Turning Street Children into Entrepreneurs

The UN estimates that 500 million people around the world are homeless, and UNICEF estimates India alone has 11 million homeless children on its streets (though it is difficult to pin down the figure). In order to survive another day, these children will work in one way or another. While there are many campaigns to ban children from working, and charities dedicated to getting them off the streets and into shelter, the raw fact remains: many of these children slip through the cracks and remain vulnerable, poor and neglected.

Most street children suffer from malnutrition, hunger, health problems, and abuse. They make ends meet by working various jobs or by stealing. While they have dreams, there is no mechanism for them to save for the future. It is a live-for-now existence that, if they survive to adulthood, means they will probably remain homeless and vulnerable.

Street and working children have money: it is a natural consequence of having to be resourceful to survive. But what they don’t have is access to banking services or trustworthy financial advice that can help them to gain wealth and move out of poverty and into a brighter future.

The Children’s Development Bank in India is one initiative that seeks to turn these neglected children into the next generation of entrepreneurs. The bank works on banking and co-operative principles, where savers are members and joint owners of the bank. Any child can save money with the bank and earn interest, as well as take out loans if they are over 15 years old. It was started in 2001 and was inspired by the Youth Bank in the UK. Interest made by the bank is shared by its members, as with many co-operative banks and credit unions.

The bank is managed jointly by children and adults. The children have a say in how the bank is run and on what conditions it should lend money. They also keep an eye on borrowers to prevent them from running off without repaying loans.

For these vulnerable children, it has many advantages: they can put money aside without fear of it being stolen or lost, save for important things like clothes, or pay for their education.

A key part of the bank’s mandate is helping the children build entrepreneurial skills for business. Mentors help the children choose a business model, select an occupation with minimal risk and more benefits, get training and solve business problems.

The bank has branches in India, Afghanistan, and Sri Lanka.

Ten-year-old Deepak Prahlad, a street child in Delhi, dreams of being a doctor.

“I know what it takes to be a doctor. I need to study hard and need to save a lot of money,” he told the Hindustan Times. For now, he works as a rag picker but has started saving 30 to 40 rupees a day in the Children’s Development Bank. The bank has 1,300 members in the city. It pays 3.5 per cent interest on savings accounts.

“Some of them want to fly very high,” said Rita Panicker, who helped set up the bank in 2001. “We have been working with street children for the past two decades. Some of these children are very talented and have entrepreneur qualities. One of the biggest problems facing these children was that they did not have a safe place to keep their hard-earned money. In fact, it was the children who came up with the idea of the children’s bank. It started with 20 members in 2001 – and now it has 1,300 members in Delhi.”

Sudesh, a 15-year-old manager who looks after the bank’s current accounts, said: “We are extremely careful about whom to offer loans since we do not want to see our members’ savings lost because of bad loans. The skills I have learnt here are going to stand me in good stead in life.” Managers are chosen every six months by the children and they compete for the job.

By David South, Development Challenges, South-South Solutions

Published: November 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Mobile Phones: Engineering South’s Next Generation of Entrepreneurs

 

Technology is fuelling unprecedented growth in productivity in Asia, with sub-Saharan Africa languishing behind (International Labour Organization). But the growth in mobile phones could help close this gap, as home-grown entrepreneurs are stepping up to exploit this new opportunity.

Mobile phone applications are proving a boon to small businesses and entrepreneurs. They are now putting power in the hands of individuals, making it easier to invent new ways of doing things, transfer money, organise business accounts, provide services, sell things, and keep in touch and up-to-date.

Technology has been the common factor in increases in productivity around the world, and with the rapid rise in mobile phone use, especially in Africa, it looks as if this handy device augers in the next wave of innovation.

And technology and mobile phones in particular, are creating a whole new route to wealth: “The switch.. frees people from geography,” Gregory Clark, an economic historian at the University of California, Davis told The Christian Science Monitor. “Singapore can be as rich as Canada, even though Singapore has no land.”

