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Social Capital Index

  • The Social Capital Index (SCI) tracks investments in the social capital market, including social enterprise, fair trade, digital inclusion, and selected clean tech and microfinance investments.

  • The SCI DealSpace

    dealspace The July edition of DealSpace brings you $206 Million worth of new equity investments and $130 million worth of debt and grants in the social capital market space. A first-mover and forward thinker to the core, Google is not very different in its grant making philosophy. Google.org recently made a grant towards InSTEDD, a non-profit organization focused on improving response systems to global health threats and humanitarian crises. Following up on the BOLD deal from our last issue, one of our featured debt investments this month is another groundbreaking transaction where the Micro Finance Bank of Azerbaijan raised $25 million in debt from international capital markets. This is the first time an Azeri issuer and a single microfinance lender has issued debt paper in international markets. Also, in June OnDeck Capital secured a $100 million credit line connecting Wall Street to small and medium business investing. Our equity investments this month range from investments in green tech with a tangible social impact to recent transactions in the microfinance space. Most noteworthy were investments made by Aavishkaar Goodwell in two Microfinance Non-Banking Financial Companies in India. We also mention the oversubscribed SNS Institutional Microfinance Fund from last year which strongly reflects the growing shift of investment sentiment towards earning good returns while still having a conscience.

  • SCI Deals in Play

    deals in play We have always maintained that even though clean and green ventures are good examples of responsible investments, they do not often fall within our scope of socially based private equity deals. However, the July edition of Deals In Play brings to you two very distinct examples of enterprises that fall in to both the green and social space. Third Energy is an alternative energy enterprise with not just an environmental mission, but also a very unique and potentially widespread social impact. Equally compelling is the Potenco solution to the energy requirements of the developing and rural world. If you are not excited yet, you will be when you read about the business model of Maya Organic for training and building micro-enterprises in India and the impact it has had on scores of rural artisans and entrepreneurs. The techniques of Collaborent for co-sourcing saves municipalities and local governments not just money but precious time and resources that can be redeployed for the better good. We cap off this edition by introducing to you a socially responsible real estate firm that focuses on quality affordable housing opportunities, the 908 Development Group. By providing high quality housing to those who would other wise be close to homelessness, they provide a tangible product that positively touches the lives of low incomes families and individuals.

  • SCI Landscaping Documents

    Below is the SCI asset class fan, which shows a spectrum of the asset classes included in the SCI, from equity to debt and including grants. Eventually we will categorize the entire Index using this fan. The full fan is available here. Also available is the fund matrix, where various social funds are described in more detail. Like all the rest of the resources in the SCI, it is a work in progress, and will become fuller and more complete over time.

    sci fan

Social Capital Markets 08

  • socap 08 advert

NextBillion

  • NextBillion Will Be Back in 2009

    We're taking a few days away from research, writing, blogs and all the rest.  Back in 2009.  Until then...


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  • Change the World (And Your Life) - Become a Kiva Fellow

    It's the holiday season in the United States, which means many bloggers are talking about gifts, giving, philanthropy and the state of the world.  All this gift-blogging got me thinking about one of my favorite gifts (to give and to receive) - Kiva gift certificates.  If you need to pick up a last minute stocking stuffer, you could do a lot worse.  (Don't know Kiva?  We've written about them before, including interviews with founders Matt and Jessica, as well as a comparison between them and MicroPlace, a P2P microfinance competitor.)

    There's another way to give Kiva, but it won't fit in a stocking: you can give yourself.  That's right: if you're looking to get involved in microfinance very personally, Kiva has a Fellowship program that allows volunteers to spend anywhere from 10 weeks to a year working for a microfinance organization.  According to their web site:
    The Kiva Fellows Program offers individuals a rare opportunity to travel abroad and witness firsthand the impact and realities of microfinance, by working directly with a host microfinance institution (MFI). The Kiva Fellow is an unpaid, volunteer based position designed to increase Kiva's impact and to offer participants a unique insider experience. Past participants have found the fellowship to be a great first step in a career in microfinance or international development.
    All the details are available on their web site.  I've been keeping my eye on the Kiva Fellows program for the past few months, especially as the financial crisis unfolded here in New York.  I wondered, what are all these newly-unemployed finance pros going to do with their time?  Maybe some of them are going to want to give back - but how?  A Kiva Fellowship is a good place to start.

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  • Job: UNDP Growing Inclusive Markets Consultancy

    Position: Research Associate / Consultant

    Location: Home based with two missions to New York

    Time frame: 1 January 2009 - 31 April 2009

    Organization:
    Growing Inclusive Markets Initiative, United Nations Development Programme.  The UNDP Growing Inclusive Markets Initiative seeks to create understanding and awareness about how doing business with the poor can be good for poor people and good for business. During its first stage, the initiative studied 50 business solutions that successfully create mutual value between business and the poor. The insights were captured in the report 'Creating Value for All ? Strategies for Doing Business with the Poor', which has been launched in more than 20 countries since July 2008.

    The goal of the second stage of the Growing Inclusive Markets Initiative is to identify successful business models that are good for the poor, the planet and profit and to understand their real and potential impact. The initiative will operate as a multi-stakeholder dialogue of experts in the field of sustainable business and development. These will include practitioners from business associations, multilateral institutions, civil society organizations as well as academics from leading research institutions.

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  • BoP Economic Prospects for 2009: Not Looking Good

    A couple of friends of mine have already asked me "So what if a couple of banks go bankrupt? Who cares about bad mortgages? What is all the big deal about?" It is hard to explain in few words why the financial sector is so vital in modern economies, when countries are as strongly connected by trade ties as it is currently the case.

