Two speed world ....notes from DC...

Just concluded 2 days at the FPD Forum.

These 2 days were part of a week long event at the World Bank Group in Washington DC, that brought together World Bank Group members and a whole host of development economists, professionals working in the development space and members from governing bodies in different emerging economies - to discuss issues that are relevant today in this space - for the Bank and its group members.

A very interesting experience indeed and an opportunity to connect with, meet and hear some really engaging discussions. A few quick highlights:

Session on Base of Pyramid Opportunities


Joined Ted London from the University of Michigan to speak on the subject of how private sector companies could scale business at the base of the pyramid. Ted presented a framework, a sort of road map that social-business ventures could follow, culled from a study of various examples across the developing world. And highlighted the difference between trying to access a fortune AT the base of the pyramid - and instead creating a Fortune WITH the base of the pyramid.

I followed that up with a practitioners view and elaborated in depth on how ITC eChoupal has been able to scale - to achieve business objectives, demonstrate growth AND reach 40,000 villages, 4 million farmers through a variety of business opportunities. Focused on a few points to elaborate on the ITC story:

1. How 'Scale' can be put into the DNA of a venture very early on
2. Empowering communities with a 'Real Choice' on an ongoing basis
   
3. Staying away from Trade-offs in the course of business - but seeking and implementing 'win-more' - 'win-more' propositions
4. Creating 'mutual value' with the community - 'tightly coupled enmeshing of interests'

I had the advantage of a lot of photographs taken during the course of my research and work on ground - and so used a lot of visual examples to bring alive the different thoughts! This session got a tremendous response - especially the live examples and led to many conversations during the rest of the two days. Including discussions with the IFC who have exactly the same charter - they are investing funds into emerging economies and are now seeking ways to improve the impact of investing in such markets - connecting social impact with business growth.

Impact Investing - what is this?

A session that sought to understand the definition of the term 'Impact Investing' - and whether this was really any different than what the Bank and IFC had already been doing. Moderated by Georgina Baker, Director of Financial Market Operations, IFC, this debate brought together some key players in the Impact Investing space. Antony Bugg-Levine, MD Rockerfeller Foundation; Nazeem Martin, MD, Business Partners; Wayne Silby, Calvert Funds and Peter Tropper, Private Equity Department, IFC.

Much debate on whether it was right to be seeking financial return when investing in social ventures - or if that put the wrong pressures onto a project that was designed for social good - and not financial growth. Whether it was appropriate to seek 4% or 9% or 0% earning from such investments - and which was more appropriate. Antony made the point that if Philanthropic funds and subsidies for social venture funds were two tools that could provide financial support to social ventures - Impact investing needed to be considered as a third tool - that could be leveraged in meeting social impact requirements. And he suggested that these were complimentary tools - to be used together and in balance.

The jury is still out on this debate though. Is Impact investing just a clever 'friendly' term for venture funds trying to get into the very attractive 'social impact market'....

Ascent of Money - Niall Ferguson

A brilliant talk by British historian Niall Ferguson, based on his new book The Ascent of Money, A financial History of the World. He was elaborating on whether the developing world had something to learn from the History of money or where they doomed to repeat it?

Was an absolute treat to hear Niall speak - and connect the dots from history that could show why the world is where it is financially today. With the Western Economy running on a speed of 1-3% growth and the emerging economies on a 7-10% growth rate - this two speed world has a lot of learning hidden within its disrespect for regulation and excess of money in pockets.

Purchasing homes has somehow been made the measure of success for middle income families - pulling people into the capitalist loop of investing in a single, very large, unhedged asset - that they cannot afford and probably do not need - but would trap them into being capitalists forever!! Its the capitalists trying to prevent others from becoming socialists :-)

Fundamentally he argued that an excessive leverage of the financial system, too much money, and inexcusable errors in monetary theory caused the crisis. And that crisis was unavoidable and would happen. But the signs needed to be read.

It was an interesting two days in DC. And the weather held up - with a little sunshine showing up once in a while. Got a chance to go to the Smithsonian Natural History Museum and see the Hope Diamond - now much reduced in its carat-age - but still a brilliant product of India!

On my way now to Boston - more from there in a few days.