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Fábio Luiz de Oliveira Rosa Social
Entrepreneur
Today we will discuss:
• THE PROBLEM: Poverty in Brazil
• THE STRATEGY: Fabio Rosa’s New Idea
• THE IMPACT: Brightening the Lives ofPoor and Rural
Brazilians
Overview: Poverty in Brazil
• The Facts:– With a population of 180
million, Brazil is home to extreme contrasts of wealth and poverty
– The richest 10% consume 46.9% of the income, while the poorest 10% get by on 0.7%
– 80% of the rural population (30 million people) live in conditions of poverty
The Recife area is marked by the highest income inequalities in Brazil.
These 2 pictures were taken less than 1 mile apart.
Interview: First Hand Perspective on Poverty in Brazil
• Could you generally describe how you saw the disparity between the rich and the poor in Brazil?
The issue is not the size of the pie, but how it is distributed. The border between wealth and poverty is strikingly apparent.
• We are also focusing on the efforts made to get electricity in more homes in Brazil. How do you recall others struggle without electricity?
I think this problem is more prevalent in the countryside. In the cities, most favelas illegally pull power cords down from the power network, so most houses have electricity “for free.” In the countryside, however, it would be much harder to do so, so most people do have to live without electricity.
Click here for full transcript of the interview
Fábio Luiz de Oliveira Rosa• WHO: A social entrepreneur and
businessman (STA & IDEEAS)
• WHAT: One of Rosa’s early successes has been the development of low-cost rural electrification models that improve the quality of life for the rural poor and slow urban migration
• WHY: Surveys of poor rural Brazilians revealed that electricity was at the top of their list, even above better working conditions
• HOW: In the late 1990’s, Rosa realized an opportunity to provide affordable energy when Brazil’s electric utilities were privatized
“I knew my work was important because two billion people still lacked electricity…. I became convinced that solar energy would prompt economic activity, improve education and health, decrease carbon emissions and relieve stress on overcrowded cities.”
-- Fabio Rosa
Why Focus on Electricity?
Electricity is a root cause of poverty in Brazil. The use of electricity in rural areas can enhance:
Education
SafetyHealth
Economic Wellbeing $
CAN FREE LARGE
AMOUNTS OF TIME
& HUMAN LABOR
STA
IDEAAS
Agroelectric System of Appropriate Technology (STA)
• For profit, for those who spend at least $11 per month
• Promote and sell solar energy systems
• Develop cost-effective solar systems at a low price
• Manufacturing of energy components
• Inform population about the benefits of solar energy
• Focus on poor rural areas
Institute for Development of Natural Energy and Sustainability (IDEEAS)
• Founded in 1997 as a non-profit organization, for those who spend less than $11 per month
• Promote and install renewable energy in low-income areas in Brazil
• Rural electrification• Social business model• Income generating schemes for
those at the bottom of the pyramid• Combining high-efficiency and low
cost technology
The Sun Shines For All (TSSFA) Business Model
• TSSFA – A project under STA
• Market research with McKinsey
• Package deal
• One time US $150 installation fee
• Leased equipment
• Flexible contractPBS Special on TSSFA and Rosa
TSSFA - Supply Chain
TSSFA - Basic Kit(US $10/ Month)
TSSFA - Kit 2(US $16/ Month)
TSSFA - Kit 3(US $24/ Month)
TSSFA - The Future
• 12V appliance store
• Electronic bill pay kiosk
• Project Quiron
Project Quiron
Program Impact
• Triple Bottom Line– Financial
• Break-even Analysis and projections
– Social• Electric Power helps improve quality of life, offers
opportunity for income generation, and helps reduce mass exodus to Brazil’s largest cities
– Environmental• Reduction in carbon emissions
Financial Projections
2006 2007 2008 2009Total Number of Kits Leased
1,000 1,500 1,740 1,880
Accumulated Number of Kits
1,000 2,500 4,360 6,100
The Sun Shines for All (TSSFA) estimates it will break-even at the end of 2009 with over 6,000 customers
GOAL FOR FUTURE YEARS: Reach over 100,000 rural customers
Social Impact
• Solar-powered electricity eliminates the need for dangerous and unhealthy lighting products
• Sourcing components of the energy kit from within Brazil benefits the local economy
• People are more likely to stay in their local village instead of migrating to overcrowded cities or shantytowns
Environmental Impact• The Agroelectric System of Appropriate Technology (STA)
estimates that providing solar energy to 12,900 families (52,000 people) would save:
- 9 million liters of kerosene- 4.6 million kilos of liquefied petroleum gas- 46.4 million wax candles- 9.3 million radio batteries- 23.2 million liters of diesel fuel
• Reduce global warming
The Social Enterprise Spectrum
Mostly Philanthropic Hybrids Mostly Commercial
“Alleviating Poverty & Malnutrition: Successful Models”
Financing and development aid, Nutrition and Food Fortification, Food Production & Distribution
General Methods:
Appeal to goodwill
Non-pecuniary rewards
Mission driven
Mixed motives
Some subsidy
Impersonal exchange
Arms-length bargaining
Market driven
Key Stakeholder Relationships
Primary beneficiaries:
Unclear or needy
Not required to pay
Subsidized pricing
Price discrimination
Third-party payers
Customer able to pay
Priced for profit
Capital sources:
Philanthropic
Donations/grants
Mixed debt & donations or subsidized investments
Capital market rate
Equity and debt
Work force: Volunteers with high
Commitment to social mission
Mixture of volunteers, professionals, paid staff or below-market wages
Paid employees, focus on financial rewards
Suppliers: In-kind donations Discounts, or mixture of in-kind and full price
Charge market prices
Governance Mission-constrained
Self-perpetuating Board stewardship
Mixtures of representation and self-selection
Balancing constituencies
Board elected by owners
Property rights
Fiduciary responsibilities
Fabio Rosa, STA, IDEAAS, TSSFA, & Quiron
For Profit & Non-Profit Social Alliance: Incorporating the Strengths of Both
For-profit:STA & TSSFA
NGO:IDEAAS & Quiron
Strength $; Breakeven in 4 years; Alliances/understanding of local
community and politics
Poor as employees–sustainability; Empowering
Weakness Size; Lack of experience compared to utility companies
in the area
$; Currently a start-up (challenges of a young
business)
Opportunity New technology can further reduce costs;
Culture of constant innovation
Can improve income and living conditions; Opportunity to reach the most poor; Social and environmental impacts
Threat Powerful utility co’s may extend grid into target area;
Default risk; Political obstacles
Reliance on livestock/ agriculture – risk of natural
disaster or disease;Micro-lending (credit risk)
Fabio’s Strategy: A “Better Mousetrap”
Not simply a one size fits all strategy – differentbusiness models to target different segments
Social alliances – incorporating benefits of nonprofits and for profits
Culture of innovative thinking & creativity
Passion and drive of Fabio Rosa
Research & strong understanding of demographics and communities
Prevents thefts Ease – un-installation FREE
Perseverance, patience, quality, and attention to detail
Fabio has changed my life. Hehas allowed my family to notonly survive, but to thrive. Heis changing the lives of every rural community here in Brazil.
“
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Questions?