Being the Change: Inspiring the Next Generation of Inclusive Business Entrepreneurs Impacting the Base of the Pyramid

7/31/2019 Being the Change: Inspiring the Next Generation of Inclusive Business Entrepreneurs Impacting the Base of the Py

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Being the Change:

inspiring the next generation of

inclusive business entrepreneurs

iMpacting the base of the pYraMiD


2/23

Being the Change: Written by:Eriko Ishikawa and

Christine Ribeiro

with Christian Gomez,

Sabine Hertveldt,

Sabine Prinz,

Marcus Watson,

and Toshi Masuoka

inspiring the next generation of

inclusive business entrepreneurs

iMpacting the base of the pYraMiD

About IFC

IFC, a member o the World Bank Group, is the largest global development institution ocused exclusively on the private sector. Wehelp developing countries achieve sustainable growth by nancing investment, mobilizing capital in international nancial markets,and providing advisory services to businesses and governments. In scal year 2012, our investments reached an all-time high omore than $20 billion, leveraging the power o the private sector to create jobs, spark innovation, and tackle the worlds mostpressing development challenges. For more inormation, visit www.ic.org.

About IFCs Inclusive Business Models Group

Launched in 2010, IFCs Inclusive Business Models Group mobilizes people, ideas, inormation and resources to help companiesstart and scale inclusive business models more eectively. Over the past eight years, inclusive business models have accountedor about 7 percent to 10 percent o IFCs annual commitments, or over $7 billion. Our work with over 300 inclusive businessclients in more than 80 countries has helped us reach more than 250 million people. For more inormation, visit www.ic.org/inclusivebusiness.

Acknowledgments

This report would not have been possible without the pioneering eorts o IFCs clients. We would li ke to give a special thanksto the leaders who took their time to be interviewed or this report: Anan Ahsan, Deji Akinyanju, Sanjay Bhatnagar, Carlos

Cavelier, Gonzalo Correa, Mitchell Elegbe, Teddy Esteve, Mike Fitzgerald, Sergio Leal, Juscelino Martins, Francisco Mere, LuisOrvaanos, Gyanesh Pandey, and Paresh Rajde.

The writing team included Eriko Ishikawa and Christine Ribeiro with input rom Christian Gomez, Sabine Hertveldt, SabinePrinz, Marcus Watson, and Toshi Masuoka. Richard Sine was the main editor with support rom Beth Jenkins. Corporate Visionsprovided the design.

This IFC publication is made in partnership with the ollowing donor partners:

Cover PhotosLet: Thailand (Sabine Prinz), Right: Ghana (Arne Hoel/The World Bank)

Rights and Permissions

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ForewordInclusive economic growth is an essential component in the ght against

poverty. By creating jobs and improving access to goods and services, it gives

all peoplenot just those at the top o the economic pyramida chance to

improve their lives.

IFC, a member o t he World Bank Group, is a leader in developing and

expanding inclusive business models. Its investment and advice support private

sector rms that are nding nancially sustainable and scalable ways to serve

the poor. These inclusive business models integrate poor people as ull eco-

nomic partners, bringing new opportunities to the base o the pyramid and

showing how innovative businesses can tap new markets.

Over the past eight years, inclusive business models have accounted or

about 7 to 10 percent o IFCs annual commitments, amounting to more than

$7 billion in all. IFCs workwith more than 300 inclusive-business clients inmore than 80 countrieshas helped it reach more than 250 million people.

In a world where 4 billion people go without basic goods and services and

have little hope or employment, this work is critical. Companies that bring

low-income producers and consumers into their supply chains are true pio-

neers, opening paths or uture prosperity.

Further developing these models is a priority or the World Bank Group,

or our private sector clients, and or me. Together, we can achieve inclusive

growth and ulll our mission o poverty eradication.

J-Y ce v pd d ceoic

Leadership PerspectiveEective leaders translate their vision o how the world should look into

A growing number o IFC clients are doing just that, developing and exp

innovative and successul business models that integrate people at t he b

the economic pyramid into their value chains.

This publication highlights the individuals who are leading some o t

companies. Based on interviews, we are able to share their journeys as b

pioneers, their challenges and achievements, and their advice and sourc

inspiration.

In recent years, IFC has analyzed the inclusive business models o mo

than 300 clients. Last year, we published a report highlighting the most

requent models in IFCs portolio, the challenges they have in common,

the results they achieved. We have also published close to 40 case studie

sharing knowledge in this way, IFC hopes to provide a resource or inclubusiness leaders working in developing economies.

I would like to thank the individuals this report highlights or sharing

stories. They are an inspiration or the next generation o inclusive busin

entrepreneurs, and there is much more to be done to create opportunit

poor people across the world.

n sjkv pd b ady sic


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Table o Contents

Lessons rom IFCs First Entrepreneur ........................................1

Introduction: How to Be the Change ........................................2

Leaders o Inclusive Business

Founders

Deji Akinyanju, Food Concepts Plc ................................4

Mitchell Elegbe, Interswitch Ltd. ...................................6Mike Fitzgerald, Altobridge Systems .............................8

Sergio Leal, VINTE Viviendas Integrales, S.A. de C.V. ...10

Luis Orvaanos, Corporacin Geo ..............................12

Gyanesh Pandey, Husk Power Systems........................14

Paresh Rajde, Suvidhaa Inoserve Pvt. Ltd. ..................16

Builders

Anan Ahsan, Engro Foods.........................................18

Sanjay Bhatnagar, WaterHealth International .............20

Carlos Cavelier, Alquera S.A. .....................................22

Gonzalo Correa, Moderna Alimentos S.A. ..................24

Teddy Esteve, Ecom Coee ........................................26

Juscelino Martins, Tribanco ........................................28

Francisco Mere, Agronanzas S.A. .............................30

Embracing the Change ..........................................................32


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r l.

Lessons rom IFCsFirst Entrepreneur

It was my rm conviction that the most promising uture or

the less developed countries was the establishing o good private

industry, Garner said in 1950. It was a path-breaking concept

or its time. The World Bank was still ully occupied in nation-

building and reconstructing the devastated countries in Europe

and Japan in the atermath o World War II. The World Banks

shareholders were governments; all World Bank lending was

directed at governments; and the responsibility or development

was almost universally assigned to the public sector.

Few investors were putting money into the developing

world in the early 1950s. Entrepreneurs in this region had ew

sources o capital to draw upon, domestically or abroad. Garner

and his supporters at the World Bank realized that IFC could

attract investors by nding viable projects, providing a stamp o

approval, then coming on board as a minority investor taking ull

commercial risk. This was Garners vision: helping create growth

economies where increased private enterprise activity would

benet everyone in the poorest countriesnot just a wealthy

ew.

Untested as it was at the time, Garner had an unshaken

belie in this idea. He traveled the world to share it, building

momentum that has continued ever since. While our current

vision statement was not in place at the time, he and his team

were carrying it out rom the beginning: creating opportunity or

people to escape poverty and improve their lives.

Addressing the Inaugural Meeting o IFCs Board o Governors

on November 15, 1956, Garner described his ardent belie in the

power o private enterprise:

Robert L. Garner had been a leadingnancier and was chie nancialocer o the General FoodsCorporation when World BankPresident John McCloy recruited himas his top deputy. Ater two yearsinside the Bank, Garner saw clearlythat lending to governments was

not enough. By 1949, he was callingor a new body to nance privateinvestment in developing countriesthe uture IFC.

