s3idf social merchant bank approach.april07

8/14/2019 S3IDF Social Merchant Bank Approach.april07

1/15

1

The Small-Scale Sustainable Infrastructure Development Fund (SThe Small-Scale Sustainable Infrastructure Development Fund (S33IDF)IDF)

SS33IDF-US Cambridge, MA, USA IDF-US Cambridge, MA, USA a public charity under Section 501(c)(3) of U.S. tax codea public charity under Section 501(c)(3) of U.S. tax code

SS33IDF-India Bangalore, India IDF-India Bangalore, India a Section 25 not-for-profit company with Section 80G tax exemptiona Section 25 not-for-profit company with Section 80G tax exemption

SS33IDFIDFA Social Merchant Bank A Social Merchant Bank


2/15

2

Indias Poverty and EmploymentIndias Poverty and Employment

StatisticsStatistics 300 million living below poverty in India

About 9 million living below poverty in Karnataka state and about 35 millionin South India; majority of the poor without infrastructure services necessaryfor development

Indias labour force is growing at a rate of 2.5% annually (~7 million) butemployment is growing at only 2.3%(~6.4 million); plus there are previous

back logs

60% of India work force is self-employed many of whom remain poor;nearly 30% are casual workers (get work only when they are able to get

jobs remain unpaid rest of the days); only about 10 percent are regularemployees

90% of labour force employed in unorganised sector no social/jobsecurity; minimum wage act marginally implemented; In rural areasagriculture workers form bulk of unorganised sector while in urban, contractand sub-contract as well as migratory agricultural labourers

Indias Ninth Plan projects that at 7% growth rate per annum, the reductionin open unemployment rate from 1.9% (~7.5 million) in 1996-97 to 1.47%

(~6.6 million) in 2007.


3/15

3

Indias Rural Infrastructure StatisticsIndias Rural Infrastructure StatisticsInfrastructure (electricity and productive end-uses, telecommunication,

transport and drinking water and sanitation) is a necessary and criticalingredient for the economic growth and decline of absolute poverty

18% of villages dont have electricity and 46% of households are not covered leads to no lighting, no productive end uses thus minimal economic activity Requires Rs 1,07,823 crores for full coverage; average annual investments forlast 10 years Rs 8,800 crores

Telecommunication 1.9 per hundred of population; 98% of villages havepublic telephones but this is not sufficient; Rs 92,690 crores for full coverage;BSNL average annual budget Rs 2,700 crores

44% of rural population not covered by road network and transportation; Rs15, 643 crores for full coverage; average annual investments Rs 2,133 crores

95% of rural population have access to some sort of drinking water source.The operation and maintenance is poor due to lack of funds.

As is evident from the statistics above, the funds required to cover the demand isway above what the government (and grants from international fundingagencies) alone can achieve. Hence the most plausible solution is for others

to participate and for alternative sources of investment.


4/15

4

The Challenges Being AddressedThe Challenges Being Addressed

Millions of poor without infrastructure

services necessary for development More sustainable, innovative, business like

approaches needed

S3IDF facilitated a grass root NGO to provide lighting

and cooking services in rural areas

S3IDFs Approach is to reducepoverty by

assisting small enterprises toprovide modern energy and otherinfrastructural services

specifically targeting poor people

supporting financially sustainable

and environmentally responsibleMSME (micro/small/mediumenterprise)

covering the provision of servicesin electricity, water, sanitation,transport and telecommunications


5/15

The Small-Scale Sustainable InfrastructureThe Small-Scale Sustainable Infrastructure 5

Safe, Improved Lighting services to HawkersSafe, Improved Lighting services to Hawkers

entrepreneur at the

solar charging station

transportation of

batteries

Reliable and

better lightingfor hawkers

For the light point projects, SFor the light point projects, S33IDF arranged the business development, technology andIDF arranged the business development, technology and

financial assistance to help the entrepreneurs increase their income, generatefinancial assistance to help the entrepreneurs increase their income, generate

employment and provide cost savings and improved lighting for working class hawkers.employment and provide cost savings and improved lighting for working class hawkers.


6/15

The Small-Scale Sustainable InfrastructureThe Small-Scale Sustainable Infrastructure 6

Low cost Lighting Services to Poor Un-electrified HamletsLow cost Lighting Services to Poor Un-electrified Hamlets

Kerosene based openwick lamps typically used

by the poor.

LED based lights

The entrepreneur at thesolar charging station

Studying with the assistanceof LED based lights

Kerosene based lampsreplaced by LED based lights

SS33IDF arranged the business development, technology and financial assistance forIDF arranged the business development, technology and financial assistance for

accessing lower cost efficient lighting system by the households delivered at a costaccessing lower cost efficient lighting system by the households delivered at a cost

equal to the current expenditure on kerosene lighting of less than Rs 2 per dayequal to the current expenditure on kerosene lighting of less than Rs 2 per day


7/157

The ModelThe Model SS33IDF produces a stream of fundableIDF produces a stream of fundable small scale for-profit infrastructuresmall scale for-profit infrastructure

enterprises.enterprises.

