An interview with Ricci Wolman of the Global Fairness Initiative
Monday, November 7, 2005
Where did you spend your Social Enterprise Summer?
I spent my summer working in Washington, DC for The Global Fairness Initiative (GFI). GFI is a an international NGO of global leaders dedicated to promoting innovative, scalable models that extend the benefits of globalization to poor communities around the world.
What project(s) did you work on, and what were your primary responsibilities?
My primary project was the creation of the Synapse Market Access Fund. Synapse is a nonprofit social venture fund that addresses the problem of global poverty by creating pro-poor trading networks. The Fund incorporates investment strategies and market concepts as a driver for designing effective social products and services. Synapse will fund scalable trade-related initiatives that bridge the gap between the formal and informal sector, empowering grassroots producers and rural communities. What was really great about this project is that the Fund did not exist before I arrived for the summer, and it was my task to conceptualize the fund, create the fund and make it operational. Because of the breadth of the project I was engaged in formulating a strategic plan, writing a prospectus, creating marketing materials and devising fundraising tactics.
Can you talk a little more about pro-poor trading networks and why there is a need for a fund that supports these networks?
Well let me begin by talking about grassroots producers. “Grassroots producers” are productive poor persons in the informal economy. There are currently over one billion self-employed workers in the global economy and in all parts of the world they are starting to band together to form Grassroots Producer Organizations (GPOs). GPOs build the collective capacity of poor producers in the informal economy to leverage capital and facilitate trade. The advent of micro-credit has aided this process by opening capital markets to GPOs. GPOs are using this capital to invest in productive assets and to produce an array of consumer and commodity goods. GPOs hope to scale their business by selling their goods to buyers in the marketplace for a profit and then to use these funds to pay back loans and to re-invest in their business. If GPOs were able to execute on this basic business model, micro-enterprises in the rural sector of the economy would grow resulting in dramatic economic and human development. What we are seeing is that as a supply-side facility micro-credit has created capital access that has led to dramatic increases in GPO productivity. However, microfinance does not address the demand-side of the trade equation – microfinance creates capacity but it does not create markets. Lack of market access poses significant challenges to poor producers. Due to their small size, lack of market information and inadequate technical capability GPOs are struggling to get their goods to market. This is a problem because reliable access to regional and global markets is critical to long-term income growth and the alleviation of poverty. This is where trading networks come in. Trading networks solve the problem for GPOs by providing a mechanism to bridge the gap between producers and markets.
Can you give an example of how this works?
Sure. There is an organization in India called The Grassroots Trading Network (GTN) that expands market opportunities for GPOs in India. GTN brokered a private-public partnership between marginalized sesame seed producers in Gujarat, India and a large agricultural commodity exporter. After two harvest cycles, the producers are realizing an average sales revenue increase of 30%, while the exporter has seen a net procurement expenditure decrease, and has found a reliable new sourcing partner. Based on the success of the pilot initiative the exporter is increasing its purchasing order, and expanding the project to other commodity lines. This is a perfect example of how a trading network was able to partner grassroots producers with a large buyer in a win-win agreement. Without GTN the exporter would not have sourced from a GPO and the GPO would not have had the expertise to sell to the exporter. GTN is effectively acting as the market maker. The Synapse Market Access Fund is investing in these market makers to ensure the growth of market participation by GPOs. The following statistic gives you an idea of how important this initiative is: Oxfam estimates that if all developing countries increased their share of world exports by five percent, the resulting income generation would equal seven times the amount of aid developing countries now receive.
It sounds like an interesting summer experience. How did you find the internship?
It was a networked job search. I had an interest in working on a Fair Trade project during the summer and I talked with Prof. Regina Abrami (BGIE) about my interests. She put me in touch with Karen Tramontano, the president of GFI and we structured the summer from there.
What was the most challenging aspect of your summer?
For me the most frustrating aspect of working in a non-profit environment is dealing with the resource constraints. Non-profits tend to have fixed budgets that favor program activities and neglect operating activities. This is especially tough when you are trying to launch a new project that requires a capital outlay. The disadvantage of this is that many great ideas never get off the ground, or are slower to take-off due to the cash constraints. The advantage is that you learn to be creative with the resource that you do have.
What was the most rewarding aspect of your summer?
The highlight of my summer occurred a few weeks after I got back to school. In September former President Clinton assembled world leaders for the inaugural meeting of the Clinton Global Initiative. The three-day event was focused on discussing and addressing today’s most pressing global challenges. At the closing ceremony Clinton recognized certain projects that displayed strategic innovation in the fight to eradicate poverty. I had the opportunity to attend the event and watch as Synapse was recognized for its commitment to funding trading networks and bridging the gap between poor produces and markets.
What should students do if they are interested in learning more about GFI and the Synapse Fund?
Students should definitely visit the websites: www.globalfairness.org and www.synapsemaf.org. In addition, we are still looking for partners and donors so students can contact me directly if they are interested in getting involved.