Fairstreet

Social entrepreneurship & finance

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ETV: The video report!

May 21, 2009 | Comments Off | Enterprises, Videos

ETV: Water at the source of social change; the video of our second report…

Fair Street - ETV from Angalio Productions on Vimeo.

The second report takes place at Bariloche, in Northern Patagonia. After a meeting in Buenos Aires with the manager of Ashoka, a network that supports social entrepreneurs, we decide to change our itinerary and make a “small” 2000 km detour to Bariloche.

Problems:

Water: Water is a crucial concern, at the very heart of the environmental challenge confronting humanity. Management, supply and diminishing resources are all issues on which much progress still needs to be made. Water quality has a huge impact on the living conditions of the poorest populations. Better water quality improves both the food supply and the hygiene of those “at the Base of the Pyramid”. With improved hygiene they are better prepared to confront the challenges of their everyday life and they can shift their efforts from fighting for survival to their personal development.

Education : In developing countries, there are currently 75 million children who do not attend school, and 861 million illiterate adults. Access to education is universally recognized as a key factor for economic and social development. Education develops knowledge, and gives access to employment: by learning concepts and techniques, marginalized communities can benefit from growth and improve their situation. They are then able to take personal responsibility for themselves and for their families. In developing each individual’s potential,  Education makes a real difference to the dignity of the human condition. “To ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling” is one of the objectives of the United Nations’ program to eliminate poverty by 2015.

Context

Despite its status as an emerging country, Argentina is a country where poverty is still prevalent, be it in big cities like Buenos Aires or in far-off regions such as Bariloche. The economic crisis that hit the country at the start of the decade had a profoundly detrimental effect on the country’s economic and social situation (between 1998 and 2001, the GDP fell from 300 to 220 billion pesos!), and its consequences remain highly tangible today. In Argentina, over half the population lives below the poverty line, and one in five is in a state of complete destitution, with revenues insufficient to provide even the necessary minimum to maintain physical capacity. This situation is mainly the consequence of a high unemployment rate: in the region of Bariloche, a quarter of the active population is unemployed, and this figure reaches 75% in the most remote areas.

The direct consequence of this poverty is the marginalization and social exclusion of a substantial proportion of the population. People live in precarious conditions which are often difficult to escape.

The company:

ETV (Emprendimientos de Tecnologias para la Vida) was founded in 2006 and aims at developing, building and distributing technological solutions to improve the living conditions of the people at the base of the social pyramid. Currently, the main product developed by ETV is the Bomba de Soga, which pumps water. ETV’s objectives are threefold: to harness the potential of technological innovations for the poorest communities; to provide work to young people from the Fondation Gente Nueva; and finally, to use some of the revenues generated by the sales of their products to fund the foundation. However, at this stage, the profits generated do not yet allow significant progress towards the achievement this third objective.

Created 25 years ago, the Fondation Gente Nueva aims to promote education and access to employment to those excluded from the traditional educational system. Helped by a network of primary and secondary schools, and the development of workshops and regional education programs, Gente Nueva wants to give each individual a chance to realize his or her potential. The schools of the Gente Nueva network are free, and the salaries of teachers, who are selected by members of the foundation, are paid by the State.

ETV products are made in the workshops of Gente Nueva, which employs a workforce of young apprentices.

The entrepreneur:

Gustavo Gennuso is originally from Buenos Aires, but he has been living in Barichole for the last 30 years. He moved there when he started studying nuclear energy at the Balseiro Institute. He continued to work in this field until 2000, whilst developing his social innovations. After creating the Fondation Gente Nueva, Gustavo now wants to prove with ETV that a viable and lasting social impact is possible. Gustavo Gennuso’s ambition is to achieve profound social change. He wants to give the poorest members of society every opportunity to develop. By accomplishing social change, he wishes to transform not only the lives of the poor, but also society as a whole.

Social impact:

ETV aims at making significant improvements to the living conditions of the poorest people. Technology development is but a means to this end. The company’s social impact is threefold: first, it improves the living conditions of those at the Base of the Pyramid; second, it creates opportunities for those suffering from exclusion; and thirdly, it finances the Fondation Gente Nueva. In three years of existence, ETV has already succeeded in reaching out to 300 families. The long-term objective is to have a direct impact on the lives of 150 000 people.

Since its creation, the Fondation Gente Nueva has welcomed over 5000 young people into its classes. It has also trained  another 3000 young people through its regional education programs. Gustavo Gennuso’s initiatives have also had an influence on political decisions relating to education in the regions where he is active.

Financial impact:

In this case, the financial impact lies more in the role played by microfinance in extending the company’s social impact than in direct financing.

Microfinance : Micro-credit is an innovation that has allowed millions of people to extract themselves from poverty. If access to capital can allow poor people to create a micro-enterprise, why should it not also allow them to buy products that will significantly improve their living conditions? Such is ETV’s strategy. It is true that the targets of Gustavo’s social business can often not afford to buy his products. The “Bomba de Soga” costs 700 pesos (+/- €140). People who earn an average of €2 per day can hardly hope to find such an amount. So, in order to extend its social impact, ETV uses the micro-credit formula to make its products more accessible. Thus, ETV’s clients fund the purchase of a water pump with a micro-credit. This support from microfinance has a twofold impact: it extends ETV’s social impact, but it also increases the future benefits of the company — and, therefore, the financial resources available to Gente Nueva, who can in turn accelerate social change through increased access to education. As micro-credit is not one of ETV’s activities, they collaborate with different MFIs (Microfinance institutions) and NGOs from the regions where they are active (mainly Northern Patagonia and the Jujuy province). This collaboration with the microfinance sector is the only way to reach the targeted 150 000 people.

Financing: In parallel with its social vocation, ETV also aims to provide financial resources for the Fondation Gente Nueva. This type of model is fairly widespread among social enterprise initiatives: in order to avoid being dependent on donations, “business” solutions are preferred and “social businesses” are created with the aim of financing the non-profit side of their activity. The remainder of the profits are reinvested in the company in order to finance research for other new technologies.

ETV and Gente Nueva have received a financial contribution from the organization Ashoka — which we will present later — of which Gustavo is a member. The company also benefited from various funds, essentially from philanthropic investors, in particular a Swiss “business angel” who has provided a credit on very favorable terms (but about which we have not received any other details). Today, ETV is seeking financial backing amounting to $74 000 (€54 833) in order to finance investments necessary for them to achieve the objectives of their business plan — specifically, for the launch of new technologies.

The strength of Gustavo’s model resides in its capacity to tackle different problems simultaneously. The all-embracing nature of his organization is striking! His model features three essential elements in the fight against poverty: education, access to capital, and healthcare. By creating synergies between different organizations, he can considerably extend his social impact, and this allows him to implement lasting change.

Sources : Interview with Gustavo Gennuso, founder of ETV and of Fondation Gente Nueva

www.unesco.org

www.oms.org

www.schwabfound.org

www.changemakers.net