From micro to meso finance

Microfinance is justly seen as a savior for millions around the world. As of 2007 it’s estimated that over 16 million of the world’s poorest benefit from the small extensions of credit that the over 7000 global microcredit organizations channel. The volume of loans now approaches some $25 billion, including an increasing share of direct peer-to-peer loans through sites such as Kiva, Microplace and MyC4. It’s primacy role in economic development and poverty alleviation was perhaps best showcased by the awarding of the 2006 Nobel Peace Prize to the father of microfinance, Muhammad Yunus, the founder of the now-famous Grameen Bank.

At the time of the award, the Norwegian Nobel Committee noted that, “Micro-credit has proved to be an important liberating force in societies where women in particular have to struggle against repressive social and economic conditions…Yunus’s long-term vision is to eliminate poverty in the world. That vision can not be realised by means of micro-credit alone. But Muhammad Yunus and Grameen Bank have shown that, in the continuing efforts to achieve it, micro-credit must play a major part.”

But building at the bottom of the economic pyramid has it’s limits. Indeed, microfinance can enable millions to survive where and when they could not previously. But as James Surowiecki, author of The Wisdom of Crowds, points out in his recent editorial in the New Yorker, there are definite limits to how far microfinance can go in enabling economic development.

He writes,

“What poor countries need most, then, is not more microbusinesses. They need more small-to-medium-sized enterprises, the kind that are bigger than a fruit stand but smaller than a Fortune 1000 corporation. In high-income countries, these companies create more than sixty per cent of all jobs, but in the developing world they’re relatively rare, thanks to a lack of institutions able to provide them with the capital they need. It’s easy for really big companies in poor countries to tap the markets for funding, and now, because of microfinance, it’s possible for really small enterprises to get money, too. But the companies in between find it hard. It’s a phenomenon that has been dubbed the “missing middle.”

Filling this missing middle, usually neglected by both domestic and international lending sources, has come to be termed “meso-finance” and aims at enabling SME’s to grow and subsequently expand their employment bases. One of the means of doing so is taking a Prosper/Zopa like approach to peer-lending, and aggregating small loans into $10,000 + amounts for entrepreneurs in the developing world. Evidently there are some significant risk issues that accompany the extension of such credit but with the right local structures in place, Web 2.0 lending might just offer meso-finance the channel it needs to extend the credit that small business owners the world over desperately want.


What matters to whom, where, and why

Here’s a fantastic application created by Gilles Bruno, a French media and IT buff, that maps media attention from some of the world’s largest newspapers. The result is a series of distorted cartograms that measure how much attention various newspapers from around the world are paying to individual countries. Moreover, it creates an interesting discussion about what matters in today’s world, and why.

For example, the image below highlights media attention from La Croix, a French catholic daily. If you compare this to a North American daily you can see a significant difference in the attention paid to French speaking countries and former colonies. The one constant seems to be attention on trade partners.


These cartograms are quite similar to work being done by Harvard/Berkman Centre fellow Ethan Zuckerman. More...Back in 2003 he led a very interesting analysis of media trends, “First steps towards a quantitative approach to the study of media attention.” The following quote from that paper drives home this concept of what matters:

“For an “apples to apples” comparison, it is useful to consider whether Japan or Nigeria is more important. Their populations are roughly equal – 130 million in Nigeria, 127 million in Japan. Neither is short on possible news stories. Nigeria, in particular, seems to have all the factors we commonly associate with headline news: crime, violence, ethnic strife and religious conflict. If we define “media attention” as “the number of stories on a given subject”, the statistics give us a clear answer: Japan is roughly seven times more important than Nigeria. Searching the archives of seven media sites and two media aggregators, we find between 2 times (BBC) and 16 times (CNN) as many stories that reference the search string “Japan” as those that reference the search string “Nigeria”, averaging 7.28 times as many Japanese stories across the sources sampled.”

His research found that the economy, above racial, ethnic or lingual affinity, is the cause of such disparities. Fair enough but it makes you wonder about the “news” that were missing when constrained to economic or geo-political lenses.

Free-market healthcare?

