Innovative Financing for ICT4D

1
Innovative Financing for ICT4D
The Case of TARAhaat
2
TARAhaat A Social Enterprise

• Objectives
• Sustainable Development
• Sustainable Business
• Using ICT

3
Making Development a Good Business

• Creating Wealth
• Generating Public Benefits

4
The Strategy

• To evolve a commercially viable ICT-based
  enterprise
• To deliver public benefits by satisfying private
  needs

5
(No Transcript)
6
Problem 1 High Costs

• Costs set by the Global Economy
• Experts, staff, equipment, connectivity, power,
  services
• Costs increased by National Policies
• Tolls and Tariffs, Lack of Services to Rural
  Areas
• Costs added by the Need to Localize Solutions
• Content, Applications, Language
• Costs multiplied by Lack of Infrastructure
• Connectivity, Power, Fulfilment Systems

7
Problem 2 Limited Revenues

• Revenues Limited by the Local Economy
• Purchasing power of less than 1 per day income
• Revenues Limited by Size of Decentralized Markets
• Small, remote communities

8
Problem 3 Limited Capacity of Rural Citizens

• Lack of Familiarity with Technology
• Lack of Management and Marketing Skills
• Lack of Access to the National Economy

9
Problem 4 Perceived High Investment Risk

• High Costs Low Revenue Potential Limited
  Capacity High Expected Risk

Stage Problem
Start-up No seed money available
Early Sceptical, modest support
Development and Pilot (Proof of Concept) Suboptimal support
Deployment and Operation Restrained financing
10
Opportunities I

• Large Numbers
• Economies of Scale
• Franchised Networks
• Low Cost Replication

11
Opportunities II

• ICT
• Efficient Distribution
• Affordable Localisation
• Overcomes Communications Barriers

12
Result

• All the market risks are compounded by the real
  reluctance to finance such operations by
• Public Funds Donors, Foundations
• Market Funds VCs, Banks, Financial
  Institutions
• ICT Corporations Equipment, Software
• Other Corporations Potential Strategic
  Alliances
• Opportunities are discounted

13
The Enterprise Life Cycle
14
TARAhaats Life Cycle
15
TARAhaats Funding Challenge
16
Lessons from TARAhaats Experience

• Donors and Foundations
• Must recognize that scalability and financial
  viability involve the generation of profits,
  which are necessary to raise market-based
  financing
• Access
• Speed of response

17
Lessons from TARAhaats Experience

• International Institutions
• Improve outreach programmes
• Must accelerate response times
• Develop new tools for risk assessment of ICT4D
  ventures
• Support a commercial perspective

18
Lessons from TARAhaats Experience

• Governments
• Recognise need for partnerships
• Eliminate tolls and tariffs on movement and/or
  import of equipment, software, etc
• Easier certification is needed for educational
  programs delivered by ICT-based providers
• ICT ventures should be used for the front end
  delivery e-governance services

19
Lessons from TARAhaats Experience

• Market Funds
• Venture Capital is not a player
• Third world risk (developing countries)
• Complexity of due diligence
• High Investment threshold
• Ascribe little value to social returns
• Banks and Financial Institutions
• Do not participate in early stage funding

20
Lessons from TARAhaats Experience

• Corporations
• Must develop innovative mechanisms for vendor
  financing
• Need to establish special pricing mechanisms for
  ICT4D
• Should provide mentoring and technical support
• Need to recognise the market potential

21
Lessons from TARAhaats Experience

• Civil Society
• Must recognize the importance and legitimacy of
  financially viable strategies to scaling up and
  ensuring continuity

22
TARAhaats Call for Action

• Establish Two ICT4D Funds for Initiatives with
  Development Potential
• With clear long-term financial returns
• Without clear long-term returns
• Financial Packaging
• Public
• Private

23
Benefits from ICT4D Mother Funds

• Consolidation of Efforts
• Sustained Financial Support
• Establish Best Practices
• Accelerate Delivery
• Metrics and Accountability

24
ICT4D Mother Fund 1

• Create Fund
• Proactively finance viable initiatives
• Invest sufficiently to get to market financing
• Staff with Practitioners, not armchair experts
• Develop Best Practices and Systems to support them

25
ICT4D Mother Fund 2

• Create Fund
• Identify ventures with substantial social
  objectives and deliverables needing long-term
  support
• Support them
• Assist them to become financially viable

26
Final Lesson from TARAhaats Experience

• The International Community
• Less talk, More action

27
(No Transcript)