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CONFERENCE NOTES AND PROCEEDINGS Leveraging Innovative and Cross-Country Learning for Poverty Reduction: Climbing the Economic Ladder – Examples from and for Nicaragua

PRME Anti-poverty Working Group International Conference 28-30 July 2014 Managua, Nicaragua

Introduction These conference notes and proceedings are intended to present the academic sessions and the daylong immersion experience that were part of the Leveraging Innovative and Cross-Country Learning for Poverty Reduction: Climbing the Economic Ladder – Examples from and for Nicaragua held in Managua, Nicaragua, 28-30 July 2014. The first section of this document consists of Conference Notes, which summarize the discussion and dialog that occurred across all three days of the conference. This section also summarizes the discussions and problem solving during the visits to COOPA and Centrolac. The second section, Conference Proceedings, consists of papers and extended abstracts, presented during the academic sessions on Day One. To all participants: We hope you had an enriching conference experience. Sincerely, The Conference Organizing Committee Al Rosenbloom, Dominican University Ana María Majano, INCAE Business School, Nicaragua/Costa Rica Christine Farias, Baruch College, USA Gerard Farias, Fairleigh Dickenson University, USA Hsu O’Keefe, Pace University & Fairleigh Dickinson University, USA Milenko Gudić, CEEMAN, Slovenia Theresa Heithaus, PRME Secretariat, USA

Conference Attendees along with members of the COOPA Milk Co-operative and representatives of Centrolac during the field visit.

Conference Notes

Edited by Professor William M. O’Keefe ([emailprotected]) with contributions of designated conference recorders and participants Susanne Kertelge Rachelle De la Cruz and Daniel Rodriguez

MONDAY, JULY 28, 2014 Panel Discussion I: Nicaragua; context, cases, collaborations – Moderated by John Ickis, INCAE, Nicaragua Panelist 1. María Rosa Renzi, Coordinator of the Human Development Office in Nicaragua, United Nations Development Programme (UNDP) - The UNDP has a long history in Nicaragua conducting projects with special focus on human development and poverty alleviation.

- During the last few years Nicaragua has been one of the most dynamic countries in Latin American and the Caribbean in terms of economic development. In 2013 the Nicaraguan growth rate was 4%, while earlier it had been just 1.5%.

- Since 2001 Nicaragua has managed to reduce extreme poverty, defined as a person living on less than $4 per day, from 79% to 54% of the population. However, the population living in a state of vulnerability ($4-$10) has increased substantially. Thus currently around 90% of all Nicaraguans are living in extreme poverty or are vulnerable to becoming extremely poor. The middle class in Nicaragua has grown much less than in other Latin American countries.

- The UNDP is promoting adoption of the Multidimensional Poverty Index (MPI), already being used in other countries such as Mexico, as a new 10-indicator index to better measure poverty and the results of poverty reduction efforts. This is being adopted in response to the increasing awareness that monetary measures alone are inadequate. This is because markets are not perfect and not everything can be assigned a price, such as the domestic work performed by women or the dominant informal segment of the economy. In addition, changes in income do not have the same effect on fully capable people as it does on less capable members of society. There is a strong need to understand that poverty is not lived in the same way in every place. Thus it is essential to include other dimensions such as access to food, quality of life, availability of health care services, etc.

- There has been a significant reduction in inequality, but unlike other countries such as Honduras, Guatemala and Costa Rica , it is more due to redistributive policies rather than economic growth. At the root of inequality are the unequal relationships of power in Nicaragua. The nation has the demographic advantage of having a young population. Thus

policies are needed to overcome structural barriers. Poverty reduction in Nicaragua will necessitate consolidation of the middle class, transformation of informal economy into the formal one. The question remains on how to break the vicious circle and what are the roles that different actors, including private sector, should assume in the adoption of different multidimensional approaches.

Panelist 2. Matthias Dietrich, Executive Director, Nicaraguan CSR Union (UniRSE), local Global Compact and World Business Council for Sustainable Development (WBCSD) Chapter - Nicaragua is seeking integrated and sustainable solutions for growth. The nation faces the challenge of a growing population, which calls for higher economic growth as well. In 1976 the population was 2.6 million. Today it has grown to 6 million. In order to resolve poverty we need structural changes but also the development of entrepreneurial capacities. In this respect we need new concepts - we need to get out of old schemes and think out of the box. The business sector needs to play a role but cannot be the country’s “fire fighter”. However, we need to look at how we can define the different roles of the different players in the game. The private sector is not the only contributor and should not try to act alone. We need to seek solutions together with the government and invest in more advanced education by building alliances with a range of potential contributing partners.

- The private sector can and does contribute to education in Nicaragua. There are the traditional initiatives carried out by companies supporting schools and education programs but new concepts are needed to also improve the quality and content of education. An example is La Fundación Unión Nicaragüense para la Responsabilidad Social Empresarial (UniRSE) which is participating in an alliance with social organizations and the ministry of education to improve the quality of current education. Companies need to look for solutions that are comprehensive and sustainable in general, and not just look at Social Responsibility initiatives designed to benefit a particular business sector.

- There is a need to think for the longer term, since at the moment there are no concepts for long-term development plans regarding education, such as those developed in Costa Rica. Nicaragua needs long-term education programs which do not change with every new government. Many years ago the Nicaraguan Chamber of Commerce established a program to improve capacity called INDA. However, progress has been limited due to the tendency for each new government to change the education policy. More progress can be made if the practice of long term thinking is adopted.

- Chiles de Nicaragua is a 23 year old producer and exporter of hot chilies used to make Tabasco Sauce. CSR principles drive decision making and no child labor is allowed. It has been a member of UniRSE since 2011. The initial seed capital came from international organizations to help Contras & Compas (Sandinista soldiers) start a business after the war in order to afford them a chance for a normal life. During the financial crises of 2008 private banks cut off funding during the harvest season. The micro-finance companies have become more demanding and are requiring more collateral. It has a production contract with Mcllhenny Company in Louisiana, USA, the maker of Tabasco Sauce, and operates under a pre-established purchasing price agreement which it also extends to the participating local hot pepper producers. The organization provides imported seeds to up to 211 farmers who have contracted to be growers and have agreed to deliver their crops to Chiles. Due to the effects of climate change, the number of participating farmers has declined slightly. The company’s technical service team instructs the farmers how to achieve the best yields. This requires face-to-face support sessions since many farmers are illiterate. This requirement increases production costs, making chilies an expensive crop. All participating famers have installed a drip irrigation system to ensure good harvests. The production contract and agreement to pay after 15 days of delivery assures that they have conditional access to needed credit. The organization also has partnerships with commercial houses such as producers of fertilizers and technology companies.

- Chiles de Nicaragua has had a positive impact on poverty reduction by creating jobs and providing needed technology, technical support, stable pricing and access to credit. While some farmers only plant for one season, others continue to plant season after season. There is the case of Don Pedro who worked for us for 15 years and his son is now working for Chiles. The entire family has benefitted. The home has benefitted from improvements; the wife can now use a modern stove and send the children to primary school. Harvesting hot peppers is labor intensive. It requires 8-9 months to harvest, plant and re-plant the crop. During the harvest season, up to 20-25 people are needed. So the crop has a positive impact on the community. Fortunately chili planting and harvesting does not coincide with the coffee harvesting and planting season.

Panelist 3. Lucía Hurtado, Co-Owner, Chiles de Nicaragua

Panel Discussion I (Cont’d): Questions & Answers Question from the Moderator: Q1: How to take learnings to schools and higher education institutions - what are recommendations for business schools to integrate poverty into the curriculum? As alumni of this institution, how can we incorporate them? - Panelist 3: I understand they’re doing it already. When I was studying here at INCAE, the social issues were less studied in class than today. Working with USAID we have learned that as an anchor company we can have a big impact to strengthen the value chain. We also work with INCAE on a climate change adaptation project which includes our suppliers. We look for humid temperature areas suitable for producing chili and for protective agricultural practices. - Panelist 2: It is important to multiply good practices, particularly through academic and business cooperation. There are a lot of opportunities for alliances between private sector and academia. In Nicaragua companies are taking responsibility for development of the country. For example, a mining company which knew the mine would run out of material one day started supporting development of businesses that would continue to provide goods and services long after the mine closed. Those initiatives requiring minimum investment which have the best results should be multiplied. There is also potential for revolving funding. There is willingness on the part of the private sector to collaborate and of academia as well. - Panelist 1: In Nicaragua we are at the beginning of a change where business is becoming more responsible for sustainable development. After seven years the responsibilities of a gold mining company that works in a poor region ends and as it leaves the region alternative is to invest in creating business (SMEs) to ensure that when the company leaves that the region will continue to develop; a dairy processing company entered a partnership for the collection of milk with the diary famers to train farmers and improve milk quality; the hardware stores where women from the mines work now – are examples that show the sustainable development. Questions from the audience: Participant Question 1: What is the expected impact of the Nicaragua canal on the development and the different sectors? Panelist 2: We see that projects like this are needed for Nicaragua, but it is an illusion that the projects solve the country's problems. The country needs to be prepared in terms of education. We do not have to wait for the canal to solve our problems, but it might help a bit.

Panelist 1: There is little information about the canal to build a position on it. While the environmental concerns are great, it is too soon to tell. However, such a big project will need a lot of prior investment in HR so that Nicaragua can take advantage of the project. But we need to go beyond human capital, we also need to make people understand what the project will do and what it will not do (i.e. face the doubts and fears). There are many positive and negative outcomes that we still don’t know. We need to do more research and find more information as to how it will be executed. Participant Question 2: Many international organizations are keen on reducing public expenditures rather than increasing them. What is the impact of the role of international organization in Nicaragua - is it positive or negative? Panelist 1: It all depends on the organization. Official development assistance had a positive impact since its contributions complement public policies and coffers. However, for the most part they did not make a significant contribution to transforming the national context since there has not been a concerted effort over time to focus on reducing poverty. It all depends on the time and the level of involvement, with government policies being the key factor. There has been a significant positive change in the last few years because organizations are now taking a more proactive approach to take action aimed at reducing poverty. They are also more focused giving advice regarding more effective poverty reduction policies and better assessment of goal achievement. Some believe that the impact has been positive, while others believe the impact has been negative.

Panel Discussion II: Lessons from the rest of the world Panelist 1. Madhukar Shukla – XLRI, India (via videoconference) - Dr. Madhukar Shukla is Professor of Organization Behavior and Social Entrepreneurship and the Director of the Fr. Aruppe Centre for Ecology and Sustainability. He has a deep understanding of the growing social entrepreneurship movement and organized the first ever conference on Social Entrepreneurship in India. This conference that brings together thought leaders, entrepreneurs and a variety of other stakeholders together has now become an annual event.

- India is a country of disparities, a country that is rich and poor at the same time. It is one of the fastest growing economies, per capita income growing at 11.7%. Poverty is not solely about income but it is multidimensional; in India it is often about access to basic resources.

- There are different poverty alleviation initiatives, many of which focus on socially marginalized groups. For example Self-Help Groups (SHGs) - small groups of very poor people mostly women, group-saving and inter-group lending since they will not get access to credit from a bank due to the high transaction costs, rural as well as urban, bank-linkage to the group. This constitutes an “invisible revolution”.

- MYRADA (1986) - Credit Management Groups (CMGs) as starting point; groups grew exponentially as well as the average loan size per group - ability to pay back allowed them to get bigger loans, nowadays almost 8 million groups - 870 women join an SHG every hour! SHGs become the backbone of many initiatives in India. They enable the creation of social support systems.

- National Rural Livelihoods Mission (NRLM) - move people out of poverty. Poverty alleviation is achieved by forming, strengthening and facilitating "institutions of the poor". Critical field experiments: (1) Asset transfer - target the ultra-poor who are landless or owning a very small piece of land. Such interventions have an immense effect on diversification of livelihood activities, fiscal discipline and positive change in habits; (2) Another example is the “Unconditional basic income transfer” which has been piloted in 20 villages: fixed universal monthly and training in financial management (everyone could join), spending on sanitation, nutrition and healthcare. Impact = 22 fold increase in assets, 100% two cooked meals/day (compared to baseline of 54%).

- Learning from India: The poor want to move out of poverty; we need to organize them to realize the potential, bottom-up process and empowerment; we need to create the systems around them and provide them with access to resources and information. Poverty alleviation is a bottom-up process starting with empowering the grassroots. The key feature of empowerment is the formation of “collectives” or “social institutions of the poor”.

Panelist 2. Linda Sama – St. John’s University (SJU), USA - Linda is Director and Founder of Global Loan Opportunities for Budding Entrepreneurs” – GLOBE which she established in partnership with the “Daughters of Charity”. GLOBE provides students first hand opportunities to learn about the micro-finance industry. When she joined SJU, part of her mandate was to bring International Business into the core. Due to her personal interest in social issues, she decided to include an emphasis on poverty alleviation.

- The Daughters of Charity is a religious organization with operations across the world whose mission is poverty alleviation. It plays the critical role of identifying good GLOBE candidates in poor communities in Kenya, Nigeria, Congo, Nicaragua and Vietnam. The success of the program hinges on the Daughters of Charity because they know the climate and candidates for the loans. They are able to help work with families, such as one in Kenya who wanted to explore a baking venture and are reluctant to take on a lot of debt because they do not understand the potential benefits.

- While the typical repayment rate for microfinance programs is 97-98%, this program has an 80%-85% rate. This is because GLOBE is about social business and not profit making. Also, there is no aggressive strategy to get payment back. Disappointments are there.

- Critical lessons learned: The initiative has a high dependence on their people on the ground (identify borrowers and distribute money); people are sometimes reluctant to take out a loan (fear of debt spiral); when somebody does not pay back the loan no measures are taken; however, they try to do everything before writing off the loans - there are examples of both success and failure, the loan itself does not solve the problem (e.g. woman who fell back into alcoholism).

- Participation offers students the opportunity to help change the world one loan at a time. Students with a passion for doing good work are selected for the program. Most are business students, although students from other disciplines are also accepted. To join GLOBE, students contribute $140 to a loan fund for small businesses in developing areas. They are responsible for doing all steps of the process, including vetting applications, organizing fundraising and promoting GLOBE on social media sites.

- The social impact in the target communities has been at the micro scale. Most of the borrowers are women who feel a sense of empowerment. Community members are increasingly involved in household and community decisions, increase adaptation of improved technologies and contribute to community development initiatives. However, the impact on poverty reduction has proved difficult to measure in quantitative terms.

- GLOBE uses also a group lending model as an experiment. For example, a self-help group in Kenya (raised half on the loan themselves and got the other half from GLOBE). However, such group loans are rare. A group of women in Vietnam raised money this way to form a tailor shop. One Nicaraguan woman says that her whole family has been positively impacted: her husband is working, her mother is watching children and now she is able to run her business. The improved technology she has adopted has also helped.

- The program has helped educate responsible leaders at the university. It was difficult at first to get the program off the ground at the university, but once it had some successes, the university started supporting it. Note that Muhammad Yunus came to the campus of the university in the first year of the GLOBE initiative. Dr. Sama earned the Academy Entrepreneurship Award in 2012.

Panelist 3. Paulo Motta – PUC-Rio Brazil - Paulo is professor of marketing with a focus on marketing to the poor. He describes entrepreneurs in Rio slums and their success stories. He has a different approach to Base of the Pyramid (BoP). His research is based on a micro perspective of the urban poor, given that poverty is always within walking distance. There is “no need to go to India” to study poverty. 80 percent of products made by the poor are produced in urban settings, primarily in very poor slums. PUC-Rio is a Catholic school where many of the students come from high income levels. Others need to be given small loans, especially those coming from extreme poverty. Some students come from different backgrounds and have different lifestyles. This causes some divide among the students. Marketing works with exchange, and whenever a person makes an exchange they are connecting with society.

- Paulo concentrates on the urban poor. As Mother Teresa stated - proximity, the poor are everywhere. Both students and employees live in terrible areas. They don’t take a romantic approach to poverty. The rich want to send the poor to another planet. It’s easy to help the poor in Africa, but they do not want to help the poor in their own countries because they compete with real estate. Study the area and help the poor find solutions.

- Examples of entrepreneurial initiatives he has studied include the following. Moto-taxis are an organized business for transport up and down narrow streets. Trash collection is another problem which is attracting entrepreneurs with creative money making solutions. 80% of the small entrepreneurs purchase large quantities of a product in demand at a market outside the slum. They then re-sell merchandise at a much higher price. 10 years ago, entrepreneurs established micro-insurance for dental plans, which has largely benefitted the 30% of the poor that had never been to a dentist. Health insurance can now be very affordable for the poor at $10/month. Not all want to be rich. Some people only want to sell up to a limit and then stop (e.g. - 70 bags of popcorn a day and no more than that). Slum dwellers lack money for snack food. $0.40 is what most people have in their pocket and they usually spend it to buy 2 cigarettes. One girl came up with a business model to sell 15 chicken nuggets in a plastic cup for one real ($0.40) at 16 percent margin. After 1.5 years she is now making 4 million dollars a year. A lot of people have copied this model. They now wear a business

uniform, offer credit card payment and look clean (cover hair). They can make 800-900 dollars a day.

- Not everyone is going to be as successful as those cited in his examples. However, these success stories are real and do happen.

DISCUSSION of PANEL II: Lessons from the rest of the world Questions from the Moderator: Q1: Many people in the barrios who want to get out of poverty become very creative. Is there any way to detect or identify entrepreneurs who have that capability? Panelist 3: I have my students do assignments. If you want to make a difference, talk to the people and come back with ideas. They come back with lots of ideas. Urban poverty is so complicated. A student died in school because he had no money to eat. Get $150 and buy food in a supermarket for a family of 4. If you want to understand the poor, eat a meal on Friday at noon and don’t eat anything until Monday afternoon. The assignments are where students can encounter poverty for themselves. Comment from the audience Participant Comment 1: What is the relation to the communities who live in extreme poverty in my country? I work at a University, which is located in the Distrito San Juan de Lurigancho, one of the most populated countries in Lima, Peru, with the highest poverty rate. What is more relevant is the attitude of students who come from these poor areas. We ask students to look for examples in every situation of their life. The university and municipality are providing the environment for change. Our students are children of parents with small business. They want to be the owners of their own business, too. They are seeking to generate their own income. The university is in one the poorest sectors, which is why probably, we make all efforts to help students out of it. All our work here is to develop basic education and entrepreneurial skills among youth. Questions from the audience: Participant Question 1: Is the work that you’re doing, started largely on personal commitment or was that something that the institution encouraged you to do? In light of that question, if you leave, will this program leave with you? How has your institution supported you or challenged you?

