October 2006

In a timely article, given the winning of the Nobel Peace Prize by Muhammad Yunus and the Grameen Bank, The New Yorker discusses the power and potential of microfinance as one way to lift people from poverty. One interesting thread of the article is around exactly how profitable enterprises serving the poor should be. It is a complex question: most microfinance organizations actually charge high interest rates to cover high transaction costs, and, once specific volumes are met, tend to be very profitable organizations. Other companies – certainly many of those supported by Acumen Fund – take years of subsidy before they move to break-even and financial sustainability. (It has to be remembered that the microfinance industry is now more than 30 years old. Its maturity allows for more sophisticated capital markets to evolve.) Finding ways to communicate the power of market-oriented approaches while recognizing the need for grant capital to build management capacity and overall infrastructure continues to be a major challenge for the social sector focused on supporting business approaches to solving social problems.

The good news is that some of the wealthiest, most powerful individuals on earth are engaged in precisely this conversation….

Our friends at The Case Foundation have posted a Spotlight on Africa on their site. The spotlight focuses on reasons for optimism and includes an article by our own Jacqueline Novogratz.

Acumen Fund CEO Jacqueline Novogratz was in Pakistan last month and, as usual, kept a journal documenting her trip. Excerpts have previously appeared on the blog, but you can read the full journal here.

The Acumen Fund Fellows have been fortunate to meet many inspiring leaders and engage in plenty of thought-provoking discussions over the past four weeks. The question about how to write and talk about Africa has been raised several times. In April, Jacqueline referenced “How to Write About Africa” on this blog and discussed it with the fellows during the first week of orientation. This piece exposes the simplicity of how most people write about Africa and inspired us to think about how to do it in a different way.

View 1 - The Outsider Who Gets It: Gayle Smith, currently a Senior Fellow at the Center for American Progress, and former journalist and senior staff member of the National Security Council and USAID, spoke to the Acumen Fund fellows about her work in Africa and as a member of the U.S. government. Many people don’t understand the appeal of living in the developing world, and I often have trouble articulating it. After living in East Africa for 20 years, Gayle explained it well, “It was easier and more satisfying to live there than in the U.S. There’s a sense there’s something bigger than you there. In D.C., there is nothing bigger than any of us.” While working for various NGOs in Africa, Gayle saw that there were stories that needed to be told and insisted that the media print them. Gayle’s unique combination as an outsider with extensive experience in East Africa provided her an honest view of the culture, people, politics, and economy and her understanding of the complexities led to her success as a journalist.

Each week, TED posts a new “TEDTalk” on its blog, featuring some of the extraordinary speakers they host each year. A talk by Jacqueline Novogratz was recently featured. Watch it below, or go to the TED site to see this and other TEDTalks.

Acumen Fund has just sent out its quarterly newsletter, with updates on our activities over the past few months. (If you’re not on the distribution list and would like to receive it regularly, you can sign up on our website.)

Yasmina Zaidman and Bhavika Vyas from Acumen Fund’s Water Portfolio are visiting East Africa to explore water and sanitation investment opportunities, starting their trip in Kenya…

During our three hour drive from Nairobi to Nakuru we witnessed an unexpected array of wildlife in patches of undeveloped land that still exists between growing towns in western Kenya. A few lone zebras look out of place outside a small but expanding settlement along the road, while Thompson’s gazelles and impala graze peacefully in a savannah in the rift valley. Bold baboons the size of German shepherds skirt the dusty semi-paved freeway between Naivasha and Nakuru, perhaps foraging for food in the garbage left behind by speeding cars. As we approach Nakuru, we pass Lake Elementia, a salt lake rimmed by white where thousands of flamingos flock. From the road, they are only a cloud of pink specks, but they are a major draw for tourists who have helped Nakuru grow into a bustling town.

While nature struggles to hold its ground in a rapidly growing country, the people who are gravitating to towns along this road and informal settlements in Nakuru, all looking for work in tourism and agriculture, face challenges of their own. As houses are built to accommodate a growing population, infrastructure fails to follow. The new towns we saw along the road may rely on contaminated river water for their water supply, and are likely to go without sanitation or sewerage of any kind. The development is uncontrolled and relentless. In Nakuru, we visit the informal settlements in the southern part of the city, where the only public provision of water supply or sanitation comes in the form of three standpipes – these are scarcely adequate to cover the needs of the one hundred and fifty thousand people who live in this settlement. In a city of half a million, there are four public toilets.

Acumen Fund congratulates Dr. Muhammad Yunus and Grameen Bank for winning the Nobel Peace Prize! We could not be prouder for knowing him and for being one member of a community that stands on his broad shoulders. I first heard of Dr. Yunus in 1985, and it was largely his work in Bangladesh that inspired me to work with a group of Rwandan women to start that country’s first micro-finance bank. More than twenty years later, Dr. Yunus has inspired thousands of individuals to start micro-finance banks that have reached scores of millions - poor people who otherwise would not have access to bank credit. He is a man who demonstrates that one person really can change the world. He also has shown that a quarter century is not a long time to create a movement that shifts our perceptions of poor people and, in turn, helps shift our perceptions of ourselves. Micro-finance is now mainstream, supported by the world’s biggest commercial banks and reaching into most countries on the planet.