Technology is seen to be opening a new phase in economic competition in services, embracing a wide range of fields, from banking to tourism to healthcare. And it is entrepreneurs who will be at the forefront of making this happen. The majority (59 per cent) of the world’s 2.4 billion mobile phone users live in developing countries (MIT) – making it the first telecommunications technology in history to have more users there than in the developed world. The number of African mobile phone users passed 200 million at the beginning of this year (www.ovum.com), making it the fastest growing mobile phone market. It has increased at an annual rate of 65 per cent – twice the global average (MIT Media Laboratory).

In Kenya in 2005, the government’s Economic Survey found the small business sector, which employs the majority of workers in the nation of 32 million people, created 437,900 jobs – mostly down to the boom in mobile phones. According to the Massachusetts Institute of Technology (MIT), adding an additional 10 mobile phones per 100 people boosts a typical developing country’s GDP growth by 0.6 per cent. The boost comes from the innovative use of mobile phone technology by local entrepreneurs.

At the University of Nairobi, the SMS Boot Camp (SMS is the text messaging system on mobile phones) is breeding the next generation of African technology entrepreneurs. Working in partnership with MIT, the student entrepreneurs are working on an impressive list of projects, which can be found online at eprom.mit.edu. The projects are varied, and include perfecting prototype ways to collect medical data on mobiles, accurately tracking phone user’s profiles (habits, friend networks etc.), improving communication between Kenyan hospitals and the centralised blood banks in the country, and quick ways to install applications on all of Kenya’s mobile phone SIM cards.

One graduate, Mohammed Temam Ali in Addis Ababa, is now working on a project for the Ethiopian Telecommunications Company. Another is working for Kenyan mobile phone download service, Cellulant.

Nathan Eagle, a visiting lecturer at the University of Nairobi, has been working with the students on the projects: “Phones are starting to be used as a surrogate for all sorts of technology we take for granted in the West. Credit cards, TVs, radios, computers, etc… In the small Kenyan village where I’m writing this email, I can pay for the taxi ride home with my mobile — we’re even scheduled to be getting a Wimax network (wireless internet) here next year. Talk about leapfrog…”

“I’m also advising a small group of newly graduated Rwandan hackers who are building an SMS-based payment system for electricity.”

But Eagle says the obstacles can still be huge: “Government corruption and red-tape. SMS is illegal in Ethiopia… it is pretty frustrating when you go over to teach an ‘sms bootcamp’ class.”

In India, where there are 185 million mobile phone subscribers, computer science doctoral student and founder of Ekgaon Technologies, Tapan Parikh, has founded a business specifically targeting developing mobile phone-based information systems for small businesses in the developing world. Working in rural India, the applications are designed to make it easier for business owners to manage their own operations in an efficient and transparent way, and also to build strong connections both with established financial institutions and their customers. By making it easier to access finance, and also to get a better price, these businesses will stand a better chance of flourishing, it is believed.

One of his applications is called Cam (named after the phone’s camera). It is a toolkit that makes it simple to use phones to capture images and scan documents, enter and process data, and run interactive audio and video.

Parikh is also using these applications to improve micro-finance. Targeting Indian self-help groups (15 to 20 people who pool their capital together, usually women), the application (called SHG MIS – self-help group management and information system) uses the phone’s camera to enter data, uploading it to online databases, and a package of Web-based software for managing data and reporting to the institution that lent the money.

“In these groups, things are often done in a somewhat ad hoc manner, using informal documentation,” Parikh says, “which can lead to instability and impermanence and contribute to the kinds of tensions that lead small groups to fall apart.” The software gives groups a more systematic method of documenting decisions, tracking financial performance over time, and collecting information on loan effectiveness. Parikh has developed his applications around the needs and behaviour of the users.

This next wave of entrepreneurs will be joining a growing list of made-in-the-South mobile phone innovators like ARYTY, G-Cash and Smart Money in the Philippines; WIZZIT and MTN Mobile Money in South Africa; M-Pesa in Kenya; Celpay in Zambia and the Democratic Republic of Congo.