Panelist 2: Programs have a very miniscule impact. In India, we have the construction of several major institutions. Given the complexity and size of India, how do we support as a partner (research, building)? This is not a person-dependent institute. We work with 8/9 NGOs. This will continue. Panelist 3: We have a center that we work with. The course was an elective, but is now part of the curriculum. Some students come back and say that with the mention of the course, they were immediately hired for the job. Participant Question 2: Why did you start these initiatives? When you leave, will the program continue? Did/do you have support from your school? Panelist 1: Yes. This program is institutionalized. Seven major education institutes in India work together to help eradicate poverty, making a direct impact is possible on local poverty, role of the university to provide the knowledge and training to people; the projects are institutionalized and do not depend on single people - work together with NGOs in the area Panelist 2: GLOBE started because of personal commitment. The University had to overcome quite a few obstacles. Now that it’s successful, the university is very much on board. But the important question is SUSTAINABILITY. We have a steering committee, which is trying to foresee succession of the program. Another way is through program alumni who remain in touch (60%) and replicability. We have met with representatives of other institutions who we’ve met with and want to replicate the program. Panelist 3: Five other faculty members are involved now. Marketing to the poor is now part of the education program. Students are proud of taking the course. Participation in this program of poverty field studies is helping graduating students find jobs.

Plenary Discussion – Milenko Gudić, CEEMAN, Slovenia Milenko Gudić

- What is poverty? Poverty is about people. It also about the specific economic, historic, cultural and political context. We need to understand the needs and dimensions of poverty (both quantitative and qualitative), and the different ways to measure it.

- What can we do? We saw a range of initiatives, both large-scale and small-scale, most of which include education. We need integrated and sustainable solutions. We need policy measures, economic measures combined with social transformation, educational

components are needed and there needs to be actions within the sector of education as well, multiplying and replicating models and best practices are key.

- What is the role of different actors including educators, government, NGOs, small groups, local communities, international organizations and business? Management educators need to cover the poverty topic within and across business school curricula, especially entrepreneurship. Educators need to focus more on developing dialogue and partnerships with the range of actors involved to try new experiments and look for innovative solutions. Many success stories have already been shared, including through different personal and/or institutional initiatives. We can learn also from failures. Comments from the audience Participant Comment 1: We need to change the concept that competition is the basis for change and economic growth. This paradigm needs to shift from one of competition to one of collaboration. In order to improve we have to compete with ourselves by examining what we did in the past and then forcing ourselves to face more difficult challenges. Participant Comment 2: We must invest in the idea that globalization is about thinking globally but acting locally. Standardization for global scalability and replicability is not necessarily an effective approach. Positive examples illustrate that successful people build solutions, scalability and replicability based on local strengths. Participant Comment 3:The concept of entrepreneurship is tied to profit and shareholders economic success. However, it is now clear that the concept of entrepreneurship should be understood as taking the risk to change and better combine resources, not only economic but also social, to find new solutions. In my school, I decided to change the name from business school to school of management to reflect this thinking. Participant Comment 4: I run an NGO here with 800 feeding stations. My experience has shown that business leaders are inspired to serve impoverished communities. Rather than lacking the desire to serve, most business leaders lack the knowhow needed to teach the poor the steps they need to take to improve their lot. One of the most important things I’ve learned is that there needs to be a cultural understanding of how to bring people from where they are in their lives to improved standards of living. Many times we find that the equipment is there, but it’s not being used. The real challenge is learning how to teach people to understand how to be better farmers. Many projects fail because the leaders do not invest sufficient effort in helping people develop the skills they need to do things better.

Participant 5: The member universities of PRME need to do more to address root problems, such as corruption and exclusion. There is also the question of who are the customers of business schools. Since they are frequently partly funded by the public, are the students the customers? Or is it society? Participant Comment 6: We need to learn how we can raise the awareness of people who can improve our situation. We are a very small organization which is trying to market our milk without access to roads, without means of organization and without adequate financial resources. We have 101 dairy farmer members and began by forming a collection facility. At that time we could store 2,000 litres of milk. Today we can store about 42,000 litres of milk and wish to raise this to 60,000 litres of milk. It was very difficult to gain access to credit. How are we to raise awareness among government, media, etc.? We have created alliances and partnerships but it is still difficult. How can we attract the attention of those who have the ability to change these micro-economic policies? If such investments are not made in rural areas, how can we reduce poverty? We want to try to come out of poverty in order to benefit our families/workers directly. Participant Comment 7: The challenge of business schools and companies is deciding how to more effectively deal with poverty. Being concerned with poverty is separated from the business of companies in peoples mind. The challenge is to make poverty closer to the core of business and incorporate the issues in all areas of management education and not dedicated classes on poverty. Poverty is treated as an optional topic rather than a central component of business school education. Participant Comment 8: We need to address the context to understand the needs - and the needs will vary across countries. Basic context like geography and culture need to be encountered. Participant Comment 9: In companies we need to change our understanding on how to integrate the community into the operations, as well as to integrate other actors into the inclusive development. This will provide room also for small initiatives, pilot projects, personal development as well as for the collaboration with governmental institutions. Participant Comment 10: What is it that stops the replication of best practices in other cases in the same countries? Business schools and academia can play the role as the common thread to multiplication/replication of these best practices. Having more dialogue is vital since debates motivate for reflection and change.

Participant Comment 11: It is a matter of competition - it can be destructive but it can also seek innovation and create capacity for improvement. We need managers who think about growth and not downsizing (care-taking of the company). Economic growth needs to be combined with intelligent policies and distributions of the benefits across the population. The talent to recognize talent is rare in organizations which are positive to change, while it is very well developed in organizations that are negative to change since these talents are a threat. Questions for business schools. Do we walk the talk? Are we collaborative or competitive? Do we build on local strength? Do we deal with standardization or do we tend to favor one model over another? Entrepreneurship… are we entrepreneurial? Participant Comment 1: Accreditation is used as an excuse for not doing the right thing. It’s the tail wagging the dog. Business schools and PRME need to be setting the mandate for AACSB. More business schools aren’t working together on this issue because we’re all competing for the students. We are practicing the same thing we’re accusing businesses of doing. We need to work together in a more meaningful way. We must learn to be more cooperative. We need to think more about the role of business in society, as well as that of business schools. Who are the customers of business schools? They are the students that attend and the companies that employ them. Participant Comment 2:The challenge for business schools and companies is how to deal with poverty issues. All are concerned about poverty and environmental issues, but think that the efforts to deal with poverty are separate from the main business concerns. A company in Nicaragua has to think of poverty as their everyday business. A big challenge is how to bring poverty issues closer to the core of business activities and business education. Participant Comment 3: How can we build poverty issues in school and businesses themselves? In the case of Chiles, we have built CSR into the business in a cross-cutting manner, involving producers, manufactures, farmers, etc. They filter the issues through their prisms and we eventually reach a decision. We make investments in light of their CSR impact. In one case applying the CSR concept led to a full $1000 savings per container. No one was asking for that money, and it was going to train our employees. We were quite amazed with the results. Investing in CSR is always profitable. Ultimately, the company should have not only a profit, but social impact on people. The impact of all decisions are carefully considered. Investing in CSR will always be profitable. Make the right decisions based on your values regardless the size of the operation

Participant Comment 4: Business schools overestimate their importance as a Corporate Social Responsibility resources in the eyes of business. In 2008, we started a study of the Communications of Progress posted by South American business members of the UNGC to assess the extent to which the businesses identified business schools as their primary partner in CSR initiatives. Our preliminary results indicated that businesses rarely partnered with business schools. Their primary CSR partners were industry associations and non-degree education and training entities. Our recommendation was that business schools should consider partnering with such entities as a means of reaching businesses rather than trying to partner directly with individual businesses on CSR initiatives.

Academic Session I: Micro Level Issues: Learning from Grassroots Initiatives Farias, G. Innovations in Poverty Alleviation: The Stories of Three Indian Entrepreneurs. Presenter 1: Gerard Farias - India has a complex environment in terms of size, culture, religion and politics. Definition of poverty used in India is 0.53 dollars/day in rural areas and 0.78 dollar/day in urban area. 29 percent of the population is below the poverty line. Desired poverty alleviation factors include achieving adequate levels of health & hygiene, access to water, proper nutrition, access to education, access to affordable energy, adequate finance. There are a lot of good poverty alleviation initiatives on-going which originally started as grass route initiatives where individuals took the initiative to identify opportunities to make a change in their society and help the poor and marginalized become more self-sustainable and empowered.

- One of these is “Make a Difference” (MAD) which focuses on empowerment of children living in orphanages and street shelters. The kids wanted books to read. Volunteers teach kids outside the school system. They bought and distributed books, and then asked the children to do book reports on the books they gave them to ensure the books were actually used. These kids stop studying at the age of 15 years since they do not see a future anymore. The focus was on justice, not pity. Students from all over the country applied to join the “MAD” movement. 70-80% of volunteers are rejected because they appear to want to join out of pity, and not justice. This operates on a franchise model where in new branches are given money to start-up. This funding diminishes every year until a branch reaches the point where it can give back to MAD to help start other branches.

- A second example is ”Mirakle Couriers” which is a courier service for the deaf. They are trained to act as paid couriers who use public transportation to deliver packages. A third example is “Grassroutes” which is a tourism service for visits to poor rural villages. The company prepares the villages for tourism by developing minimal infrastructure and training the villagers to provide great service. They then book and schedule visits to selected villages and the villagers organize, run and receive the income from these tours. The villagers are empowered to improve their situation and earn an increased income.

Kahn, S. and Farias, C. Women Empowerment, Poverty and Microfinance –The Pakistani Experience. Presenter 2: Christine Farias. - 22.3 percent of the population of Pakistan lives below the poverty line, which is defined by level of caloric intake. The population is growing at 2 percent/year. Women are poorly represented in the labor force in Pakistan. Female empowerment is complex because of cultural, religious and educational issues. KASHF Foundation set up in 1996 to demonstrate that economic empowerment of women can be a key factor to move Pakistan beyond its current social and economic standing. The goal of this micro-finance initiative is to break barriers women face in the workforce. This is a public - private partnership which employs a demand-driven approach to minimize the chance that participants end up in a debt spiral.

- This program is managed by the Pakistan Poverty Alleviation Fund, an independent unit set up by government. KASHF provides innovative micro-finance programs and products to create additional value for the borrowers and improve their organization as well. Initiatives include Women Entrepreneurs Council, Financial Literacy education, KASHF School of Finance and the training in the Use of Media.

- Key lessons learned include conclusions that large banks should be involved and projects should be less dependent on subsidized funds. Micro-finance projects should be targeted to create jobs meet the needs of the poor, result in the creation of products and services that foster self-sufficiency and which are priced to be sustainable after termination of support funding. In order for micro-finance initiatives to be effective, there needs to be high levels of enabling macro-economic activities, with the government playing the role of catalyst.

Pisani, M. Home-Based Convenience Stores at the Base of the Pyramid: A Case Study of Nicaraguan Pulpería Entrepreneurs. Presenter 3: Michael Pisani. - This is a study of self-employed micro entrepreneurs who run mostly informal and necessitydriven (i.e. no other employment option) business concerns at the base of the pyramid

(BOP). The study examined a sample of these little in-home stores in Nicaragua (500) and El Salvador (450). Pulperias sell basic food supplies, junk food, a little of everything. Starting in 1996, the study was conducted without the benefit of a national business data base for reference purposes in Nicaragua. However, the 2012 data set indicates that there are at least 100,000 pulperias in Nicaragua employing about 200,000 people.

- 85.1% pf pulperias are operated by women and 67.2% are located in urban areas. The average age of the owners is 46.3 years. 60% of pulperia employees have no or only primary education. Gender, location, record keeping and opening times matter: Women earn 45 cents less per hour than men. The average monthly income for females is $85.17 and for males $156.23. Record keeping, a gender independent skill, increases earnings by 24 cents per hour on the average, and more in Managua. Record keeping also offset some of the earning penalties of location. Due to shopping habits of the poor, extending the work day significantly beyond a certain point does not increase income.

- Pulperias are a way of improving lives of people without or only with primary education so the next generation can go to school. Intergenerational mobility is a good measure of “success” for such activities. It is interesting to note that Pulperos wishing to change occupation earned $0.26 less per hour Questions from the audience Question 1: How would you envision incorporating these initiatives in the business management curriculum? M. Pisani: We have control over our own classes. I make sure the base of the pyramid is discussed, along with international business. Since I’m interested in this part of the world, they have to learn it. I use Prahalad’s book as well as several articles. It starts with the teacher. It’s done one teacher at a time. It’s so important to have other models out there. The College of business where I teach has one faculty, and I’m it. Question 2: What do students think of you teaching about poverty? M. Pisani: The reaction is bewilderment. The students are there because they’re required and when we show them this, they take it. There’s no push back. Question 3: What is behind the data that you have presented which is not permitting women to excel, even though they have a better education? This is something that we must unravel. We

can give resources to women, but they can’t do everything regarding social reproduction. We need this reflection in the university, but do not forget the gender perspective. M. Pisani: From one sector, women earned more than men because they were more educated. Some people that sell popcorn seem to lack ambition, is that the same for those in pulperias. Some are necessity driven and some are ambition driven. It’s a continuum and it exists. Question 4 : How do you distinguish between a formal and informal business/pulperia? M. Pisani: In my previous research I found what distinguished a formal vs. informal pulperia is the closer it is located to government halls, and the bigger it is, the more it tends to be formal. An advantage to being formal is greater access to resources. But there’s not too much of an advantage unless the resources are highly visible. Question 5: Why is there a difference in income between women and men? M. Pisani: Cultural issue even though women have been in leadership roles longer. Women’s work is primarily seen in the home and since they’re there anyways, they may as well open up business. It’s important of course to ask WHY! The answer is that the size of the pulperia that women have tends to be smaller since they must also take care of their families. However the men, as primary bread winners for the family, can and do expand their business. Inventory size is definitely correlated with gender. Question 6: There are employees and owners. Is there any discrimination between earnings? M. Pisani: The employees are mostly unpaid family members I was asking about what kind of problems and what kind of solutions. At the university graduate level, we’re always trying to perfect skills through case studies which arehypothetical. We need to develop solidarity between students and the poor. We need to develop so that they can be managers of their own change. Poverty happens everywhere and we’re always acting to help them. How long do we need to be doing this? If a social group comes out with some innovative ideas or entrepreneurship ideas, new ones will emerge and old ones will expire. Will a university come out with interdisciplinary schools and other universities to position themselves in cultural values? This relates to human center design and design thinking. You can teach people an approach which forces cross-disciplinary studies. Do we really care? Do our students care? We need to remoralize our universities!

Verdi, M. and Farias, C. Education, Youth Empowerment and Entrepreneurship – Microfinance Innovations: The Case for Peru. Presenter 4: Christine Farias.

The Blue Sparrow initiative, founded in 2007, is a poverty alleviation initiative focused on rural Peru where 48% of the population is living in poverty and suffering from problems of illiteracy and poor nutrition. The program focuses on giving hope to young people to study and create a future for themselves. Blue Sparrow looks beyond just the education challenge by also improving family wellness and living conditions.

Project 1: Conectados consists of computer labs to enable students to learn the usage of technologies. Most labs are now self-sustaining. Their location in rural areas alleviates the need to spend time and money travelling back and forth to school. Project 2: The family requires sufficient income to afford to send the child to school. The family is empowered with a micro-loan so the kids can go to school. Project 3: Hectare Max is a program designed to support agriculture development by applying a range of measures needed to increase land use productivity as a means of increasing income and productivity. Project 4: Wellness is a health improvement program focused on increasing quality of water and reducing air pollution to ensure welfare.

DISCUSSION Question from the audience 1: How would you envision these grassroots initiatives in management education? M. Pisani.: Case studies and assignment in own classes (undergraduate); it is our responsibility to spread the word G. Farias: Use case studies from different parts of the world; bring more case studies like the presented ones into classrooms but also make students travel. C. Farias: Creating outdoor classrooms - we cannot teach business and economics from books in a classroom but in the field. Field Study Programme to Costa Rica to facilitate learning by doing. Make students understand that we are part of the problem and then think further about how we can become part of the solution. Comment from audience 1: Gender approach is important (women cannot do everything), but we should not forget the gender perspective to be able to eliminate the barriers

G. Farias: About 90% of social entrepreneurship efforts in India are directed towards women since it is a general perception that the money is better utilized by women M. Pisani: We need to acknowledge that there is continuum of people who are self-sustaining and that others try to grow Comment from the audience 2: Borrowers do not necessarily have an entrepreneurial spirit but it is about feeding the family and sending kids to school Question from the audience 2: What are the advantages and disadvantages from moving from the informal to the formal sector? M. Pisani: When closer to local government entity more likely to be formal and bigger. Advantage: access financing, but most don't know that they are informal and what that means. Question from the audience 3: Why do women earn less than men in the pulperias? M. Pisani: Much more traditional environment, women have less standing in society (less value) Comment from the audience 3: Women generally do not grow business as fast as men since they have to take care of their family and they usually reinvest in their family. Question from the audience 4: How do you envision adding such poverty topics to school curriculum? M. Pisani: Must expose students to the Bottom of the Pyramid (BOP) concept. This is most likely done “One teacher at a time”. G. Farias: Pick a case study covering issues from a diverse range of perspectives. Encourage students to travel. C. Farias: Introduce poverty topic by conducting filed study programs. Business students are typically bewildered by BOP material.

Academic Session II: Multiple Perspectives; Learning from various institutions Yepes, G. Programa Plan Padrinos® (ES). Presenter: Gustavo Yepes Lopez - Plan Padrinos (Colombia) is a university-based program designed to teach students how to work with small for-profit companies to improve the management skills of businessmen and

help them achieve big changes in internal productivity in key areas a business. Students analyze companies, develop and implement improvement plans and track results. They acquire practical knowledge which they can apply in the service of development. The program goes beyond interaction between students and faculty, but also with companies, business people and alumni. Plan Pardinos not only delivers hands-on experience to students, but it also offers interesting research issues for academia and training opportunities for faculty. This program has proved to be very popular with small business leaders. The overall rating is 4.3 on a 5 point scale.

Majano, A. and Murillo-Rojas, J. Effectiveness in Programs to Fight Poverty: The Experience of Central America. Presenter: Ana María Majano. - This is a five year study of poverty alleviation programs established in 2007 and funded by the POMA Foundation. A conceptual framework was developed to explore the success measures employed, document key measures of program effectiveness and identify lessons learned. Twelve case studies were prepared to document a range of poverty alleviation initiatives. All will be published later this year. The Libras de Amor program in El Salvador took a holistic view of the problem by integrating the stakeholders and clearly identifying the needs of the target population.

- Of the 12 cases studied, none was able to objectively measure whether the project actually helped eradicate poverty due to the failure to define objective and measurable output measures at the start of the initiative and then apply them during and at the end of the program. The key learning is that program leaders must introduce measures of success at the start of the program in order to be able to assess whether the project actually had the intended impact. For example, a poverty alleviation initiative focused on improving nutrition can demonstrate whether or not nutrition was improved. However, they are not able to demonstrate whether or not this resulted in a reduction in the level of poverty.

