Wednesday, December 30, 2009

Dubai: A wealth of misplaced fortune

Re-entering the developed world has always been difficult for me. Overwhelmed and often convicted by the ostentatious and pretentious use of wealth and natural resources, I struggle (and fail miserably) to imagine how a country can justify, say, wasting 150 trillion kilocalories of food a year while 1/4 of the population in other countries face starvation. Or justify consuming 20,680,000 barrels of gasoline a day, while others are rationing power 3 days a week because of fuel shortages. Or spending an average of $64-$110 per capita daily on expenses while half the world's population lives on less than $2 a day.
As I prepared to battle these realities on my flight from Nairobi to San Francisco, I was confronted with a whole new enemy during my two 12 hour layovers in Dubai. As I explored the emirate, I couldn't help but tremble at the magnitude of the world's new tallest building, or the world's first indoor ski resort, or the world's second tallest hotel that also changes colors and is shaped like a sail boat. And as I thought about the World islands -- a collection of 300 man-made islands constructed to resemble today's world (video here) -- I couldn’t help but realize how divided today's world really is.

And unfortunately, as I've said before, the solution to eliminating this gap isn't easy. There are, however, some obvious interventions that would help to narrow it, one of which became painfully clear while I was exploring Dubai: Make smarter investments.

As simple as this sounds, the story of Dubai has proven that simple is far from common. As the government recently came to grips with the desert of debt it's in, the wisdom behind the investments this debt supports has been seriously questioned. Take the World islands, for example. Here is a project that cost an estimated $14b to make, in which the Guardian newspaper reported that the project is unlikely ever to be completed and the islands are slowly slipping back beneath the waves.

Now take that wasted $14b, and imagine what would happen if it was responsibly invested in businesses that are sustainably and profitably meeting the needs of marginalized customers in base of the pyramid communities. Imagine if it was invested in a vehicle such as Acumen's capital markets fund (mentioned here), which is built upon a history of profitable double bottom line investments through patient capital. Imagine the impact. Instead of 300 mounds of disappearing sand, millions of lives would be transformed, struggling economies would be revived, investors would receive financial returns, and the world would grow closer to resembling the harmonious place that the World islands is supposed to emulate.

Monday, December 14, 2009

New news (Part 3)

Several months ago, I embarked on a quest to share the 'new news' coming out of the continent, specifically focusing on entrepreneurs who are birthing sustainable value through the ventures they are creating. Since then, I've grossly failed at sharing a number of these stories, partly because of confidentiality reasons from work, but mostly because I've struggled with finding time to conduct the homework needed to adequately represent these ventures.

The past two weekends, however, have more than made up for this lost ground, as I've had the opportunity to sit with almost 20 early stage entrepreneurs, each one with brilliant business ideas and emerging ventures. Entrepreneurs that will create an academy that teaches students how to produce household furnishings, or an all natural grocery store that procures from small scale farmers, or a computer accessories manufacturer that distributes through supermarkets, or a customized email template designer that also places advertisements, or a back office outsource solution that oversees clients' administrative tasks, or an animal feed processor that sells to the same farmers it buys the raw materials from, or a biomass stove manufacturer that uses sugarcane waste as fuel.

As the on-the-ground lead for a new nonprofit organization called Sinapis Group, I had the opportunity to be inspired by each of these entrepreneurs as I interviewed them for Sinapis's pilot fellowship, a 7 month program that will provide each entrepreneurial fellow with comprehensive business training, one-on-one mentorship and capital, with the ultimate goal of job creation and economic development.

When considering the business landscape entrepreneurs face in Kenya, it is painfully clear why an intervention such as Sinapis is mandated. Small to medium-sized enterprises have been largely overlooked by both the microfinance institutions that fund smaller ventures and the commercial banks that capitalize much larger establishments, creating a "missing middle" dilemma for SMEs. To complicate matters, many of the emerging SME interventions are only focusing on existing SMEs, not start ups.

And aside from capital, there are a number of other barriers, well articulated on Sinapis's website: the underdeveloped business knowledge/skill of many entrepreneurs, lack of SME sector support services (e.g., small business associations), prohibitive business regulations and bureaucracy, access to good industry and market information, and underdeveloped infrastructure.

For these reasons, Sinapis (meaning mustard seed) has realized the need to help fill in the gap. And based on the entrepreneurs' enthusiasm during the interviews, the organization seems to be heading in the right direction. As one entrepreneur said, even if I have the best idea and the most passion and perseverance in the world, I'll still need access to resources and a supportive environment to have any hope that the venture will succeed.