I believe deeply that the most dynamic orce in pr

ing a better lie or people, and a more worthy lie

comes rom the initiative o the individualthe o

tunity to create, to produce, to achieve or himsel

his amilyeach to the best o his individual talen

this is the essence o the system o competitive pr

enterprise20th century modelas it has been d

oped by the most enlightened and successul busi

concerns. It holds the promise o rewards accordin

what the individual accomplishes. It is based on th

cept that it will beneft most its owners and mana

it best satisfes its customers; i it promotes the leg

interests o its employees; i in all regards it acts a

good citizen o the community. It is moved by th

to earn a profta most respectable and importan

tive, so long as proft comes rom providing useu

desirable goods and services. It is my belie that th

services and the best profts result rom a compet

system wherein skill and efciency get their just r


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2

Introduction:How to Be the ChangeYou must be the change you wish to see in the world.Mahatma Gandhi

IFC imagines a world in which the our billion people now living at the baseo the economic pyramid (BOP) have access to the products, services, andeconomic opportunities they need in order to build the kinds o lives they

aspire to leador themselves and or their children. We all need cleanwater, quality ood, aordable housing, reliable energy, decent roads,ecient communications, and comprehensive nancial services, and thoseliving at the BOP are no exception. While the poorest o the poor needand deserve humanitarian assistance, the working poor have combinedpurchasing power that is signicant. They are not oten prized as a marketsegment, but their voices are beginning to be heard.

Creative business leaders are being the change by

embracing this market segment. They see people living at the BOP

as value-conscious consumers, interesting new supply sources,

and strategic distribution and retail partners. They are helping the

BOP meet their own needs by nding ways to oer the goods,

services, and economic opportunities through commercially viable,

scalable business modelswhat we call inclusive business

models.

Developing an inclusive business model is a journey. It requires

nnovation, investment, an ability to learn, and an appetite or

doing things dierently. Its about changeand that change oten

starts within the change agent himsel.

s oy

n 1956, IFCs rst president, Robert L. Garner, described

entrepreneurship as that elusive combination o imagination to

see an opportunity and to mobilize the necessary resources to

seize it. Each o the individuals highlighted in this publication

possessed this entrepreneurial spirit and seized the opportunity to

do business with people living at the BOP.

Most companies implementing inclusive business models

share a key ingredient: strong leadership. Without a clear vision

and drive rom the top, it is dicult to break new ground.

This publication describes the personal journeys o 14 inclusive

business leaders, and talks about their personal i nspiration,

challenges and successes.

Each one o them ollowed his own path to inclusive business,

but all share the passion and perseverance necessary to see it

through.

The entrepreneurs who ounded their companies recognized

market needs and set out to create businesses to ll them,

incorporating inclusive business models rom the outset. The

seven ounders proled in this report are Deji Akinyanju, Mitchell

Elegbe, Mike Fitzgerald, Sergio Leal, Luis Orvaanos, Gyanesh

Pandey, and Paresh Rajde.

Others brought growth to a business rom the inside as amily

members, or were chosen as proessional managers because o

their vision and skill set. The seven individuals we call builders

or the purpose o this report are Anan Ahsan, Sanjay Bhatnagar,

Carlos Cavalier, Gonzalo Correa, Teddy Esteve, Juscelino Martins

and Francisco Mere. Some builders, such as Juscelino Martins and

Teddy Esteve, created a separate company in order to better meet

challenges such as the lack o nancing or BOP throughout the

value chain.

Whether ounders or builders, all o the leaders in this

publication showed an ability to think creatively about societys

toughest problems. They saw business opportunities where others

only saw pressing needs. They dared to imagine new models that

merged business and societal agendas. Together, they show us

that:

Short-term returns must be balanced with long-term goals.

All o the leaders proled in this report recognize that nancial

sustainability is crucially important. In act, they expect that doing

business with the BOP will make them even more protable in

the long term. Protable inclusive business models take time to

develop and oten involve up-ront investment. But, as Francisco

Mere o Agronanzas says, I you are not able to be nancially

sustainable, in the long term you are doing more harm than

good.

A local ocus helps inclusive business models develop.

These leaders know how important it is to understand the local

realities o the low-income people whom they count as customers

or business partners. Most o t heir companies are based in the

same countries where these customers and business partners live,

which gives them intimate knowledge o their conditions, needs

and capabilities. The rest keep a strong local presence in these

countries. Gonzalo Correa o Moderna says, In Ecuador more

than 50 percent live under the poverty line. All companies have a

role to generate change and bettering conditions, because in the

medium term, this also gets reinvested in better consumers.

The team is as important as the leader.Being a leader is not about being in charge; it is about

empowering others to achieve their ullest potential. Many o the

leaders proled in this report stressed the importance o remaining

humble and recognized their teams as core to their companies

success. One example is Mitchell Elegbe o Interswitch, who eels

that A lot o businesses ail because o the one man business

syndrome. By creating an environment where people are ree

to do what they believe is right, Interswitch and other co

have ostered the innovation that has led to their success.

Good relationships are key to success.

Inclusive business models rely heavily on good relationship

various partners, many o them non-traditional, based in r

areas, or in the inormal sector. These business relationship

are based on trust built over the years. As Juscelino Martin

Tribanco says, You should invest in knowledge and inorm

and in having good relationships with people.

Staying optimistic is crucial to growth.

All the leaders expressed their unshakable optimism or th

uture, despite the considerable obstacles that they have a

You have to be aware o the criticism, but there has to be

overriding optimism. I you dont, there is no drive, says G

Pandey o Husk Power.

Companies that work with the BOP oten need to overc

special challenges. They must understand new markets an

market behavior, appraise new risks, and develop new bus

processes and systems. They must also deal wi th the perce

o some investors that inclusive business models involve m

Many o the leaders proled in this publication said their e

supporters were crucial to their success.

IFC is proud to be one o these early supporters, investin

and helping to mobilize the resources needed to grow bot

companies and their impacts on people living at the BOP. I

will constantly strive to identiy ways to accelerate develop

through private sector engagement, leading the way and bthe change the world wants to see.

Many o the leaders proled here took the road less traveled to success. Some were born in developing countries but let to ga

educational and proessional experience at leading schools and corporations in the developed world. They could have easily staye

there, and led successul careers in comortable surroundings. Instead, they returned to their countries to apply what they had le

Others inherited the amily businesses. In some cases, their amilies success would have permitted them a more relaxed li esty

But, instead, they work tirelessly to advance their company, improving their nation and its people rom the BOP along the way.

The same challenges that scared others awayunskilled workorces, red tape, the lack o basic servicesare what inspired th

leaders. They recognized the challenges their countries aced as opportunities that they could address through creative and susta

business models. As Deji Akinyanju says, I just cannot see mysel making an impact o this magnitude anywhere else.

To these leaders, much was givenand theyve given even more in return.

to whoM Much is given, Much is expecteD

Being the Change


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Being the Change Founders

4

Dj akyjceo, d c p

What brought meback home is the passionto make a dierence.

I just cannot see myselmaking an impact o

this magnitudeanywhere else.

Making themost impact athome in Nigeria

concept which they call container baking. Buttereld sells entire

baking units to (primarily emale) small-scale bakers, supplying

them with all the high-quality inputs they need and providing

them with training and marketing support. Were developing

entrepreneurs in that segment, and getting our brand out there,

so it actually works positively or us in this market, Deji says.

Opened in 2003, Buttereld Bakery is now Ni gerias largest

ormal bread maker. In 2004, Food Concepts launched a quick-

service restaurant chain, Chicken Republic, which now operates

over 65 stores in Nigeria and Ghana and plans to expand to

300 stores. Chicken Republic also works closely with small-scale

partnersits armers. The chain supplies arms with eed and

high-quality day-old chicks, which the armers grow i nto chickens

destined or Chicken Republic restaurants.

To succeed in working with so many small partners, Deji

believes, processes must be as simple and practical as possible.

Highly complex or technical processes are dicult to replicate

successully across a wide network o partners. Scaled-down

manuacturing and production techniques are better candidates

to achieve scale and sustainability at the base o the pyramid.

Food Concepts now employs over 1,400 people across its

bakery and quick service businesses and has trained over 7,500

people since its 2001 launch, many o whom come rom the base

o the pyramid. IFCs investment will und urther expansion o

the Chicken Republic chain and the bakery operation. It is alsosupporting construction o a 250-hectare poultry arm south

o Lagos. Free Range Farms is expected to process 10.5 million

ree-range chickens per year and employ 250 people by 2014.

Deji sees a growing demand or chicken among Nigerians as they

climb the economic ladder. Current demand is outstripping supply

because o underdevelopment in the agricultural sector and strict

import controls on chicken.

