Wednesday, January 31, 2007

Danone, Grameen and Yogurt in Bangladesh

A lot is being made out of the Grameen, Danone joint venture in Bangladesh which will produce fortified yogurt for the malnourished children in Bangladesh.

A detailed article from Fortune appears in Saving the world with a cup of yogurt

The modus operandi is as follows:

Danone will invest $500,000 in the venture. Grameen will supply the rest. Three years down the line, Danone will take back the initial investment and keep ploughing the rest of the profits back into the venture. (I think Telenor also said the same!)

Grameen borrowers will supply milk to the venture. Danone will make yogurt and sell them in cups priced $0.07 (approximately Rs. 3, or Taka 5). Grameen members will buy these cups and will sell them across their villages. The plant manufacturing yogurt will also employ women.

What is surprising is that such a venture actually requires french technology and investment. In India, plenty of local milk cooperatives make milk, yogurt and derivative products. The largest player in India is Gujarat Co-operative Milk Marketing Federation, which owns the brand name Amul. The multinationals Nestle or Danone or nowhere in the game. Yunus could have easily obtained technology at near zero cost or free from Amul, and could have run the plant with his own money.

The story of Danone's involvement is over-romanticised in the Fortune article. The $500,000 investment is probably just a fraction of what the CEO of Danone spends on his travel around the world.

We hope the malnourished children of Bangladesh get their nutrition quickly.

Give microcredit to 160 million in India - Yunus

Muhammad Yunus was in India in connection with the Satyagraha centenary celebrations. (For those who do not know, Mohandas Gandhi launched the Satyagraha movement - a novel way of non-violent mass protest - in South Africa to get more rights for Indian immigrants in White-ruled South Africa, 100 years back. Later on, he came back to India to lead the country to freedom from the British rule. The function has been organized by India's Congress Party, the leading partner in the ruling coalition.)

Yunus addressed the gathering and has also been talking to press otherwise. He has talked about financial apartheid - of financial institutions not providing credit to poor. He says 16 million people in Bangladesh have been provided with micro-credit. If the same percentage is extended in India, then at least 160 million people should be given micro-credit in India.

Financial Express Article

Tuesday, January 23, 2007

Microfinance and the broader agenda

Two part article in The Financial Express on Microfinance by Amrit Patel and Gopal Kalkoti (who are 'professionals with decades of field experience in microfinance planning').

1. Microfinance and the broader agenda
2. Microfinance: outreach and self-sufficiency

Yunus upsets Bangladeshi politicians

This had to happen.

Muhammad Yunus has now succeeded in uniting the two warring political parties in Bangladesh - for one cause. To criticise Yunus.

Yunus, with his global fame after the Nobel Peace Prize, told AFP that politicians in Bangladesh as a class are dishonest and they are in politics only for money. (Which, I think is entirely true, not only in Bangladesh, but also in India and Pakistan and most other countries.) However, certain truths should not be told publicly, and bluntly.

BNP and Awami League - the two main political parties, aggressively fighting each other (I mean, not just ideologically but also with knives and stones!) to win the next general elections, have both criticised Yunus for being unfair and "jingoistic".

For more details: One | Two | Three

Yunus was recently offered the post of the caretaker chief of the country (a tradition in Bangladesh when one Government leaves and the elections have to be held for choosing the next Government), but declined.

The work Yunus is doing in Bangladesh still requires some support from those in power. If not anything, the Government has the ability to harm the good work microcredit can do, by simply bringing in more and needless regulation.

Yunus should be wiser in deciding what to say aloud and what not.

A defamation suit has also been filed against Yunus. Gulf News says, "Advocate Nazrul Islam Chunnu, joint general secretary of Jatiya Samajtantrik Dal (JSD) in Mymensingh in northern Bangladesh, filed a defamation suit against Younus, the New Age newspaper reported."

Bush is a terrible leader - Yunus

Nobel laureate Muhammad Yunus has told a newspaper that George Bush, the President of USA is a terrible leader who "has led the world on a dangerous path and it will take a lot of time to take it back on the right one."

Reported in The Australian.

Microfranchising: the next big thing

Microfranchise is the next great idea after microfinance, writes Swaminathan Anklesaria Aiyar, in The Economic Times.

There is only one serious example quoted - GrameenPhones of Bangladesh. Aiyar cleverly bats for Telenor. ("Without the financial and technical clout of Telenor, GrameenPhones could not have gone far.")

The other examples - Scojo (Spectacles) and HP (Marriage photos and video) have a fair way to go. ITC is not in the same franchise model; it outsources Agarbathi production and few other similar activities.

Aiyar wants Anil Ambani of Reliance Infocomm to unleash a revolution like what Yunus did in Bangladesh through the 'Phone Women', rather than looking at taking over Hutch.

Microfranchise ideas look a bit farfetched at this stage.