MICRO FRANCHISES

Micro-Franchises are small business opportunities for local entrepreneurs to create power and water infrastructure in impoverished communities and thereby build the foundations for business opportunities and economic development for some of the world’s 3,000,000,000+ poor people.

Micro-Credit Today

2007’s Nobel Peace laureate started the successful Grameen Bank and pioneered the micro-credit industry.  Dr. Muhammad Yunus’s work has brought enormous benefits to many people in remote or impoverished communities who have successfully started small businesses in their communities and in turn benefited their clients.

This is a proposal to expand micro-credit financing into a new business realm, Micro-Franchises, which directly addresses the need of the poor for infrastructure on which to build viable 21st century economies.  This expansion and collaboration with technology driven enterprise will catalyze and accelerate the growth of micro-credit, increase its effectiveness and efficiency by integrating free-market capital and business practices and further win micro-credit’s acceptance as a viable industry and investment vehicle.

This solution

• Works within the existing business-world paradigm,
• Is driven by capital,
• Is incentivized by profit,
• Will grow and spread through the generation of income, and
• Is a lucrative, logical opportunity for technology companies, manufacturers and banks.

The business activities directly address Developing World problems of

• Rapid population growth,
• Energy and resource consumption,
• Pollution,
• Health care,
• Infrastructure,
• Communications and connectivity,
• Education,
• Weak economies and institutions,
• Lack of income generation. 

Most importantly, this strategy will stimulate meaningful economic development in the Developing World that is profitable, culturally considerate and indigenous in design and benefit.

From Micro-Credit to Micro-Franchises

Micro-credit addresses the central challenge of a motivated but poor entrepreneur in an impoverished community: no collateral.  The loans are small and are backed by the mutual responsibility of a group of community leaders, usually women, to one another and to their community.  Default rates are very low and profits are good.

The micro-credit industry and its clients would benefit from an increase in the number and choices of viable businesses available to the entrepreneur.  To oversimplify and put it bluntly, without education or outside experience Maria opts to use the money to run roughly the same kind of store that Marta has a couple streets away.  The customers benefit but there isn’t generally a community infrastructure component or a B to B chain of benefits.  Where micro-credit provides great opportunities, micro-franchises can help further fulfill development goals by helping impoverished communities develop their own economies, means of production, distribution capacity, and to create sustainable income and wealth.  For-profit Micro-Franchises, based on a network of entrepreneurial leaders, community and mutual responsibility, are free-market mechanisms for building the essential 21st century infrastructure needed in impoverished communities that then creates opportunities for additional businesses, goods and services. 

The opportunity for a successful Micro-Franchise industry is:

• To identify and engage technology firms that are manufacturing reliable, distributed energy systems, water pumping and storage systems, water purification systems and waste treatment systems. 
• To work with the companies to create and price packages of hardware and supplies that address a range of conditions and possible fuel sources and can be franchised as businesses with a plan for profitable execution. 
• To identify and encourage effective, forward thinking Micro-Credit institutions, like the Grameen Bank, to underwrite and adminster loans for portions of small to medium sized free-enterprise infrastructure projects in the communities where they now work. 
• To function as the central investment coordinator with micro-banks, donor organizations and technology banks and investors to underwrite a portions of the loans.
• To function as an entrepreneur liaison and advisor.
• To work with the Micro-Credit banks to identify countries with adequate laws and protections for successful commerce. 
• To work through existing NFPs and their relationships to identify impoverished or remote communities in need and to train motivated individuals therein who can get the jobs done and businesses running. 

This is potentially a powerful and effective collaboration individuals, groups and businesses that will coalesce into a profitable industry for positive change and beneficial development for the world’s poor.

First Things First - Distributed Power - A Jump Start an Economy

To succeed economically, a community, its individuals and its businesses need a cheap, sustainable, indigenous and hopefully non-polluting source of energy.  From Iraq to rural China, Africa and South America, what the “other half” doesn’t have is cheap, reliable power and there’s some chance that the rest of us may soon be suffering from the same deprivations.  Distributed energy, independent of the grid, whether it’s solar, micro-hydro, tidal, biomass or some other resource a community may be blessed with, is inarguably the way to provide sustainable, reliable, appropriate energy production in the long term and a basis for a healthy economy.  