Entrepreneurs in West Arica have an opportunity to be

movers in rapidly developing markets, Deji says. What bro

me back home is the passion to make a dierence, he sa

I just cannot see mysel making an impact o this magnit

anywhere else.

Deji recognizes the challenges to working in Nigeria

including administrative challenges and poor inrastructure

he ocuses on the positives instead. This is a country with

huge population, great resources, vast arable land, and hig

unemployment so you can get people back to work. To re

or other entrepreneurs seeking to start businesses in Ari ca

has a simple piece o advice: Come and get started as ea

as you can, because you need time to make mistakes, and

opportunities are huge.

ooD concepts plc

Heres a troubling act: About 90percent o the ood Nigerians consumeis imported, even though 70 percent oNigerians work in agriculture. Thats areal problem. But or an entrepreneurlike Deji Akinyanju, its also a tremendousopportunity.

Born and raised in Nigeria, Deji went to the UK or college and

to work at Accenture, the global management consulting rm.

Ater several years waiting or the right opportunity to return to

Arica, Deji moved to South Arica and began a trading business

which included supplying ood or UN survival kits in Burundi and

Rwanda. Deji ound himsel drawn to the ood industry because o

the impact it could have in improving ood supply and enhancing

livelihoods. He was impressed by domestic ood companies in South

Arica and Zimbabwe that were creating brands that could challenge

international players. One example was Zimbabwes Innescor, a

diversied ood supplier that started out as a single shop and grew to

employ over 3,000 people. For Deji, this was the prototype or home-

grown ood and restaurant brands in Arica.

Deji was part o a wave o Nigerians who returned home in 2000

with a change in government. When he learned o Nigerias inability

to eed itsel, Deji saw a chance to create a national player that could

harness the tremendous potential o local labor and small businesses.

Like so many entrepreneurs, he stumbled at rst. In 2001 he opened

a chicken and pizza outlet unded by $2 million in seed capital raised

rom riends and amily. But the chicken and pizza brands he had

ranchised rom South Arican companies didnt t local West Arican

tastes. A bread ranchise also ailed to take o.

With the ailure o a more traditional retail concept, it soon

became clear that small-scale suppliers and distributors would be

vital to bringing products to market and achieving scale. In thebread market, or example, Deji discovered a broad network o

people already selling products at the base o the pyramid. We,

the organized bakers, only constitute about 20 percent o the bread

consumed in the country per day, Deji says. To get our product to

the other 80 percent, we have to engage with the network o small-

scale bakeries and table-toppers around the country.

Food Concepts Buttereld Bakery brand is now operating a

IFCs Investment:

$13 million in equity and $7 milldebt nancing.

Headquartered in Nigeria, Food Concepts is a leading West

Arican quick service restaurant and bakery operator. Its main

line o poultry restaurants, Chicken Republic, launched i n

2004 and now has 65 outlets in Nigeria and Ghana. To acilitate

backward and orward integration strategies, the group also

comprises Buttereld Bakery Nigeria (includes 9 plant bakeries)

and Free Range Farms (a state-o-the-art poultry arm and

poultry processing plant). Food Concepts works closely with

its network o small-scale suppliers and distributors, providing

them with inputs and training and working to improve their

livelihoods. It has also added Pizza Republic and Reeds, a ne-

dining Thai usion restaurant to its portolio.


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6

As a young engineer working at thetelecom rm Telnet, Mitchell Elegbe wascharged with devising new ideas or thecompany. His job was to nurture themor a year and then hand them over tosomeone else to run as a business.

He once conded in his boss that he worried about running out oideas. She reassured him: She told me that a man never runs out o

ideas. Getting ideas is a process, an attitude, a culture.

One o Mitchells ideas at the timemodernizing Nigerias payment

systemgrew into Interswitch, which makes lie easier or Nigerians o

all economic backgrounds even as it osters the process, attitude and

culture that support indigenous innovation and talent development.

When Mitchell envisioned Interswitch at the turn o the century,

the cash that dominated Nigerias economy had become a source o

crime, raud and corruption. Just one example: With banks closing on

Friday aternoons, Nigerians withdrew cash to last the entire weekend.

Criminals knew that on a Friday night or Saturday, theres a high

likelihood that there will be a lot o cash to steal, Mitchell says.

Thereore, there is a direct correlation between armed robbery and

the way that Nigerians used cash.

Developing electronic payment in Nigeria required overcoming a

strong cultural bias toward cash. You have to look at the cultural

belies o a country to know how to innovate, Mitchell says.

Nigerians give cash as gits at weddings, at burials to show sympathy,

at childbirth, and other occasions. You and I know that culture change

cannot be achieved in a short period o time. So the approach is not to

eliminate cash but to preach a message that there is a more ecient

way to use it.

Launching Interswitch also required overcoming skepticism even

among the new companys shareholders. I was asked, How do you

run a 24/7 business in a country where power is not constant? In a

country where telecom is still very unreliable? When the people you

target are predominantly in love with their cash? How do you get

the human resources needed or an entirely new area like electronicpayment? These are the kind o issues we aced.

Today, Interswitch is demonstrating how electronic payment can

work in Nigeria. Nigerians once had to travel to a branch or oce and

wait in long lines to obtain their salary, deposit money, or pay a bill.

Now they can do these things instantly by cell phone, at an ATM, or

through a wide network o merchants. They reap the benets not only

in security, but also productivity: The Nigerian government, which is

now promoting a cashless economy, estimates that the direct cost o

handling, processing, and managing cash exceeds $1.2 billion in 2012.

M eM D/ceo, i ld.

You just need to create thatenvironment where people

are ree to do what theybelieve is right.

Bringing paymentinnovationsto the BOP

Mitchell knew that electronic payment could be appealingto banks as well as the Nigerian people, because transactions

are a signicant source o banking revenues. He partnered with

Accenture to develop a business case and a business plan, and

then he took a step that many entrepreneurs are not willing to

do: Though Interswitch was my idea, I gave up ownership to the

banks, he says. It was more important to see the vision come to

ruition than owning the organization, so ownership was given to

institutions that we believed would be needed rom a corporate

governance point o view to assist in growing the business. The

banks owned about 85 percent o the company, and we had a

board o the CEOs o banks in Nigeria, as well as one or two IT

companies, all o which combined to ensure that proper corporate

governance was ollowed.

This close partnership with key players in nance and IT has

helped Interswitch stay ahead o the competition, Mitchell believes.

It has also helped Interswitch avoid some o the pitalls o sole

ownership. A lot o businesses ail because o the one man

business syndrome. The man thinks that all decisions should be

weighed rom his point o view: I am using my lie savings to run

this business. That mode can cause you to make bad decisions. For

example, you dont pay or quality personnel because you think its

your money going away. You ace problems because the governing

structure was wrong rom the outset.

Interswitch must work with the base o the pyramid to succeed

and grow, Mitchell believes, because most o the countrys

population is located there. More prooundly, Mitchell believes that

getting the BOP involved in the process appears to be the only

sustainable way or real development to take place in Nigeria.

Currently, Nigerias economy is dominated by the inormal sector,

Mitchell explains. Money that does go to the ormal banking

sector moves out rapidly, as individuals in the cities send money to

their amilies in the countryside. Electronic paymentacilitated

by widespread use o cell phones in the countrysidepromises to

keep more money in the banking system, and banks are a major

source o unds used or the countrys development. (Interswitch

also contributes to the countrys development by working with

micronance banks. All o Nigerias micronance banks are now

part o the Interswitch network.)Mitchell osters creativity at Interswitch using the lessons

learned at Telnet and elsewhere. You just need to create th

environment where people are ree to do what they believe

right. He encourages employees to air their views and to pu

ideas and passions not directly tied to their job description. T

company also sponsors a Hackathon in which its engineer

on a project or 72 hours and showcase it to a panel o judg

These policies have spawned several successul ideas, Mitche

As an entrepreneur, Mitchell himsel remains an idea ma

The avorite part o my job is coming up with an idea and t

getting someone to run with it and make it a success beore

become bored. This implies that theres a crop o people you

groomed to do this. You work out something with them, th

back and watch those ideas become very successul.