- Other lessons learned include the following: 

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Being full of good intentions is not enough - initiatives must have integral, holistic designs which address the multidimensional nature of poverty and then define measurable output goals. Due to the complexity of the poverty alleviation challenge, opportunities for improvement can best be attained by inter-institutional cooperation. Must remain flexible during implementation and adapt to the changing situation. Just because it is a social project does not mean that management skills are not needed to



execute the project - they are essential. We need capacity to plan and execute, collaborate and apply best practice learnings. A transparent process for identifying intended beneficiaries is critical. Implementing organizations must have the empowerment needs and background of target population very clear in their minds based on a thorough diagnosis and clear definition of the baseline.

Naughton, M. and de la Cruz, R.: Poverty, Prosperity and the Purpose of Business Mission Driven Business Education at Catholic Universities. Presenter: Michael Naughton and Rachelle de la Cruz. - Cultural inequality is increasing - both material and spiritual poverty need to be addressed. We behave as if we are more concerned about what we have than what we become. Thus we need to ask ourselves: how can we change the way business is actually taught? All businesses need to have good goods, good work, good wealth. There is a need for a multilayered view of poverty to include material destitution & exclusion as well as moral and spiritual alienation. Education is about trying to see things in relationship to each other. A multi-dimensional approach to prosperity is needed instead of a focus on just shareholder value maximization

Jäger, U, Cardoza, G and Umaña, L. Integrating Base of the Pyramid Experiences into Business School Courses: Learning from Mintzberg how to Include Poverty Issues. Presenter: Urs Jäger. - We need to explore ways regarding how to include the BoP topic in the curriculum. But first we need to define what poverty means. The specific nature of poverty varies around the world. Learning at the BoP is experience-based. The management instructor has different roles when teaching about the BoP: Analyst, Leader, Lecturer, Moderator. Learning can no longer be viewed as a skill that must be learned. Rather, it should be seen as a skill that everyone has from birth. We need a theoretical framework to base our learning on, we need a way to systematically gain experience and then have ways to systematically reflect on the experiences. Application of the Learning Paradigm concept is a useful way to explore both knowledge-based and experience-based learning. Faculty need to help students to find the most effective ways to obtain insights in the local context. DISCUSSION

Comment from the audience 1: The question is when and how to introduce BoP into business education, not whether to introduce it. Comment from the audience 2: In order to educate a child you need a whole town. We need to tell the story beyond the classroom because students hear and see something else out in the world. Question from the audience 1: Subjective perception of whether you feel better after you got help counts, not the objective measurement of poverty and its improvements A.M. Majano: we cannot tell about the effects not because there are none but because we frequently fail to define measurements when designing the project. We neglect to clearly define what we mean by the poverty dimension which we want to reduce in that specific case. We should improve the design, execution and evaluation of projects to be able to see whether the objective is reached or not.

Practitioner perspectives: Learning and Networking with Practitioners Susan Kinne: Grupo Fenix, National Engineering University of Nicaragua - Grupo Fenix is a group of organizations dedicated to research and development of renewable energy solutions, especially for the rural poor. It was started by a group of students from the National Engineering University. In one of their projects they launched a solar cooker distribution program. It was initially designed to pay women, some of whom were landmine victims, to sell solar cookers. But the women decided that, rather than just sell cookers made by others, they preferred to work together with university faculty and students to design, build and then sell the cookers that they had made. Starting this solar cookers initiative in the community led to a lot of new initiatives the results of which were not necessarily measurable in terms of poverty alleviation or increased profitability. For example, in response to an initiative suggested by a community member, the women decided to use the solar cookers to improve the quality of second grade coffee beans, thus creating an improved product for consumption and sale. The community also established the first restaurant ever that relies solely on solar cookers to prepare the food. Communities such as this have become places where university students and faculty go to learn rather than teach. “Edutourism” is the model that Grupo Fenix employs to sustain itself and grow. To date more than 80 courses in solar technologies with homestays and cultural and technological exchanges have been delivered.

Ambreen Waheed: Responsible Business Association, Pakistan

- This responsible business initiative focused on demonstrating how business CSR initiatives can move beyond giving money as charity by finding ways to improve the life of people linked to the business taking responsibility to lift people out of poverty, give them respect and social improvement. Enhancing the self-respect of the poor is key to making them want to assume responsibility for improving their lives and break the cycle of dependence on charity. CSRinitiatives need to look at the root causes as to why people get involved in certain businesses and how their family is involved. Factors such as whether children go to school, and if not why not, also need to be considered. In such cases the goal is to build a fostering environment so kids can go to school instead of working, even to the point of opening schools if necessary. Thus it is important not to only give money, but to also help them build a business and create opportunities for the families to have a sustainable initiative

- The example presented was that of a program to assist paper scavengers in Pakistan improve their business model by providing training with limited resources. The scavengers of paper in Pakistan learn how to sort paper to change the process of recycling by not collecting paper from the dumpsters. They learned how to pursue more environment-friendly objectives so as to avoid making the paper unrecyclable. They were instructed how to move up upstream, before the dumpsters, into the initial disposal process to start a trash sorting initiative so people could collect the paper from door to door. This change helped improve the quality of the material collected. It also resulted in greater income for the scavengers because they now had more and better quality paper to sell.

Lizeth Zuniga: Asociación Renovables, Nicaragua - This association is formed by 42 organizations which promote the development and use of renewable energy in Nicaragua. Their purpose is to significantly reduce reliance on petroleum, which at present is the source of 78% of the energy consumed in Nicaragua, by funding the adoption of renewable sources. Companies are encouraged to take a more active role in promoting electrification of their off the power-grid communities which are not serviced by the government electrification efforts. Companies are encouraged to subsidize the adoption of small scale distributed renewable energy sources such as generators, and in some cases supporting the development of renewable local grid-based sources such as smaller scale hydroelectric power. This electrification initiative is intended to improve the quality of life and help eliminate non-productive uses of time which at present are required to cope with the consequences of the lack of electricity. Access to affordable electricity will allow women to spend less time cooking and free up time to attend training sessions. Ready access to electricity will also free up men from certain labor intensive tasks so they too can attend training programs.

- The faculty and students of the academic community can play key roles helping newly energized communities adapt to this transformation by providing the education, and training support needed. A key issue is helping community members learn how to monetize their energy use so they know how much various activities cost and are better prepared to make energy-use trade-off. Local training is provided to improve community technical skills required by specific projects such as alignment and operations. Community awareness events are organized to celebrate this enhancement to community life and better inform the public about public policy/law 532 and renewable generation and energy distribution basics. Education and support efforts are also offered to help new users understand the potential benefits of ease of energy access, identify local employment opportunities and ways energy access can contribute to their wellbeing.

TUESDAY, JULY 29, 2014 Visits to Centrolac and COOPA CENTROLAC - Centrolac is committed to being an environmentally and economically sustainable dairy enterprise which supports healthy, prosperous communities. They have built a plant to process waste water, and while the typical dairy production process requires 12 liters of water to produce one liter of milk, this company requires just 0.9 liters of water to produce one liter of milk. Development of a non-pasteurized milk product has eliminated the need to refrigerate its milk storage tanks. It has developed a range of flavored milk products which it packages in small, affordable containers. Centrolac has achieved high standards of quality assurance and production efficiency in its ultra-modern production facility. - The company started selling milk eight years ago and it has become an important player in the market, especially in urban areas. However, in rural areas the brand is represented but not dominant because, due to distribution constraints, Centrolac can only deliver its products twice a week. Pulperias, the small in-home shops scattered throughout the rural areas, are the main source of milk and other dairy products for local residents. Competitors have welldeveloped distribution networks and can deliver products daily. However, Centrolac uses the non-alcoholic distribution network of the beer company Cerveceria Nicaragua which only delivers twice per week. They also have to face the fact that because of security reasons the pulperias are not open for people to enter, instead, they are served from a window. For this reason, unless a customer specifically orders Centrolac milk, it is likely that they will be given a competitor product by the pulperia attendant. However, Centrolac has launched successful marketing campaigns by printing on their packages images of popular movie productions. - Centrolac is noted for its Ultra-Pasteurized Milk, which it sources from farmer-owned cooperatives. It has also introduced Matilda, a milk-like product made from vegetable fat, which is targeted to low income families. Since packaging is a crucial factor, Centrolac has successfully partnered with the packaging company Tetra Pak to develop and field-test a new flexible aseptic packaging container for milk which requires neither refrigeration nor preservatives and has a six month shelf-life. At present the company only offers milk in different types and flavors, soy drinks and juices. However, Centrolac plans to expand their offers in the near future to other milk-based products such as cheese.

- In May 2012 it established the Centrolac Cattle Hub Center to provide dairy farmers with products and services, including credit on milk sales to allow financing of better feed and improved stock. At present the yield per cow is about 3 liters per day, as compared to 64 liters per day in the USA. Milk quality tends to be low in part due to the lack of basic sanitary practices. The Cattle Hub provides technical support, including improved equipment, at no cost to producers to help improve milk production and farm profitability. Many farms are small and unprofitable. The goal is to demonstrate that by utilizing appropriate technology, learning better ways of milking cows and by feeding them properly, milk yields can be significantly increased. The company is committed to allocating more resources to improving the productivity of the milk producers. Such initiatives are to include more education for the entire family. - Thus Centrolac has established collaborative relationships with the producers over which it has limited direct control. It is challenged to differentiate the types of quality milk products it offers when there are few incentives for producers to increase quality. Cows are almost exclusively field grazed, and normally suffer from a lack of feed during the dry season, unless the producer has conserved feed for this period. Thus the company experiences a shortage of milk during the five month dry season due to lower productivity and an excess of milk during the rainy season.

WORKING LUNCH WITH COOPA MEMBERS - COOPA is a milk collection and cooling center established in 1994 which now works in alliance with the Centrolac Cattle Hub. The dairy farmers own this milk collection center, rather than the processors, and many of them raise cattle for meat as well as milk. There is a large variation in the number of cattle and the amount of land owned by members, which leads to differences in perceived needs, goals and priorities. Major challenges this dairy cooperative faces include the following:     

lack of access to adequate financing lack of sufficient technical support staff (only 1 or 2 are providing support at present), very costly energy sources (lack required funds to finance needed technical studies of solar energy) inadequate cooling facilities (especially during the highly productive Spring period) the lack of an adequate collection infrastructure.

- Another major challenge members face is the financial instability brought on by the large variation in milk prices. In the dry season when product availability is low farmers receive a premium price. In the wet season when they have an excess of product available they receive a lower price, forcing some of them to sell excess milk at low prices to other buyers. Producers need to be recommended by an existing member to be considered and then must pay a one-time member entry fee of between $2,000-$3,000 to join the cooperative if accepted. Membership affords them access to a range of benefits outlined above in the description of the Centrolac Cattle Hub. - The COOPA representatives participating in this field visit formed breakout working sessions to focus on the following topics: 1st. Finance (13 votes) 2nd. Energy (7 votes) 3rd. Marketing & sales (6) 4th. Quality (5 votes) 5th Infrastructure (5 votes) [Note that the Centrolac representative expressed his concern about the fact that technical service, which was identified as a critical concern by Centrolac management, was not identified as a key priority by COOPA members, but it was stated by some people that it was probably because they are already receiving that support as part of their alliance with Centrolac]

A Partial List of Working Group Results: WORKING GROUP - INFRASTRUCTURE - Rather than try to resolve the deficiencies in the area infrastructure, the group decided to accept the existing transportation constraints and utilize available local (INCAE) resources to focus on the more manageable challenge of finding ways to improve the transport of milk from the dairy farm to the collection station. The team members proposed the following series of development projects. 1. Select an INCAE faculty member to meet with a COOPA working group to outline a plan of work. One of the needed tangible outputs would be a written description of a logistics-focused student internship, to include intern selection criteria. Note this this faculty member would agree to supervise and guide the intern(s) selected.

2. The task of the intern(s) would be to develop a detailed logistics wall map of the location, potential vs actual milk supply volume and transport problems of each of the 211 suppliers. The results of this process would lead to the preparation of a detailed set of priorities and plan of action. 3. A second larger team of interns would be formed to expand and roll out the implementation plan which would include agreed-to performance measures and measurable goals. Examples of potential sub-projects would include: - Benchmarking with other logistic groups, such as UPS or food distributors such as Walmart or Whole Foods, to get ideas of how to overcome the constraints quickly with a minimum of resources - Identification of alternative and affordable milk collection and transport vehicles - Feasibility analyses of establishing small permanent or mobile collection sub-stations. Etc. 4. A second parallel project activity, which would require a second team of interns with a different set of skills, would be to develop and deploy a community action committee to persuade the local government to better maintain the roads. A core project would be to do a cost-benefit analysis to determine the total cost of postponing road repairs, including avoidable construction expenses and potential economic benefits lost due to inaction.

WORKING GROUP - MARKETING - Problem: During the summer months, the produced quantity of milk doubles. However Centrolac continues to buy the same quantity every month and cannot/will not buy the extra amount being produced. Therefore there is an excess supply of milk for which there is no demand. The farmers do not know what to do to get good value for this excess milk. - At the moment, the farmers sell the milk for a very low price in the villages. This is because there is no way for them to produce less milk. - Favored idea: Start working together with local or regional organizations, such as universities, to identify ways they can market the extra milk at the normal market price and/or develop new dairy products from the excess milk. • For example, they can sell the extra milk during the summer period to the universities for the same price they receive during the normal season

• The advantage of this option is that there would not be any direct competition with Centrolac, and therefore no conflict of interest 

The other idea is to partner with Centrolac to develop new products such as cheese, brand them together with Centrolac as a Fair Trade product and market the products internationally at a premium price as Fair Trade quality products of a rural cooperative and a local dairy manufacturer which improve lives and protect the environment.

WORKING GROUP - FINANCE The group asked cooperative members to provide clarification on the main issues and problems regarding finance. Access to finance was mentioned among the most important barriers since neither the cooperative as a business entity nor its members are considered eligible for obtaining bank loans and credits. And if they were, the issue of ensuring collateral would be a serious obstacle. In addition, preparing a request for loans, credits and other sources of external finance requires skills and expertise, which cooperative members and administrators are lacking, while the respective consultancy costs are high and unaffordable. Asked about the priorities for which external finance is needed the cooperative members emphasized (a) machinery, (b) auditorium ($ 30,000-50,000), and (c) a processing plant for the production of cheese for export to the US market ($500,000 to $ 1-2 million). The working group also asked about how the above-mentioned problems and needs are being discussed with CENTROLAC and other stakeholders. The answers received indicated that there was no strategic dialogue between the partners and stakeholders. The following recommendations were made: Financial strength could be improved through a higher milk production volume, which could be achieved by: (a) having more cows per corporate member, (b) higher productivity – milk yield per cow, and (c) expanding the cooperative membership base. These alternatives do not exclude each other, on the contrary, they are mutually reinforcing. There is a need to establish a strategic dialogue between CENTROLAC and COOPA. The dialogue should also include the milk processing and cheese production facilities, which both parties are interested in, seemingly independently from each other. The dialogue should also help COOPA to make CENTROLAC understand that the auditorium project is above all targeted for improving the technical support and advisory services to cooperative members (which is a highly ranked CENTROLAC’s priority) rather than the construction of a new building-facility.

The parties should also work together in developing and proposing legislative changes that would make the cooperative as an entity, as well as individual farmers and/or group of farmers eligible for bank loans and credits. The cooperative should also reconsider its membership fee policy and rules and try to find solutions to financially weak farmers to join as new members. The working group also developed a list of concrete international organizations and/or associations that could provide either external sources of finance or technical support. The group also suggested cooperative as a partner for various study trips, experiential, service and action learning projects to be included into the educational programs of INCAE and other business schools.

WEDNESDAY, JULY 30, 2014 Perspectives and Possibilities: Learning from Nicaragua – Round Table Discussion Facilitated by Gerard Farias TAKE-AWAY LEARNINGS (Comments from the audience) - The political context can determine how companies and organizations make decisions or have to make decisions. We need to understand poverty in the context and the situation and aspirations of the people living in poverty.

- Community power - important to understand the context, it is necessary to work with the community leaders to have an impact on governance (grassroots understanding, understanding of the context and the community)

- There are different power structures we need to understand (politics, religion, culture, caste) - There are programmes in which locals volunteer because they have the feeling they have the ability to change something in their country; programmes where high school students teach students without or little education to get a degree.

- Connection is crucial: (1) Connection between global and local - global trend of what keeps people in poverty and transfer to local level; (2) Connection between theory and practice there is no good theory that is not coming from practical experience; (3) connection in terms of information - what you need to know and where to get it from. Governments need to go from power usage to service provision; there are many win-win-solutions than we know.

- We need to establish an appropriate communication to create alliances, become partners and build trust. Poverty alleviation is not about the government giving. Nor is it about waiting for the government to give. It is about taking action, even when government takes the credit.

- It is about opening windows and doors; need for macro-economic policies e.g. infrastructure; understand where poverty comes from to be able to fight it

- Three perspectives on poverty: research pay, romanticizing what poverty means. Other (the poor are another species); we need to do a micro-analysis of the poor because they are all

different - do we deal with the poor or are they something else? Poverty is often a subjective feeling (even rich people in Brazil perceive themselves as poor)

- Partnership is important, but there are different perspectives on what partnerships mean from the different partners - need for clarification since different needs may imply also different solutions. What business schools could do about all this?

- We need to help people understand what they don't know and the details of the situation so that they can help themselves. They suffer from a lack of information and a lack of process understanding which is essential for effective problem solving. This is an area for interaction between learning partners and business schools.

- We did not meet with the poorest of the COOPA members, the 30-40% of the farmers, because they lack the means to get to the meeting. There are big differences between the members of the cooperative and their level of poverty. COOPA has programmes to help those ones who are really in need. Some producers have university education and therefore the ability to manage their farm in a more effective and efficient way. However, this is not true for the vast majority of the members.

- Investments in education are needed, especially for children, to build a basis. The low level of education is the key problem of poverty. People do not know how to best spend the money they earn. In the coffee sectors, when people received more money than usual they went out and bought cars rather than making investments in their farm

THE WAY FORWARD (Comments from the audience) - Some companies now try to work together and create strategic alliances, starting the dialog with the people, taking people into account and consulting with them on policies. This is an example of using an entrepreneurial perspective for policy development by involving council members, representatives at the department level and representatives of the mayor in the municipality.

- Start at the grass-root level and go up to the top. But when needed also top-down (education).

- Outcomes of advocacy work of NGOs has had an impact at the municipality level. We managed to change 40 laws, some of which are already approved but some processes will take very long.