    Probably the best way to explain its importance is by thinking of the economy as a machine and the financial sector as a lubricant. The financial sector's role is to efficiently allocate capital from savers to investors.  Financial markets lubricate the rest of the economy's productive activities.  Thanks to this lubrication, the economy is able to "work harder" and make fuller use of all the cogs in its machinery. If financial markets stop functioning, then the machine would not be able to work as efficiently as before, because it would lack the lubrication needed to keep full speed. This is in a nutshell why Washington has bailed out the financial sector, without even thinking about it, but appears much less willing to help the collapsing US automobile manufactures.

    A second important aspect to take into account of financial markets is that banks are strongly connected to each other. If GM closes down tomorrow, other surviving businesses, such as Toyota, will probably benefit. However, in financial markets, if one financial agent, for example a bank, suffers, due to the interdependencies in the system, many other banks will suffer too. If one bank fails, other banks will tend to fail as well. This domino effect is something characteristic of industries with businesses which are tightly connected with each other and strongly dependent of each other's actions.

    As financial markets have grown increasingly global, the allocation of capital from savers to investors has become global. As a consequence of the US financial crisis, BoP markets will probably suffer in the coming year.

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  • The Definition of Success

    visionaryI recently read an article titled Negroponte - missionary not manufacturer, in which the author makes the argument that, well, Nicholas Negroponte - founder and Chairman of the One Laptop Per Child project - is a missionary, not a manufacturer. I think this is a very interesting point and caused me to ponder the definition of success.

    Negroponte has been pilloried in the press, blogosphere and by analysts around the world, and even to an extent by me. You can see this in a three part blog posting that I wrote that starts here.

    While some of the criticism may be valid, if you actually change the perspective of how you view his role ... from someone that is trying to manufacture and sell millions of laptops, to someone that has a vision of a computer as a key tool for accelerating learning and technology adoption, then his cause would be seen in a different light. And that is exactly why the world embraced him in 2005 when he first introduced his OLPC project.

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PSD

  • Disruptive technologies: M-Pesa vs. the banks

    Mobile payment systems are turning out to be a truly disruptive technology in Kenya. The great success of M-Pesa, the now prototypical example of mobile payments, has the banks frightened, at least according to an article in the Nairobi Star. But Kenyan blogger Bankele calls for a truce: "Banks need to change and embrace M-Pesa as it is able to do some things they can't or won't do." According to Bankele, the alternative is not pretty:...take away m-pesa and people will go back to stuffing cash in tins, rolling them in blankets and mailing them in cartons on buses. They will not go back to open new bank accounts or queue at western union.(Hat tip: Elia Varela Serra at Global Voices Online)

  • Entrepreneurship - the key to prosperity ctd.

    World Bank data show a strong correlation between measures of entrepreneurship and income. But how does this relationship come about, and what drives what? Abhijit Banerjee, of Poverty Action Lab fame, gives his take:It turns out that the businesses of the poor are also poor businesses: The typical business has zero paid employees and no machines in almost every country where we have data and where we have the information to be able to calculate this, what the household earns from the business is less than what they would earn on the lowest end of the labor market. They are in effect buying a job and not [a] particularly good job at that... ...The problem is that for a business to rise beyond its many competitors?the thousands of fruit vendors in Chennai---it has to have something special about it: The product (P) must be different or the quality (Q) must...

  • Next in line for m-banking services: Papua New Guinea

    This past October I participated in a 2-day Mobile Money Summit in Port Moresby, Papua New Guinea. Why Papua New Guinea? There is growing interest among telecom companies and banks there in mobile financial services. Although the meeting was attended by more than 50 people from around the Pacific, the majority of the participants were from companies doing business in Papua New Guinea. IFC cosponsored the event, along with the Asian Development Bank, Bank of Papua New Guinea, the Business Council of Papua New Guinea and the Port Moresby Chamber of Commerce and Industry. The topics discussed reflected the variety of participants ? an overview of mobile banking, regulatory discussions, and success stories from the region. Bank South Pacific also provided us with a demonstration of a mobile banking service. And I spoke during a session on New Solutions: Engaging with Customers and Creating Compelling Products, where I presented a...

  • How to defeat witchcraft ctd.

    I finally found the time to pick up a copy of Economic Gangsters and find out exactly how coauthors Raymond Fisman and Edward Miguel propose to defeat witchcraft. (See my earlier post on Fisman's presentation at the World Bank for background):[W]e think more foreign aid should explicitly play an insurance role for poor countries. We call this new type of aid Rapid Conflict Prevention Support (RCPS). RCPS aid would kick in for countries experiencing temporary income drops, in much the same way that it's better to see a doctor when you start getting sick rather than waiting for the infection to spread. By the time you've got pneumonia, it's already too late... ...Since sharp and unexpected income drops are the symptoms of conflict vulnerability, donors should time foreign aid to provide relief when these circumstances arise. And this is when RCPS aid would kick in. When underlying economic factors return...

  • Off the mark on microfinance

    Writing in the Ethical Corporation newsletter, Rajesh Chhabara recently opined on the near-term prospects for microfinance in Asia. Their take? Things are just hunky-dory:Despite the trouble in global financial markets, investors continue to put money into Asian microfinance. A $40m fund aimed at financing start-ups in microfinance was launched in October by the India-based Institute for Financial Management & Research Trust, supported by a group of investors including India?s Icici Bank. In May, ASA International of Bangladesh, ranked number one on the Forbes list of top 50 microfinance institutions, raised $125m in funding ? the largest ever by a microfinance institution ? through private equity firm Catalyst Microfinance Investors... Diverse sources of funding and a sustainable business model mean the microfinance sector is well placed to withstand upheavals in the global financial markets. And the trend of banks and private investors putting more funds into the sector looks set to...

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