As a leader in a ast-growing market, Mitchell recognizes

you may not have the luxury o knowing all the acts you n

to take a decision. So you need to cultivate a system that do

make it dicult to make a decision even as you keep search

or more acts. Also, do not be a slave to your position, be b

enough to go to your people and say, Based on these new

think we should move this in a new direction.

Last years acquisition by an investor syndicate (including

will speed Interswitchs growth in Nigeria and Sub-Saharan A

Interswitch also wants to bring electronic payment into new

markets like transportation and health. To Mitchell, the acqu

has validated that he and his company have created a lot o

and they have only just begun. We have not tapped into a

o what is happening in this market as ar as electronic paym

concerned. That gives me huge hope or the uture.

interswitch ltD.

Interswitch is a payment processing company that improves the

lives o Nigerians living at the base o the pyramid by oering

a method or people to make transactions using pre-paid

cards or mobile money. In 2011, Interswitch had 15,300 direct

and indirect BOP customers. Interswitch helps underbanked

customers access and transer money easily by oering

the Verve, a pre-unded card that can be unded through

mobile phones, via the Internet, or at ATMs, point-o-sale

terminals, and bank branches. The money is available instantly

to the recipient and can be withdrawn at an ATM. Parents

use the Verve to send money to their children in college,

conglomerates use it to pay casual workers, and people across

Nigeria use it to send money to loved ones in rural areas.

IFCs Investment:

$10.5 million in equity


9/23


8

Mike Fitzgerald studied math andcomputers in college, but he steers arclear rom the stereotype o the awkwardloner. Im not an introvert, says theclet-chinned Irishman.On graduation he joined mobile phone giant Ericsson because he was

entranced by the potential o telephony to help people connecthis

interviewer quizzed him on how he might design a mobile technology toassist a relative who couldnt speakas well as the potential or travel.

While we all deal with customer demands every day, I wanted to go out

and meet with them, he says.

Six months ater joining Ericsson, Mike was on the road, eventually

running business units in China and Caliornia. He was surprised to learn

that mobile service operators in both places aced similar challenges,

challenges that came to dene the rest o his career: Once you move

outside the cities, large towns and the highways, you are aced with the

challenge: How do you get power, how do you get transmission and how

do you make sure that the costs o providing voice and data connectivity

in these particular communities isnt astronomical?

Mike rst got the opportunity to respond to this challenge in 1999.

He led a management buyout to orm a company called Microcellular

Systems, which was soon acquired by a public company, InterWAVE

Communications. Ater a stint at InterWAVE, Mike and a partner, Guy

Waugh, poured the money they received or selling Microcellular into

a six-month easibility study or the concept that eventually became

Altobridge. They traveled around the world talking about their idea to

a variety o industry players as well as venture capitalists. They sought

to assess whether there was a market or a low operating cost remote

communication solution and who else might already be working on

similar technology. The trip yielded two potential partners and helped

them gain support orand condence intheir idea. With their

concept more ully developed, they went back to their ormer business

partners and colleagues in 2002 and said,Heres the architecture, heres

the propositionwhos interested?

Many o them were, and this group ormed the core o Altobridge.

Mike remains convinced that a easibility study is essential to orminga new company. The easiest thing in the world is to stay blind and

content and passionate about your idea. The hardest thing is to go nd

out how many other people are doing it. You owe it to yoursel and you

also owe it to the shareholdersthe people putting up the money, he

says, adding: Id preer to lose tens o thousands o personal wealth

than millions o investor wealth.

About 1.6 billion adultsor 23 percent o the worlds population

are not connected to basic telecommunications services, Altobridge

estimates. The biggest hurdles to connecting to remote communities

Mk dceo, ad sym

The easiest thing in the

world is to stay blind andcontent and passionateabout your idea. The

hardest thing is to go ndout how many otherpeople are doing it.

Connecting remotecommunities withmobile services

are expensive telecom towers, high power costs and the expensive

satellite bandwidth that carries the data. Altobridge has developed

a compact, solar-powered mobile communications systemcalledlite-siteTMwhich minimizes satellite bandwidth usage and power

consumption. The system can serve communities with 100 to 1,500

subscribers protably; traditional mobile deployments require several

thousand subscribers. The lite-site has been commercially deployed in

countries including Malaysia, Indonesia, Niger, Ghana, Oman, Tonga,

Papua New Guinea, Solomon Islands and Mongolia.

Todays mobile operators continue to be challenged by the huge

trac base they have within the worlds cities, but these markets are

nearing their saturation point, Mike believes. Working closely with

leading analysts, Altobridge has commercial evidence that real growth

is to be ound in the periphery. But convincing mobile operators that

these communities can be protably served is Altobridges biggest

challenge. The company reached a milestone about ve years ago in

Malaysia, when Altobridge decided to take ull risk and deploy the

solution to 20 remote communities. We nally said, weve got to do

it ourselves. We cant keep trying to convert each person to believe.

And now, once you have the traction, once you have the reerences,

once you have demonstrated that you can scale to hundreds o sites,

it is easier or more to believe. We are now going out and gauging

the economic and social benet, the underlying growth and benets

that come with connectivity.

Altobridge is a company with a split personality, Mike admits

one that refects Mikes own personality. Though Mike doesnt use the

term, the two sides o that personality might be called dispassionate

and compassionate. On the dispassionate side: We are capitalists,

Mike declares. We are seriously ocused on ensuring that the

solution makes money or the operator that deploys it, irrespective o

the community they serve.Along those lines, Mike ollows what he calls evidence-based

management and evidence-based leadership. He was introduced

to the idea by a business school proessor at Stanord, where he

completed a leadership program. A management team that stays

ocused on market evidence, Mike says, will not be swayed by egos

or opinions. It will be more productive and will make more accurate

decisions. Altobridges success, he says, lies in the deep research that

preceded its ounding, and that continues today.

The compassionate side o that split personality acknowl

that a large portion o the countless remote communities Alto

seeks to connect are among the poorest and most isolated in world. Altobridge engineers routinely visit these communities

analyze the actual communication activity: the moment when

mother, long separated rom her son, speaks with him on a p

or the rst time; a villager discovers a better price or their pr

or a local entrepreneurs eyes light up at the wonders o the In

Our guys are out in the eld taking pictures, and they send t

back to us, Mike says. These pictures become part o the cu

the company. One such image is on Mikes laptop as a screen

another appears every time he reaches or his phone. We de

get up in the morning motivated by the act that our success w

connect millions o unconnected people, and were already co

to a huge number o them.

While Mike admits to not being ascinated by day-to-day

management o a company, he loves the challenge o nding

customers. Giving employees a taste o that challenge is also

to motivating them, he believes. One o the advantages o b

a small company is that you can take people close to the cust

and give them the experience o meeting customer demands.

new commercial opportunities is similar to the hunger o the e

heading out across that thin ice or the rst time. And when w

that deal, everyone eels a part o that success.

You never know where your next customer is coming rom

Mike says, so its important to be constantly on the alert. Like t

boss, Altobridge employees are constantly searching the world

customers, or technical innovations, or or market evidence t

will help them connect the unconnected at the lowest possibl

Im quite happy going to a meeting on the other side o the

that was a complete waste o time, he says. I try to make sthe meeting will be as productive as possible. But Id rather ta

chance and have a meeting that ended up meaning nothing t

skip that meeting and miss an opportunity. The worst thing yo

going to do is learn something new.

altobriDge sYsteMs

Headquartered in Ireland, Altobridge is an R&D-ocused,

wireless network solutions provider. Its ounding vision

was to remove the technical and commercial barriers that

denied remote and rural communities access to aordable

mobile voice and internet connectivity. Since its creation in

2002, Altobridge has designed, patented and commercially

deployed technology innovations that have bridged the

digital divide; breakthrough solutions that now enable mobile

network operators, particularly in emerging markets, to

aordably connect unconnected communities.

IFCs Investment:

$5 million in equity


10/23


10

Sergio Leal witnessed rsthand theproblems with building a companyaround one great man. His grandatherwas one o the wealthiest men in townand a celebrity in the urniture business.

The entire amily beneted rom thewealth, but when his grandather passedaway, the company quickly unraveled.