- There is a window of opportunity for export since free trade and export is a rule (but government approval is needed).

- NGOs and private business work together in communities. This is progress from only working separately with the communities. Change comes from the base and the work with the youth.

Dialogue on Poverty and Corruption: Role and Relevance of the Anticorruption Toolkit: Milenko Gudić - The anti-corruption tool kit is recognized as a valuable resource that can be used to educate students and executives on the nature and consequences of corruption. The starting point in this initiative is to help learners articulate the fact that corruption starts with an individual such as themselves.

Platforms and Opportunities for Research and Knowledge Exchange: Facilitated by Milenko Gudić Curriculum & Teaching Issues Which Merit Attention 1) How do we enable all to have a deeper understanding of and connection to poverty? 2) Can all areas of business education, such as finance, incorporate the poverty topic into the curriculum? 3) What is the cause and effect relationship? Does business cause poverty? 4) Define the causes of poverty. Do the causes rely on what we do every day? 5) While it is important that businesses use a portion of their profits to help the poor, it is more important that businesses earn money in less harmful ways. 6) We need to recognize that businesses products are both good (taxes and jobs) and bad. We also need to discuss the role of business in society and promote the idea of sustainable development and responsible leadership. 7) Faculty need to find ways to reduce reliance on text books which very rarely include information on poverty.

8) We need to involve student more in the learning process, including through the experiential, action and service learning approaches. 9) There is a need for open access to a data base of poverty-related curricula and material together with a guide as to how to incorporate the topic into a course. This data base should be flexible enough to meet the needs of a range of business education requirements, starting with cases where faculty need a limited amount of material so as to include the topic in a course, to cases where faculty require material and curricula to teach a course on poverty. 10) Faculty development is critical since any innovation in one aspect of the educational process (e.g. content) requires appropriate innovations in all the other segments (e.g. educational methods and tools, student and faculty engagement, institutional and organizational policies and arrangements, etc.). These efforts should also encourage faculty to use their academic freedom for critical thinking, innovation and change.

Conference Proceedings

Academic papers

Innovations in Poverty Alleviation: The Stories of Three Indian Entrepreneurs Gerard Farias, Madison, NJ USA

Extended Abstract The story of poverty in India is not new. India is estimated to have a population of more than 1.2 billion people, with about 70% living in rural areas. The Indian government has officially defined the poverty line at about 50 US cents per day, way below the World Bank and United Nations definitions of $1.25 a day. This poverty line along with the fact that India has achieved impressive levels of economic growth has led to the claim that India has brought it’s poverty levels down to about 21% of the population in recent estimations. However, these numbers have been disputed with observers claiming that the number of poor in the country has remained constant at about 400 million people and the reduction in the ratio is an artifact of the steady population growth. After all 400 million exceeds the population of many countries including the United States. Further, by setting the poverty line at 50 US cents per day, many people who actually in poverty appear above the poverty line. According to Kaul (2013), about 67% of the Indian population lives in poverty. While poverty is India’s most pressing issue, it is also accompanied by host of other issues that serve to further compound the problem. For instance, India’s agriculture (that generates income for 70% of the country’s population) is prone to the vagaries and inconsistencies of the monsoon often driving even more people into poverty. It is against this backdrop that the paper will feature three innovative social entrepreneurs (Bornstein & Davis, 2010) and their efforts to impact a section of Indian society. The paper will explore the motivations and purpose of these entrepreneurs with the idea of developing a deeper understanding of how business schools curricula could address the development of leadership, passion and drive to facilitate thinking and appreciation of global social and environmental issues and the initiation of action to address them. All the social entrepreneurs discussed here were interviewed on a one on one in 2011. The MADness of Jithin Nedumala and Sujith Varkey Sujith Varkey had just been accepted to one of India’s leading law schools and as a gesture of thankfulness, he and Jithin Nedumala, his classmate, took some sweets to share with the children at an orphanage in Kochi, India. In conversation with the children, they understood that the children would like books to read. They returned a week later with books and told the children that they would be back the following week and would like to hear about the progress they had made. When they returned, they were pleasantly surprised to find that the children had written book reports to demonstrate their efforts. But Jithin and Sujith realized that these children could use help. They determined that if the children were tutored in English, they would, in addition to learning the language, become more employable in the future. They organized a group of friends to begin visiting the orphanage on a regular basis to teach the children. Thus began MAD— Make-a-Difference. Sujith Varkey took the concept with him when he moved to law school in the city of Pune and began a chapter there. As word of MAD spread through the media, they began getting requests from students for support to start chapters of the organization in different cities with a large number of India’s college youth eager to volunteer. MAD began its work in 2005. Today MAD has chapters in 23 cities, has had 2000 volunteers and has served 5000

children. It adopts a well proven curriculum and takes full responsibility for its results. They have a financial model that makes them self-sufficient operating as a charity. This part of the paper will elaborate on their story. Meanwhile Jithin, who had started a business while in college, decided that MAD needed a full time CEO who was committed to the success of the organization. He continues to be the CEO today. Inir Pinheiro and Grassroutes Inir graduated from with an MBA from Xavier Institute of Management, Bhubaneshwar, one of the leading business schools in India in 2006. Typically, in India, companies visit these leading business schools and hire the graduates at very high salaries. Inir, initially participated in this placement process, but decided to drop out and follow his dreams instead. He was concerned about extreme inequality, injustice and a variety of issues that people in India face. After some thought and research, he decided to focus on rural India. He had several goals; first, he wanted to address poverty in rural India. He believed that addressing poverty would not only improve the quality of life of people in the villages, which in turn would reduce the need for rural to urban migration. Second, he wanted to introduce rural India to urban India. He decided to develop small villages as tourist destinations with an emphasis on maintain the character of rural life. This involved an initial investment in building a basic structure to accommodate tourists and providing training to the citizens of the village to host their guests. The visitors would experience rural life, including their day-to-day activities. It is important to emphasize that the amenities built for the tourists are very basic with the intention of giving visitors a genuine experience while simultaneously preserving the village lifestyle. Grassroutes, the for–profit company incorporated to implement this social business solicits grants to make the initial investment in each village. Once the village was established as a destination, Grassroutes markets each village to a variety of clients from vacationers to corporate training departments. Inir has won several awards for his work and his project. This part of the paper will tell his story. Dhruv Lakra and Mirakle Couriers Dhruv used to work as an investment banker. While he was paid well, he was dissatisfied and felt that he needed to make a contribution to society. He gave up his investment banking position when he was admitted to the Social Entrepreneurship program at Oxford, England. While on a trip back to India, he boarded a Mumbai bus and happened to sit next to a young man who was deaf on the bus. He attempted to communicate with him and realized how difficult it was and was moved. Through his research he found that India has about 6 million deaf people and in most cases they are afforded little dignity, have almost no opportunities for jobs and a generally considered a burden on society. Dhruv decided to start a parcel courier service that would employ only deaf people. While, a courier service employing only deaf people would pose its own unique challenges, Dhruv was committed to creating profitable company even while creating an environment of dignity and respect for the deaf. This was the genesis of Mirakle Couriers. Each of the above examples tells the stories of entrepreneurs who chose to address societal issues and poverty either directly indirectly. They come from different educational backgrounds. Each

of them is dissatisfied with “business-as-usual” and believed that they could meaningfully impact a part of India’s population. There are differences in how they made their choices. The genesis and evolution of MAD was emergent, and the growth was opportunistic. In contrast, both Grassroutes and Mirakle Couriers followed a more traditional route (relatively) as they needed the support of investors. The origination of the idea for MAD and Mirakle Couriers happened by a chance meeting. The idea for Grassroutes was a result of a search for an idea. All the entrepreneurs share a deep passion for and commitment to what they do. REFERENCES Bornstein, D. & Miles, S. (2010) Social Entrepreneurship: What everyone needs to know. Oxford University Press, New York, NY. Kaul, V. (2013) Required: A new poverty line that shows that 67% of India is poor. http://www.firstbiz.com/economy/required-a-new-poverty-line-that-shows-67-of-india-is-poor43862.html Author Information: Gerard Farias is Associate Professor in Management at the Silberman College of Business at Fairleigh Dickinson University in Madison, New Jersey.

Women Empowerment, Poverty and Microfinance – The Pakistani Experience Salman Khan, New York, USA Christine Farias, New York, USA

Abstract: This paper describes the activities of The Kashf Foundation, a wealth management company for low income households focused on empowering women and promoting entrepreneurship and poverty alleviation through innovative microloan programs. The goal of this organization is to alleviate poverty by providing innovative and affordable financial and non-financial services to low income households, especially women, in order to enhance their participation in the labor force. Key Words: Microfinance, Pakistan, Women Empowerment

BACKGROUND Pakistan is located in South Asia with Afghanistan, China and India on its borders and is a gateway to the Middle East and Central Asia. More than one-quarter of the population in Pakistan is classified as poor according to data provided by the finance ministry in its economics survey of 2010-20111Error! Hyperlink reference not valid.. The Pakistani Government estimates that 40-43% of the people live below the poverty line2. The non-income measures of welfare related to health and education are low in comparison with those of other countries in South Asia. Table 1 highlights gaps in wellbeing and life chances in Pakistan in relation to other regional countries. Health outcomes in Pakistan are low compared to other countries in South Asia. Some of the factors that account for this lack of progress is the high population growth of 2.0 percent in 2013. Life expectancy in Pakistan is 65.5 years as of 2012. Indicators relating to child mortality and maternal health also shows low progress for Pakistan. Furthermore, the impact of the increase in international prices of major food commodities which reached their highest level in nearly 30 years had a very negative impact on the poor. A study conducted by the food and agriculture organization suggests that higher prices increased poverty. The poor were hurt by higher prices in all countries studied (Albania, Bangladesh, Ghana, Guatemala, Malawi, Nepal, Nicaragua, Pakistan, Panama, Tajikistan and Vietnam)3. Micro lending in Pakistan till the late nineties was confined to the agricultural sector, with an emphasis on production loans rather than developmental loans. In the year 2000, there emerged a realization that the poor need a broad range of services in order to promote sustainable growth. Subsequently, the microfinance sector has been experiencing growth and making progress towards profitability despite facing various external challenges. Due to a favorable market 1

http://www.finance.gov.pk/survey_1011.html http://www.pbs.gov.pk/ 3 The State of Food Insecurity in the World, FAD, Rome 2011 2

environment both existing and new investors continue to invest substantially in microfinance banks. Table 1: Regional Countries Human Development Indicator Country

Life Expectancy 2012

Infant Under 5 Mortality Rate Mortality Rate Per 1000 Per 1000 2011 2011 Pakistan 65.7 59 72 India 65.8 47 61 Bangaladesh 69.2 37 46 Sri Lanka 75.1 11 12 Nepal 69.1 39 48 Bhutan 68.0 42 54 China 73.7 13 15 Malaysia 74.5 06 07 Indonesia 69.8 25 32 Philipines 69.0 20 25 Thailand 74.3 11 12 Source: Human Development Report 2013 & UNICEF *National Institute of Population (NIP)

Maternal Mortality Rate Per 1000 2011 260 200 240 35 170 180 17 29 220 99 48

Population Growth Rate(%) 2012 2.03* 1.31 1.58 0.91 1.77 1.18 0.48 1.57 1.03 1.87 0.54

In Pakistan, microfinance is gaining importance as an effective tool of social mobilization and poverty alleviation. Currently, a variety of institutions ranging from NGOs to private and government sponsored rural support programs are delivering microfinance services to the poor. With a view to enhance the access of low-income communities to socio-economic services, the Government of Pakistan has set up an independent unit, the Pakistan Poverty Alleviation Fund (PPAF). The Fund is working through a network of partner organizations providing strong community outreach programs. PPAF continuously monitors and analyzes the effectiveness of its programs. Introducing microfinance to empower women is a complex issue in Pakistan particularly because of the strong religious, cultural, and educational barriers that prevent women from contributing to the household income as well as participate actively in the labor force. Women in Pakistan are very poorly represented in the labor force accounting for one of the lowest female labor force participation rates in the region. The gender gap of more than 50 percentage points in the labor force participation rate in Pakistan is much higher than the average gap of 35 percentage points in South Asia. In this context, it will be important to ensure gender equality in accessing social service and labor markets since neglecting the provision of equal access to women would forego the potential contribution of half of its human resources4. While poverty rates in Pakistan have declined from 34.5% in 2001-02 to an estimated 17.2% in 2007-08, women and girls are still underrepresented in the labor force5. Poverty Reduction Strategy Paper –II. http://www.worldbank.org/en/results/2013/04/26/pakistan-achieving-results-in-a-challengingenvironment . 5 www.worldbankWorldbank.org 4

This paper will provide an overview of the microfinance industry in Pakistan and the important role it has played in empowering women with the purpose of alleviating poverty. This overview will be enriched with a more detailed understanding of the specific challenges, approaches and effectiveness of a specific organization that has been active in the field. Micro lending in Pakistan The Pakistan Poverty Alleviation Fund (PPAF) is the lead agency for poverty reduction in Pakistan and is one of the largest spenders on the poor in the country. The organization symbolizes the fortitude of public-private partnership in order to address various issues of poverty with the objective of achieving social and economic change. Being a community-led, demand-driven institution, PPAF focuses on partnerships which are value-driven. The essence of PPAF’s work is to support and strengthen institutions for the poor (partner organizations) in developing institutions of the poor that are well governed, transparent, democratic, and accountable. One of those organizations is Kashf Foundation. Our paper attempts to understand the impact and success of how the programs supported by the PPAF network of organizations are changing the way women are viewed in Pakistan and the impact it is having on women empowerment and microcredit innovations to combat poverty. The paper will focus on examining the case of Kashf Foundation and its innovative and successful microfinance programs that are empowering women and alleviating poverty in Pakistan. KASHF The Kashf Foundation was set up in 1996 to demonstrate that the economic empowerment of women can be a key enabling factor to move Pakistan beyond its current social and economic standing. In 1996, for every Rupee disbursed in the market as micro-loans, only 25% was provided to women but currently in Pakistan’s microfinance sector almost 50 percent of the clientele are women6. The foundation has not only a vivacious financial access program, but it also offers non-financial services such as financial literacy and education trainings, business development 6

Kashf.org

trainings, trainings on gender roles, gender justice and business expansion trainings so that households can effectively use the credit they access from the institution. Kashf Foundation’s economic empowerment program has grown from 913 female clients in June 1999 to 312,182 female clients in June 2013 with an outstanding portfolio of Rs 3.54 Billion ($30.54 million) and cumulative disbursem*nt of Rs 29.67 Billion ($296.7 million) to over 2.22 million female clients. Kashf Foundation has trained 527,376 clients in financial literacy and financial education (cumulatively) since 2010 and provided trainings on gender justice and gender empowerment to over 93,709 participants (since 2011)6 - this includes clients, their husbands and adolescent boys from the community. Demand driven Approach The Kashf Foundation does this by analyzing client business and household cash-flows during the due-diligence phase. A complimentary client feedback system is also in place which provides client feedback and insights on existing and new facets of the business. The officers at the foundation undertake detailed and in-depth Business Appraisals to understand clients’ business and financial needs. In the appraisal, all related costs, revenue and profit are determined alongside all costs incurred at the household level, to ascertain the client’s monthly net disposable income. This allows them to better assess the appropriate product offerings and loan amounts for the clients and maintain its code of ethical and responsible finance by reducing the incidence of over-indebtedness. Furthermore, the oversight process allows the organization to conduct frequent loan utilization checks at a client’s place of business, to monitor loan use and get ongoing insights on clients’ business needs. Clients are also visited by Branch Managers, Area Managers, Senior Area Managers and Regional Managers in order to assess client satisfaction with product offering and staff behavior. Innovative Programs and Products KASHF uses multiple innovative programs to empower women in Pakistan such as Women Entrepreneurs Council- which helps the organization stay abreast with client needs and solicits feedback on all facets of the program. Female clients value the ability to undertake financial transactions themselves without having to rely on others to do simple things such as budgeting and simple book-keeping. Keeping this in view, Kashf Foundation has designed and implemented financial education as a key product offering. It is also one of the first microfinance institutions in Pakistan to produce and air an awareness raising campaign through mainstream media. Kashf Foundation produced and aired a 15 episode TV show and 8 public services messages. The media campaign highlighted the issues and constraints faced by women and lowincome households in Pakistan and empowered women with the ability to recognize their own economic worth and find sustainable solutions to their issues. This is gradually changing how women are viewed in Pakistan, though wide disparities exist between rural and urban Pakistan. 1. Women Entrepreneurs Council A key innovation in Kashf Foundation work is creation of a Women Entrepreneurs Council (WEC), which helps the organization stay abreast with client needs and solicit feedback on all facets of the program. Kashf Foundation undertakes a quarterly meeting with the client

representatives that form the WEC. The WEC has client representatives from all of Kashf’s areas of operation. These WEC members interact with other clients in their areas to understand overall needs, identify client level issues and highlight initiatives that the clients’ would like to introduce. Based on the background knowledge of peers within their areas and their own personal experiences, the members of the WEC make recommendations to Kashf’s management. The Kashf management also discusses ideas for new products and envisions changes in the product methodology with the WEC members for their feedback and insights. 2. Financial Literacy Financial education is a key component of Kashf foundations approach especially in the case of female clients who value the ability to undertake financial transactions themselves without having to rely on others to do simple things such as budgeting and simple book-keeping. Kashf has designed an educational product in order to help clients understand cash flows, discern between business and household cash-flows, make simple budgets, and monitor progress against savings goals. The program is called Systemized Financial Education (SFE) training. They also work on ensuring that all financial education training is provided in the community so that clients can come to the training with ease and convenience. The training is delivered at the house of a client (who volunteers) and is located in the close vicinity of participants’ houses. Proximity of service provision is a key attraction for low-income households, especially women, making this a popular program. 3. Kashf School of Finance Another attractive product the Kashf School of Finance, aims to help low-cost private schools improve the quality of the education provided. In the program, school owners and Kashf staff adopt a consultative process to determine the most important capital needs for the school – this may include infrastructure investments such as desks, chairs, blackboards and classrooms or investments in working capital such as teachers’ salaries, school administration and improvements including painting, building maintenance and replacing old computers. 4. Use of Media Kashf is one of the first microfinance institutions in Pakistan to produce and air an awareness raising campaign through mainstream media. Kashf Foundation produced and aired a 15 episode TV show and 8 public services messages. The media campaign highlighted the issues and constraints faced by women and low-income households in Pakistan.

