Friday
March 2
2012

Kishor Nagula

Roundup – 3/3/12: Profiting Off the Poor, the Ends vs. the Means

So this week’s batch of articles primarily has focused on the growth of mobile money, be it in banking or in the form of an e-wallet. The literature behind the surge in the field is astounding, with articles and publications stretching from the seas of development publications (e.g, Journal of International Development) to white papers by Consultancy Group to Assist the Poor (CGAP) to, this week, articles by McKinsey.

The mobile phone, once deemed as a yuppie plaything, is now cited in The Economist as the single most transformative tool for development. To me, the argument behind such a claim lies, as Ignacio Mas wrote this week here, in the tool’s simplicity. We’re just beginning to witness the impacts of the tool in areas of financial inclusion and public health, so who knows what the potential is in the next 10 to 20 years. But to return to my point, the mobile phone is so transformative because – as research as shown – the tool can be picked up and used by almost anyone. Research has shown that the illiterate have essentially rote learned their way through sending SMS and even participating in mobile banking-like ventures. I’d suggest checking out the various presentations from Jan Chipchase, executive creative director of Global Insights at frog Design, on his website including this one: Designing Services for Financial Inclusion.

Another topic that dominated discussion this week was the summary of Vikram Akula’s keynote at the Harvard Social Enterprise Conference. Prior to SKS fiasco, there were a series of heated discussions (see video below) between Akula, then the founder and CEO of SKS Microfinance, and Grameen Bank Founder Muhammad Yunus. Their conflict focused on SKS’s IPO and the much deeper topic of profiting from the poor. Akula’s position centered around the potential benefits of the IPO while Yunus vehemently opposed such a venture. So it was a surprise to read Akula’s contrite statement: “Today, I can look back at what we did and say, ‘Professor Yunus was right’.”

But to spin this idea a little differently, a few weeks ago Josh Cleveland posted an interesting piece about Danone’s latest BoP venture to sell a nutrient-infused yogurt, Fundooz. (It’s interesting to note that the product came to fruition initially through a partnership with Grameen). Priced at a value seemingly within the BoP price range, the yogurt seeks to provide a tasty antidote to the ever-growing problem of malnutrition. Despite its attributes, is this proposition ethical? After all, Danone is putting a price on nutrition that, while many would argue doesn’t break the bank, does profit off a health plight. Or are for-profit ventures the panacea for sustainably eradicating core plights at the BoP?

I obviously don’t have an answer, but am curious to know what readers think about that.

In Case You Missed It … This Week On NextBillion

NexThought Monday: At Harvard Social Enterprise Conference, SKS’s Akula Opens Up On Failure By Alex Gregor

The Power of Exposure: The Influence of Role Models and Design on Aspirations By Heather EsperWDI

The Big Idea: (UPDATED) Simple Truths About Mobile Money By Ignacio Mas

The Big Idea: Taking Mobile Money Forward By Eric Tyler

In Tune With the SONG Fund: Investing in health in India By Rose Reis

Categories
Uncategorized
Tags
microcredit, microfinance, mobile banking, profits