Sergio decided rom a young age to become an entrepreneur

like his grandather. He built the skill s needed to start a company,

becoming a certied architect, obtaining a masters degree in nance

and gaining experience in construction, design, and marketing. But

when he was nally ready to take the plunge, he realized you have

to be with people who are better than you. VINTE was built out o

a partnership o ve men sharing a common vision but each with

their own specialty: sales, construction, administration, design and

technological innovation, and government relations. This structure

supports a holistic view o the business that builds value or its

customers (and the company) in a diversity o ways.

Sergio was just 27and the youngest o the partnerswhen

he convinced them to leave the homebuilder where they had all

worked or a decade. They had tired o their employers singular

ocus on selling homes. Instead, they recognized a serious shortage

o aordable housing or lower-income amilies and shared a dream

o improving the quality o l ie or the next generation o Mexicans.

We say that a house should be a source o inspiration or Mexicans,

so we can transorm ourselves into a dierent nation, Sergio says.

VINTE has established its niche by oering innovative technology

and modern inrastructure services. Its homes are designed to reducegas bills by 75 percent, and VINTE oers electricity-saving eatures

such as rootop solar cells and wall meters to measure utility service

consumption. Homes are equipped with computers and Internet,

acilitating access to security cameras and a housing development

website.

The company also enables homeowners to orm a community

cooperative to manage their own housing developments. Following

the sale o a development, VINTE has a year-long transition period

s lceo, vinte vd i,s.a. d c.v.

About 1,100 developersin Mexico are dedicated

exclusively to build housing.That is what leads you toa one-time transaction.

I sell you a home, and Ileave. What VINTE does is

dierent. What VINTE doesis: I stay with you.

Transorming anaordable houseinto a source oinspiration or all

during which it teaches residents property management skills and

community values. And VINTE developments include eatures such

as gated courtyards, schools, water treatment plants, playgrounds

and recreational areas supported by aordable resident

community ees.

These eatures help residents gain pride in their communities,

but they also support VINTEs bottom line. VI NTE oers custom-

made urniture or its new residents so homes can be urnished

rom the moment they move in. It provides Internet service

connection in the homes or a ee. And it oten purchases its

customers homes back and re-sells them, oering liquidity to the

homeowners. VINTE is not developing homes, Sergio saysit is

developing customers over the long haul, selling them a range o

products and services. And both VINTE and its customers benet

rom the success.

About 1,100 developers in Mexico are dedicated exclusively

to build housing, Sergio says. That is what leads you to a

one-time transaction. I sell you a home, and I leave. What VINTE

does is dierent. What VINTE does is: I stay with you. I sell you

a home. I organize you socially. I sell you the urniture or your

home. I sell you the technology or your home. I take care o the

maintenance. And then I buy back your home to sell you a bigger

one [as your amily grows]. Thus our business model is a long-

term chain. VINTE innovated on this theme, and surely the sector

will move in that direction now.Founded in 2002, VINTE has become the 19 th largest builder

in Mexico, building over 14,000 homes during the last decade

with a specialty in aordable housing or low- and middle-income

amilies. They have studied details such as the optimal number o

homes that should be represented in a neighborhood committee

(no more than 500); how ar stores should be located rom homes

(less than a kilometer); and the ergonomics o the urniture it

oers.

As VINTE grew, the partners took pains to avoid hiring s

who didnt share their visionthose employees rarely laste

anyway, Sergio says. Sergio used the same mentality when

deciding on investors. He turned down investments rom s

wealthy Mexican amilies. He preerred an i nvestor who w

add more than monetary value and shared the teams visio

led VINTE to take on IFC as a lender and equity partner in

VINTE has beneted rom government programs that al

working class people to access housing nance. For examp

through a program known as INFONAVIT, private employe

allocate ve percent o monthly payroll to individual saving

accounts which can later be applied to a mortgage down

payment or loan payment. VINTE does its part by adding v

to communities, which increases the tax base and reduces

maintenance burden on governments. More importantly, p

who live in a well-maintained community tend to have bet

esteem, which leads to better productivity and a benet to

country as a whole.

For Sergio, VINTE would not have been possible withou

o his partners. He compares his team o partners to a mar

Were all convinced that we are worth much more toget

separated, and each day we make a big eort to work tog

well, because the great complementarity o our dierence

what makes us strong.

vinte vivienDas integrales

Founded in 2001, VINTE is a homebuilder specializing in

aordable, sustainable housing or low- and middle-income

amilies in Mexico. As a vertically integrated company, VINTEs

operations span land acquisition, housing design, housing

development planning, construction, marketing, and sales.

VINTEs shareholders have a collective vision to raise housing

standards in Mexico while providing innovative, value-added

aordable housing. As o 2012, VINTE had sold more than

14,000 houses. VINTE also has operations in green and social

businesses, including recharging wells and lagoons, telemetry

systems to digitally measure consumption, solar energy water

heaters, photovoltaic systems, and Internet service.

IFCs Investment:

$12.5 million in debt nancing, million in equity, and $14.3 millia guarantee


11/23


12

Entrepreneurship is in Luis Orvaanossblood. His ather, Jorge OrvaanosZiga, was a nationalistic businessmanwith a lot o idealism who oundedbusinesses in appliances and industrialmaterials. His grandather and uncleswere also successul businessmen.

I am the third generation o businessmen, so I was born into this

group. Within you, you have a need to create, to promote, to take

risks, to overcome challenges, to generate jobsultimately creating

activities that benet the people around you, Luis says.

As a teenager, Luis loved to tinker in his carpenters workshop,

and soon he was selling construction materials that he had designed.

From 19 years old on, I elt a business was building, without anyone

guiding me. I was somehow internally developing that capacity. I

could never be an employee. I always had to be the leader o my

destiny.

In 1972, the Mexican government launched INFONAVIT and

FOVISSSTE, two savings programs that have enabled millions o

working class Mexicans to nance aordable homes. Luis started

Corporacin GEO a year later with another architect in the service

closet o his apartment. They were two young men with visions o

grandeur, starting the business without secretaries or dratsmen. It

is a romantic and passionate business, because o the great reach

you can have, the desire to apply architecture or the purpose o

development.

With no ormal business training, Luis relied greatly on books to

teach him the basics. He read many business books as he made the

transition rom architect to ull-time manager. But he is especially

ascinated by biographies o leaders ranging rom the Egyptian

pharaohs to John F. Kennedy. He studies the lives o heroes like

Winston Churchill as well as villains like Joseph Stalin. Asked aboutthe infuences that have shaped his career, he responds, I cant say

i it was a person, or books, or an eventor as [Spanish philosopher

Jos] Ortega y Gasset says, I am I and my circumstance, no?

Corporacin GEO has grown into a leading housing developer

in Mexico and one o the largest in Latin America. Luis credits

the companys success to its decision to specialize. GEOs niche is

aordable housing, and within that specialization, we have worked

l ocm d ceo, c geo

I am the third generationo businessmen, so I was

born into this group.Within you, you have aneed to create, to

promote, to take risks,to overcome challenges,to generate jobs

ultimately creatingactivities that benetthe people around you.

Creating activitiesthat benet thepeople around you

a lot in research and development, Luis says. That has made us

more ecient in processes rom buying our land i n bulk, to the

[property] handover, and securing training and education o the

amilies that live there.

Another outgrowth o that R&D has been the Alpha

preabricated construction technology that is unique in Latin

America today. The homes components are built at a actory, then

transported to a building site or assembly. The aster delivery

time allows GEO to build a larger house at the same low entry

price. It also reduces waste generation and energy use during

construction, and allows or construction o a more energy- and

water-ecient home. By 2015, Alpha homes will comprise hal o

all homes that GEO builds.

GEOs ability to serve the base o the pyramid is enhanced by

the companys size, Luis says. The company has invested heavily

in advanced IT to increase management eciency. It can take

advantage o economies o scale by purchasing in volume: We

are, or example, the main client o practically all the cement

companies in the country. The company also enjoys avorable

terms with nancial entities. A reputation o reliability with banks,

suppliers, and government all help the business deliver aordable

housing at a rapid rate.

Luis has helped to build a strong corporate culture at GEO.