Impact of Microfinance The microfinance sector in Pakistan, is relatively young compared to those of other countries in the region, and it continues to progress. There are a lot of issues that still need attention and serious consideration especially when it comes to areas such as access to finance, sustainability

and efficiency. Structural reforms in Pakistan’s economy, and particularly in the financial sector, were initiated in the early 1990s. The reforms included the following:  The liberalization of the economy- This meant the opening of the economy and promoting competition while endorsing policies in order to attract foreign and local investment.  The privatization of State Owned Enterprises SOE’s such as some of the main banks in the country has resulted in visible improvements in the nature, form, scale and depth of the financial sector and in financial intermediation.  The State Bank of Pakistan (SBP) which is equivalent to a central bank in another country, had been under the control of the Ministry of Finance, but was given a higher degree of autonomy. The SBP has played a key role in the evolution of micro finance policy in Pakistan since 1999. A Microfinance Support Division was established at SBP, in order to improve the environment in which the new and existing micro finance institutions were to function. The SBP has been encouraging the provision of credit to entrepreneurs. The SBP considers this to be the ‘only durable basis through which the poor can benefit from the financial sector of the country’ (SBP, 2003).  The establishment of credit agencies (for rating of banks and other financial institutions) Definition of Poverty The government of Pakistan defines someone as poor, in need of financial assistance as those with a per capita consumption level below the government’s poverty line. The poverty line is defined as “the level of total per capita monthly expenditures at which an individual obtains the minimum caloric requirement (2,226 cal. per adult)7”. One of the key lessons for a country like Nicaragua is to cultivate a banking system that runs parallel with economic growth, This would help the sector of Micro Finance to capitalize on the growth, which Pakistan has not been able to do. The critical aspect that a country like Nicaragua has to focus on is the access to financial services so and to gauge the impact of microfinance sector on empowering women and alleviating poverty. Foundations like Kashf are trying to provide financial access to the most needy in order to have some kind of effect on poverty alleviation. The poverty reduction strategy and lessons for Nicaragua The government of Pakistan in 1999 started a comprehensive process and deliberation to deal with poverty and also discussed specific reforms for the microfinance sector in Pakistan. The Interim Poverty Reduction Strategy Paper (I-PRSP,) which was published in November 2001, is ‘a comprehensive strategy, which links social and poverty related expenditures with the attainment of key social and human development outcomes. The I-PRSP is a concerted effort aimed at pooling poverty reduction efforts at the federal, provincial, and district levels, across various ministries, departments, and divisions, to ensure realization of desired outcomes by focusing on key success drivers.’. The government came to the realization that access to credit 7

sbp.org.pk

was the best way of empowering the poor and improving their incomes and lives. An example of such a partner was the Asian Development Bank which expressed that ‘poverty reduction potential of micro-finance [was] widely recognized at the policy level and among the development community’ (ADB, 2000). The Governor of the State Bank of Pakistan in 2003, stated that micro finance needs to be placed in the ‘overall context of the efforts of the State Bank in expanding the outreach of financial services and help the goal of poverty alleviation in the country’ (State Bank of Pakistan, 2003). The microfinance institutions ordinance 2001 was propagated by the government of Pakistan for the development of the microfinance sector by introducing the concept of a ‘microfinance institution’ (MFI), defined as ‘a company that accepts deposits from the public for the purpose of providing microfinance services.’ In Pakistan, poverty alleviation is one of the major goals for any institution in the microfinance sector. However this excessive focus can sometimes inhibit the growth of the sector. So for Nicaragua to benefit and promote economic growth a key factor is not to equate poverty alleviation to microfinance. Because of the Pakistani experience at Kashf , this tends to limit the size of the sector and hinder the main objective which is to provide access to financing to people at large. It can certainly work as a poverty alleviation tool, while at the same end of the spectrum create jobs and meet the needs of the poor. Another key lesson for Nicaragua is that most of the time the micro finance sector like Kashf Foundation do not necessarily reach the poorest of the poor. Another key lesson from Pakistan is with regard to the institutions involved in the microfinance sector. Through these microfinance institutions, the government has created a segmented market where the poverty alleviation and social aspects of finance would be taken care of by smaller and specialized banks and not by the large commercial banks. Large commercial banks would be left to develop the fast-moving and higher end of the overall credit market. Since most of these banks have now been privatized the social and governmental pressure on these institutions has been reduced and most commercial banks don’t feel an obligation to lend to the needy or poor segment of the market. Nicaragua can learn a very helpful lesson form the Pakistan Microfinance sector which is its heavy reliance on subsidized funds to cover most costs and maintain operations. To ensure the sustainability of the industry, Nicaragua should build their own institutions with exceptionally low cost structures and reconsider pricing their products and services in order to enhance their revenues and become self-sufficient. One of the key features of microfinance institutions in Pakistan is that they are being led by unsustainable institutions that are heavily subsidized. The main goal of most institutions is to provide regular and reliable access to financial services, but the majority of these institutions are unable to generate sufficient revenues to cover their cost of operations. According to a study conducted by the Ministry of Finance in conjunction with the UK Department for International Development (DFID) - “Moreover, the asset side of the balance sheet shows that MFIs are using their assets inefficiently. There are several reasons why MFIs do not optimally utilize their resources. Across the country, microfinance is regarded as a charitable activity. Institutions thus charge exceptionally low interest rates and do not regard their credit operations as a significant means to raise revenue. The challenge to MFI profitability in Pakistan thus appears to stem from a charitable vision of microfinance that has adverse effects on product pricing, asset allocation and credit risk throughout the sector. MFIs are averse to charging sustainable interest rates since these are perceived as usurious and counter to the movement's mission of alleviating poverty. Microfinance providers thus wind up on a low cost low yield

curve, running heavily subsidized programs. Also, and of particular relevance to this poverty and social impact assessment, the MF sector has yet to demonstrate its potential in terms of its social and poverty impact.” CONCLUSION The micro finance sector in Pakistan is not far behind most of the competing countries in the region such as India, Bangladesh, Sri Lanka and China. So for a country like Nicaragua learning from an organization like KASHF foundation specifically the way they function is a small part of a bigger picture. The country has to specifically learn from the mistakes and policy implementation that the government of Pakistan has pursued. All the basic functions of micro finance institutions will be fulfilled if access to capital and a system that promotes the industry is provided and supported by the government initially. So what can be categorized as the right conditions for a country like Nicaragua to promote the microfinance industry and maximize its social and poverty alleviation impact? The answer to this question is the high levels of macroeconomic stability coupled with the development of the banking sector. From the Pakistani experience the government of Nicaragua should play a catalytic role in the initial phase of the industry and then eventually let the microfinance industry evolve under its own momentum. Another key aspect is the liberalization of its economy in the early stages of the microfinance industry while remaining alert to not creating an artificial segmentation of the sector that inhibits growth of the micro finance sector. Author Information Salman Khan is a Research Associate at LS Capital Partners Management LLC New York, New York. Christine Farias is a Lecturer in Bert W Wasserman Department of Economics and Finance, Zicklin School of Business, Baruch College, City University of New York.

“Home-Based Convenience Stores at the Base of the Pyramid: A Case Study of Nicaraguan Pulpería Entrepreneurs”

Michael J. Pisani, Mt. Pleasant, Michigan USA Abstract. – In this paper, I explore the business and (household) income outcomes of base of the pyramid (BOP) in-home convenience store entrepreneurs through a census-like business survey in Nicaragua. Utilizing a 2012 crosssectional and nationally representative business focused micro data set (bases de datos de la encuesta continua de hogares) undertaken by the Nicaraguan Insituto Nacional de Información de Desarrollo (INIDE), 470 pulperos are examined. Inhome convenience stores or pulperías are ubiquitous BOP businesses serving BOP consumers. Most pulperías are operated by female entrepreneurs in an informal regulatory environment and serve as a link toward poverty reduction at the BOP. Multivariate analyses suggest gender, location, record keeping, work experience, job satisfaction, and hours worked all have a significant impact on pulpería profits. Key Words – Entrepreneurship, Pulperías (Tienditas), Poverty Reduction, Base of the Pyramid, Nicaragua

INTRODUCTION It has been over a decade since C.K. Prahalad argued that multinational corporations (MNCs) could help themselves by helping those at the “bottom of the pyramid” (Prahalad, 2004). Importantly because of his academic stature, Prahalad brought renewed management and global attention to the plight of those around the world earning just a few dollars or less a day. However, his message suggesting that MNCs could and should drive the process of poverty alleviation in the developing world misses and excludes a vast reservoir of entrepreneurship already present at the base of the pyramid8 and capable of serving the needs of those at the base of the pyramid (Pisani & Patrick, 2002). These base of the pyramid entrepreneurs— farmers, store keepers, tradesmen, and the like— have been present all along, but have been largely overlooked in their potential to assist in the sustainable development of the base of the pyramid (BOP). While these BOP entrepreneurs are not the sole solution to reducing poverty in the poorest regions of the world, they should play an important role in a comprehensive policy approach toward poverty mitigation. Hence a better understanding of the entrepreneurial talent at the BOP will help construct meaningful policy approaches. As such, this paper focuses on one popular and widespread business segment of entrepreneurs at the BOP operating in Nicaragua: the in-house convenience store or pulpería.

8

More recently, the phrase “base of the pyramid” has mostly replaced the more pejorative expression “bottom of the pyramid”.

The pulpería or alternatively named tiendita9 located in most of Latin America more closely resembles a microenterprise than a small business because very few tienditas employ more than a single employee, though most utilize unpaid family members as helpers within the microenterprise (Pisani & Yoskowitz, 2012). Academic researchers have classified microenterprises as business entities with typically five or fewer employees, engaged in nonprimary activities, and selling at least 50% of their output (Johnson, 1998; Mead & Liedholm, 1998).10 Mead and Liedholm (1998) found that working proprietors or one-person shops accounted for over half of all microenterprise employment in the developing world. Extending the workplace to unpaid family members within working proprietorships accounts for over 75% of all workers engaged in microenterprise establishments (Mead & Liedholm, 1998). It is the pulpería that is situated precisely at the crossroads between BOP entrepreneurship and BOP consumers. This crossroads embraces the ability to serve the BOP while improving one’s own economic standing within the BOP. My research questions seek to better understand the BOP entrepreneur—including base characteristics and business outcomes—through the entrepreneurial lens of pulpería owners in Nicaragua. Restated, “What are the personal characteristics of and business outcomes for pulperos in Nicaragua?” And “How are the outcomes related to poverty reduction at the BOP?” The remainder of the paper is organized as follows: section two describes pulperías (the sampling unit) and associated microenterprise literature. Section three explains the research methodology and context of the study. Section four presents my results concerning the segmentation of tienditas and the poverty reduction impact of tiendita ownership on the household with section five providing a discussion of these results. The last section concludes the paper. PULPERÍAS Pulperías (tienditas) are pervasive throughout Latin America. The in-house convenience or tiny grocery store is typically found in the relatively poorer or underdeveloped sections of the country—such as shantytowns, rural hamlets, and urban barrios. The pulpería caters to a nearby clientele that is bound to the neighborhood by location, primarily the result of mobility constraints resulting from a lack of financial resources, inadequate transportation alternatives, and poor job prospects. In Nicaragua, more than half of urbanites and roughly three-quarters of rural residents chose tienditas as their primary shopping outlet (D’Haese, Van de Berg, & Speelman, 2008). The in-house convenience store typically devotes and converts the front section of the home to a selling space or retail outlet. The basic stock of a pulpería includes staple food supplies, hygienic products, junk food, school supplies, and other specialty items depending upon the pulpería. Start-up costs for pulperías may be relatively small, oftentimes less than $100 (Pisani 9

The term pulpería is commonly used in Nicaragua to describe these in-home convenience stores. Throughout much of Latin America, however, the more often used term is tiendita. Both terms as well as tendero/a and pulpero/a (owner of a tiendita or pulpería) are used interchangeably in this paper. 10 This is in contrast to SMEs which usually allow for firm size to include up to 50 employees.

& Yoskowitz, 2012).11 The typical pulpería is open from six in the morning until eight in the evening, seven days per week. For the best and most regular customers, pulperías may extend credit. The workforce principally comes from the family unit, typically under the direction of the wife, who is almost always at home because of the home-based location of the business, and is generally supported by other family members in the household (Haase, 2007). Pulperos are microentrepreneurs and as such are self-employed where entrepreneurship refers to own-account employment (Blanchflower & Oswald, 1998). Entrepreneurs at the BOP have been described as lying on a continuum between necessity-driven entrepreneurs (own-account business owners without other employment options) and opportunity-driven entrepreneurs (ownaccount business owners by choice, exploiting a market niche [Kirzner, 1973]). For example, Williams (2008, 2007) observed that both necessity and opportunity drive many into informal entrepreneurship. Gurtoo and Williams (2009) find that in India self-employed informals may be necessity and/or opportunity driven over time, illustrating microenterprise life cycle dynamism as the motivation to participate in the informal economy. Tienditas are mostly informal business concerns as are the majority of the microenterprises in developing countries and Central America (Funkhouser, 1996; Jain & Pisani, 2008; Pisani & Pagán, 2004; Pisani & Ysokowitz, 2012). The retail function of tienditas may be performed under the auspices of government regulators and tax collectors, but more often than not, the government is absent from tiendita oversight. This hidden from government purview employment has been referred to as informal employment (Hart, 1973, 1970). In essence work “activities that avoid state regulation” best describes informality (Itzigsohn, 2000, p. 11). Recent scholarship has revealed the importance of the macroeconomic climate at the BOP in combination with microenterprise health (Daniels, 2003; Pisani & Patrick, 2002), microfinance and microenterprise development (Baptista, Ramalho & da Silva, 2006, Pisani & Yoskowitz, 2005), the returns to small start-up investment (McKenzie & Woodruff, 2006), and as dynamic or disadvantaged enterprises (Fajnzylber, Maloney & Montes Rojas, 2006; Nichter & Goldmark, 2009). The literature is mixed with regards to micro-entrepreneurship and the sectoral maximization of earnings (Daniels, 2003; Pisani & Pagán, 2004; Fajnzylber, Maloney & Montes Rojas, 2006). RESEARCH METHODOLOGY The cross-sectional data set, bases de datos de la encuesta continua de hogares [ECH] (II trimester del 2012)12, utilized in this paper was accessed through the Nicaraguan Insituto Nacional de Información de Desarrollo (INIDE). Partial external support for the survey came from the Economic Commission for Latin American and the Caribbean and the International Labour Office. The ECH survey was deployed by INIDE and completed in Nicaragua from April to June 2012 with a primary focus on economic activity. The household questionnaire contains categorical and ratio data concerning the household roster and demographics and employment. The random national household survey included 6,811 households spread

11 12

All monetary amounts in this paper have been converted to U.S. dollars. The data set and accompanying material are available at: http://www.inide.gob.ni/.

representatively across the country and included 31,281 persons.13 Pulperías were identified utilizing two ECH survey questions in combination: occupation as shop keeper (vendedores y demostradores de tiendas y almacenes) and location of business (en su propia vivienda). Hence only stores located in one’s home were included. As the weighting mechanism was not adequately described in the ECH survey documentation, no weighting was used in the empirical analysis reported in the results section of the paper. However, preliminary weighting may suggest a national total of 213,500 Nicaraguans employed in 91,313 pulperías across the country.14 Nonetheless, the final results utilized in this paper display information from 1,079 employed (owners and employees) in 470 pulperías.

The Nicaraguan Context Contemporary Nicaragua has faced many challenges including natural disasters (e.g., earthquakes and hurricanes), social, economic, and political upheaval (e.g., revolution and counter-revolution), external pressures and shifting alliances (e.g., the oscillating roles of the US, socialism, the Nicaraguan diaspora, and Venezuela), and widespread poverty (e.g., about threefourths of the current population lives on $2 or less per day [World Food Programme, 2014]) (Walker & Wade, 2011). More recently, the political landscape has been dominated by Sandinista Daniel Ortega who has held the presidency since 2007. Under Ortega’s leadership, the nation’s foreign policy has titled to the left and aligned the state with the Bolivarian alliance centered in Venezuela. Economically, the nation is tied to the capitalist global market, in particular the United States and the CAFTA region plus Venezuela. Nicaragua, with approximately six million inhabitants, is the second poorest country in the Western Hemisphere with a 2011 per capita GDP of $1,510 with 42.5% of households living below the national poverty line (World Bank, 2013). Presently the economy is growing between three and five percent per year with moderate inflation under ten percent (Banco Central de Nicaragua, 2013). Informal employment remains persistently high at about 75% of all employed Nicaraguans. There is a direct relationship between informality and self-employment which are both inversely related to per capita income (Xavier et al., 2012). Hence, self-employment remains an important economic employment outlet and driver of the economy with selfemployment comprising roughly one-third of the economically active population (Banco Central de Nicaragua, 2013, Pisani & Pagán, 2004). The composition of the $10 billion economy is about 35% services, 35% manufacturing, and 30% agriculture. The economy is very open to global trade with imports and exports comprising 105% of GDP and overseas remittances accounting for 15% of GDP (Banco Central de Nicaragua, 2013). Lastly, the capital city, Managua, is a classic Latin American primate city containing about half of the nation’s population and is the hub of the nation’s economic activity. 13

The representative national sample of households, or sampling frame, was selected randomly from approximately the same number of households from each department of Nicaragua except the capital city of Managua, where that number was tripled. Care was taken to include both urban and rural households in the same proportion as the population in the region. The universe of households (7,460) was derived from previous censuses, voter registration rolls, and validated with field observation. The non-response rate was 8.7%. Overall, the quality of the data and sample are considered good. 14 No specialized government census of tienditas exists for Nicaragua.