By David South, Development Challenges, South-South Solutions

Published: September 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Entrepreneurs Use Mobiles and IT to Tackle Indian Traffic Gridlock

 

Around the world, traffic congestion is often accepted as the price paid for rapid development and economic dynamism. But as anyone who lives in a large city knows, a tipping point is soon reached where the congestion begins to harm economic activity by wasting people’s time in lengthy and aggravating commuting, and leaving them frazzled and burned out by the whole experience. According to the World Business Council for Sustainable Development, 95 percent of congestion growth in the coming years will come from developing countries. Even in developed countries like the United States, in 2000, the average driver experienced 27 hours of delays (up seven hours from 1980) (MIT Press). This balloons to 136 hours in Los Angeles.

Developing countries are growing their vehicle numbers by between 10 and 30 percent per year (World Bank). In economic hotspots, growth is even faster. In India, the cities of Delhi, Mumbai, Kolkata and Bangalore account for five percent of the nation’s population but have 14 percent of the total registered vehicles. In the Islamic Republic of Iran, Kenya, Mexico and Chile, 50 percent of cars are in the capital cities (www.peopleandplanet.net).

India’s Koolpool is stepping in with a 21st century upgrade to the old concept of carpooling. India’s first carpooling service (in which drivers share rides to reduce congestion and save money) uses the power of the country’s mobile phone network to link up people by SMS (short message service) text. Already launched in Mumbai, it is being rolled out in other cities as well.

Koolpool surveyed Indian drivers and found that the average car only had two passengers. Koolpool is an idea from the Mumbai Environmental Social Network (MESN), a registered charity with the mandate to come up with innovative solutions to environmental and infrastructure problems. Its goal is to prove “low-cost and high efficiency IT-based solutions are the way of the future. With no gestation period and minimal investment, they are profitable and more importantly for us, people friendly.” Koolpool claims that an increase from 1.7 passengers per vehicle to 2.04 will decrease travel time and pollution levels by 25 percent. It also claims to be the first carpooling service to combine SMS text messaging and IT.

Ride-givers send a text message to Koolpool just before going down a major road. Koolpool then sends a list of ride seekers on the route, their membership identifications, the designated stopping point for pick-up, number of riders and login time. If there are no ride givers on that route, then ride seekers are pooled together to get a taxi and share the costs. Members of Koolpool pay an annual membership fee and exchange credits by mobile phone between ride seekers and ride givers, which are then redeemed at gas stations for petrol.

And Koopool comes at just the right time: congestion in India will probably only get worse in the near term, as the government pledges to build even more roads and make the country’s cities “the flyover capital of Asia”.

In Kolkata, says Sudarsanam Padam, former director of the Central Institute of Road Transport in the city of Pune, the average speed during peak hours in the central business district (CBD) area is as low as seven km/hr. Bangalore currently has average speeds of about 13-15 km/hr in its CBD, but this is expected to go down to three to eight km/hr in the next 15 years, according to the city’s police traffic commissioner, M N Reddi.

By David South, Development Challenges, South-South Solutions

Published: June 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Like this story? Here is a dirty secret: this website is packed with stories about global South innovators. We spent 7 years researching and documenting these stories around the world. We interviewed the innovators to learn from them and we visited them to see how they did it. Why not use the Search bar at the top and tap in a topic and see what stories come up? As for my work, I have been involved with start-ups and media ventures since the early 1990s. While most tech entrepreneurs were either still in their nappies in the 1990s (or just a drunken night away from being conceived in the 2000s), I was developing content for this new thing they called the "Internet". In the years since I have learned a great deal about innovation and digital and have shared these insights in the stories on this website as well as in the 5 issues of Southern Innovator magazine. So, stick around and read some more!    