Dr. Yunus continues to inspire. By insisting on giving credit and not grants to individuals, he reminds us constantly of poor people’s desire to change their own lives - and capability to do so if given the chance. Acumen Fund shares his philosophy and has built systems inspired by the work and lessons of this determined individual and the extraordinary institution he built.

We also congratulate the Nobel Committee for so clearly reminding the world of the link between poverty and peace. May the rest of us build on this.

Saiban, our housing investment in Pakistan, is among the 13 finalists of the Ashoka-Changemakers Competition on “How to Provide Affordable Housing.” We’re so pleased to see Saiban honored for its work.

By going to the Changemakers site, you can help select the three winners. (You will need to select three entries for your vote to be counted.) Saiban’s entry is titled “Incremental Developmental Housing for low income groups.” The deadline for voting is October 16, 2006, and winners will be announced on October 17, 2006.

On a Saturday, one year ago at precisely 8:50 A.M., I was in my bed, sleeping soundly. Suddenly, everything began vigorously swaying left and right. At first, the shock of the motion had me confused, but as I opened my eyes, I realized it was an earthquake. I got up to go stand beneath the beam of the bathroom door (Dad’s orders since we were kids – apparently the safest place to be) but I couldn’t walk more than four steps without losing my balance and falling to the ground. The house was a big bowl of Jell-O and I was somewhere in the middle of it all. This was the biggest quake I had ever experienced, and I was certain my house would collapse any minute.

Fortunately no serious damage occurred, although I was so scared after the six-minute quake passed that I didn’t move from beneath the beam for a good 20 minutes.

Shortly after, I learned that a ten-story apartment building in my city, Islamabad, had just collapsed. I hopped in my car and drove over to the site. There were hundreds of cars parked alongside the road as I approached and a shot of adrenaline rushed through my veins. Thoughts of all the people I knew living in that building sparked all kinds of fears. One of my friends was in the building with his mother, grandmother, sister and cousin when it collapsed. The last three made it out, but his mother and grandmother stayed trapped inside at the ground-floor level beneath the tons of rubble.

My friends joined me as I arrived, and we all began helping clear the rubble. Unfortunately, our fervor was not enough to lift the enormous blocks of concrete that weighed down the remains of the building, which was now only 20 feet above the ground.

Some days you can set out to change the world and you find that the world changes you.

So there I was at 11am, sitting in the New York Human Resources Administration (HRA) with everyone else waiting for an appointment about Medicaid, food stamps, drug rehabilitation support, housing and child care. I had been there about two and a half hours, and as I sifted through more than 100 pieces of application papers (so confusing for even this UC Berkeley/Oxford grad), I felt a tug at my ankle and discovered a happy face of a little girl crawling on the floor. Her mother was across the bright purple room from me talking about how her phone was disconnected so when HRA couldn’t get a hold of her, the food stamps were cancelled. A deep voice next to me was struggling to read the electronic numbers on the signpost with a pair of broken glasses and then he began to comment, “all these teenagers having babies and you know the daddies just run away fo’ sho. The only place they can go is here. This is the only help for them babies.” It made me think about the night before when my sister and I were watching the Irish news about a woman who had tried desperately to get help from social services for severe depression, but no one was there that day…in the meantime, she killed herself and her children.

So why was I here?

Well, the seven Acumen Fund Fellows showed up to work one morning and were asked to empty our pockets. We were given a paper explaining that our assignment for the day was to write an article from the perspective of the poor about the quality of New York’s social services. We were given a $6 metro card, a $5 bill and a paper listing the instructions and some homeless shelters, clinics and food stamp offices. Our challenge was to live for a day as if we were poor so that we could understand better all the day to day struggles of our clients—the poor.

A recent series of articles in The New York Times highlights the everyday challenges of water access and sanitation in major cities all over India, and the significant consequences these challenges have on the lives of Indians. With over 700 million people lacking access to adequate water supply, and 2.1 million children under 5 dying from preventable water-borne disease, the toll is devastating. With both infrastructure and natural resources overstretched and misused, individuals take on a “me-first” approach, trying to get the water they need at any cost. This leads to accelerated degradation of pipes, which are illegally tapped, and water resources that are being drawn with little planning from depleted aquifers. Where in the midst of these governmental, social and market failures, is there cause for hope?

We see it in evidence that communities, local organizations and entrepreneurs can devise sustainable and equitable strategies to address the pressing needs that now affect almost every level of society. One Acumen Fund investee, Heritage Livelihood Services Provider, developed a model to bring water storage to peri-urban slums around Hyderabad so that women and children there could escape the fruitless cycle of waiting for water tankers. WaterHealth International, another member of the Water Portfolio, is providing safe and affordable drinking water to rural communities in India without relying on scarce groundwater resources. Technological innovators from India and abroad are looking to partner with local governments and NGOs to test decentralized approaches to tackling water quality and water access problems, and Acumen Fund is actively seeking ways to turn these bold experiments into scalable and sustainable models for reaching the vast and growing number of people who are ready for a change.