1 The Small-Scale Sustainable Infrastructure Development The Small-Scale Sustainable Infrastructure Development Fund (S Fund (S 3 IDF) IDF) S 3 IDF-US – Cambridge, MA, USA – IDF-US – Cambridge, MA, USA – a public charity under Section 501(c)(3) of U.S. tax code a public charity under Section 501(c)(3) of U.S. tax code S 3 IDF-India – Bangalore, India – IDF-India – Bangalore, India – a Section 25 not-for-profit company with Section 80G tax exemption a Section 25 not-for-profit company with Section 80G tax exemption S S 3 3 IDF IDF – – A Social Merchant Bank A Social Merchant Bank – –
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The Small-Scale Sustainable Infrastructure Development Fund (SThe Small-Scale Sustainable Infrastructure Development Fund (S33IDF)IDF)
SS33IDF-US – Cambridge, MA, USA –IDF-US – Cambridge, MA, USA – a public charity under Section 501(c)(3) of U.S. tax codea public charity under Section 501(c)(3) of U.S. tax codeSS33IDF-India – Bangalore, India –IDF-India – Bangalore, India – a Section 25 not-for-profit company with Section 80G tax exemptiona Section 25 not-for-profit company with Section 80G tax exemption
SS33IDFIDF– – A Social Merchant Bank –A Social Merchant Bank –
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India’s Poverty and Employment India’s Poverty and Employment StatisticsStatistics
300 million living below poverty in India
About 9 million living below poverty in Karnataka state and about 35 million in South India; majority of the poor without infrastructure services necessary for development
India’s labour force is growing at a rate of 2.5% annually (~7 million) but employment is growing at only 2.3%(~6.4 million); plus there are previous back logs
60% of India work force is self-employed – many of whom remain poor; nearly 30% are casual workers (get work only when they are able to get jobs – remain unpaid rest of the days); only about 10 percent are regular employees
90% of labour force employed in unorganised sector – no social/job security; minimum wage act marginally implemented; In rural areas agriculture workers form bulk of unorganised sector while in urban, contract and sub-contract as well as migratory agricultural labourers
India’s Ninth Plan projects that at 7% growth rate per annum, the reduction in open unemployment rate from 1.9% (~7.5 million) in 1996-97 to 1.47% (~6.6 million) in 2007.
transport and drinking water and sanitation) is a necessary and critical ingredient for the economic growth and decline of absolute poverty
18% of villages don’t have electricity and 46% of households are not covered – leads to no lighting, no productive end uses thus minimal economic activity – Requires Rs 1,07,823 crores for full coverage; average annual investments for last 10 years Rs 8,800 crores
Telecommunication – 1.9 per hundred of population; 98% of villages have public telephones but this is not sufficient; Rs 92,690 crores for full coverage; BSNL average annual budget Rs 2,700 crores
44% of rural population not covered by road network and transportation; Rs 15, 643 crores for full coverage; average annual investments Rs 2,133 crores
95% of rural population have access to some sort of drinking water source. The operation and maintenance is poor due to lack of funds.
As is evident from the statistics above, the funds required to cover the demand is way above what the government (and grants from international funding agencies) alone can achieve. Hence the most plausible solution is for others to participate and for alternative sources of investment.
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The Challenges Being AddressedThe Challenges Being Addressed Millions of poor without infrastructure
services necessary for development More sustainable, innovative, business like
approaches needed
S3IDF facilitated a grass root NGO to provide lighting and cooking services in rural areas
SS33IDF’s Approach is to reduce IDF’s Approach is to reduce poverty by…poverty by… assisting small enterprises to assisting small enterprises to
provide modern energy and other provide modern energy and other infrastructural servicesinfrastructural services
and environmentally responsible and environmentally responsible MSME (micro/small/medium MSME (micro/small/medium enterprise) enterprise)
covering the provision of services covering the provision of services in electricity, water, sanitation, in electricity, water, sanitation, transport and telecommunicationstransport and telecommunications
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Safe, Improved Lighting services to HawkersSafe, Improved Lighting services to Hawkers
entrepreneur at the entrepreneur at the solar charging stationsolar charging station
transportation of transportation of batteriesbatteries
Reliable and Reliable and better lighting better lighting for hawkersfor hawkers
For the light point projects, SFor the light point projects, S33IDF arranged the business development, technology and IDF arranged the business development, technology and financial assistance to help the entrepreneurs increase their income, generate financial assistance to help the entrepreneurs increase their income, generate
employment and provide cost savings and improved lighting for working class hawkers.employment and provide cost savings and improved lighting for working class hawkers.