Earlier in the year I blogged about the true costs of healthcare and the role technology and the Web 2.0 might play in reducing those costs. But maybe we should forget about providing expensive healthcare procedures all–together and instead take a true free-market / division of labour approach and outsource expensive procedures to where they’re cheapest.

Unlikely and politically unpalatable as that may seem, global medical tourism is a $20 billion industry, expected to grow to 40 million cross-border trips by 2010. In the US, 750,000 Americans went abroad for some type in treatment in 2007, and by 2012 that number is expected to top 6 million. Evidently, there are questions about standards but Joint Commission International , a US not-for-profit that accredits American hospitals, has accredited over 140 international hospitals (based on US standards) and expects the number to grow to almost 300 over the next three years.

Fancy a beach?

More...For host countries, this is big business. For example, according to the Jordanian Ministry of Health incoming medical tourism attracts 120,000 patients a year, and generates between $650 million and $700 million annually. For a country whose total GDP (PPP) comes in at approximately $27billion and total exports at just $5 billion, medical tourism thus represents a pretty significant, and growing, share of the country’s income.

Moreover, for countries such as the US developing country healthcare hosts represent massive potential savings. The Journal of Financial Planning estimates that savings may range from 50 to 95 percent of the U.S. cost.

Here are some examples from the National Centre on Policy Analysis:

  • Apollo Hospital in New Delhi, India, charges $4,000 for cardiac surgery, compared to about $30,000 in the United States.
  • Hospitals in Singapore charge $18,000 and hospitals in India charge only $12,000 for a knee replacement that runs $30,000 in the United States.
  • A rhinoplasty (nose reconstruction) procedure that costs only $850 in India would cost $4,500 in the United States.

Given those cost savings, should government run healthcare outsource expensive procedures and focus their budgets on what they do best, and most efficiently? Sounds a bit like a basic Ricardo-esque gains-from-trade analysis. And perhaps this is the next frontier of globalization: a world where government budgets are divvied up on a per capita basis and citizens shop the world for the best deal on government services…. global government anyone?

Networked Education

Bill Vadja, CIO of the US Department of Education, joined us in Washington for our Government 2.0 launch meeting and in the spirit of fair trades I thought I’d give one of his key projects a little press. The School 2.0 initiative is led by the Director of the Office of Educational Technology, Tim Magner, and focuses on how the education system needs to proactively adapt to changes in our global economy.

You can download their nifty map here. It’s quite similar to our nifty network map shown here:


Regardless of the source, what these models entail is a focus on a new, networked form of education. A model shaped by the following (amongst other) factors: 60% of new jobs require a post-secondary education; 22% of college freshmen are taking remedial math courses; allophones form a growing proportion of the workforce; and the number of college students in the U.S. choosing engineering as a major fell 20% between 1993 and 2002.


Moreover, we’re increasingly talking about jobs that we can’t actually define. In a recent conversation with European Union Commissioner for Social Affairs Vladimir Spidla, he noted the need to adapt the European education system for jobs that don’t yet exist but for whom the skill sets needed are yet to be a regular component of the European education system. What comes first, you might ask…

So given the new set of demands being placed on the education system, what’s the solution? This discussion often gets sidetracked by mention of collective bargaining agreements, compensation, etc, but the focus needs to be on what the future of the classroom is. We’ve all grown up in a very linear learning space – Barbara Kurshan, executive director of Curriki notes, “we started at page 1, finished at page 365, and considered ourselves learned.”

But this model is increasingly giving way to a random knowledge space where we define a problem and go to multiple sources to find pieces of the answer. And while this may hold true for the manner in which students currently study, it has yet to become an institutionalized part of the classroom. Doing so would mean not only putting a computer in every classroom ala Al Gore but rather connecting students from across regions and nations to create peered/shared learning communities, where knowledge is built in up-to-date iterative cycles, with the teacher, or networks of teachers and other stakeholders, available to vet and direct these processes – like in the above diagram.

And while we’ve yet to see too much movement in this direction, projects such as the Department of Education’s School 2.0 Initiative are steps in the right direction, and highlight the role of top-level leadership in making things happen.