NYTimes OpEd: How Brazil Fights Poverty

January 4, 2011

In follow-up to a (somewhat) recent post on income inequality in the United States:

There was a New York Times “Fixes” Op-Ed yesterday on how Brazil has drastically decreased income inequality over the past 7 years. Author Tina Rosenberg writes:

“Many countries display great wealth side by side with great poverty. But until recently, Brazil was the most unequal country in the world. Today, however, Brazil’s level of economic inequality is dropping at a faster rate than that of almost any other country. Between 2003 and 2009, the income of poor Brazilians has grown seven times as much as the income of rich Brazilians. Poverty has fallen during that time from 22 percent of the population to 7 percent.”

How did Brazil achieve such a feat? By giving money to the poor. Or, in more technical terms: conditional cash transfers.

“The idea is to give regular payments to poor families, in the form of cash or electronic transfers into their bank accounts, if they meet certain requirements.  The requirements vary, but many countries employ those used by Mexico: families must keep their children in school and go for regular medical checkups, and mom must attend workshops on subjects like nutrition or disease prevention.”

Brazil has been a progressive force in other ways. At the School of Public Health, we often hear of Brazil’s pioneer decision to offer free HIV drugs to all their citizens: a “controversial” policy that saved lives by ignoring intellectual property rights. Hundreds of thousands of lives were likely saved. The United States put Brazil on the “Special 301” watch list.

In this case, however, Brazil was not the first-mover. In 1997, Mexico created a social program called Progresa (now renamed and better known as Opportunidades) which has demonstrated the success of conditional cash transfers.   Positive results include increased school enrollment, retention and attainment; improved nutrition and other preventative health behaviors; and reduced maternal-infant mortality rates. (I always like “public health interventions” that are really just social economic programs).

The Oportunidades program has served as a model for similar programs in other locations including Brazil and even New York City. (Spoiler alert: The NYC program didn’t work.)

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A Gathering of Great Minds

December 4, 2009

A little over two weeks ago, I had the opportunity to attend Acumen Fund‘s Investor Gathering – a quazi-shareholder-meeting for a non-profit organization which works to use entrepreneurial approaches to solve the problems of poverty.  It was a true honor to be in the same room as successful entrepreneurs, passionate donors, the hard-working Acumen staff, and active friends of the patient capitalism cause.

The morning kicked off with  “deep dive discussions.” The topics included Building Healthcare Systems for Low-Income Customers, Talent for the Social Enterprise Sector, Crossroads Pakistan: Emerging Opportunities, and the discussion I attended:

Innovations in Water and Sanitation.
It’s easy to talk about the importance of water; it’s harder to pose a solution that remedies the enormous lack of access to this basic human resource. Overcoming the challenge of a sustainable (clean!) water supply takes creative thinkers that fight the status quo and seek new means for the provision of basic needs.   The leaders of the conversation were just those people.

Moderated by Acumen Fund Ripple Effect Project Manager Sangeeta Chowdhry, the discussion featured:

  • David Kuria (Founder and CEO of Ecotact which builds and operates high-quality “ikotoilet” and shower facilities inKenya. He was also a winner of the Africa Regional Entrepreneur of the Year in 2009.)
  • Sanjay Bhantagar (CEO of WaterHealth International which provides safe drinking water for more than 300,000 customers per year.)
  • Marc Manara (the Water Portfolio manager of Acumen Fund)

Hearing from the leaders in the field was incredible.  I remember thinking “If everyone heard their message, people would be throwing money at them.”  More than once, I felt the enthusiasm and passion that drove these projects and wanted to jump up and demonstrate my support.  (And this was about sanitation!)

The classic argument that water is a basic human right and should be provided free by the government can make market-oriented approaches like Ecotact and WHI difficult.  The truth, however, is that 1 billion people still lack access to safe drinking water and 2.5 billion lack access to hygienic toilets. There is an economic cost of water purification and someone has to pay: public or private. Frankly, the public system is broken and not adequately addressing the problem at hand.

Businesses like WHI and Ecotact have demonstrated how effective market forces can be in expanding access to basic services.  They have proven that even impoverished populations will pay for quality products when made available and therefore

An example of one of Ecotact's Ikotoilets

these markets can help in promoting social justice.  Where the public sector fails, social enterprise can kick it up a notch to get things done and push public interventions to improve.

Following the morning discussions, multiple Acumen Fund leaders and friends took the stage to provide updates on the progress of the patient capitalism ideas, sharing lots of on-the-field stories.  I’ll summarize a few of my favorite speeches:

Keynote by Arif Naqvi – Founder and CEO of Abraaj Capital: When the leader of the largest private equity firm in the Middle East, North Africa, and South Asia kicks off an event; you know something big is happening.  Naqvi provided an eloquent speech, describing the future of socially-responsible investing.  This is not just a current trend, but a revolutionized way of combining business and philanthropy to shape the next era of global development.