Once independent energy production is in place, water can be pumped.  When you can pump water you can clean water and then you can deal with the waste.  These four basic community infrastructure projects alone provide several major (micro) business opportunities, Micro-Franchises.  In their implementation the proposed businesses have also helped eliminate the key source of childhood mortality: waterborne illnesses, the major concern of impoverished parents. 

Distributed energy systems in remote and/or poverty stricken areas might not immediately spin out an electric transportation system or a globally competitive appliance manufacturing plant that scoots an under-privileged community onto the on-ramp of progress, but in addition to clean water, toilets, and some products, electricity or steam from an appropriate, indigenous source would create concrete business opportunities:

• The provision of health care
• Community Sponsored Agriculture
• Construction
• Transportation
• Appliance Services
• Service Businesses
• Products complementary or competitive to imports
• Value-add processes to their existing resources and exports. 

The biggest benefit that electrical energy opens up is the opportunities for communication and connectivity.  Today that equals education and a chance for the motivated or their children to compete for income in knowledge-based work.  Communication and education are additional business opportunities. In the future, for the poor as well as for the rest, successful development will be defined more by health, environmental considerations, education, income opportunities and sustainability and less by consumption and hyper-mobility.

Is Consumption Really Development?

Development today is built largely a consumption-based paradigm.   However, people are asking themselves, is the consumption of lots of foreign consumer goods and processed foods really development?  Is choking off my own community’s ability to create goods and services and turning over the production of most goods and services to multi-nationals progress?  Does it make any sense for a weak economy to consciously agree to compete for what fossil fuels are left with the countries and companies that already have all the cash they are going to need to control the remaining supplies?

While everyone in the world, especially the “other half”, are now realizing how nice it is to have cars, refrigerators and almost any other thing you can imagine, it is also becoming more and more obvious to everyone that either because of pollution or resource issues the endless stream of consumer goods for everyone is probably not achievable, certainly not sustainable and likely not to be survivable. Especially given the burgeoning Developing World population, not everyone is going to get everything they want. 

But if not everyone can get everything they want, maybe most people can get what they need: clean water, a clean environment, food, shelter, health, less pollution, communication, connectivity, an education, some transportation and a way to compete for income.  These 21st century development essentials are possible with reliable, cheap distributed energy.

The most important beneficial outcome of development is a decrease in population growth rates.   Rapid population growth is a Developing World phenomenon.  People in the developed world, by contrast, have far fewer children.  In most developed countries population growth rates for native-born populations are less than replacement rate mainly because having more children becomes a clear economic choice, and an expensive one.  Because of this demonstrable link between development and population growth, a concerted effort to promote development in the Developing World, especially development that skips over some of the consumption and pollution phase that characterized development in the last century, will significantly help lessen the pressures of population growth worldwide.

The Case for Micro-Franchise Businesses

This is an opportunity for

• Emerging First World technology companies, especially those producing distributed energy systems,
• First World Capital,
• The Franchise Model,
• The Micro-Credit Industry and donor organizations like the World Bank,
• Developing World Entrepreneurs and Bankers.
• Tele-communications, connectivity, web-based businesses and knowledge workers

The opportunity for these forces to collaborate and bring together their aims and processes in order to build an industry that addresses the critical needs and now dangerous problems of poverty, pollution and population growth in the Developing World.

Of all the forces pressing for this solution the most seemingly obvious is that technology companies and manufacturers producing distributed energy options face an uphill battle bringing their products to market in the First World where we’re already wired and fueled with grids, power plants and refineries. We here don’t absolutely need solar panels integrated into the roof, yet.  We still get our electricity off the grid and our fuel from a pump.  The “other half” in the Developing World meanwhile needs distributed energy now.   The first in a long list of synergies would appear to be to match the need in the “Developing World” for energy with the need on the part of the distributed energy industry for markets in which they can create economies of scale, reduce costs and grow their businesses.