Google Books: https://books.google.co.uk/books?id=K-OmJjqLSOMC&dq=development+challenges+june+2007&source=gbs_navlinks_s

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Kiva: New Gateway of Loans for the Poor

 

The rise of social networking websites has created new opportunities for the poor to gain access to much needed credit. Kiva.org is pioneering a new way for entrepreneurs in the South to obtain for their businesses unsecured, no-interest financing from lenders worldwide. By just a click of the mouse a person anywhere in the world can lend as little as US $25 or more to aspiring entrepreneurs in developing countries.

Kiva, which means “agreement” or “unity” in Swahili, was founded by Matthew and Jessica Flannery after time spent in East Africa. They built upon the idea of Nobel Peace Prize Winner, Mohammud Yunus’ Grameen Bank but took it a step further by tapping into the resources of the web. It works by allowing potential lenders to search for an entrepreneur via the website. Each entrepreneur’s business idea is explained, a photo of the entrepreneur is posted and the amount of the loan they require and how much they have raised so far are clearly displayed. It is then a simple matter of the lenders using their credit cards to make a loan online. Kiva then transfers all the funds to their local partners (microfinance institutions) which, in turn, disburse the loans to each business. All entrepreneurs are screened for their trustworthiness and the viability of their business. Loans are usually between 6 to 12 months and lenders receive regular email journal updates from the business they sponsor. Gradually, the loan is paid back and the lender is returned the full value of the loan.

The process is so simple that one may ask, “Does this really work?” Take the story of Nicholas Kristof, columnist for the New York Times who recently accounted his experience with Kiva.org in his New York Times Op-Ed piece, “You, Too, Can Be a Banker to the Poor”. Through Kiva.org he chose two entrepreneurs, a baker and an owner of a TV repair shop in Afghanistan and lent them US $25 each instantly making himself a business partner with total strangers. He recently visited Afghanistan to see their progress and found two thriving businesses. Mr. Abdul Satar, the baker, borrowed a total of US $425 from a variety of lenders, Nicholas being one of them, and was able to open a second bakery with four employees. Mr. Abdul Saboor who runs a small TV repair shop now has a second shop with two new employees.

By harnessing a user friendly website to make instant cash loans, Kiva has come up with one of the simplest and most direct ways to help poor entrepreneurs who need start up capital. It was first tried out in Uganda about a year ago where partnerships were forged with local microfinance institutions that examined and evaluated each business before they were posted on the website. It has now attracted close to 18,000 lenders contributing an average of US $82.

“I believe the real solutions to poverty alleviation hinge on bringing capitalism and business to areas where there wasn’t business or where it wasn’t efficient,” co-founder Matthew Flannery told the New York Times. “This doesn’t have to be charity. You can partner with someone who’s halfway around the world.”

By David South, Development Challenges, South-South Solutions

Published: April 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Like this story? Here is a dirty secret: this website is packed with stories about global South innovators. We spent 7 years researching and documenting these stories around the world. We interviewed the innovators to learn from them and we visited them to see how they did it. Why not use the Search bar at the top and tap in a topic and see what stories come up? As for my work, I have been involved with start-ups and media ventures since the early 1990s. While most tech entrepreneurs were either still in their nappies in the 1990s (or just a drunken night away from being conceived in the 2000s), I was developing content for this new thing they called the "Internet". In the years since I have learned a great deal about innovation and digital and have shared these insights in the stories on this website as well as in the 5 issues of Southern Innovator magazine. So, stick around and read some more!    

Google Books: https://books.google.co.uk/books?id=T2V2VMuJuQEC&dq=development+challenges+april+2007&source=gbs_navlinks_s

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Grassroots Entrepreneurs Now Have Many Ways to Fund their Enterprises

In the past, African entrepreneurs were extremely limited in the options for funding their plans. They had to rely on often ineffective national banks or local networks based on political, tribal or family connections to secure funding for enterprises. That has now changed, and there is an explosion in new thinking on business start-ups and how best to help grassroots entrepreneurs.