RESULTS In this section, results are presented to provide insight into the two research questions which are focused on the personal characteristics of and business outcomes for pulperos in Nicaragua and how these outcomes relate to poverty reduction. To begin this section, I contrast and contextualize pulperos from their employees. Previous research has shown tenderos to be highly segmented by gender; hence tenderos are next disaggregated and described by female and male owned tienditas. Subsequently, multivariate analyses as to the determinants of business profits are presented. Lastly, household income in relation to potential poverty outcomes is offered. Pulpería Owners and Workers A demographic profile of pulpería entrepreneurs and workers appears in Table 1 in the Apendices. Entrepreneurs are overwhelmingly female while employees are also majority female and many are children. The survey is national in scope with all of the regions represented noting the principle importance of Managua. Urban areas house about two-thirds of tiendita owners and workers in households holding around five people. Pulperos are nearly twice as old as their workers. The workers are nearly all (98.9%) part of the larger family structure and receive almost no explicit monetary remuneration for their assistance in the pulpería. Most of the owners and nearly all of the workers proclaim literacy, yet the workers have generally more education than the pulperos perhaps indicating improved educational outcomes for pulpero children. The tiendita owner typically resides in a married household with the younger workers more likely to be single. [Gender-Based Comparison of Pulpería Firm Characteristics As already noted, the vast majority of pulpería owners are female, this reality deserves further explanation. Pisani and Yoskowitz (2012) and Haase (2007) suggest the gendered nature of pulpería ownership is a result of the convergence of women’s work and women’s role in the home, socially constructed. That is, “in this view, female business proprietorship undertaken in the home is acceptable, perhaps moral, because ‘good’ women remain at home under the watchful eye of husband, family, and community” (Pisani & Yoskowitz, p. 124). Hence the pulpería “is situated at the junction of public and private spaces, where the home dually serves as a business establishment literally adjacent to the street, and as the hearth of the family where the most intimate family affairs are conducted” (Pisani & Yoskowitz, p. 124). Most, but not all, pulperos operate their microbusiness as a year around endeavor (see Table 2 in the Appendices). When in operation, the microenterprise generates business income; reported mean monthly profits were $85.17 for female tenderas and $156.23 for male tenderos.15 A significant profit gap exists between female and male pulperos where female owners earn profits just over half (54.5%) of their male counterparts. Most tenderos average just a bit more than 40 hours per week working in the tiendita. Active record keeping takes place in about one in five tienditas. Few employees work in the tiendita, most that do help in the tiendita are family 15

The conversion rate used is 22.9840 Nicaraguan córdobas per $1US as recorded on July 1, 2012 on Oanda.com.

members working without pay and all report an absence of enrollment in social security, a clear sign of informal work conditions. A majority of pulperos wish to remain in their present occupations, though a substantial minority would change occupations if they were able to increase their income by doing so. Yet very few sought new employment elsewhere. However, about one-third of tenderos earn income through a second job (though participation in a second job is not correlated with those seeking to change jobs) averaging between 11 and 15 hours a week, respectively for women and men.16,17 Of the pulperos with a second occupation, two-thirds (66.4%) owned a second business. The account of second businesses include: bakeries/cooks (33.7%); street vendors (29.2%); laundry (9.0%); tiendita (7.9%); agriculture (7.9%); seamstress (5.6%); other (5.6%). Those not owning a second business almost exclusively earned a second income through agricultural employment. Multivariate Analysis for Principal Business Ownership Profits To better understand the determinants of business profits, I estimated a multiple regression analysis utilizing 15 preselected (a priori) variables. These include gender (female =1), region (Managua [=1] or rest of the country), location (urban [=1] or rural), household size (number of persons living in the household), potential experience (this estimates the amount of potential work experience, calculated as age minus years of education minus 6), potential experience squared divided by 100 (to uncover any nonlinear returns to experience), literacy (literacy = 1), years of education, civil status (married [=1] or not married), foreign remittances (=1 if household receives foreign remittances), keep business records (=1 if tiendita keeps separate business records), have employees (=1 if tiendita has employees), wish to change jobs (=1 if pulpero indicated a desire to change jobs), have a second job (=1 if tendero possess a second job), and number of hours worked per week. The dependent variable is business profits per hour (constructed from monthly business profits and hours worked per week variables). For all tiendita owners, the following five independent variables were significant in determining monthly profits: gender, region, business record keeping, wish to change jobs, and hours worked (see Table 3 in the Appendices). Female pulperas earned $0.45 less per hour than their male counterparts, a gender earnings penalty. Pulpería location in Managua enhanced hourly earnings by $0.29. Those tienditas that keep business records and accounts increased their hourly profit by $0.24. Tenderos wishing to change jobs earned $0.26 less per hour than those tenderos seemingly happy in their current occupation. Lastly, tenderos who worked more hours found themselves earning $.02 less per hour. Because women are the clear majority of all pulperos, a separate multiple regression with only female pulperas was estimated. Five independent variables significantly impact tendera profits: region, potential experience squared/100, business record keeping, wish to change jobs, and hours worked (see Table 4 in the Appendices). Tenderas located in Managua earned a $0.26 per 16

Female pulperas earned $85.17 in their primary occupation and $10.87 in their second occupation monthly. Male pulperos earned $156.23 in their primary occupation and $13.97 in their second occupation monthly. The amount of hours worked on the second job was significantly different between men and women (ANOVA, F=6.606, df=1, p= .011). 17 In contrast, only 11.0% of employees of tienditas held a second job. Representative second jobs include: agricultural work (25.4%), tiendita (23.9%), street vendor (19.4%), cook (13.4%), laborer (11.9%), and other (6.0%).

hour premium over those tenderas located throughout the rest of the country. The returns to potential work experience were nonlinear and negative for women indicating diminishing profits the longer one stayed in business. Business record keeping boosted hourly profits $0.16 for pulperas. Tenderas wishing to change jobs saw diminished hourly profits of $0.23. Finally, the longer tenderas worked in the tiendita the less she profited per hour by $0.02 per hour.18 Too few observations for men made a separate analysis of this type unviable. Household Income, Poverty Reduction, and Pulpería Ownership Previous research has shown that microenterprise ownership may be a viable poverty reduction strategy for individuals for whom the formal educational system has passed by (Pisani, 2013). As educational opportunities are limited in many developing world contexts, entrepreneurship at the BOP becomes an important path toward poverty reduction. Incomes of tendero households in this ECH sample reveal three main sources of income: principal occupation, secondary occupation, and monetary transfers. Household income for tendero households is displayed in Table 5 in the Appendices. As already noted, male pulperos earn a substantially higher business profit than their female counterparts. Secondary occupational income is comparable between the sexes, averaging just over $10 per month. Monthly transfer income, for those households that receive it, is substantial. In fact transfer income to the tendero household is more than the monthly business profits for female pulperas and more than half of the monthly business profits for male pulperos. In all, total monthly household income rises above $100 for female owned tienditas and nearly $200 for male owned tienditas. On a per capita household basis, incomes average $32.02 for tendera households and $60.00 for tendero households. DISCUSSION Recently, Nichter and Goldmark (2009) advanced our understanding of the structural challenges and opportunities facing micro and small enterprises (MSEs) in the developing world. They lumped together the most challenged or “survivalist” firms as firms (and households) on the margins of life, literally interpreted. Nichter and Goldmark (2009) found that the most disadvantaged survivalist firms happen to be those MSEs that are female-owned, informal, and home-based within developing country economic contexts. While not all tenderos are female, clearly women dominate the tiendita business landscape in Nicaragua. No tiendita in the survey reported enrollment in social security, a signal of informality. And by definition, only storefronts embedded within households were selected for analysis; hence in a classic sense, Nicaraguan female pulperas match Nichter and Goldmark’s description of a survivalist firm— where average business income falls under $3 per day. Additionally, tenderos are limited in educational achievement where nearly one-fifth have never attended school and collectively over 60% possess an elementary school education or less. As the average pulpero is middle-aged and married, the possibility of acquiring additional education is highly improbable in a developing market context. Within this disadvantaged environment, 18

Additionally, the multiple regression model for monthly profits for second business ownership proved insignificant. Nevertheless, one variable impacted second business profits: receipt of foreign remittances. Indeed, foreign remittances augmented hourly profits by $1.48. Hence, assistance from abroad may help create and sustain a notable secondary income. Nevertheless, this result is only to be understood as illustrative of the potential remittances may have on second business income.

the good news surrounds the economic returns to entrepreneurship even where the educational system and accompanying opportunities have passed tenderos by. In a country where 75% earn $2 a day or less, tenderos earn nearly one-third more than this perilous benchmark (and some quite a bit more). Additionally, the workers in tienditas, who are mostly family members, have a much higher rate of educational achievement suggesting that the children and extended family members of tendero households have the ability to pursue greater levels of education— where greater levels of education translate into higher paying work. Even so, about one-third of tenderos desire a change of occupational scenery hoping that another job would be higher paying. Second occupations for those tenderos who have them suggest few viable alternatives for higher paying work; in essence, many tenderos are doing relatively well considering their occupational alternatives. The gendered nature of work for pay is evident in the substantial earnings gap between female and male owned pulperías. Gender accounts for the largest differential among all of the variables estimated to determine profits. This gap reflects the severe undervaluing of female work in Nicaraguan business society (Babb, 2001). Other earnings penalties were associated with dissatisfaction with tiendita work, hours worked, and length of time worked at a pulpería (females only). Work dissatisfaction and lower earnings are complementary and expected. Working longer in time and experience, defies earnings strategies, but reflects the low value placed upon “women’s time” especially that time spent in the home. Nevertheless, earnings premiums are associated with location in Managua and with business record keeping. As Managua is the economic hub of the nation, it is expected that neighborhood businesses would perform better in the economic magnet of the country. Keeping business records— recording business transactions— separates home accounts from business accounts, assists in the acquisition of business acumen, and facilitates business decision making (e.g., pricing, margin development, and cost control). Importantly, bookkeeping is a transferable skill that may help mitigate against other uncontrollable earning penalties (e.g., gender, location). Pulpero ownership is clearly a step forward toward reducing poverty at the BOP as the average returns for a full day’s work translates into potential business profits of $5.36 for women and $8.48 for men. When combined with other sources of income, such as a second job and transfer income (e.g., remittances, pensions), monthly household income exceeds $100 for pulperas and $190 for pulperos. Of course monthly per capita household incomes reflects the number of persons living in the household, but the threshold number in which per capita income dramatically falls off is 4 household members for pulperas (from $43.12 for a four-person household and $28.11 for a five-person household) and 5 household members for pulperos (from $111.39 for a four-person household and $27.04 for a five-person household). As compared to other employment and earnings alternatives for relatively unskilled labor at the BOP, the economic profits associated with pulpero ownership provide a stable and above average means of income. CONCLUSION Pulperías, in-home convenience stores, are ubiquitous in Nicaragua where the total number of pulperías may exceed 100,000 firms employing 200,000 Nicaraguans. This is not an inconsequential business sector. Indeed more than half of Nicaraguans shop frequently at

pulperías, more so in rural areas and in the urban periphery reaching base of the pyramid consumers. In meeting this consumer market niche, pulperías fulfill a Kirznerian or incremental market approach (and market need) toward entrepreneurship. Pulpería ownership in Nicaragua is the primary (though not the exclusive) domain of female entrepreneurs at the BOP. For most pulperos, profits achieved through self-employment most likely surpass other realistic employment options. This financial outcome is good news for most pulperos who have little or no education. Moreover, business income from pulpería ownership is relatively stable in the region, another benefit of tiendita ownership (Pisani & Yoskowitz, 2012). This is so in spite of the triple disadvantage of the majority of pulperías: female owned, informal, and based in the home (Nitcher & Goldmark, 2009). Challenges remain, however, for pulperas who suffer a large profit penalty because of their gender. While gender roles and economic equality are a larger societal issue, this sector may be enhanced through the targeting of pulperas for training in bookkeeping. Pulperas who kept a separate accounting of the business earned nearly a 25% profit premium. Public resources could be arranged for basic bookkeeping training at the BOP in order to improve the earnings outcomes of pulperas. Other policy initiatives, such as access to financing and investment capital, business planning, and ease of governmental regulation, may also be helpful in sustaining and improving pulpera businesses. Self-employed pulperos play an important role at the BOP, not only serving BOP consumers, but also achieving some modicum of relative good fortune for themselves and households given the available alternatives. Hence, work as a pulpero may be as good a self-employment option as possible for adult women and men to reduce poverty and move beyond survival at the BOP in a challenging emerging market like Nicaragua. REFERENCES: Babb, Florence E. (2001), After Revolution: Mapping Gender and Cultural Politics in Neoliberal Nicaragua, Austin, TX: University of Texas Press. Baptista, José, Joaquim J.S. Ramalho, and J. Vidigal da Silva (2006), “Understanding the Microenterprise Sector to Design a Tailor-made Microfinance Policy for Cape Verde,” Portuguese Economic Journal, 5(3), 225-241. Banco Central de Nicaragua (2013), “Nicaragua en Cifras – 2012,” [Nicaragua in Figures] http://www.bcn.gob.ni/estadisticas/economicas_anuales/nicaragua_en_cifras/2012/Nicaragua_cifras_201 2.pdf, accessed on May 29, 2013. Blanchflower, David G. and Andrew J. Oswald (1998), “What Makes an Entrepreneur?” Journal of Labor Economics, 16(1), 26-60. Daniels, Lisa (2003), “Factors that Influence the Expansion of the Microenterprise Sector: Results from Three National Surveys in Zimbabwe,” Journal of International Development, 15(6), 675-692. D’Haese, M., Van de Berg, M., & Speelman, S. (2008). “A Country-wide Study of Consumer Choice for an Emerging Supermarket Sector: A Case Study of Nicaragua,” Development Policy Review, 26(5), 603-615. Fajnzylber, Pablo, William Maloney and Gabriel Montes Rojas (2006), “Microenterprise Dynamics in Developing Countries: How Similar are They to Those in the Industrialized World? Evidence from Mexico,” The World Bank Economic Review, 20(3), 389-419. Funkhouser, Edward (1996), “The Urban Informal Sector in Central America: Household Survey Evidence,” World Development, 24(11), 1731-1751.

Gurtoo, Anjula and Colin C. Williams (2009), “Entrepreneurship and the informal sector” Entrepreneurship and Innovation, 10(1), 55-62. Haase, Dwight (2007), “Closing the Gender Gap,” ESR Review, 9(2), 4-9. Hart, Keith (1970), “Small Scale Entrepreneurs in Ghana and Development Planning,” Journal of Development Planning, 6:104–120. Hart, Keith (1973), “Informal Income Opportunities and Urban Employment in Ghana,” Journal of Modern African Studies, 11 (1): 61–89. Itzigsohn, José (2000), Developing Poverty: The States, Labor Market Deregulation, and the Informal Economy in Costa Rica and the Dominican Republic, University Park, PA: The Pennsylvania State University Press. Jain, Adishwar and Michael J. Pisani (2008), “Small and Microenterprise Business Development in Costa Rica: An Examination of Domestic and Foreign Born Entrepreneurs,” Latin American Business Review, 9(2), 149-167. Kirzner, Israel M. (1973), Competition and Entrepreneurship, Chicago, IL: University of Chicago Press. McKenzie, David J. and Christopher Woodruff (2006), “Do Entry Costs Provide an Empirical Basis for Poverty Traps? Evidence from Mexican Microenterprises,” Economic Development & Cultural Change, 55(1), 3-42. Mead, Donald C. and Carl Liedholm (1998), “The Dynamics of Micro and Small Enterprises in Developing Countries,” World Development, 26(1), 61-74. Nichter, Simeon and Lara Goldmark (2009), “Small Firm Growth in Developing Countries,” World Development, 37(9), 1453-1464. Pisani, Michael J. (2013), “Informal Entrepreneurship in Central America: A Labor of Love or Survival?” in Mai Thi Thanh Thai and Ekaterina Turkina (Eds.), Entrepreneurship in the Informal Economy: Models, Approaches and Perspectives for Economic Development, New York, NY: Routledge, pp. 127-142. Pisani, Michael J. and José A. Pagán, (2004), “Self-Employment in the Era of the New Economic Model in Latin America: A Case Study from Nicaragua,” Entrepreneurship & Regional Development, 16(4) July, 335-350. Pisani, Michael J. and Daivd W. Yoskowitz (2012), “A Study of Small Neighborhood Tienditas in Central America,” Latin American Research Review, 47(4), 116-138. Pisani, Michael J. and J. Michael Patrick (2002), “A Conceptual Model and Propositions for Bolstering Entrepreneurship in the Informal Sector: The Case of Central America,” Journal of Developmental Entrepreneurship, 7(1), 95-111. Prahalad, C.K. (2004). Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, Upper Saddle River, NJ: Prentice Hall. Walker, Thomas W. and Christine J. Wade (2011), Nicaragua: Living in the Shadow of the Eagle, Boulder, CO: Westview Press. Williams, Colin C. (2007), “Entrepreneurs operating in the informal economy: necessity or opportunity driven?” Journal of Small Business and Entrepreneurship, 20(3), 309-20. Williams, Colin C. (2008), “Beyond necessity-driven versus opportunity-driven entrepreneurship: a study of informal entrepreneurs in England, Russia and Ukraine”, Entrepreneurship and Innovation, 9(3), 157-65. World Bank (2013), “Nicaragua,” http://data.worldbank.org/country/nicaragua, accessed on May 29, 2013. World Food Programme (2014), “Nicaragua,” Accessed at: http://www.wfp.org/countries/nicaragua on February 11, 2014. Xavier, Siri R., Donna Kelley, Jacqui Kew, Mike Herrington, and Arne Vorderwülbecke (2012), “Global Entrepreneurship Monitor 2012 Global Report,” available at: http://www.gemconsortium.org/docs/download/2645, accessed May 31, 2013.

APPENDICES Table 1: Pulpería Demographics: Entrepreneurs and Employees Variable Entrepreneurs Employees (paid and unpaid) Gender (%) Female 85.1 65.8 Male 14.9 34.2 Region* (%) Segovias 11.1 10.7 Western 6.2 14.9 Managua 29.8 26.3 Southern 10.4 11.0 Central 6.8 4.9 Northern 11.7 16.7 Atlantic 12.8 15.4 Urban/Rural Urban 67.2 68.0 Rural 32.8 32.0 Mean Household Size (std. dev.) 4.8 (2.5) 5.5 (2.4) Mean Age (std. dev.) 46.3 (15.4) 24.1 (16.0) Literate (%) Yes 83.4 95.6 No 16.6 4.4 Education – Last School Attended (%) None 19.1 4.6 Primary 42.1 43.9 Secondary 26.2 40.9 Technical 3.5 1.2 University 9.1 0.2 Mean Education – Years (std. dev.) 6.0 (4.6) 7.1 (3.8) Civil Status (%) Single 4.5 61.6 Married (includes unions) 65.1 27.6 Separated/Divorced 21.5 8.7 Widowed 8.9 2.1 Earned Income/Paid in the Pulpería (%) Yes 99.1 3.9 No 0.9 96.1 N= 470 609 *Region is grouped as Segovias = Estelí, Madriz, Nueva Segovia; Western: León, Chinandega; Managua; Southern: Granada, Masaya, Carazo, Rivas; Central: Boaco, Chontales; Northern: Jinotega, Matagalpa; Atlantic: Río San Juan, RAAN, RAAS.

Table 2: Pulpería Firm Characteristics – Entrepreneurs (as primary occupation) Variable Female Male Work as a PulperoYear Round?* (%) Yes 83.8 94.3 No (seasonal/other) 16.3 5.7 Earned Pulpería Income Over the Past Month? (%) Yes 99.5 98.6 No 0.5 1.4 Amount Earned in Pulpería – Monthly Profits ($US) Mean 85.17 156.23 Standard Deviation 85.38 311.39 Hours Worked per Week Mean 40.57 42.74 Standard Deviation 23.27 22.22 Keep Bookkeeping Records? (%) Yes 29.0 20.0 No 71.0 80.0 Number of Employees (%) 0 27.8 22.9 1-4 71.8 75.7 5-8 0.5 1.4 Enrolled in Social Security? (%) Yes 0.0 0.0 No 100.0 100.0 Do you wish to change jobs? (%) Yes 31.5 41.4 No 68.5 58.6 Rationale for those indicating they wish to change jobs: (%) Increase income 94.4 89.7 Better use my skills 0.8 6.9 Other 4.8 3.4 Have you looked for other work over the past 3 months? (%) Yes 7.0 12.9 No 93.0 87.1 Do you have a second job? (%) Yes 30.2 31.4 No 69.8 68.6 Hours Worked per Week in Second Job Mean 11.01 15.77 Standard Deviation 7.43 10.67 N= 400 70 *Italics = significant difference at the .10 level.