GEOs growth has been organic; internal promotions have built

managers rom people who started 10 or 15 years ago at thelowest levels o the company. Those promotions help motivate the

companys 9,000 employees. This is a company o opportunities

and, as you have this opportunity or growth, the company

benets, Luis says.

Who is qualied to be an entrepreneur, in Luis view? Anyone

who has a spirit or risk, who has a spiri t or working with eort,

who has also a capacity to suer, and to many times eel isolated

... The person needs to have perseverance and ollow-thro

on his goals and objectives, because all is resolved through

work, work. Work constantly and with condence and you

come out ahead, and transmit it to all those around.

Luis clearly believes he is on a mission to provide good h

to working Mexicans. I dont know which other products

benet the people like a house can. A house is or all o yo

lie, a house is our roots, a house is prosperity, a house is a

investment, a house is the amily union. Our most satisyin

moments are when we visit a development that was a was

and now all the homes are built, along with the parks, gar

schools, shops and courtyards. These are very gratiying

momentswhen each amily receives their new house, an

hope that it provides. These are the elements that push us

keep pushing us.

corporacin geo

Corporacin GEO is the largest low-income housing developer

o sustainable communities in Mexico. Through its subsidiaries

located in the most dynamic cities o the country, GEO is

engaged in all aspects o design, development, construction,

marketing, sales and delivery o mainly low-income housing

segment with additional activities in the middle income

segments. GEO is one o the most geographically diversied

homebuilders in Mexico with operations in 22 states. In its over

39 years o experience, GEO has sold more than 600,000 homes

which currently provide housing to 2.2 million-plus people.

GEOs solid business model is ocused mainly in the aordable,

entry level and economic segments, which are supported by

government policies and by the Mexican housing institutions

INFONAVIT and FOVISSSTE.

IFCs Investment:

$25 million in equity


12/23


14

Born in a poor village in Bihar, Indiaspoorest state, Gyanesh Pandey couldntstand going home. He let early, movingin with his grandparents in a nearbytown and enrolling in boarding school at

the age o 6. Eventually, he ound himselhalway around the world, working onpower management technologies asan electrical engineer at a Caliorniasemiconductor company.

He could have never looked back, but that village haunted him. He

hated it, but he still elt he had to do something about it.

For the next ve years, Gyanesh and a New Delhi-based riend

rom boarding school, Ratnesh Yadav, mulled over alternative energy

technologies and conducted experiments during their o hours. They

toyed with biouel rom jatrophaa shrub that can be grown on

marginal landsbut that didnt pan out. Gyaneshs plan was to nd

the right technology, then hand it o to someone to implement on

the ground. That way he could help his old village without ever really

having to return.

Then he attended a retreat that changed everything: Ten days

o Vipassana, also known as insight meditation. No talking,

no exercise, no TV, no newspaper, nothing. Just Gyanesh and his

thoughts. Thats where it hit him: Vipassana helped me understand

that i you really want to do something, you have to get down and

dirty. You cant just be trying to do something rom the outside.

About a month later, he moved to Bihar. He was back home in the

village hed avoided all his lie.In Bihar, where practically nothing is wasted, Gyanesh ound rice

husks were going unused. Returning to basic gasication t echnology,

he began experimenting with these husks as eedstock. The vil lagers

and even Gyaneshs own amily thought he was crazy. Rumors few:

Gyanesh had stolen money in America and was hiding out; He was

escaping rom a disgruntled ex-wie. There was no logical reason

or him to be there playing around with rice. But he pressed on:

gy pdyc-d, ceo/cto, hk p sym

Entrepreneurship can behard and spirit-sapping

labor, but it can alsoelevate your spirit.

Feeling theproblems andbringing solutionshome to Bihar

You have to be aware o the criticism, but there has to be an

overriding optimism. I you dont, there is no drive.

Gyanesh and Yadav poured their personal and retirement

savings into two prototype power plants, and newly-ormed

Husk Power had a string o successes: They won several business

plan competitions with help rom a riend in business school,

Manoj Sinha. The Shell Foundation provided a grant and

technical assistance. And the team raised a round o venture

capital nancing rom reputed rms like Acumen Fund and

Oasis Fund. It has allowed Husk Power to scale-up rapidly, and

also provided Gyanesh with a new surge o condence: When

we won all these business plan competitions, it was a very

interesting realizationpeople are buying it so easily, he says.

When investors got interested it was an aha moment as well.

I didnt know much about the social investment eldI was

concentrating on philanthropy, or some kind o debt undraising.

But people were willing to invest equity in the villages. That was

interesting.

Husk Power is making a dent in Bihar, where less than one-

third o residents have access to electricity. In just three years, it

has installed 72 small-scale power plants that serve more than

30,000 households. For just $2.20 a month, users get electricity

or 6-8 hours each evening. Its more environmentally sound than

existing sources such as kerosene, wood, dung and diesel. I ts also

cheaper: Husk estimates it has saved its customers $1.25 million.Husk Power has also created over 350 jobs, a particular source

o pride to Gyanesh: When I talk to some people who had

absolutely nothing, who were out there at the mercy o things, I

eel very proud that we were able to give them a livelihood.

Gyanesh credits his close riends and extensive social network

or much o his ability to make things happen as an entrepreneur.

Im sitting in a random village trying to do R&D, tryi ng to build

electronic devices, and I have the luxury o thinking o a na

calling them and asking or a avor that takes two hours o

time. I have a comortable relationship with a lot o people

rom school. But as his employee base expands, he says i

important to implement perormance management system

the ace o the shiting loyalties and desperation he somet

encounters on the ground.

Theres no ormula to becoming a successul entreprene

says Gyanesh: Its a culmination o your lie. It takes every

o your time, and its airly risky in that i it works out, you

something, and i it doesnt, you have nothing ... Entrepre

can be hard and spirit-sapping labor, but it can also elevat

spirit. That happens when you can eel the problem you a

to solve. I you can eel the problem, solutions are born.

It was not until Gyanesh went back to the source o the

problem and truly understood it that he was able to nd a

solution. This seemingly simple solution is helping to trans

villages into places that people want to live in. Gyanesh is

homeand happy to be there.

husK power sYsteMs

Founded in 2007, Husk Power Systems (HPS) is a decentralized

power generation and distribution company serving rural

India. It has developed an innovative biomass gasication

technology capable o generating power as eciently as

conventional biomass gasiers, but on a micro scaleenabling

the company to serve rural villages at prices they can aord.

The gasiers run on the vill ages letover rice husks. HPS

covers 250 villages and employs 350 people. It has provided

electricity to over 2,500 villages and 150,000 people in the

state o Bihar, India. Besides IFC, Draper Fisher Jurvetson,

Cisco, Oasis Fund, Acumen Fund, and LGT Philanthropy

Foundation also have equity stakes in the company.

IFCs Investment:

$350,000 in equity


13/23


16

Paresh Rajdes vision or his companycrystallized in a single moment in 2006as he watched TV news ootage o acrowded Indian train station. I saw thatthe railways was having huge problemswith payments or tickets. Customers

were travelling rom ar and wide andqueuing or hours to have their tickets

processed.

Because o the bottleneck in payments, customers were oten not

buying tickets at all, resulting in lost revenues or the railway. A

very humble and novel thought came to me: I can help this railway

with my knowledge o technology and reduce the hardships o

customers.

That moment o insight has grown into an online electronic

payments platorm that reaches over 10 million people across 2,800

towns in India. Through Suvidhaa, Indians can transact with over 300

businesses in utilities, telecom, entertainment, education, transport

and nancial services, as well as government agencies. The platorm

can be used or payments, purchases, transers, remittances,

ticketing, and more.

Suvidhaas highly inclusive business model brings the convenience

o electronic payments to a population that still transacts largely in

cash and has relatively little access to payment cards or the Internet.

The consumer accesses the platorm through a network o about

55,000 merchants and retailers, who handle the cash and make the

transactions on consumers behal.

