William Kramer

Grassroots Business Initiative Grows Tall

I attended an all-day workshop at the IFC yesterday on their Grassroots Business Initiative (GBI). A half dozen of the Initiative’s enterprises from Africa, Asia, and Latin America, and 30 or so GBI partners also attended, along with their program staff. The meeting was conducted under “Chatham House” rules, which means that I can’t report on who said what, but allow me to share with you a few general observations, and a bit about one talk.

First, no surprise here, it’s remarkable how many of the issues that are of concern to these quite small enterprises (and intermediaries helping them) are exactly those that big organizations must contend with ?finding and succeeding in markets, managing for growth, balancing objectives. It’s no solace to these small, struggling social entrepreneurs, but things don?t get easier when you get bigger.Second, there was general agreement that the big issue for these fledgling enterprises is (lack of) access to some hybrid form of capital combined with technical assistance and business mentoring. Solving this problem is critical, not just for the businesses, but also the multilateral development banks who are losing–no, have already lost–their central role in financing big enterprises; there is so much private capital sloshing around the world that the MDBs need to go downstream, and fast. These are, of course, exactly the issues we are focusing on inside DTE for the foreseeable future (more on that as activities unfold).

Third, it was clear that there is a growing need for all kinds of ancillary goods and services to feed this growing corner of the private sector-led development arena–market linkage, business development services, education and training curricula and delivery. The discipline is growing up quickly, and demand outstrips supply. Should be a seller’s market! Well, we can hope, can’t we?

Finally, here’s a quick recap of a nice talk by Elizabeth Littlefield, head of CGAP. She gave a? tour d’horizon of financial service access, discussing four major trends. I won’t do justice to her by being brief, but here goes:

  1. Demographic shifts–as we note in The Next 4 Billion, the advanced industrial countries are demographically history, and the future belongs to the fast-growing developing world. It will be urban, mobile, connected, savvy; big implications for where money is, how it moves around, what are the policies that manage in a new environment.
  2. Wireless rules: wireless connectivity is the key to reaching billions, including for financial services, and it’s the linchpin of cost reduction for businesses.
  3. The BRIICs and the rise of populism: The US and Europe don’t call the economic, or political, shots as much as they used to; the BRIICs (I argue that Indonesia should be included here, and probably Mexico too) have cash, markets, enterprising populations, and independence of thought and action.
  4. New Donors and Social Activists are joining the MDBs, donor governments, and the traditional big foundations as significant players in populating the landscape of development philanthropy–it’s being called philanthropreneurship. Gates/Buffett, Omidyar, Skoll etc are reshaping the development agenda. As Elizabeth said, we’ll see whether these new philanthropists are as good at spending their money as they are at making it. Not a given.