Variable

Table 3: Multiple Regression Pulpería Hourly Profits β Standard Error t statistic Significance

Constant Gender (Female =1) Region (Managua=1) Location (Urban=1) Household Size Potential Experience (PE) PE Squared/100 Literacy (Yes=1) Years of Education Civil Status (Married=1) Foreign Remittances (Yes=1) Keep Business Records (Yes=1) Have Employees (Yes=1) Wish to Change Jobs (Yes=1) Have Second Job (Yes=1) Hours Worked

1.891 -.449 .291 -.050 -.007 .009 -.018 .111 .012 .020 .128 .241 .130 -.264 .011 -.016

.384 .132 .114 .112 .019 .010 .013 .155 .015 .104 .212 .108 .112 .101 .102 .002

4.927 -3.412 2.559 -.451 -.387 .904 -1.328 .713 .817 .194 .606 2.224 1.158 -2.614 .112 -7.327

.000*** .001*** .011** .652 .699 .367 .185 .476 .414 .847 .545 .027** .248 .009*** .911 .000***

Adjusted R2 = .119 Model ANOVA: F= 4.916, df=15, p=.000*** ***, **, * represent statistical significance at the .001, .05, and .10 levels, respectively.

Table 4: Multiple Regression Pulpería Hourly Profits –Female Owners A. Nicaragua – Inventory Growth per Year Variable β Standard Error t statistic Significance Constant 1.005 .253 3.970 .000*** Region (Managua=1) .262 .097 2.694 .007*** Location (Urban=1) .107 .095 1.122 .263 Household Size -.009 .016 -.600 .549 Potential Experience (PE) .011 .009 1.197 .232 PE Squared/100 -.020 .012 -1.723 .086* Literacy (Yes=1) .071 .134 .531 .596 Years of Education .004 .013 .289 .773 Civil Status (Married=1) -.011 .088 -.125 .900 Foreign Remittances (Yes=1) .139 .176 .790 .430 Keep Business Records (Yes=1) .160 .092 1.740 .083* Have Employees (Yes=1) .142 .094 1.508 .132 Wish to Change Jobs (Yes=1) -.227 .089 -2.566 .011** Have Second Job (Yes=1) -.049 .088 -.556 .579 Hours Worked -.016 .002 -8.359 .000*** Adjusted R2 = .144 Model ANOVA: F= 5.726, df=14, p=.000***

***, **, * represent statistical significance at the .001, .05, and .10 levels, respectively. Table 5: Pulpero Household Income ($US)

Income Source Principal Occupation Monthly Mean Amount (std. dev.)

Female

Male

All

85.17 (85.38)

156.23 (311.39)

95.67 (144.90)

Hourly Mean Amount (std. dev.)

0.67 (0.83)

1.06 (1.79)

F=14.552, p=.000

0.73 (1.04) F=9.093, p=.005

Secondary Occupation Monthly Mean Amount (std. dev.)

10.87 (38.88)

13.97 (43.70)

Hourly Mean Amount (std. dev.)

0.25 (0.97)

0.13 (0.43)

10.87 (39.60) F=0.494, p=.482

0.24 (0.91) F=1.023, p=.312

Transfer Income^ Monthly Mean Amount (std. dev.)

96.21 (97.18)

117.84 (59.80)

99.72 (92.18) F=0.597, p=.442

Total Income Monthly Mean Amount (std. dev.)

111.70 (114.57)

192.40 (313.88)

123.62 (162.42) F=14.950, p=.000

Per Capita Household Income Monthly Mean Amount (std. dev.)

32.02 (47.39)

60.00 (103.49)

36.15 (59.79)

F=13.214, p=.000 *Italics = significant difference (ANOVA, comparison of means) for females and males at the .01 level. ^Note: 67 female households received transfer income, 13 male households received transfer income, and 80 total households received transfer income.

AUTHOR INFORMATION: Michael J. Pisani is Professor of International Business and holds the Jerry and Felicia Campbell Endowed Professorship for Research within the College of Business at Central Michigan University located in Mt. Pleasant, Michigan, USA. Professor Pisani received his A.B. in Latin American history and international relations from the University of California, Davis, both his M.A in Latin American studies and M.B.A. in international management from the University of New Mexico, and his Ph.D. in international business from the University of Texas – Pan American. Dr. Pisani’s research interests include the intersection of international business and development, cross-border business/economic phenomena, (Latino) entrepreneurship and selfemployment, sustainability, informality, microenterprise development, microfinance, regional economic integration, consumer ethnocentrism/animosity, currency substitution, political economy, and development studies. His geographic focus primarily concerns the Americas with special attention to the Texas-Mexico (and extended NAFTA) borderlands, South Texas, Central America, the Caribbean, and the US Midwest.

Education, Youth Empowerment and Entrepreneurship – Microfinance Innovations: The Case for Peru Marcos Verdi, New York, USA Christine Farias, New York, USA

Extended Abstract

A crucial step in fighting poverty is to recognize its impact on the people it affects. Poverty can be simply described as a general lack of resources. Poverty constrains access to education, health and nourishment, affecting the well-being and dignity of those it affects. Thus, in order to effectively assist poor people it is necessary to consider all of the different types of afflictions they suffer and work with them and for them in alleviating their poverty and enhancing their livelihoods. Human beings from virtually every nation both developed and developing suffer the consequences of being poor in different ways. Poverty alleviation is complex and the need for innovative models and programs to combat this complexity sustainably is becoming more and more urgent. In the developing world, Peru is one of the countries in which the crudest face of poverty is visible. Despite the impressive economic growth that Peru has experienced over the last decade (GDP growth rate of 6.4% between 2002 and 2012 and an increase of more than 50% in Peru’s per capita income during this decade19), a large portion of its population still lives in extreme poverty and under conditions that hinder human development. The national poverty rate fell from 48.5% in 2004 to 25.8% in 2012. However, the disparity in the poverty rates between rural and urban areas still remains very high: in 2011 the poverty rate was 18% in urban areas while it was 56.1% in rural areas20. With a bureaucratic government and a centralized structure, most Peruvian regions are in urgent need of attention from governmental and/or nongovernmental organizations that can help improve the lives of its citizens and communities. Blue Sparrow is a non-profit organization currently working in different parts of Peru with a very unique and holistic business model. They partner with schools and communities in extremely poor rural and urban areas of Peru, more specifically in the areas located near the Andean City of Huancayo where the youth do not have access to a proper educational experience due to a lack of technology, financial resources or outdated teaching programs. They also work with urban schools and communities in Lima, focusing on empowering marginalized youth, promoting sustainable change and alleviating poverty through education, entrepreneurship and microbusiness21. Through a series of four programs which address the financial, psychological, educational, and occupational needs of poor people, this organization has been working with Peruvian disadvantaged youth and their families to assist them in lifting themselves out of poverty. Blue Sparrow’s approach is highly personalized - they work with small communities adapting their programs to the unique and specific needs of the community at hand. The success 19

20 21

http://www.worldbank.org/en/country/peru/overview

www.worldbank.org www.bluesparrow.org

of this organization demonstrates the potential of a holistic and community centered approach to combat poverty in an effective and realistic way. Blue Sparrow’s Program: The holistic model of Blue Sparrow includes four programs – each intended to address a specific need of the respective community. Conectados: Under this program schools are provided with computer labs in order to enhance students’ learning experience. Besides providing the computers, they also provide trainers who work alongside students and teachers to make sure they make full use of this educational tool and eventually become self-sustaining. Microfinance: The idea for this program arose as a necessity to fund “Conectados”. Part of the funding had to come from students’ families. However, many households did not have enough resources to contribute. As a result, Blue Sparrow saw an opportunity to provide microfinance services to help these families start or expand a small business and thus increase their household income. Some of these businesses include guinea pig breeding, vegetable planting, amongst others. Hectaremax: This program attempts to help farming families improve their efficiency by providing them with better tools and teaching them better techniques to work their land. It arose mainly as an attempt to shorten the large number of hours that children of farming families spent working the land which took away from their studying and leisure time. Needless to say, less hours of work also benefit the other members of the family who can spend more time on other productive activities. Wellness: Even when the financial condition of poor families may improve, there are other factors that may still prevent them from enjoying a better life. Based on this principle, Blue Sparrow decided to create a project that could address specific issues that are common in certain communities. For instance, in the Andean communities where Blue Sparrow is established, they are providing families with low-cost, highly efficient heating systems that are vital to survive the low temperatures of some parts of Peru. Blue Sparrow is aware that these types of necessities will vary from region to region and that is why they are constantly developing new projects to meet these unique needs. This program is an attempt to give completeness to their work by working with communities at a personal level as well. Nevertheless, given that Blue Sparrow has been working only with small communities so far and have been successful in empowering these communities through their holistic programs of education, microfinance, health and wellness, and farming techniques there is an urgent need to scale up in order to reduce extreme poverty in other Peruvian communities. It is necessary to ask and determine whether the Blue Sparrow model of youth and family empowerment is applicable to larger disadvantaged populations such as those found in inner-city neighborhoods and slums as well as other parts of rural Peru and explore the implications of such expansion in reducing poverty and income inequality without compromising on the mission of the organization. Social entrepreneurs like Blue Sparrow have demonstrated the potential to address poverty, youth empowerment, education and microbusiness on a small scale. Their success has been due to their ability to provide personalized attention and a high level of interaction with the

people they serve. The ability to scale up without compromising on the quality of this interaction is a key factor in determining the success of replicating this model. For example, the success of providing education in computer technology and support to schools in rural areas of Peru, would depend on the level of contact by local staff and the local partner groups in maintaining quality and standards. Scaling up by the traditional means has the potential to dilute this contact, diluting a critical aspect of a social entrepreneurial effort. Besides, to scale up with the four programs in a holistic manner would require large investments and would necessitate government involvement to achieve economies of scale so that the services being provided can be made available to the poor at an affordable price. The literature on scaling up social entrepreneurship draws on traditional business entrepreneurship which may not be appropriate in all cases especially since social entrepreneurship requires high contact and individualized solutions. A critical aspect of microfinance and youth empowerment through education and entrepreneurship requires close relationship with the field staff, peer groups and loan recipients to be successful. Standardization would limit the uniqueness and responsiveness of field staff to each situation22. Moreover, commitment and values of the field staff are important ingredients for successful implementation of the holistic approach to community development. Scaling up therefore becomes complex and complicated and may or may not achieve the goals intended, which are to significantly reduce poverty and enhance human development. Our paper discusses the interdependence of education, entrepreneurship and microfinance focusing on the success of Blue Sparrow’s programs in Peru which are aimed at alleviating poverty and empowering youth and families in the communities served. In addition, the paper will also explore the critical issue of scale so that more of Peru’s poor can benefit from the Blue Sparrow model.

Marcos Verdi is a Baruch College alumnus who graduated with a Bachelors in Business Administration in Economics from the Zicklin School of Business. He is currently a graduate student at the Polytechnic Institute of New York University. Christine Farias is a Lecturer in the Bert W Wasserman Department of Economics and Finance, Zicklin School of Business, Baruch College, City University of New York.

22

Christine Farias and Gerard Farias. "Social Entrepreneurship and Issues of Scale."Proceedings of the New York State Economics Association. vol. 5, September 2012, p. 59-64.

TITULO: PROGRAMA PLAN PADRINOS® Gustavo A. Yepes López23

Carlos José Belo Pérez24

“Es por ello que la pobreza del pobre no es un llamado a una acción generosa que la alivie, sino a la exigencia de construcción de un orden social distinto” Gustavo Gutiérrez Merino

Resumen El presente documento presenta los fundamentos, antecedentes, descripción y resultados del programa de fortalecimiento empresarial “Plan Padrinos®”. Concebido en el año 2000 y que hasta el segundo semestre del año 2013 ha beneficiado a 1.119 micros pequeñas y medianas empresas, demostrando ser una estrategia efectiva para combatir la pobreza desde la perspectiva del desarrollo de capacidades.

Introducción La creciente necesidad de los países con mercados emergentes (FTSE, 2009) de crecer económicamente les impone el reto de competir en entornos regionales e internacionales, buscando el reconocimiento y posicionamiento de sus empresas en el mercado mundial. Éste desafío no solo implica revisar y ajustar las políticas y programas estatales de fomento empresarial que promuevan la competitividad del país, sino que requiere de estrategias para promover un crecimiento incluyente y respetuoso con el medio ambiente y que evite a toda costa la proliferación de la pobreza entre una buena parte de la población y el arraigo de la pobreza entre las comunidades históricamente desfavorecidas. 23

Administrador de Empresas de la Pontificia Universidad Javeriana, Magister en Administración de Empresas de la Universidad Externado de Colombia, candidato al título de Doctor en Ciencias Empresariales de la Universidad Antonio de Nebrija. Actualmente se desempeña como Director de Gestión y Responsabilidad Social de la Facultad de Administración de Empresas de la Universidad Externado de Colombia, donde también dirige el grupo de Investigación de Gerencia y Responsabilidad Social y el Programa de Fortalecimiento Empresarial Primeros Pasos en RSE. 24

Ingeniero industrial Universidad América, Especialización en Evaluación y Gestión Curricular. adelanto Master en Gestión de la Calidad European Quality Formation Online, actualmente docente investigador Universidad Externado de Colombia, en programas de pregrado, posgrado y Maestría Facilitador Programa Plan padrinos desde 1998 hasta la fecha, Consultor y Asesor empresarial área de Estrategia, Procesos y Costos.

Teniendo clara la importancia del empoderamiento productivo y la autonomía económica de la misma población para luchar contra el fenómeno de la pobreza (PORTER, 1995) y consientes de la importancia estratégica que tiene el sector mipyme para el desarrollo incluyente de un país, desde el segundo semestre del año 2000 se lanza el programa de fortalecimiento empresarial para empresas mipymes denominado Programa Plan Padrinos®. El Programa Plan Padrinos® tiene como propósito contribuir al desarrollo de capacidades de la población de Bogotá, mediante el fortalecimiento de pequeñas unidades productivas, para que en el marco de una economía de mercado, puedan desarrollar las capacidades necesarias para competir en ese mercado que cada vez es más global y competitivo. Hasta el segundo semestre del 2013, el Programa Plan Padrinos® ha logrado beneficiar a más de 1.119 micros, pequeñas y medianas empresas, con la implementación de mejores prácticas empresariales y la generación de cambios en los hábitos gerenciales, permitiendo con esta alianza interinstitucional, que sean los propios actores los que propendan por su productividad y prosperidad aportando al desarrollo del país mediante la generación de empleo, impuesto, divisas y mejores bienes y servicios. Los resultados tangibles del programa que se presenta en este informe, son el resultado de un estudio de impacto realizado en el 2011 para el periodo comprendido entre el I semestre del 2002 y el II semestre del 2009, que contó con una muestra representativa de 399 empresas participantes. Con este documento se pretende postular la experiencia del Programa Plan Padrinos®, para la conferencia del Anti-poverty Working Group a realizarse en Nicaragua, en el mes de julio del 2014, como un ejemplo de lucha contra la pobreza con base en los aprendizajes y resultados de más de 13 años de esfuerzos y sinergias con diferentes instituciones tanto públicas como privadas del país.

1. LA PROBLEMÁTICA DE LA POBREZA Y EL DESAROLLO DE LAS MIPYMES Para Amartya Sen, la pobreza se entiende como “la ausencia de las capacidades básicas que le permitan a cualquier individuo insertarse en la sociedad, a través del ejercicio de su voluntad” (SEN, 1995). Sin embargo para esta se puede ver desde tres diferentes perspectivas. La primera que se refiere a la presencia de “Necesidades Básicas Insatisfechas - NBI”, (vivienda, servicios sanitarios, educación y capacidad económica), la segunda que se da en función de la exclusión de los derechos que viene dada por la insuficiencia de ingresos para alcanzar el umbral de supervivencia o línea de indigencia y la tercera como falta de capacidades que imposibilita a las comunidades pobres a participar de los beneficios sociales. (MUNIZ, E. 2010) A pesar de los grandes esfuerzos que se vienen realizando por los gobiernos locales de muchos países del mundo para abordar los problemas de la pobreza, mediante la realización de estudios

de caracterización y línea de base, construcción de infraestructura y programas para aprovisionamiento de agua potable, saneamiento básico, vivienda, educación, capacitación para el empleo y hasta de la generación de programas de emprendimiento, los resultados palidecen frente a la situación de exclusión que sigue enfrentando la población. (RACZYNSKI, 1995) Y aunque en América Latina específicamente, según la Comisión Económica para América Latina y el Caribe – CEPAL la situación de pobreza en la región presenta una tendencia a la baja25, indicadores como el Gini que advierten que América Latina es la región más desigual del mundo; cinco de los diez países más desiguales del mundo se encuentran en la región y en promedio en 18 países el 10% más rico de la población recibe 32% de los ingresos totales, mientras que el 40% más pobre recibe solo 15%, poniendo de manifiesto que la lucha contra la pobreza no solo es un reto importante para superar en la región, sino que requiere de mayores esfuerzos para revertir este fenómeno (CEPAL, 2012). Para Amartya Sen, aunque íntimamente relacionadas, la pobreza va más allá que la falta de renta que le impide a un grupo poblacional cubrir sus necesidades básicas, sino que se relaciona con la privación de las capacidades que le permiten a una persona participar de la vida en comunidad, entre las que se encuentran el mejoramiento de las capacidades humanas para aumento de la productividad y del poder para obtener ingresos. (SEN, 2000) En una era globalizada donde el triunfo del mercado y el capital es evidente, se hace necesario realizar esfuerzos para buscar el equilibrio, no con el ofrecimiento de paliativos, regalos o dadivas que pueden hacen dependientes a las comunidades, sino con instrumentos que les brinden las condiciones necesarias para competir por si mismos (PORTER, 1995), para que estas comunidades desarrollen sus propias capacidades y puedan enfrentare a estas nuevas realidades que las vienen excluyendo de su activa participación en la vida social del país y en muchas ocasiones condenándolos a situaciones históricas de pobreza. Según la CEPAL el incremento de la pobreza en Colombia entre 1995 y 2000 se ha debido totalmente al incremento en el desempleo, “el mayor nivel de pobreza aparece relacionado positivamente con los incrementos en el desempleo y la inflación, y con la mayor regresividad en la distribución del ingreso; incrementos en la tasa de cambio real y en el salario mínimo real disminuyen la pobreza” (NUÑEZ, J. RAMÍREZ, J. 2002) Por tanto se hace necesario abordar esta problemática desde el desarrollo de las capacidades de la población, ofreciendo entonces a los propietarios y administradores de las más pequeñas unidades productivas el conocimiento y las herramientas necesarias para competir con mejores condiciones en una economía de mercado. En el mundo, el sector de las micro, pequeñas y medianas empresas es de gran importancia, genera entre el 35 al 45% del empleo y entre el 18 al 37% del producto interno bruto - PIB, y en algunos países que logran su inserción en mercados mundiales entre el 9% y el 25% de las (SNIJDERS, 2003) (EC, 2009). Dada su contribución a la generación de empleo y participación en la generación del producto interno bruto de los diferentes países, las MiPymes día a día cobran mayor relevancia en el ámbito mundial (ESSER, 1996) y se vuelve un sector estratégico para abordar el problema de la pobreza. 25

Para el 2012 de 167 millones de personas en situación de pobreza (28,8% de los habitantes), un millón menos que en el 2011

Para el caso colombiano en particular, pese a que las mipymes constituyen cerca del 98,7% de las empresas legalmente constituidas (VILLAMIL, 2004), aún no han alcanzado un nivel de desarrollo significativo y su tasa de mortalidad es muy alta, razón por la cual un programa de fortalecimiento en gestión empresarial se muestra como alternativa para contribuir a disminuir los niveles de inequidad en el país. Esta problemática es entonces el punto de partida para el diseño e implementación del programa de fortalecimiento empresarial para mipymes denominado Plan Padrinos®.