Portfolio Update by Acumen Fund CIO Brian Trelstad: I admit I was confused when Brian began his speech with a story about 17th century pilgrims and his family lineage.  After a few slides, however, the point became clear.  It turns out that the Acumen Fund is a lot like Brian’s great-great grandfather (or twice-removed uncle? I forget the actual relationship): they are both pioneers.  The idea of “blended value” seeks to achieve both financial sustainability and big social returns in the long run by evaluating both financial and social profits.  Has it worked?  It’s too soon to tell.  But the excitement from the audience was clear and the general vibe: optimistic.  Brian gave a comprehensive update on the Fund’s 33 investments and the future possibilities in consideration.  The majority of investees are performing well and the future looks bright.

Bringing Clean Energy to Low-Income Consumers- From Vision to D.light: One of Acumen Fund’s investees, D.light, serves as a paragon of social innovation.  Its creators identified a major problem: low-income families rely on expensive and

D.Light allows families to have safe lighting during the night

A woman cooks under D.light's design, instead of using a kerosene lamp.

dangerous kerosene lamps for basic lighting at night.  To address this issue, two Stanford grad students (including speaker Sam Goldman) designed a very simple, very inexpensive solar powered light source targeted at developing communities.  Now, for $10, families can purchase a sustainable solution for their poor lighting needs.  Children can read at night, mothers can cook without fear of knocking over flammable gas, and families can depend on the light for the long-term as it recharges on its own.

Want to bring real change for your dollar?  $10 provides clean energy to the bottom of the economic pyramid.  Think what can be done when other innovations provide similar simple solutions for other major problems:  straws to purify water, cooking stoves that stop indoor air pollution, micro-drip irrigation systems to grow crops in drought.  This is social entrepreneurship. This the future of poverty alleviation and the Acumen Fund and companies like it are leading the way.

Building a Global Community: When Sasha Dichter took the stage, he did something I have never seen a Director of Development do: ask for money.  Albeit, I don’t come across lots of Development directors, but his speech was genuine.  He was not requesting donations, but was instead asking the audience to continue their support in a partnership dedicated to seeking solutions to poverty problems.  His manifesto should be read by everyone.

And, of course, the Acumen Fund Fellows: a truly impressive bunch.  Taking the stage with a truly theatrical entrance, the Fellows provided inspirational quotes in their native languages and proceeded to offer brief monologues demonstrating their passion for the cause.  These are the  leaders of social enterprise today (go check them out!).

To find out more about the Acumen Fund, check out this video: it summarizes all you need to know about the organization and in only 90 seconds:


Acumen Fund: Training the Next Generation of Leaders

July 28, 2009

Earlier this summer, 17 students from across the US and around the world came together in New York City to talk about one thing: social entrepreneurship. I was privileged to participate in the Acumen Fund‘s inaugural Student Leaders Workshop and the experience was insightful, exciting, and humbling all at once.

While the workshop focused on poverty alleviation and development through “patient capitalism,” many of the lessons I took away from the program have significant implications for all things public health. (It seems, after all, the more public health courses I take, the more I recognize the importance of well-structured, well-managed, sustainable interventions that truly address the needs of the people served.) The solution? More focus on market mechanisms.

While market mechanisms may not work for everything (read: health care in the US), there is definitely something to say for the empowerment of the underserved by supporting a long-lasting business economy, not providing charity and aid alone. Organizations like Kiva, Ashoka, Skoll Foundation, Echoing Green, and Acumen Fund are recognizing the potential for growth, and “social returns” in a new and emerging market populus: the poor. By targeting the “base of the [economic] pyramid,” companies can find new opportunities for profit while including underserved populations in to the global economy. And not just as consumers, but producers too. It’s worth looking up if you haven’t done so before. Check out #socent on Twitter if you really want to see what’s going on.

Our student group was also fortunate enough to hear the enthusiastic words of buisinessman marketing guru, best-selling author, and activist Seth Godin. He offered a lot if interesting wisdom and a challenge to young students to fight against the status quo and truly make a difference in the world. One of his pearls worth listening to: “Don’t go to medical school.”

The group of passionate, out-spoken, intelligent students (of whom I came across clearly by mistake) came to the workshop each offering their unique skills, vision, and ideals. Each left with enthusiasm to continue the work of creating positive social change and each left with a determination to continue the push for a social movement to end global poverty.

Currently, the group is working on developing a new product that will help spread awareness for the ideas of social entrepreneurship in bringing about change in poverty alleviation, health, and sustainable energy. Additionally, a viral film is in production to bring people together from all over the world to see what changes can be made through social enterprise (Find out more here or get involved here)

Let’s get to work.