Concepts such as socially responsible investing, social enterprises and fair trade have opened up new frontiers for business development. All focus on the so-called triple bottom line: people, planet, profit. Economist Milton Friedman’s refrain that the only social responsibility of business was to increase profits, is being proven wrong. Some even go as far as to say social enterprise is the model for the 21st century.

“There’s lots of money to be made here,” said James Baderman of What If, an innovation company in the UK that employs 300 people and devotes 10 percent of its profits to helping social enterprises develop and grow. “There are huge opportunities; just look at the double-digit growth in fair trade and organic goods over the past decade. Consumers are increasingly making choices based on the ethical nature of products.”

Many in the social enterprise movement believe breaking the cycle of poverty and economic stagnation requires more than charity; it requires the creation of sustainable businesses that will pay local taxes and employ local people. They have also adopted and adapted the techniques used by multinational companies to improve the desirability of their products. A key part of these new socially responsible businesses is branding and marketing.

In Kenya, the UK’s Traidcraft (www.traidcraft.co.uk) – an organization that fights poverty through a wide range of trade-related activities combining a development charity with a trading company – is working with the Kenya Organic Agriculture Network to develop markets for Kenyan herbs, spices and related products in local and international markets. These include gums, resins (e.g. frankincense), herbs such as coriander, oregano, garlic and lemon grass; spices such as paprika, chillies, rosemary, lemon balm, and essential oils such as pepper tree oil, sinoni oil, and megalocapus oil – all grown in marginalised, arid areas.In another development focused on Kenya – but applicable across Africa – is being led by the UK-based Mark Leonard Trust (http://markleonard.net/). Called the Mainstreaming African Crafts project, it seeks to boost demand for Kenyan craft products in the UK market. It will build demand by focusing on growth areas (such as baskets, jewellery, leather), emphasizing the distinctiveness of African craft products and support product development in line with identified market trends. The aim is to launch a branded Kenyan product range at an international trade fair in 2008.

Along with improving the branding and marketing of social enterprises and fair trade businesses, funding options are becoming more varied. One new source of funding for budding social entrepreneurs is the William James Foundation’s 4th Annual Socially Responsible Business Plan Competition. It awards winners who develop business plans that blend people, planet and profit together with over US $40,000 in cash and expert advice to make sure it is spent well. Past winners have included business ventures as varied as an Afghan company that sends SMS text messages on security alerts, to others making hand-made organic clothing and portable vaccine packs for remote areas.

“We’re at a tipping point wherein the entrepreneur who builds in long-term values of sustainability is the one who will be successful,” said Ian Fisk, executive director of the William James Foundation and a long-time sustainable business activist through Net Impact (http://www.netimpact.org/index.cfm). “Most of what people think of as environmental and social activism in business is simply long-term thinking about energy costs and human resources. There are thousands of good ideas out there. The foundation wants to find those that are attached to solid business plans and help them succeed.”

The success of this approach has also attracted the attention of multinational companies like the oil company Shell. At the Shell Foundation (www.shellfoundation.org), they look at all the enterprises they support from a hardnosed, business perspective. Rather than seeing a producer who needs to produce, they look first at the market and the consumer, and then work backwards to get the producer to make the appropriate products that will sell. “No micro-enterprise is sustainable unless there is a viable route to market,” said Sharna Jarvis, Programme Manager for the Shell Foundation. “The problem with the standard model for micro-finance is that it begins with the producer, not the consumer. It is all about what someone wants to make – there is not enough emphasis on whether anyone will buy it.”

A new internet search engine has also been launched that is seeking a new way to create a steady flow of funds to nonprofit enterprises working to reduce poverty. Called GoodSearch (www.GoodSearch.com), it plows 50 percent of its advertising revenue (about a penny a search) back into nonprofits selected by its users. Powered by the well-known portal Yahoo!, if for example 1,000 supporters just searched twice a day, it would raise US $7,300 a year for an organization.

By David South, Development Challenges, South-South Solutions

Published: February 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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