2. LOS ANTECEDENTES DEL PROGRAMA Como respuesta a la necesidad de una formación más pertinente y el desarrollo de capacidades entre la población, en junio de 1998 se pone a prueba un ejercicio piloto de práctica empresarial en el programa de Maestría en Administración de Empresas de la Facultad de Administración de Empresas de la Universidad Externado de Colombia, en donde los estudiantes próximos a terminar ponían en práctica los conocimientos adquiridos a través del plan de estudios al servicio de una micro, pequeña o mediana empresa, permitiéndole de esta manera desarrollar ejercicios de consultoría que los aproximasen a la realidad de las empresas colombianas. Los excelentes resultados para ambas partes (estudiantes y empresarios), permitieron que en el primer semestre del año 2000 este ejercicio se convirtiera en el soporte y eje central de un programa de apoyo empresarial promovido por la Asociación Colombiana de las Micro, Pequeñas y Medianas Empresas – ACOPI y diseñado especialmente para el desarrollo de las empresas afiliadas al gremio, mediante una estrategia de interacción universidad – empresa, y en donde los estudiantes de una materia del programa de Pregrado en Administración de Empresas participaran como asistentes de experimentados consultores. Con la intensión de fortalecer el equipo de profesores, mejorar el desempeño del programa como agente de cambio y desarrollar sus propias metodologías, a mediados del 2001 se realiza un convenio de cooperación con la alianza entre la organización de origen Suizo, Fundación para el Desarrollo Sostenible – FUNDES y la universidad Mexicana Tecnológico de Monterrey para operar en Colombia el programa Crisol Pyme. Con metodologías más estructuradas y superados algunos de los conflictos con el área administrativa que generaba el nuevo ambiente de formación y con el fin de mejorar la convocatoria, la Facultad asumió totalmente los costos de operación del programa, (sin costo alguno para el empresario) e invito a diferentes instituciones como el Grupo Bolívar 26, y luego a Bancoldex27 a convocar a las empresas pyme que visitaban sus consultorios empresariales. En el 26

El Grupo Bolívar es un conglomerado empresarial que cuenta con 26 empresas, 12.000 empleados y una facturación cercana a los $5 billones anuales y reconocidas marcas como Davivienda, Seguros Bolívar y la Constructora Bolívar. 27

El Banco de Comercio Exterior de Colombia S.A. – Bancoldex, entidad gubernamental vinculada al Ministerio de Comercio, Industria y Turismo, que opera en Colombia como banco de segundo piso y que se ocupa del desarrollo del sector empresarial y promotor del comercio exterior del país

2005 el nombre Programa Plan Padrinos® es registrado como marca ante las autoridades comerciales de Colombia e inicia formalmente sus actividades en conjunto. Los resultados de esta iniciativa dependen de un importante esfuerzo económico por parte del Facultad y de sus socio estratégicos como el Grupo Bolívar y Bancoldex, ya que más allá de los recursos necesarios para un clase tradicional, el programa requiere de personal para su permanente actualización y mejora, para las actividades de coordinación de las instituciones asociadas, las labores de aseguramiento de calidad y seguimiento, las de convocatoria y selección de empresarios, los docentes para el entrenamiento y seguimiento a los consultores junior y empresarios, además de recursos como salones, medios audiovisuales, refrigerios, diplomas, etc. El grupo Bolívar y Bancoldex como socios estratégicos aportan el personal para las convocatorias, participa con la consecución de salones y medios audiovisuales para las presentaciones y eventos de socialización, además de encargarse de las atenciones que se les hacen a los consultores junior y empresarios. Vale la pena destacar que la financiación a cargo de la Facultad hace parte del compromiso institucional con el desarrollo empresarial del país, y enmarcada en la estrategia de responsabilidad social universitaria de la Facultad, que busca el mejoramiento social articulándolo a resultados concretos para la organización. (YEPES, 2006) Este apoyo al sector mipyme por parte del programa se puede estimar en aproximadamente 2.500 dólares por empresa, pero esta cifra más allá de ser considerada un gasto, se calcula como una inversión ya que trae consigo beneficios para la Facultad tales como el mejoramiento de la calidad y pertinencia de la formación impartida en los programas de pregrado y maestría en administración de empresas, la validación de algunos de los procesos de investigación y el fortalecimiento del profesorado, así como la realización de diversos proyectos con diferentes instituciones públicas y privadas, como alcaldías locales, entidades financieras, entre otras, donde el monto de las contrataciones supera los 1.150.000 dólares en los últimos años, cubriendo casi la totalidad del territorio nacional (31 ciudades) y atendiendo a más de 10.000 empresarios de los diferentes sectores económicos. Estos hechos que permiten inferir que a pesar de los altos costos que este tipo de programas implica, se abren nuevas posibilidades de apoyo a los sectores empresariales menos favorecidos, generado beneficios directos para la Facultad en especial en el fortalecimiento de su proyección social.

3. DESCRIPCIOON DEL PROGRAMA PLAN PADRINOS® El Programa Plan Padrinos® surge como respuesta a la problemática de las mipymes identificadas por los grupos de investigación en Pequeñas y Medias Empresas, Empresas de Familia, Gerencia y Responsabilidad Social de la Facultad y se soporta en el desarrollo de metodologías de fortalecimiento empresarial generadas por los estos mismo grupos.

Para la Facultad el programa Plan Padrinos® es entendido como un ejercicio de “consultoría integral asistida”, que facilita las actividades de mejoramiento empresarial entre las que se encuentran un diagnóstico inicial, el diseño de planes de acción a corto, mediano y largo plazo, el seguimiento en la implementación, en el marco de un proceso que se realiza en un lapso de 3 meses, tiempo que dura el la intervención. El programa busca dentro en el marco del desarrollo de capacidades (SEN, 2000) afianzar el mejoramiento empresarial, a partir de un proceso que permite el desarrollo del pensamiento sistémico, mejoras en la forma de gerencia y gestión en las áreas funcionales de la organización, vinculando la teoría con la práctica de los estudiantes y promoviendo crecimiento y sostenibilidad para las mipymes Colombianas. El modelo está diseñado para que los empresarios inicialmente conozcan su realidad a partir de un diagnóstico base que evalúa las áreas funcionales (gerencia, recursos humanos, mercadeo, operaciones, finanzas), cuenten con el acompañamiento de un equipo de consultores, quienes apoyan el análisis de la situación y la problemática y buscan la implementen acciones de mejora creativas e innovadoras y teniendo en cuenta los limitados recursos con los que este tipo de empresas cuenta. Entre los objetivos del programa, además del mejoramiento de la capacidad de gestión de las mipymes para la sociedad, está el desarrollo de nuevos proyectos, metodologías y líneas de investigación para la Facultad, los cuales se dan a partir de los hallazgos encontrados, además, el programa contribuye a mejorar la calidad de la educación que obtienen los estudiantes y los conocimientos y experiencias adquiridas en el programa los hace más competitivos laboralmente. Entre los participantes encontramos estudiantes de los programas de Pregrado y Maestría en Administración de Empresas de la Facultad, que asumen el rol de consultor junior, profesores expertos en mipymes de las líneas de investigación en Pymes, Empresas de Familia, Estrategia, Finanzas, Gerencia y Responsabilidad Social que asumen el rol de consultor senior, empresarios, gerentes o representantes legales de empresas mipymes, funcionarios de Grupo Bolívar y Bancoldex y personal administrativo de la Facultad de Administración de Empresas.

FASES DEL PROGRAMA

Fase I: Convocatoria de Empresas y Entrenamiento Consultores Junior En esta fase del proceso el equipo administrador del Programa Plan Padrinos® constituido por personal de la Facultad, Grupo Bolívar y Bancoldex, realiza actividades de promoción, información y selección del grupo de empresarios participantes, garantizando un perfil de entrada y el compromiso de asistencia e integración de trabajo con el consultor durante el proceso de intervención. Paralelo a esta selección, los estudiantes participantes inician un proceso de reconocimiento e interiorización de las características, problemática, importancia y perspectivas del sector mipyme en Colombia, apoyado en los resultados de las investigaciones de las Facultad. Adicionalmente,

se da la formación básica en conceptos de consultoría, metodología, las herramientas utilizadas en el programa y se brinda el entrenamiento necesario por parte del consultor sénior para que puedan desempeñar adecuadamente su papel. Fase II: Integración Empresarios- Consultores Junior En esta fase, se reúnen empresarios y estudiantes con la coordinación del consultor sénior en las aulas de la Universidad para dar inicio a la consultoría. El vínculo empresario - estudiante se da a partir de actividades de integración que permitan la generación de confianza entre empresarios y estudiantes conformando así los equipos de trabajo. Fase III: Diagnóstico En esta fase se busca valorar la gestión gerencial en la empresa, e identificar la situación de la misma, para lo cual se utilizan los dos instrumentos de trabajo siguientes: 1. Herramienta de Diagnostico que permite a través de un aplicativo evaluar por áreas funcionales la situación actual de las empresas, a partir de una doble perspectiva, del consultor junior y del empresario. Los resultados se ilustran a través de un gráfico llamado al interior del programa “diamante de competitividad” Para interpretar la información del diagnóstico, se establecieron rangos de valoración de cada una de las áreas funcionales que permiten definir cuales cambios se deben realizar para mejorar las condiciones iniciales. 2. Guía de Entrevista (KURB, 1999) esta herramienta esta soportada en una serie de preguntas que permiten el levantamiento de información y valoración de cada una de las áreas funcionales, estableciendo a partir de la reunión en la empresa el DOFA de cada área (BELTRÁN, 2004). Los resultados de esta fase son presentados para ser validados en un informe por los consultores junior y empresarios al consultor sénior. Fase IV: Talleres Empresariales y Planes de Mejoramiento En esta fase del proceso se llevan a cabo sesiones de trabajo dirigidas por el consultor sénior, donde además de ofrecer los conocimientos básicos administrativos a los empresarios, se busca que en cada taller se realicen actividades y propuestas de mejoramiento de la situación actual, con objetivos en el inmediato, corto y mediano plazo. Fase V: Informe de Resultados En una sesión donde participan los empresarios, los consultores junior y los consultores senior, se presentan las acciones implementadas y los planes de acción definidos para la empresa. Los asistentes comentan los esfuerzos y los resultados. Los estudiantes obtienen en esa sesión su calificación final. Fase VI: Seguimiento y Evaluación Una vez finalizado el proceso de consultoría, se establece contacto con los empresarios a través de una unidad, llamada consultorio empresarial, la cual está ubicada en las instalaciones del Grupo Bolívar y de Bancoldex, en donde un estudiante en práctica de la Facultad, hace

seguimiento a los planes de acción establecidos a corto, mediano y largo plazo, aquí también se realizan las evaluaciones de impacto y se prestan servicios de asesoría gratuita con apoyo de los consultores senior.

4. LOS RESULTADIOS DEL PROGRAMA 4.1

PROPUESTA METODOLÓGICA

En el 2011 se toma la decisión de realizar un estudio de impacto del programa Plan Padrinos®, el cual tuvo como punto como partida una muestra de las empresas participantes entre los periodos ( I semestre del 2002 hasta el II semestre del 2009), periodo durante el cual el cual se contó con la participación de 537 empresas. La información con la que se contó tenía tres fuentes de datos fundamentales. 1. Información general de la empresa. 2. Ficha de diagnóstico realizada. 3. Planes de acción de propuestas de mejora. 4.2 MARCO METODOLÓGICO El estudio de impacto fue de tipo descriptivo, empleando información primaria, según las bases de datos de las empresas participantes en el Programa Plan Padrino periodos I semestre del 2002 hasta el II semestre del 2009. 4.2.1 POBLACIÓN Dadas las condiciones de la población se utilizó el Muestreo sistemático de elementos, con el fin de tener una buena cobertura de la población. De las 537 empresas participantes durante el periodo seleccionado, se escogió una fracción de muestreo bastante amplia que representa, el 74% de la población participante. Se tomó como objetivo de la recolección de la información la proporción (P) de la percepción que tenían los participantes sobre si este tipo de estrategias redunda en el fortalecimiento empresarial. Error máximo permitido (ε): Se considera que las estimaciones obtenidas acerca del objetivo, máximo se alejaran de la proporción verdadera en un 3% con una confianza del 95% (Valor de la distribución de probabilidad Normal Z=1.96). Dado que no se tienen estimaciones acerca de la proporción verdadera de nuestro objetivo de recolección de información, se asume un valor de P=0.5

Donde despues de reemplazar los valores respectivos nos arroja un tamaño de muestra de 358 participantes, se considero un error de no respuesta del 12%, que cubria recoleccion de

informacion mal diligenciada, la imposibilidad del participante a responder en el mometo requerido, etc. Lo cual dio como tamaño de muestra definitivo 399 participantes. 4.2.2 RECOLECCION DE LA INFORMACIÓN La información para la investigación se obtuvo a través formatos de recolección diseñados para generar archivos entregados a los consultores junior que contienen la siguiente información.  Formatos generalmente denominados pro-competitividad, los cuales contienen la información de diagnóstico de cada empresa con las calificaciones de los consultores junior a las diferentes áreas, sub áreas y calificación de los empresarios a cada área.  Formatos los cuales describen información cualitativa de la empresa, así como la indicación de las áreas susceptibles de mejora.  Formatos los cuales muestran presentación de la empresa y presentación del mapa de competitividad 4.2.3 PROCESAMIENTO DE LA INFORMACION La técnica a utilizar será la consolidación y análisis del contenido de la información de los trabajos de consultoría realizado por los estudiantes del programa desarrollando para ello los siguientes pasos: • Diseño de base de datos para consolidación de las fichas de diagnóstico, teniendo en cuenta las variables que estructuran la encuesta de diagnóstico empresarial, que permitirá consolidar la información de cada una de las variables de las diferentes áreas, así como las calificaciones de los consultores y empresarios. • Esta base de datos permitirá consolidar los resultados de la totalidad de las empresas, generando información del sector, área de calificación de mayor debilidad, áreas de desarrollo en la empresa 4.2.4 DEPURACION DE LA INFORMACION Como criterios de control al proceso de depuración de la Información se realizaron siguientes procesos:

los

• Los valores presentes en la información deberán estar entre 1 y 4. Cualquier valor fuera de este rango deberá ser revisado. • La información consolidada de las fichas de diagnóstico deberán ser consistentes con la información descriptiva de los informes o presentaciones de las empresas. 4.2.5 ANÁLISIS DE LA INFORMACION Una vez tabulada la información se podrán emplear los siguientes mecanismos para el análisis buscando tendencias o patrones en la caracterización de las empresas:

ANALISIS DE PARETO: A través de esta herramienta se buscará determinar la frecuencia (PANDE. NEUMAN. CAVANAGH, 2004) de las debilidades de las empresas, la composición de las mismas por tipo de sector que han participado en el programa Plan Padrinos®. GRAFICOS DE TENDENCIA: Se busca determinar tipo de tendencia frente a la caracterización de las empresas, por áreas. 4.2.6 ANÁLISIS DE RESULTADOS Para las 399 empresas analizadas se procedió a hacer un análisis de las mismas en términos de sector al que pertenecen; posterior a este análisis se realizó la revisión global consolidada de las diferentes variables según la estructura de la ficha de diagnóstico empleada en el proceso de consultoría; en donde se determinan las principales tendencias en cada una de las áreas (Estratégica, Mercadeo y Ventas Producción y Servicios, Medio Ambiente y Empresa, Comercio Exterior, Finanzas, Recursos Humanos, Marco Legal y Vinculación Familiar). El estudio cualitativo de carácter descriptivo y explicativo, con información suministrada por la herramienta de diagnóstico, permitió consolidar las siguientes tablas: Consultores Junior participantes Periodo de

Numero de Numero de

tiempo

empresas

2002/1 2002/2 2003/1 2003/2 2004/1 2004/2 2005/1 2005/2 2006/1 2006/2 2007/1 2007/2 2008/1 2008/2 2009/1 2009/2

9 7 15 9 40 29 58 31 16 14 28 18 24 25 34 42 399

estudiantes 14 16 20 21 56 40 64 34 30 26 46 38 44 42 56 65 612

Empresas participantes ÁREAS DE ACTIVIDAD SERVICIOS VARIOS MANUFACTURA VARIAS INMOBILIARIAS CONFECCIONES COMERCIAL SEGUROS DISEÑO PUBLICITARIO ASESORIAS VARIAS RESTAURANTE COLEGIOS TRANSPORTE IMPORTADORAS TURISMO CONSULTORÍA

# DE EMPRESAS 93 116 41 37 38 7 13 20 8 7 6 5 2 6 399

PORCENTAJE 23% 29% 10% 9% 10% 2% 3% 5% 2% 2% 2% 1% 1% 2%

La mayor intervención se ha concentrado en empresas de servicio (lavanderías, centros clínicos, colegios, etc.,), de manufactura (calzado. muebles, metalmecánica, artes gráficas, etc.), y en menor grado de comercio y otros servicios.

Con la información resultante del diagnóstico de cada una de las áreas se elaboró la siguiente tabla que permite apreciar el nivel de desarrollo de cada una.

ÁREA