Base of the Pyramid Week The Inter-American Development Bank’s (IDB) Opportunities for the Majority Initiative celebrated the Base of the Pyramid Week in Washington DC from May 29-31. The main goal of this series of conversations was to promote a discussion around impact investing in Latin America and the Caribbean (LAC); the role public policy innovation plays in catalyzing market-based solutions to poverty; and the power of distribution platforms for scaling up business models that serve the base of the socio-economic pyramid in the region. On the first day of the week, the IDB and the Global Impact Investing Network (GIIN) kicked off the event with a discussion around the potential for impact investing in LAC and how the IDB should be the preferred partner when investing in the region given its network, expertise, and knowledge of the region’s social challenges. With the participation of over 200 people, the Impact Investing Forum was a success thanks to the coordinated efforts of the Bank and GIIN. OMJ distributed its first report on the usage of the Impact Reporting and Investment Standards (IRIS) to track social performance indicators across its projects. This 14-pages report provides an overview of IRIS and how OMJ adapted and is applying these metrics not only to credit operations but more specifically to OMJ’s grant portfolio. The Forum opened with a session moderated by Luther Rangin Jr., CEO of GIIN, together with Alejandro Villanueva, from W.K Kellogg Foundation, Jorge Rubio Nava from CitiGroup, and Bernardo Guillamon from the IDB’s Outreach and Partnerships Office. To round out the impact investment discussion, three breakout panels focused on case studies and the nuts and bolts of sourcing, structuring and catalyzing finance and policy to support impact investments. Moderators to the plenary session included Rob Katz, from Acumen Fund; Ben Thornley, from Insight at Pacific Community Ventures; and Geoffrey Dyer from the Financial Times. OMJ’s fourth annual Strategic Partners Dialogue formed the discussion of day two. The Dialogue brought together over 120 business executives, academics and government officials to discuss how policy innovation can catalyze business solutions that are bringing housing and broadband to the poor in Latin America and the Caribbean. To open the Dialogue, IDB’s President Luis Alberto Moreno updated the crowd on OMJ’s achievements and its portfolio of 33 projects totaling more than $200 million, while stressing the initiative’s ability to leverage five dollars for each one invested, for a total leverage of one billion in 4 years of operations. The discussion on housing was moderated by Valeria Budinich, Vice-president of Ashoka, and included speakers from companies bringing homeownership to low-income families in Mexico, Colombia and Nicaragua, as well as a representative from the Federal government of Mexico. Juan Sebastian Pardo, president and CEO of Credifamilia—a regulated financial institution that finances low-income housing in Colombia, said he spent five years readying his company to enter BOP markets.
He said Colombia’s policies and regulatory framework were favorable to launching Credifamilia and to helping the company reach those who work outside the formal economy obtain long term financing. However, Pardo said he would like to see the creation of a government agency focused on lending to low-income homebuyers. Rodrigo Caldera, the General Manager of RAFCASA, a Nicaraguan company that OMJ supports, raised a point echoed by many at the Dialogue: scalability. Budinich added that lowincome housing is a multi-billion dollar market in many Latin American countries and scaling up would need to be massive to provide adequate and affordable housing for the region’s poor and that it would remain a challenge. Headlining the panel discussing connectivity, Colombian Minister of Information Technologies and Communications, Diego Molano, highlighted how broadband was a “fabulous” way to reduce poverty. He cautioned that providing infrastructure, connectivity and market ecosystems for private interventions were not enough. Applications that help the poor make money are needed. Peru’s Viceminister of Communications, Raul Ricardo Perez, echoed Minister Molano. He said investors should focus on both hardware and software. CISCO’s executive director for Advanced Technology Policy, Andres Maz, said applications for Latin America were fundamental but needed to be “homegrown” and developed in the region. Maz also said that while many governments in Latin America agree that broadband is important, inconsistent policies, tax norms, barriers to investment and restrictions on content often hamper its development and penetration. Given that internet traffic is expected to grow by 50 percent a year in LAC, Regenie Fräser, Caribbean CANTO’s Secretary General, said awareness of broadband was needed in the Caribbean and called for “stakeholders in the region to come up with proposal and strategy on how to accelerate broadband.” The need for proper ecosystems and scaling up were topics brought up several times over the course of the morning and it’s something that remains at the core of what OMJ is working to create strategies and financing for. Steven Puig, IDB Vice-president for Private Sector offered the closing remarks. Two recent IDB publications provided important background knowledge and information for the conversations: Room for Development. Housing Markets in Latin America and the Caribbean, a comprehensive study that includes shocking data about the housing gaps in the region and suggestions on how the market failures can be addressed. And Bridging Gaps, Building Opportunity, a document that provides an overview of the industry and how broadband is a catalyst for economic growth and social progress in LAC. Once the sessions ended, attendants to the Dialogue participated in a luncheon and were treated to a lively talk by Michael Fairbanks, SEVEN Fund’s founder. The Client Workshop rounded out BOP Week with a conversation on scale and distribution platforms that over 200 people attended. Three different panels on OMJ-financed business models—moderated by executives of the Bank and fielded by company executives and OMJ investment officers—discussed the role of partnerships and innovative distribution platforms in enabling models to scale rapidly. The cases presented examples of potential ways of reaching scale in providing goods and services to the base of the pyramid: Empresas Públicas de Medellín (financial inclusion in Colombia), Tenda Atacado
(financial access and training for entrepreneurs in Brazil) and Mi Tienda (improvement of distribution chains and training for rural stores in Mexico). Daniela Carrera, Chief of the Financial Markets Division; Juan Pablo Bonilla, Chief Advisor of the Executive Vice-presidency; and Nathaniel Jackson, Senior Advisor to the Vice Presidency for Private Sector and Non-Sovereign Guaranteed Operations played a key role as moderators in getting the most out of the panelists and the audience. Julie Katzman, the Bank’s Executive Vice-president, provided the closing remarks of the Workshop. Throughout the Workshop—and also during the Dialogue—OMJ conducted electronic polling of the audience to ask their thoughts and reactions to different topics and flashed the responses almost in real time on screens in the room. The enthusiastic participation of over 500 people during the three days of events, the diversity of fields and sectors represented, as well as the number of alliances and partnerships that resulted from the meetings confirmed IDB’s convening power and the growing interest in market-based solutions to LAC’s poverty challenges. OMJ will continue to work on creating these events and conversations that advance the knowledge of the impact investing industry and doing business at the base of the pyramid. Participants’ suggestions and the results of the polling system are inputs for future venues.