Acumen Blog

What excites Pakistani graduate students?

This past week I was in Lahore, Pakistan visiting LUMS, the country’s leading graduate business school. I had meetings with the superintendent and several professors before making a presentation to students on Acumen Fund’s work. Approximately 50 filled the auditorium, and no one left before the end of our 90-minute presentation and Q&A. I usually try to talk about why and how we do what we do, rather then talk about organizations. It was exciting to see how enthusiastic these 24- to 28-year-old Pakistanis were about the idea of investing in businesses whose customers are mostly poor. We fielded question after question about these resource-poor organizations and how Acumen Fund tries to help them: How do you keep the strategic plans simple? How capable are the managers, and how do you help them? How involved do you get in running companies? What do you do when there is a great idea but no leader? Are there good ideas in other countries that we should try in Pakistan? [Read More]

The challenge of housing for the BOP

The challenge of structuring appropriate Acumen Fund housing investments is that they do not – cannot – look like traditional real estate development projects. The population we target does not have the disposable income needed for 15-20% equity down payments, and often the full family’s monthly income flow is insufficient to carry a very large mortgage. This means that we are looking for innovative financial structures, or small-scale projects that have primarily demonstration value. These features translate to higher lending risk, which causes most property lenders to step back from commitments. Acumen Fund’s strength in bringing commercial lenders to the table is that we have a higher threshold for risk then other institutions, and thus are in a position to leverage their involvement by bearing the first loss. We are demonstrating this leverage in launching a commercial mortgage lending program, as well as in lending to squatter property purchases in Pakistan, where our Housing portfolio is varied and growing after four years of investing. [Read More]

Economic lives of the poor

Understanding how poor people make economic choices and how their spending decisions are shaped is fundamental to providing them with affordable good and services such as housing, clean drinking water and health services and products. If we can become better at identifying what people want and what they choose to spend their meager incomes on (rather than assuming we know what they need), we can move closer to giving them access to those resources. [Read More]

Essay competition on business and development

The world needs good, crisp writing on delivering goods and services to people making less than four dollars a day. Especially interesting are the business models that may work in terms of delivering critical goods and services like clean water, healthcare and housing to the poor. The IFC and Financial Times have launched an essay competition on “Business and Development: The private path to prosperity” to promote best thinking on the role of business, development and social entrepreneurship. We hope friends of Acumen Fund contribute. [Read More]

Learning from designers

Maybe because I was grouped with the “design” participants, another key learning from Davos was this: Innovate, design, and problem-solve based on the voices and concerns of the people you want to reach and serve. Boundaries are blurring, the divides are increasing (based on perception if not reality). So the road to workable solutions lies with starting with who you want to reach and not bringing a top-down solution to their problems. The world is readier than ever for new approaches that are created from the bottom-up. The high number of designers who were exploring such issues is a testament to how far the world has come. We are learning a lot about the poor. We now need to be more effective in building systems that allow them to make their own decisions and choices. [Read More]

Reality and perception at Davos

Perceptive reality was a theme that appeared over and over at the WEF meeting. People make decisions in their lives based on their own world view as well as their own sense of fairness. Whether economic disparity is truly increasing or decreasing is much less important than the perception that not only is it increasing more quickly than ever but that some people are being left entirely out of the global economy. This is what matters – whether people believe they have a chance at joining the global marketplace. If they don’t – but see their neighbors or fellow countrymen doing it, then unhappiness sets in. Whether talking about economic disparity or religious tensions, the same holds true, which has enormous implications for getting different religious groups to sit down and talk to one another. [Read More]

One World at the World Economic Forum

At Davos, more than ever before, I felt a sense that boundaries between government, the private sector and the nonprofit sector are blurring to much positive effect. If corporations used to think about Corporate Social Responsibility in terms of good brand marketing, they now are looking at it with a much stronger focus on metrics, a reminder of what they are trying to do. Nonprofits, on the other hand, are adopting better business practices, are speaking the language of markets and are searching for new capital formation strategies and partnerships to extend their reach and make their work more effective. If any sector was less evident at Davos, it was the public sector. However, we need government not only to scale different interventions, but more important, we need government to provide the environment, the frameworks that allow for more flexible investment and the easier creation and management of enterprises. Increasingly, private initiative resources and initiative will solve tough public issues and these innovations will move more quickly and at larger scale than ever before. [Read More]

Impressions from a Davos rookie

For a first-timer, the World Economic Forum meeting at Davos can be completely overwhelming. There were nearly 2,400 delegates – not to mention 2,400 WEF staffers and 9,000 police officers. After five days of meeting hundreds of people, I came away exhausted but with a great sense of privilege from being in that beautiful place with so many people who not only care but want to do something about the world. I left the meeting with a number of insights and ideas, which I will write about in subsequent posts. [Read More]