The owner/operator musthave some capital at risk(even sweat equity)

Supported by technology,financing arrangements andpre-investment analyses

Cash flow to cover allcapital and operating costs.

The business must be

explicitly pro-poor,environmentallyresponsible, and shoulddemonstrate a high degreeof replicability.

A Solar powered computer kiosk run byentrepreneur in a rural village in Andhra Pradesh


8/158

Key ElementsKey Elements Business Development ServicesBusiness Development Services

(BDS)(BDS) Financial assistance and dealFinancial assistance and deal

structuring geared to facilitating localstructuring geared to facilitating localFI co-financingFI co-financing

A revolving fundA revolving fund

(debt, equity, partial guarantees, etc)(debt, equity, partial guarantees, etc) Independent evaluationIndependent evaluation Lesson learning and disseminationLesson learning and dissemination

Night Soil biogas in residential school

Implementation Challenges

Efficient ovens in silk reeling units

Cost recovery for BDS, evaluation

and dissemination Custom-design vs. replication with

some adaptation (not quite cookie

cutter)

Capacity Building


9/159

Examples of S3IDF Projects

Based on market research of infrastructure-related activities that canhave a significant impact on the poor, our current priorities are:

Lighting Biomass energy

Silk production and processing

Distribution of modern energy sources (last mile supply of LPGand electricity)

Information and communications technologies (ICT) Water and sanitation

Small/micro-enterprise based infrastructure

More than 65+ projects implemented that benefits more than 12,000people

100+ new projects are being examined

Total investments of about Rs 76 lakhs done till date and this hasabout Rs 33 lakhs of our money invested. Expected Rs 7 lakhs ofreturns through these investments.


10/15 The Small-Scale Sustainable InfrastructureThe Small-Scale Sustainable Infrastructure 10

LPG Access for Cooking by Poor Households

LPG Cookshop a common kitchen providing poor women with clean,

convenient cooking made affordable by a pay-for-use operation.

Fuelwood collected typically

by women and children

Health hazards (from smoke and

soot) from fuelwood cooking

Cookshop in use


11/1511S3IDF

Energy-linked Information/Communication forEnergy-linked Information/Communication for

Rural SchoolsRural Schools

Kondlahalli Rural SchoolKondlahalli Rural School

SS33

IDFs innovative business and financial structuring helps ruralIDFs innovative business and financial structuring helps ruralschools introduce cost-effective computer education for students.schools introduce cost-effective computer education for students.

T Mi E i B ll k CT t Mi E t i B ll k C t



Transport Micro-Enterprise: Bullock CartTransport Micro-Enterprise: Bullock Cart

U-Haul PartnershipU-Haul Partnership

SS33IDFs financing support to a grassroots NGO helps local small holders and poorIDFs financing support to a grassroots NGO helps local small holders and poor

farmers rent a cart and lower the cost of transporting harvested crops.farmers rent a cart and lower the cost of transporting harvested crops.



SME development Areca plate and cup

manufacturing

S3IDF facilitates the business development, technology, financial and

market assistance to help create Areca product manufacturing SMEs.

Areca Leaf Products

Areca Plantations



Telecom Services in Rural Areas

S3IDF enables local NGOs to access bank loan for the phone equipment

and facilitates leasing of the phone equipment to small shops.


15/15The Small-Scale Sustainable InfrastructureThe Small-Scale Sustainable Infrastructure 15

Contact usContact usSS33IDF US:IDF US:

The Small-Scale Sustainable InfrastructureThe Small-Scale Sustainable Infrastructure

Development Fund, Inc.Development Fund, Inc.The Carriage House, 5 Hastings SquareThe Carriage House, 5 Hastings Square

Cambridge, MA 02139 USACambridge, MA 02139 USATel: +1-617-576-0652 Email:Tel: +1-617-576-0652 Email: [email protected]@yahoo.com

SS33IDF India:IDF India:

The Small-Scale Sustainable InfrastructureThe Small-Scale Sustainable InfrastructureDevelopment FundDevelopment Fund

#800, 14th Cross, 1#800, 14th Cross, 1stst Phase J.P. NagarPhase J.P. Nagar

Bangalore 560078Bangalore 560078Karnataka, IndiaKarnataka, India

Tel: 080-65902558 Email:Tel: 080-65902558 Email: [email protected]@s3idf.org

For more information about S3IDF, visitFor more information about S3IDF, visit http://www.s3idf.orghttp://www.s3idf.org
mailto:[email protected]:[email protected]:[email protected]:[email protected]://www.s3idf.org/http://www.s3idf.org/http://www.s3idf.org/mailto:[email protected]:[email protected]

s3idf social merchant bank approach.april07

Documents