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Posts Tagged ‘minority communities’
Q&A with Charlie Dou, author of Micro-Hydro Power case study in China

Charlie Dou is an adjunct Professor and Research Associate, Alternative Energy Institute, West Texas A&M University, USA; CEO, Beijing Bergey Windpower Co. Ltd., served as International advisor for UNDP/GEF on renewable energy project in China, key Expert for EU, Consultant for the World Bank/GEF, etc. He is directly involved in many research and international projects sponsored by UNDP/GEF, the World Bank, China central government, and has published and/or edited 14 books and more than 40 papers/presentations, including “China Village Power Project development Guidebook” and the series books of “Capacity Building Strategy for the Rapid Commercialization of Renewable Energy in China” for UNDP. He received his Master’s Degree in Engineering Technology in the US, and Master’s Degree in Electric Engineering in China, and once worked on his doctoral degree on Industrial Engineering at Texas Tech University.

To download the Micro-Hydro Power case study from the GIM database, please click here.

What is the project’s basic value proposition and what makes its financial model sustainable?

The economic development is slow for these remote villages located in China’s western mountain regions and the life of these villagers is poor because of their inability to access electricity.  Extension of traditional utility power line is not viable, and not affordable for low-income residents.  Finding a technical and economically feasible solution is key for rural electrification in such areas.  Micro-hydro power is the least costly technology for power generation compared with other renewable energy technologies and traditional power plants. This case provides a successful example of local people relying on their own efforts to develop an electricity service without government and outside financial assistance and improve their life.

In developing countries, what are the main challenges for access to energy for the poor?

The main challenges for access to energy for the poor in developing countries is to develop a solution for a financially and technically sustainable power supply and affordable power service.

What main factors make this model successful that will allow it to be replicated elsewhere?

First, availability of resource and technology. Second, affordability of the solution (again, micro-hydro power generation is one of the least costly power generation technologies). Third, self-motivation (local residents wished to change their status). Fourth, clear ownership (the micro-hydro power system was developed and managed by the villagers themselves).

What would you say was critical about the actor ecosystem that enabled this business to be successful?

The villagers there have lacked power supply for generations. They wished to change this situation.  But the local utility company is not interested in expanding the service to such areas due to high investment and poor return (or even no return, since the losses from the power transmission may be even more than the power to be applied).  Micro-hydro power generation provides an affordable and environmentally friendly solution, since usually, for such a micro-hydro power generation, no civic construction is needed.  The water flow will not change significantly, which means little negative impact on local ecosystems compared with large hydro dams.

Q&A with Tram Nguyen-Stevenin, author of MDI Betterday Fairtrade Products case study in Vietnam

Tram Nguyen-Stevenin was born and raised in Vietnam. She graduated from ESSEC MBA with a focus in Marketing & Sales, and has 13 years of international management experience acquired in both the association sector and private sector. She effectively managed Sales & Marketing for the largest European and American multinationals operating in Telecommunications and e-commerce & Online Financial Services. For over 2 years, she has been the Executive Director of a Business Organization (European Chamber of Commerce) in the developing and exciting country of Vietnam. She accepted this appointment which is somehow different in her corporate career path as a key opportunity to promote and facilitate trade and investment activities between the EU, her welcome mainland, and Vietnam, her born country. After her term at EuroCham, she is now back to the business world as the Marketing & PR Director at K+, the first media joint-venture ever in Vietnam between the Canal Plus group (Vivendi) and the national broadcaster Vietnamese Television VTV.

MDI is a SME specialized in equitable trade of agricultural products, including coffee, green tea, jasmine tea, snow mountain tea and cashews grown in eight provinces across Vietnam. MDI works in partnership with groups of smallholder farmers, mostly from ethnic minority groups in poorer and remote areas of Vietnam.

To download the MDI Betterday case study from the GIM database, please click here.

What is MDI’s basic value proposition and what makes its financial model sustainable?