Trained as a chartered accountant, Paresh ran his own accounting

practice or a decade early i n his career. But he yearned to do

something unconventional. An oer to support a riend in a

technology venture led Paresh to explore the technology industry,

which in turn led to the ounding o an online lottery business

that Paresh later sold. The business i nvolved a network o gaming

terminals, and when Paresh saw the chaotic scene at the train

station, he thought this might be the opportunity to bring a

similar kind o network to solve a new problem. Paresh scored an

early victory when he met with a senior ocial at the Ministry or

p rjdceo, sd i p., ld.

I dont care so muchabout [a hirees]

knowledge, becausethat can be gained.Attitude is all

important.

Enabling the BOPto get their ticketto technology

Railways. Within minutes they understood the model, li ked it

and said, We would like to do business with you.

But developing Suvidhaas network took time, due to a classic

chicken-and-egg problem: Unless we have a good distribution

network, the service providers will not want to join. But unless

we have good service providers as partners, we will not be able

to grow our distribution network to arrive at critical mass. Today,

Suvidhaa has succeeded in attracting a wide variety o top service

providers to become the number-one digital distribution company

in India. But protability is still a challenge because electronic

payments are a low-margin, high volume game. So Suvidhaa is

racing to grow even aster. It aims to reach deep into rural areas,

where even more customers are rom the base o the pyramid.

I am a rst generation large-scale business owner, Paresh

says. I have no ormal business training. I did not go to

management school. Ive grown companies rom the bottom up.

My management style comes purely rom my own logic, always

thinking out-o-the-box at every step o the business model

and operating process. I think that has helped me to bring the

company together and motivate our people. He believes his

collaborative approach explains why most o his ounding sta is

still with the company.

Paresh attributes his business success to his ability to remain

calm under pressure; to encourage innovation; and to hire well.

I dont care so much about [a hirees] knowledge, he says,because that can be gained. Attitude is all important.

The most important actor, however, has been his upbringing.

One o our siblings born in a small vill age near the India-Pakistan

border, Paresh learned about sacrice and hard work rom an

early age. His parents poured all they had in their childrens

education. We had a tough time in my school days, when my

parents would oten not have enough money to buy our school

uniorms, Paresh says. The school in his village only went

the elementary level, so Paresh and his siblings had to mov

larger towns to continue their education, all the way to M

All our siblings ultimately acquired post-graduate degrees

It has been a long journey rom the small village where

grew up, yet it is his parents values that motivate him. Et

practices, morals, commitment, integrity, hard work ... the

the basic ingredients I inherited rom my parents that have

me get to where I am today.

suviDhaa inoserve pvt. ltD.

Suvidhaa Inoserve Private Ltd. (Suvidhaa) is headquartered

in Mumbai, India. It oers individuals the means to make

electronic paymentsonline and over their mobile phones

or a variety o virtual products and services, making payments

more convenient and less costly and expanding consumer

choice in the marketplace. The company was ounded in 2007

and currently employs over 250 sta with experience in retail

payments, e-commerce, and technology. Suvidhaas shareholders

include the companys ounder Paresh Rajde; angel investor

Shapoorji Pallonji Mistry, chairman o the leading Indian

conglomerate Shapoorji Pallonji Group; Northwest Venture

Partners in Caliornia; Reliance Venture Asset Management Ltd.

o the Reliance ADA Group in India; IFC and Mitsui & Co., Ltd.,

one o Japans largest trading conglomerates.

IFCs Investment:

$6.5 million in equity


14/23

Being the Change Builders

18

Anan Ahsan let his native Pakistan orthe United States to attend college in1989. Ater graduation, he pursued acareer in the ood industry, moving toCanada, France, South Arica and thePhilippines. When Engro Foods tried to

woo him back to his native country withan oer o a CEO position, this globalcitizen admits to a bit o trepidation.

Like everyone else, I saw how Pakistan was portrayed on CNN, with

the lack o security. I have two children, both teenagers, so I wasnt

sure I was quite ready.

Over the course o two years o discussion with the Engro board,

what ultimately convinced Anan was the companys twoold mission:

To help small armers maximize their production and hence raise the

companys overall productivity, and to create wealth by building on

company and country strengths. Here was an opportunity to learn

something new and to have a positive impact on his native land. It

sounded almost too good to be true: Anan questioned almost every

board member individually to gauge their sincerity beore accepting

the job.

While Anan knew what it took to grow a large ood company,

he encountered new territory with the companys inclusive business

model and unique supply chain. He quickly learned that all o these

things are interrelated, as empowering small-scale producers is vital

to propelling Engro Foods growth.

Engros core dairy business is powered by an extensive milk

collection network that cuts out the middleman and guarantees

smallholder armers air and prompt compensation or their mil k. The

network currently serves about 125,000 armers, but Pakistan has

over 2 million dairy armers in total. Anan says he needs to keep that

network growing i he is to keep Engro growing at its current rapid

pace: Nothing works i we dont have our supply chain in order.

Engros supply chain still only meets 70 percent o the companys

demand or milk; the rest must be imported as milk powder. So

increasing the supply o raw milk is a big priority or Anan. Anan is

a aceo, e d

Sincerity o eort, sincer-

ity o purpose and sincer-ity with people. That leads

to trust, and i people trustyou, then it is easier orthem to ollow you

as well.

Coming hometo Pakistan, as aglobal citizen

working with the Asian Development Bank and IFC on an initiative

to support small- and medium-sized arms. For the medium-sized

arms, one goal will be to mechanize production, which improves

both productivity and quality.

In the quest to make Engro the rst iconic Pakistani

multinational, Anan has shepherded the companys acquisition

o a Canadian rm that produces halal and vegetarian ood or

Muslims and South Asian communities in Canada and the US. In

the uture, Anan hopes more Pakistani armers will be selling to

North American consumers by this route.

Anan is also hoping to improve trade ties between India and

Pakistan, as it could help Engro as well as the economy on both

sides o the border. He is a member o the Pakistan Business

Council, which advises the Ministry o Foreign Aairs and

Economic Aairs, and chairs a Committee on India-Pakistan trade

relations. National policy was not an area Anan would have been

able to work on while at his ormer employer, Anan says. I I

was able to make a positive impact on policy decisions, and make

this valuable contribution to the country, he says, that to me

would probably be the biggest achievement in my career.

As a rst-time CEO, Anan is putting his l eadership skills to

the test. Successul leaders know how to translate a vision into

relatively simple terms and to communicate it in a way that gets

people on board, he says. Sincerity is also important: Sincerity o

eort, sincerity o purpose and sincerity with people. That leads to

trust, and i people trust you, then it is easier or them to ollow

you as well.

As Anan helps to grow Engro, hes reconnecting his wie and

two teenagers to their roots; the amily speaks Urdu at home.

And Anan is inspired by Engros impact on Pakistans society and

economy. The company supplies armers with technical guidance

that improves production and engages in a variety o community

development activities. Anan recently met with women th

Engro helped to train on livestock care. They are now wor

as local veterinarians or the dairy armers and earning a so

income. But money was not the biggest benet the wome

rom the training, Anan noticed. It was the recognition th

receive rom their amilies and communities. V illage reside

to them as doctors, and one o the ladies proudly noted

even her ather-in-law comes to ask her or advice.

Witnessing the proound consequence o such a simple

intervention has been extremely ullling or Anan. Stil l gr

proessionally as well as personally, this sel-described glo

citizen is very happy with his decision to return home and

make Engro Foods a global company.

engro ooDs ltD.

Engro Foods Ltd. was launched in 2004 as a ully-owned

subsidiary o Engro Corporation Limited, one o Pakistans

largest conglomerates. Engro Foods manuactures, processes,

and sells dairy products, juices, ice cream, and rozen desserts.

Since the companys core business is dairy, procuring milk is one

o its most important activities. Through Engros milk collection

network being present right at their doorstep, coupled with

on-arm training and technical guidance on arming and

milk production, Engro is helping improve the livelihoods o

hundreds o thousands o people. More recently, the company

has also entered into the international market. Its rst venture

has been to acquire a halal oods business, Al Saa Halal, Inc.

(Al- Saa) in North America.

IFCs Investment:

$50 million in quasi-debt or EngFoods. IFCs other commitmentsgro Corporation Ltd. total $87 min debt, $26 million in equity, anmillion in quasi-debt.