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Low cost Lighting Services to Poor Un-electrified HamletsLow cost Lighting Services to Poor Un-electrified HamletsKerosene based open
wick lamps typically used by the poor.
LED based lights
The entrepreneur at the solar charging station
Studying with the assistance of LED based lights
Kerosene based lamps replaced by LED based lights
SS33IDF arranged the business development, technology and financial assistance for IDF arranged the business development, technology and financial assistance for accessing lower cost efficient lighting system by the households delivered at a cost accessing lower cost efficient lighting system by the households delivered at a cost
equal to the current expenditure on kerosene lighting of less than Rs 2 per dayequal to the current expenditure on kerosene lighting of less than Rs 2 per day
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The ModelThe Model SS33IDF produces a stream of fundable IDF produces a stream of fundable small scale for-profit infrastructure small scale for-profit infrastructure
enterprises.enterprises.
The owner/operator must The owner/operator must have some capital at risk have some capital at risk (even ‘sweat equity’)(even ‘sweat equity’)
Supported by technology, Supported by technology, financing arrangements and financing arrangements and pre-investment analyses pre-investment analyses
Cash flow to cover all Cash flow to cover all capital and operating costs.capital and operating costs.
The business must be The business must be explicitly pro-poor, explicitly pro-poor, environmentally environmentally responsible, and should responsible, and should demonstrate a high degree demonstrate a high degree of replicability.of replicability.
A Solar powered computer kiosk run by entrepreneur in a rural village in Andhra Pradesh
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Key ElementsKey Elements Business Development Services Business Development Services
(BDS)(BDS) Financial assistance and deal Financial assistance and deal
structuring geared to facilitating local structuring geared to facilitating local FI co-financingFI co-financing
A revolving fund A revolving fund (debt, equity, partial guarantees, etc)(debt, equity, partial guarantees, etc)
Independent evaluationIndependent evaluation Lesson learning and disseminationLesson learning and dissemination
Cost recovery for BDS, evaluation Cost recovery for BDS, evaluation and disseminationand dissemination
Custom-design vs. replication with Custom-design vs. replication with some adaptation (not quite cookie some adaptation (not quite cookie cutter)cutter)
Capacity BuildingCapacity Building
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Examples of S3IDF Projects
Based on market research of infrastructure-related activities that can have a significant impact on the poor, our current priorities are:
Lighting Biomass energy Silk production and processing Distribution of modern energy sources (“last mile” supply of LPG
and electricity) Information and communications technologies (ICT) Water and sanitation Small/micro-enterprise based infrastructure
More than 65+ projects implemented that benefits more than 12,000 people
100+ new projects are being examined Total investments of about Rs 76 lakhs done till date and this has
about Rs 33 lakhs of our money invested. Expected Rs 7 lakhs of returns through these investments.
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LPG Access for Cooking by Poor Households
LPG Cookshop – a ‘common kitchen’ providing poor women with clean, convenient cooking made affordable by a pay-for-use operation.
Fuelwood collected typically by women and children
Health hazards (from smoke and soot) from fuelwood cooking
‘Cookshop’ in use
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Energy-linked Information/Communication for Rural SchoolsEnergy-linked Information/Communication for Rural Schools
Kondlahalli Rural SchoolKondlahalli Rural School
SS33IDF’s innovative business and financial structuring helps rural IDF’s innovative business and financial structuring helps rural schools introduce cost-effective computer education for students.schools introduce cost-effective computer education for students.
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SS33IDF’s financing support to a grassroots NGO helps local small holders and poor IDF’s financing support to a grassroots NGO helps local small holders and poor farmers rent a cart and lower the cost of transporting harvested crops. farmers rent a cart and lower the cost of transporting harvested crops.
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SME development – Areca plate and cup manufacturing
S3IDF facilitates the business development, technology, financial and market assistance to help create Areca product manufacturing SMEs.
Areca Leaf Products
Areca Plantations
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Telecom Services in Rural Areas
S3IDF enables local NGOs to access bank loan for the phone equipment and facilitates leasing of the phone equipment to small shops.
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Contact usContact usSS33IDF – US:IDF – US:
The Small-Scale Sustainable Infrastructure The Small-Scale Sustainable Infrastructure Development Fund, Inc.Development Fund, Inc.
The Carriage House, 5 Hastings SquareThe Carriage House, 5 Hastings SquareCambridge, MA 02139 USACambridge, MA 02139 USA