MDI works in partnership with groups of smallholder farmers, mostly from ethnic minority groups in poorer and remote areas of Vietnam. The company is committed to the development of the rural sector in Vietnam and believes that the best way to accomplish sustainable development is by doing business in a fair and ethical way with people in the sector: by engaging producers as trading partners, MDI can improve their livelihoods, increase their incomes and assist them in linking with markets on terms that are beneficial for them.

With their motto “Development through pro-poor business” MDI has a “double bottom line” meaning that in addition to being a “for-profit” their success is also measured by the social impact that they can achieve.

What are the main challenges for scaling up the business?

- Physical Infrastructure: in order to grow and reach to new farmer groups, MDI needs to invest and recruit local staff in the mountains to collect and check the quality of the crops.

Besides, in terms of organization, as a small structure with limited human resources, the company has to undertake many tasks, from providing support to farmer groups right through to marketing their products internationally. Furthermore, MDI does not have a big budget for marketing and advertising their brand.

What has the involvement of MDI done for ethnic minorities in the country?

MDI works with farmer groups to help improve quality of production, achieve Fairtrade certification and organic certification. MDI is currently working with around 1000 farmers, representing total household size about 4500-5500 people. All of the farmers they work with live below the international poverty line of US$1 day; most are ethnic minority people; and many live in remote mountainous regions.

Because MDI only started recently, the impact on income is still quite modest. However, the tea farmers were able to double their income from tea this year – tea is about 1/3 of their overall “income” but represents almost all of their cash income.

It can also be noted that the farmers feel more pride in their products and are excited to see that their tea and cashew is being sold in the international market but still retaining the identity of the producer groups.

“We are proud to know that our products are sold in many foreign countries and…I cannot believe that my picture is in fact appearing on tea boxes to many people!” explains a young Mong lady.

For MDI, what were the main benefits of the fair trade certification?

The FAIRTRADE Certification Mark is a registered trademark of Fairtrade Labelling Organizations International (FLO). It certifies that products meet the social, economic and environmental standards set by Fairtrade. The Mark certifies products not companies. It does not cover the companies or organizations selling the products.

For producers Fairtrade uniquely offers four major benefits

  1. Stable Prices
  2. A Fairtrade Premium
  3. Partnership
  4. Empowerment of farmers and workers

What would you say was critical about the actor ecosystem that enabled this business to be successful?

Oxfam Hong Kong has played a critical role in providing contacts, linkages and assistance on international markets to MDI.

Oxfam International is a confederation of 14 like-minded organizations working together and with partners and allies around the world to bring about lasting change. Oxfam International works directly with communities and seeks to influence the powerful to ensure that poor people can improve their lives and livelihoods and have a say in decisions that affect them.

Oxfam Hong Kong helped MDI with the launch of Betterday Fairtrade products into Vietnamese supermarkets in December 2007 and also introduced their products in Hong Kong. In 2008, Oxfam subsidized MDI paying 50% of their trip to exhibit their Fairtrade products at the Hong Kong Food Expo. Oxfam also supported a trip to meet tea farmers in Nghe An, Central Vietnam, where Oxfam has been working for over a decade.

Q&A with Samer Abdelnour – author of case study: Blacksmiths (Sudan)

Samer Abdelnour is a PhD candidate in Management at the London School of Economics where he explores the intersection of enterprise and development in postwar and conflict contexts. His ongoing research explores the interactions among NGOs during humanitarian response, and the role of community-based and collective enterprise in postwar development. He currently manages applied research projects across Sudan (Darfur, Southern Sudan, Blue Nile). He is also a founding member of the Foundation for Sustainable Enterprise and Development, and an affiliate of the Centre for Refugees, York University.

To download the Blacksmiths case study from the GIM database, please click here.

What is the basic value proposition of the Blacksmiths cooperative case and what makes its financial model sustainable?