15/23


20

Since he was a child, Sanjay Bhatnagar

has been amiliar with the problems o

communities that lacked clean water.

Growing up in northern India, he

travelled through many rural areas with

his ather, a rural banker.

Later, Sanjay let India to earn masters degrees in business and

engineering, but then returned to Asia to work on major inrastructureprojects. He started to notice a disturbing contrast: In remote areas,

industry was obtaining water while surrounding communities were

suering.

We were building large power plants in remote areas and pulling

in long pipelines to get water to eed the plant, but the people around

the plant had no access to clean drinking water, Sanjay says. Clearly

society has the capability to get the water. But the business model

or providing it to the communitiesin the absence o government

actiondid not seem to exist.

WaterHealth International has developed that business model.

WHIs WaterHealth Centers puriy locally sourced water and sell it

or about 10 cents per 20 litersmuch cheaper than centrally bottled

water, which is oten shipped in rom long distances. WHI has built

over 500 centers since 2006, including over 400 in India and the rest

in Asia and Arica. The average center serves up to 10,000 individuals

each day.

As a market-driven business, WHI is constantly adapting to its

customers needs, Sanjay says. In some communities, it aces an initial

challenge: Most o the people are not used to paying or water at all.

So when they start paying or it, the question is how much can they

pay, and is it sucient or protable operations in the WHI context. The

answer to this question determines our site selection, but thankully,

WHI can run operations in a wide range o communities.

But then the challenge evolves: Customer desires change over

time. In markets where we were providing sae water, people were

initially just happy that it was available. Now, they want convenience.

They now want to see i we can deliver the water inexpensively to their

homes because that is how these communities develop. We gradually

tend to use more water and more services. As an organization, i we

dont provide it, then someone else will. That is how we think about

our business. Whether the business is inclusive or not, you have to

think o your consumers as customers, and not as aid recipients.

It is a common misperception that WHI benets rom government

subsidies or individual or corporate donations, Sanjay says. Instead, the

centers are purchased by a variety o sources including corporations,

non-prot organizations, governments and oundations. Local

sjy bceo, wh i

As an organization, iwe dont provide it, then

someone else will. That ishow we think about ourbusiness. Whether the

business is inclusive ornot, you have to thinko your consumers as

customers, and not asaid recipients.

Bringing waterand health to all

governments also provide a small patch o land on lease and access

to the dirty water. WHI builds the centers with the help o local

labor and operates them with the help o local sta. The company

operates the centers or 10 to 15 years, during which the revenue

rom the water purchases covers operation and maintenance, cost

o energy and debt service. The community takes ownership at the

end o the term and shares in the prots in the interim.

Sanjay received his graduate training in the U.S., worked or

American companies Schlumberger and Enron, and now resides

in New York. But the developing world remains the ocus o my

career, even though the platorms that I have been involved in could

have been an American or a European company, Sanjay says. One

o Sanjays goals with WHI, he says, is to bring First World thinking

to communities wherever they are. It doesnt really matter i they

are in the remote parts o India, in Arica or Asia.

One example: The idea or real-time monitoring o our

WaterHealth Centers came rom a case study I did in business

school on OTIS Elevators. OTIS was having a problem where the

elevators would break down and their inability to x it in time was

inconveniencing their customers. They asked themselves, How can

we gure out in advance when the elevator might stop working,

so that we can x it beore there is a service disruption? Thats the

concept behind the maintenance o our WaterHealth Centers. We

try to do predictive and preventive maintenance to avoid downtime,

so we can provide reliable service to these communities.

Ater leaving Enron, Sanjay ounded a private equity rm and

joined the board o an Indian inrastructure company. He remains

on their boards, while leading WHI, or good reason: All o thesebusinesses are geared towards inrastructure, creating, developing

and nancing inrastructure. Having done this in multiple markets

prepares you or situations that you might nd in a venture like

WHI. WHI works in ve countries right now, and each is dierent.

It is easy to adapt the learning and experience rom large-scale

inrastructure projects to the needs o decentralized inrastructure.

For better or worse, large-scale, centralized inrastructure

projects remain the avored way or governments to bring water

to their people in virtually every circumstance. Sanjay believes

that governments with limited budgets should be supportin

decentralized business models that leverage private sector u

This enables the public sector to reach a larger number o

underserved communities compared to what would be poss

i they went it alone, Sanjay wrote in a recent editorial or

Companymagazine (co-authored with Dennis Merens o Do

Venture Capital).

I think that the issue is that people have been trying to u

tool to solve every problem, Sanjay adds. The decentralize

purication model is one tool in the toolbox that happens to

many o our problems, especially o communities that are sp

out, or have outgrown existing inrastructure. The challeng

Sanjay says, is how do we get world leaders to pay attentio

this innovation and stop spending money on unsustainable m

In the absence o public sector leadership, how do we get th

private sector to take more o a leadership role and create p

private partnerships that can succeed?

Sanjay can proudly point to WHIs sustainability, as the r

achieved protability in some parts o the world and is neari

it in others. He describes his leadership style as collaborativ

responsive and committed. Collaborative so WHI can coexi

existing approaches; responsive to the needs o its customer

communities; and committed to reaching its goal o 100 mil

people within 10 years.

waterhealth international

WaterHealth International, Inc. (WHI) is a company that develops, installs,

and operates water purication and disinection systems that provide

aordable, high-quality potable water or underserved populations in ruraland peri-urban areas. WHI houses these water treatment systems in small-

scale, decentralized acilities called WaterHealth Centers in local communities.

At an initial investment o less than $10 per person, WHI can provide morethan a decade o healthy drinking water to communities in need. As o

2012, WHI is headquartered in Delaware and has aliate oces in India,

Bangladesh, Ghana, Nigeria and Liberia. Along with the Coca Cola AricaFoundation, Diageo and IFC, WHI is a key member o the Sae Water or Arica

Initiative whose objective is to expand the use o clean water in underserved

communities in Arica. WHIs investors include the International FinanceCorporation, Dow Venture Capital, Sail Venture Partners, Plebys International,

Tata Capital Innovations Fund, and the Acumen Fund. IFC has invested $5

million in equity and $10 million in long-term debt nancing.

IFCs Investment:

$5 million in equity and $10 milliolong-term debt nancing


16/23


22

The public sector or the private: Whichmakes a greater impact on everydaypeople? Carlos Caveliers amily hasestablished legacies in both, and Carloshimsel has led a dramatic career ineach, which provides him with a unique

perspective on the question.

Carlos grandather, Jorge, was Colombias rst urologist, but

his passions were in public health and public service. He became a

senator and served in the Ministry o Health; he also established the

Colombian arm o the Red Cross, and later became convinced o

the health benets o pasteurized milk. That conviction spurred him

to buy a pasteurization plant in the city o Medellin, which his son

Enrique dismantled and rebuilt in their small hometown o Cajica

in 1959. Enrique ran the dairy and was also mayor o the town

or 20 years. Carlos remembers hearing stories at the dinner table

about his athers battles with national authorities to obtain public

services or his people. That entranced young Carlos much more than

talk o dairy sales numbers or debt nancing, so he decided on a

government career.

Carlos was attending college in the United States when activist

and journalist Luis Carlos Galan Sarmiento invited him back to

Colombia to be part o his New Liberalism movement. Carlos was

elected to various posts, including city councilman and senator,

beore his political lie took a dicult turn. In 1989 his mentor Galan

was assassinated as he ran or President. Carlos was later elected to

Colombias House o Representatives and became general secretary

o the Ministry o Justice. Then, in 1992, the notorious drug lord

Pablo Escobar escaped rom prison and many politicians were

menaced, prompting Carlos to leave politics.

Carlos went to work on the amily arm without any businesseducation. Under his leadership, however, Alquera grew rapidly and

became the countrys largest provider o Ultra High Temperature (or

UHT) milk. (Carlos later studied public administration at Harvards

Kennedy School o Government.) The base o the pyramid gures

strongly

Documents

Being the Change: Inspiring the Next Generation of Inclusive Business Entrepreneurs Impacting the Base of the Pyramid