poorly designed for eco-promoting features like parking for public buses. "It is time we found new temples of modern India, which we can be proud of. Not another shopping mall which we want to pass off as an airport" she closes. I agree. Lets do the math. Lets think for ourselves.

Healthcare: Stuck between Scam India and Slum India

Believing in the right to life equals believing in the right to health: a basic human right. In India, right to health comes in the form right to clean water, nutrition, waste management, clean air even before it gets to curing sicknesses. So India is solidly "stuck between scam India and slum India" said Dinesh Trivedi of the Healthcare ministry during the session on Health and Happiness at the 2010 PAN-IIT conclave in Noida. He was making a case for public-private partnerships in bringing change to India. Of the total money spent in India on Healthcare, 80% is spent by the private sector and 20% by the government (public funds). This means that 80% of the spend goes to 20% of the population and 20% of the spend goes to 80% of the population. Unless we change something this trend will continue. Obesity related diseases go hand in hand with malnutrition related ones and the twain do not meet. The formation of institutions like the All India Medical Institute (AIMS) was visionary in combining the latest in medical research while also serving the poor; but the government has not had the funds to follow through with more such institutions and indeed even the AIMS suffers from lack of funding. How do we get out of the rut we are in?
Change comes with convergence of three factors :
Feasibility: domain of science and technology - this includes Indian sciences like Ayurveda
Viability: driven by economics and policy
Desirability: Our political and social will
Public-Private partnerships can facilitate movement along all three vectors simultaneously.

I found Mr. Trivedi quite eloquent and persuasive. So if you are in the private sector looking to make things happen - contact him. PAN-IIT has said that all sessions will at some point be on YouTube. You can search for this session (its not there as of this writing) for verification. This writeup is from my personal notes.

How Many IITs are there in India?

I had the opportunity to attend 2010 PANIIT conclave as a IIT-Kharagpur spouse this year - i.e. as an impartial observer. One of the first things I noticed was the large number of new IITs - Its hard to miss the new banner; in places I had not even heard of. On the other hand, how many had heard of Kharagpur which houses one of the oldest IITs? I was not the only one noticing this. Alumnae discussions on the topic expressed concern of maintaining quality in the face of such aggressive expansion and the notoriously slow pace of government decision-making. At the same time Alumnae from different IITs vied with each other on how bad conditions were in IIT when they went there - from yellow water in Kharagpur to deplorable food in Delhi.
I believe that the expansion is a great thing and long overdue. And the risks of quality can be well managed for the following reasons:
1- Students: The older IIT capacity is so far below the number of brilliant available minds applying that even with the expansion- only the best will be able to get in. At alumnae meets I always hear that it is having brilliant students as companions made the IIT experience what it was. So this will not change.
2- Teachers: I personally know 2 brilliant deans who now have an opportunity to head a new IIT. Without growth they would not have the opportunity. I do not believe these teachers will compromise. As a daughter of parents (mother and father) who chose the teaching profession - I believe there is a lot more than money that attracts teachers - they will give it their best. With opportunity comes fresh ideas and new hope - it will trickle down from deans to the rest of the staff.
3- Curriculum: Nehru's vision for a free India included science and technology. And the great emphasis in IIT on that has paid a huge dividend for India. But times have changed - we are now in the knowledge economy where innovation is the name of the game. Improving the social sciences, medicine and arts curricula may be easier in the new IIT's and will certainly be a boost for students inclined towards disciplines beyond technology.
All in all, Its a great step forward for India.

Fellowship Opportunity with AIF

Fellowships opportunity announcement from AIF:     http://www.aifclintonfellowship.org/
SERVE. LEARN. LEAD.

MISSION: The AIF Clinton Fellowship for Service provides a select group of young American professionals with the opportunity to serve marginalized and underprivileged communities in India by working with non-governmental organizations (NGOs) for a period of 10 months.

VISION: The AIF Clinton Fellowship Program is committed to developing the next generation of young Americans leaders. Equipped with a practical, field-based knowledge of international development, they will become life-long ambassadors for service to the marginalized & underserved in India.

Together, AIF Clinton Fellows and NGO leaders form dynamic partnerships to exchange technical skills and knowledge, as well as passion, commitment, and new ways of looking at the world, which ultimately transforms both the individual and organization.

Since 2001, 291 young Americans have worked with over 150 Indian NGOs through the AIF Clinton Fellowship for Service. Alumni have become transformative leaders and entrepreneurs in business, international development, academia, journalism and other fields, and together represent a collective force and organized network for sustaining a long-term agenda dedicated toward change in India.

APPLICATION DEADLINE: November 15th: Early; January 1st: FINAL

Please check out our blog which highlights stories from the field:
WWW.AIFCLINTONFELLOWSHIP.ORG/BLOG

Please contact: INFO@AIFCLINTONFELLOWSHIP.ORG,
POONAM.SINGH@AIF.ORG, OR CALL 408-816-1975

There is an information session: 11/3/2010, Pigott Hall, Stanford 4:30-6:30

RAFT: Resource Area for Teaching

Did you know? A bamboo pole and the stem of a papaya leaf are excellent  for teaching how waterfall-energy can be transformed into electrical-energy. I was about 8 years old when during heavy monsoon season, my father first taught us how to harness rainwater into a waterfall using a bamboo pole (its hollow). The water then falls onto a turbine made with papaya leaf stems (the texture is firm yet pliable enough to stick flat-panes into it) which would go whirring about whenever it rained. We could never get enough of it! And I did not even know this was a science lesson.
I was reminded of this story when I visited RAFT - a local bay area resource for teachers (I found out about them as they were there for National Lab Day along with HP) to support STEM education. They use materials discarded by industry to create the lessons. One activity I liked was a car made from retractable badges and discarded CDs - shown in pic. But I couldn't help comparing: bamboo and papaya vs discs and badges! How times have changed! But science education hasn't - its still about engaging young minds to make it fun and relevant.

VayuGrid Attracts Investor

VayuGrid (wind-energy) has wings! from Gerad Rego:
"I am glad to announce that VayuGrid, a company I co-founded based on a for-profit social business model that just received funding of $4.3m from a strategic investor. Also enclosing a press release of an interview with the President of Mahindra & Mahindra for your perusal. Look forward to collaborating together around the EIR program to replicate a model across industries and across the pyramid. Look forward to collaborating together with other Fellows to see how we can leverage any other work into our business."

Congratulations to Gerard Rego, fellow Digital Vision graduate, on a major milestone: For a report- Check CNBC coverage : M&M eyes majority stake in Vayugrid's Indian ops.