The blacksmiths offer agricultural implements customized to the particular farming needs and conditions in various regions of Darfur, as well as traditional handicrafts and tools embodying cultural and historical customs. The animal plough, itself an adaptation brought to Darfur, has demonstrated potential for widespread dissemination and impact in terms of agricultural productivity and farmer livelihoods. Along with the plough comes new forms of knowledge, and an alternative to development approaches – such as mechanized farming projects – which are proven to be destructive for the environment and livelihoods in Darfur.

I like to think of the financial model as a work-in-progress. The financial model, as it is today, has evolved simultaneously with the needs of the Blacksmiths, and the conceptualization of the Blacksmiths as a community-based enterprise. Significant components of the financial model, including the floating of metal as a form of credit, stockpiling implements for accommodating contract sales, official business registration, and the opening of bank accounts, have allowed the blacksmiths to overcome challenges associated with production, demand, and growth. Moving forward, I expect that the financial model will continue to evolve as some Blacksmiths push to refine their manufacturing techniques and specialize in new tools and ventures.

Is the financial model sustainable? Not entirely. The Blacksmiths rely on their NGO partner Practical Action – who helped establish the metal credit system and registration – for ongoing material support during times of change and as a result of ongoing challenges. In addition, they still have incredibly rough methods of accounting, which may be an impediment to growth in the future. While dependency is built into the existing financial model just as it is the overall partnership, what the Blacksmiths have been able to achieve in partnership with Practical Action is quite remarkable considering the socio-cultural, economic, political and environmental challenges they face in Darfur.

Why did the Blacksmiths choose to organize into a cooperative? What are the benefits and challenges of such a model?

Throughout Sudan’s modern history, cooperatives have played an important role in its economic development. While cooperative enterprises are shown to be more resilient than individual-entrepreneur models in most contexts, in Sudan many initiatives promoted by successive governments were unsustainable due a top-down approach to implementation and management. Among many communities in the Sudan, there exists a strong cultural tendency, known as nafeer, to cooperate through work. In addition to these, there are other motives to support the decision of the Blacksmiths to organize into a cooperative. The Blacksmiths are among the most marginalized groups in Darfur, with historically few social linkages to other groups. Because of this, they became accustomed to relying on one another as a form of social and economic solidarity. This is demonstrated by the way in which conflict-displaced Blacksmiths were accommodated in the homes and workshops of others. They also congregate in markets for strength in production and retail. A cooperative model builds on these foundations and allowed the Blacksmiths to gain efficiencies in terms of their interactions with Practical Action and other organizations. By forming a cooperative, the Blacksmiths were able to benefit from training and apprenticeships, development of a metal credit scheme, comfortably specialize into different products, and group together for the purposes of producing for the changing aid market. It also concentrated the challenges of management and administration, allowing most members the ability to focus on the core aspects of production. Currently, the challenges and costs of coordination are set to increase as the Blacksmiths attempt to manage their increased socioeconomic successes and the desire for some members to diversify into other investments and businesses.

What impact does procurement from the UN Food and Agriculture Organization (FAO) generate for the Blacksmiths community? Do you think procurement from international organizations in general can contribute to more inclusive markets?

The immediate and apparent impact of the UN FAO contracts for the Blacksmiths is quite positive. However, it is important to keep in mind the impact of the scale of the contracts, which were so large that the Blacksmiths were extremely nervous about their ability to deliver. Even their banker was in disbelief as to the amount of the payment. The size of the contracts and related visibility of supplying the FAO surely served to raise their professional and economic status. In addition, producing agricultural implements for Darfur gave the Blacksmiths an opportunity to apply their knowledge to the contract to ensure implement appropriateness for various soil and farming conditions; had this not occurred numerous implements would have been produced and delivered to regions requiring alternative tools. Finally, Practical Action’s ability to encourage the FAO to procure from Darfur, and not from elsewhere, contributes to the local economy and helps to ensure maximum impact in the value chain, from production through to use of tools and implements.

