Kerabu

The Truth About Fair Trade Coffee

The Globalisation Institute (a British think tank with ideas as fresh as my brother Din's daily brew at Ristretto Roasters) has some really interesting thinking on what the Fairtrade movement really means for growers in the developing world. Here's a snippet of what Alex Singleton has to say on the subject:

It is Fairtrade Fortnight, and we are all being encouraged to pay extra for everything from coffee to bananas. Coffee, a totemic product for the development community, is a product where many producers have suffered from lowering prices. Massive overproduction, caused largely by mechanisation in Brazil and the rise of Vietnam as a major producer, has had its effect on prices.

To read Singleton's manifesto on how to renovate the Fairtrade movement to make it truly meaningful to growers, check out Fairtrade 2.0 (n.b., best viewed while imbibing a nice cup of Ristretto's Kenya AA Katuro).

Tags: fairtrade, coffee, globalisation

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Co-Op vs. Open Source

This is interesting, from Kid Mercury, responding to an article on Innovation Insider about the Darwinian development process and new media:

I agree that this model is the future of media, and I'll even take it a step further and say this will result in the end of corporate business structure as we know it -- open source production strategies need open source organizational structures as well, and as the value of knowledge surpasses that of capital and as the means of production (a computer and Internet connection) become more and more affordable, expect things like LLCs and Ltd's and S-Corps to be replaced by co-ops. To put it intuitively, the future of media won't be done by a traditional company with a traditional payroll -- it'll be done by revenue-sharing alliances and communities.

I think he's spot on--up to the point where the word "co-op" occurs.  To be fair, I don't think he really means co-op, as he uses open source, more accurately, in the next breath--but this too leads me to want to explain why the word co-op gives me hives, just for the sake of argument.

Port of the reason that traditional business structures must go is that they dampen speed, agility and creativity by the very fact that they are negotiated between individuals. A co-op is probably the worst offender of all when it comes to favoring negotiated behavior over personal initiative and dampening the human impulse to create. Open source collaboration is quite a different model from the co-op. Basically an entrepreneurial model for collaboration, open source depends on synergy, rather than negotiation. I think that the reason a lot of new media and other "new" business models are failing is precisely that they fail to recognize the fundamental difference between these models--and they almost always bet on the wrong pony, choosing negotiation and heirarchy every time. As I've written before, new media companies that mine content are bound to fail--precisely because they strip the synergy from the happy chaos of the blogosphere.

For instance, I read today on TechCrunch that Technorati has added "authority" as a filtering tool--authority being another word for linkedness. This is a useful tool, as anyone who has waded through the meaningless bit it also reinforces the values of heirarchy and consensus, to me this cuts against the grain of what's valuable about the blogosphere. (It also mirrors a problem in the physical world, where "extroverts" fare better than "introverts" because of a culture that values connections over content, but that's another story.) The problem with Technorati hasn't been that it doesn't show me the biggest, but that it doesn't show me the best. I'd rather see search get fuzzier and smarter--give me a search cloud I can manipulate to produce results based on richness and accuracy of content, rather than popularity. Maybe we should be looking to dating sites like match.com and eharmony for ideas for improving our search models (matching tools, rather than searching tools?), rather than building more dumb, machine-like tools that spit "results" at us.

From Zopa

Having taken a deep breath, sat down and read a few posts, I can now attest that the Zopa blog is quite endearing. Genuine musings from the partners in a company, including this list of quotes about money that made me laugh:

“No one would remember the Good Samaritan if he’d only had good intentions. He had money as well” - Margaret Thatcher

“Money can’t buy you friends, but you can get a better class of enemy” - Spike Milligan

“Whoever said money can’t buy happiness simply didn’t know where to go shopping” - Bo Derek

“Money, it turned out, was exactly like sex: you thought of nothing else if you didn’t have it and thought of other things if you did” - James Baldwin

“Time, like a loan from the bank, is something you’re only given when you possess so much that you don’t need it” - John Braine

“Acquaintance, n.: A person whom we know well enough to borrow from, but not well enough to lend to” - Ambrose Bierce

Looking into Africa

This post is to introduce everyone to Franklin Cudjoe, who has agreed, upon reading the Kerabu business plan, to undertake a preliminary feasibility study for Africa.  Franklin is the head of Imani, an entrepreneurial think tank in Ghana, and writes some pretty fierce editorials advocating economic liberty instead of "rock star economics."  Begging his pardon, here are some snippets of what he wrote to me upon reading the Kerabu plan:

Very interesting Hillary. Looks like the most cogent plan for bridging the micro credit gaps as you mentioned.  And I’m already considering joining the ‘bandwagon’ as a social entrepreneur combining charity with the business acumen of a for-profit corporation in order to enhance social transformation.

I have been in touch with the Country Director of Action Aid, Ghana and my imagination is that as you mentioned ‘allies’ such as non-profits already in the microfinace business, it might be a good chance to network with them.

Under “The Existing Micro finance Market”, Kerabu has a fine plan for lowering loan costs while maintaining that personal contact. A colleague who works with the Adventist Relief Agency in Ghana complained a fortnight ago about a rare feat he chalked for the NGO in the area of loan repayments. He was the only one in the history of the NGO to have had a 52 pc recollection rate whereas many recorded less than 30 pc....

Franklin has a lot more to say, but I'll exercise restraint in quoting.... I'm looking forward to hearing more from him.

Count Me In

Maybe if you knew how to tell what gender your money was, you'd be better able to help it to reproduce.

Here's an item on Fast Company's blog about Count Me In, an online women's microlending institution  started by Nell Merlino, who also came up with Take Our Daughters to Work Day:

Impressively, CMI has a 90% repayment rate, despite the fact that almost 100% of the women the organization funds were previously denied loans by 3 to 5 banks. The secret? CMI has created a unique "women-friendly" credit scoring system that differs from the system used by most banks and other lending organizations.

Makes one think about how we design and use our all-important credit rating systems.  How many investment opportunities are overlooked because they don't fit standard criteria for creditworthiness?

Of course, there could be other factors contributing to CMI's high repayment rate.  For instance, maybe the women borrowers are winnowed by personal interviews, or made to self-select by jumping through numerous hoops before receiving funds.  Either of which would affect the success rates as much as any credit rating system.  My other question is, has CMI actually made enough loans that their rating system has actuarial significance? 

Still, what all this suggests is that our choice of a single credit rating system for everything from car buying to lines of credit is arbitrary--we need different systems for different kinds of money.  Someone who wouldn't be a good risk for a high-interest credit card might well be a great risk for a small business loan, for instance.  Learning how to tell could create new investment opportunities.