The logic of distributed energy will itself be a force propelling this effort forward.  The industry’s opportunities for profit will be powerful motivators.  The Micro-Credit industry is already profitable and maturing: gaining experience and institutional knowledge and implementing best practices.  Expansion towards underwriting franchises, a business model of the new century, is a logical step forward. The World Bank and other Micro-Credit guarantor organizations will benefit from collaboration with multi-national companies and banks willing to participate in underwriting appropriate micro-infrastructure projects.  The Micro-Franchise industry’s distributed electrification and water solutions programs will create income, value and downstream opportunities in a manner familiar to capital in established free-market systems. 

How ready is the world for this to happen?  Consider a company like UPS.  In it already exist almost all the elements required for an effort like this to succeed.  It runs wide and efficient supply chains that can push as well as pull products including distributed energy systems, supplies and parts.  They have a finance division that is looking for opportunities and micro-banking is providing good rates or return on investment and very low default rates as well as growth and legitimization of the industry.  UPS is comfortable with the franchise model.  With UPS’s experience and in-sourcing capability they can train, direct and support entrepreneurs and bank administrators,  especially with their workforce language skills.  UPS just happens to have all the required components already in place.  In addition there are dozens of nascent energy tech firms, manufacturing firms, financing and investment opportunities and other companies like UPS in the world ready to do business together to mine “the fortune at the bottom of the pyramid”.

The opportunities for the developing world entrepreneurs and banking professionals

Energy Production – Electricity/Steam

• Lighting
• Heating
• Cooling
• Appliances and appliance services

Water

• Harvesting
• Pumping and storage
• Purification
• Heating

Construction – including buildings with passive solar and active solar; new and retrofit
Manufacturing
Services
Telecommunications and Connectivity
Information
Education and educational services
Banking

• Access to global capital market and secure banking
• Credit reporting industry
• Real estate market
• Business opportunity planning
• Capitalization of downstream franchise opportunities

Truly beneficial development takes place when a community develops its own entrepreneurs, enterprises and economies, and the resultant means of production, business practices and institutions are afforded an opportunity to mature and establish incomes, wealth and equity.

Micro-franchises

• Allow for real and sustainable, economic development of indigenous, businesses, means of production, institutions, valuable currency, income and wealth by introducing and nurturing commerce in what is now a literal power vacuum
• Provide entrepreneurial opportunities in isolated communities
• Provide wider access to capital
• Provide markets for capital
• Provide access to international banking with secure exchange, storage and investment of wealth
• Promote access to information and education
• Reward entrepreneurial effort
• Empower people
• Create wealth in the form of corporate business entities
• Create wealth for individuals, families, communities, farms, businesses and organizations
• Place distributed energy and information systems in isolated communities and will lead to independence, empowerment, freedom, businesses, income and wealth
• Lead to the creation of a multi-source power generation capacity
• Help provide economic viability and economic health to rural communities
• Increase the value of a community’s natural capital
• Help rural areas to continue to exist as stores of natural capital sustainably providing raw materials, products and assimilating waste.
• Keep wild places wild but let people there get connected, integrate and create wealth
• Lessen migration to cities
• Reduce the need for emissions of pollutants and greenhouse gases
• Help solve the problem of exporting an unsustainable consumption-based development model and the environmental damage that more than 6 billion super-consumers will cause.
• Help address the problems like environment degradation, poverty and pollution associated with rampant population growth
• Help the market more efficiently allocate natural resources to their highest and best uses.

Thank you for your time on this matter.  Please consider lending some of the talent, resources and stature of the Grameen Bank to assist in tranforming this proposal into a real, profitable and beneficial industry.

Jamie Campbell 
PO Box 4046
Telluride, CO 81435
970.417.2389
Jamie@jamiecampbell.com

2007©