Still, to conceive development as a long-term process of social change, we must also consider the potential drawbacks of the contract. For one, the mass distribution of agricultural implements across Darfur occurred outside local market mechanisms typical of the way aid is disseminated. Tools distributed freely, normally produced for sale through traders and markets, can cannibalize future demand for implements. Farmers or households with excess tools and implements sell these to market vendors. In fact, the Blacksmiths are very concerned about their own tools finding their way back into local markets and selling for less than the cost of production. As a result, the Blacksmiths may compete against their own products being sold through the same markets at a lower price point. Still, competing against your own tools versus tools made in China or elsewhere may be the lesser of two evils. These factors point to the importance of monitoring and evaluation over a number of years beyond the contract and dissemination of implements, and also a deeper consideration of the impact of aid on local market actors.

What role does the NGO Practical Action play in this model?

Practical Action is an integral part of the business model. The relationship between Practical Action and the Blacksmiths began as an NGO-beneficiary model, and has evolved into a partnership where each plays specific roles. These roles have shifted over time, through periods of incubation, development, and growth. Over their twenty-year partnership, Practical Action has provided training, access to knowledge and resources, representation in the complex development bureaucracy, and planning. This relationship is unique in many respects, but has evolved in part due to Practical Action’s focus and expertise in appropriate technology and the natural alignment with the work of the Blacksmiths, and also their unbroken, long-running commitment to the Blacksmiths and an intimate knowledge of the socio-cultural, economic and environmental complexity of Darfur region.

Is it really possible for inclusive business models to develop and grow in conflict-affected regions like Darfur?

It is important to keep in mind that in stable, industrialized contexts it can take many years for an enterprise to reach a position of sustained stability; in poverty and conflict contexts long-term business development approaches – rather than short-term intervention – will greatly increase chances of success for inclusive business models. That said, as attractive as it might sound I do not see this case only in terms of ‘conflict’ or ‘post-conflict’. Certainly the Blacksmiths and the users of their implements and tools have faced, and will likely continue to face, great turbulence in all aspects of their lives and environment. The development and growth of the Blacksmiths model, as an inclusive business model, is based on a number of important factors relating to their own skills and work, and well as their relationship with and approach of Practical Action.

Saras Sarasvathy’s concept of effectuation – in some ways the reversal of conventional/western thinking on entrepreneurship – provides a framework for exploring entrepreneurial logic and decision-making which is valuable for explore the case of the Blacksmiths. Rather than building and executing a business plan to an existing market, effectual logic first asks of the entrepreneur(s) three questions as a starting point for any enterprise: Who am I? What do I know? Who do I know? Through strategic partnerships and expanding into different market segments, the entrepreneur(s) continually create the market and their market position. Both the Blacksmiths and Practical Action have a strong grasp of these elements, and brought with them appropriate knowledge, skills, capabilities, resources and relationships into their partnership. Importantly, Practical Action has helped the Blacksmiths to conceptualize themselves in new ways through the evolution and growth of their business. As this occurs, Practical Action and the Blacksmiths are able to shift their own role in the relationship and therefore explore the boundaries of and expansion beyond their prior success. This not only allows for growth and development, but also builds strategic flexibility into the business model. Strategic flexibility and the continual reevaluation of their roles allows for their continued success, development and growth even in the dynamic and turbulent Darfuri context.

What has been your personal experience going through the GIM training and case research process?

First and foremost, I am excited to be part of the GIM initiative. I saw the development of this case study as an opportunity for me to share the experiences of the Blacksmiths and my ongoing research with them to practitioners, policymakers and academics. While I was unable to attend the initial training session, the GIM team ensured that I received consistent support throughout the entire research and writing process. The GIM case study protocol, conceptual materials, and thorough review process made for an excellent learning opportunity. The process has been an absolute learning pleasure. I wholeheartedly recommend the process for any researcher interested in exploring analytic case studies as a potential research methodology or output for their research.