Archive for the ‘India’ Category

Absolute Numbers 2007-2017: The “Developing” World Now Dominates the Internet


Traditionally, the data on ICT usage across the world tends to be presented proportionally – per capita usage, or penetration in the form of percentage of population. This made sense 10 years ago, when the world had just begun to notice the rapid growth of mobile phone adoption in developing regions. The typical example shown above was extremely popular – many of you will recognize it – Africa was outstripping the world in phone sales, and the prepaid business model had opened the floodgates.

At this time, however, devices were still at the feature phone stage, and Nokia owned the market. Voice and SMS were the real time communication disruptors, and smartphones only just entered the public consciousness. Internet penetration was still in the future.

Recently, however, I came across current data on internet usage presented in absolute numbers – shown above – of people online. The difference is rather stark, when compared to the proportional representation – see below.

Not only are the next two billion online, but the absolute numbers re-order the regions in a very different way. Asia leads the world online, and even Africa ranks higher than North America. Here’s the same data presented, by region, as a pie chart.

The distortion created by proportional or per capita presented skews the true landscape of the actual human beings who are using the internet. Ten years ago, this might have made sense given the passive content consumption nature of much of the early world wide web.

Today, given the dominance of social media, and the frictionless ability for anyone to share their thoughts, their photos, or their music video, its the absolute numbers that actually make a difference. There is more content available in Mandarin than in English, though we may not know it, and there are more Africans talking to each other every morning than there are North Americans.

I’ll be following up with more writing on the implications of this historic decade in human history – between 2007 and 2017, the long awaited next billion not only came online, but began showing us how to disrupt everything from cross border payments, to cryptocurrency adoption. They are my hope for a more peaceful, inclusive, and sustainable future for our grandchildren.

Financial Behaviour Patterns Observed Among Households in Rural Informal Economy in Asia

This is the original working paper of the research conducted on rural household financial management, in developing country conditions, pioneering the use of methods from human centered design for discovery, during Nov 2008 to March 2009, aka the Prepaid Economy Project. It was peer reviewed by Brett Hudson Matthews, and I have incorporated his comments into the PDF.

This research study was carried out with the aid of a grant from the iBoP Asia Project (, a partnership between the Ateneo School of Government and Canada’s International Development Research Centre (

The abstract:

The challenge faced by Bottom of the Pyramid (BoP) ventures has been the lack of knowledge about their intended target audience from the point of view of business development whereas decades of consumer research and insights are available for conventional markets. What little is known about the BoP’s consumer behaviour, purchasing patterns and decision making tends to assume that there are no primary differences between mainstream consumers and the BoP except for the amount of their income – pegged most often between $2 to $5 a day.

In practice, the great majority at the BoP manage on incomes earned from a variety of sources rather than a predictable salary from a regular job and have little or no access to conventional financial tools such as credit cards, bank accounts, loans, mortgages. This is one of the biggest differentiators in the challenge of value creation faced by BoP ventures, particularly among rural populations (over 60% of the global BoP population lives in rural areas).

Exploratory research was conducted in the field among rural Indian and rural Filipino populations in order to understand how those on irregular incomes managed their household expenses. Empirical data collected by observations, interviews and extended immersion led us to identify patterns of behaviour among the rural BoP in their management of income and expenditure, ‘cash flow’ and ‘working capital’ and the significance of social capital and community networks as financial tools. Practices documented include ‘conversion to goods’, ‘stored wealth’, ‘cashless transactions’, and reliance on multiple sources of income that mature over different times.

This paper will share our observations from the field; identify some challenges these behaviours create for business and also explore some opportunities for value creation by seeking to articulate the elements that BoP ventures must address if they are to do business profitably with the rural ‘poor’ based on their own existing patterns of financial habits and norms.

The Conclusion:

In sum, it can be concluded that the challenges for value creation can be quite different for BoP ventures interested in addressing the rural markets. From the observations made in the field, we can highlight three key implications for business development. These are:

  • Seasonality – with the exception of the salaried, everyone else in the sample pool was able to identify times of abundance and scarcity over the course of natural year in their earnings. Identification of a particular region or market’s local pattern of seasonality would benefit the design of payment schedules, timing of entry or new product and service launch, for example.
  • Relative lack of liquidity – The majority of the rural households observed tended to ‘store wealth’ in the form of goods, livestock or natural resources, relying on a variety of cashless transactions within the community for a number of needs. Conventional business development strategies need to be reformulated to take this into account as these patterns of behaviour may reflect the household’s purchasing power or income level inaccurately.
  • Increasing the customer’s span of control over the timing, frequency and amount of cash required – Since the availability and amount of cash cannot be predicted on calendar time, this implication is best reflected by the success of the prepaid mobile phone subscriptions in these same markets. When some cash is available, it can be used to purchase airtime minutes for text or voice calls, when there is no money, the phone can still receive incoming calls. Models which impose an external schedule of periodicity, frequency and amount of cash required may not always be successful in matching the volatile cash flow particular to each household’s sources of income.

Prepaid Mobile: The Business Model that Empowers

It feels like a long time since I last pondered the nuances of the prepaid business model, until I came across some words written by Indian social media researcher Swati Janu. She documented her observations on the infrastructure of insecurity from the tenements of New Delhi.  There’s value in reflecting on how our understanding only increases over time, and we can never say that we’ve stopped learning

This sentence caught my attention:

From a rural population that is fast going online to the resourceful teens in urban slums, the lower income demographics are choosing to buy internet, through small but recurrent amounts, which enable them to straddle the line between affordability and aspiration.

The small but recurrent amounts – the Rs 10 mobile recharge Janu writes about – are the lifeblood of the prepaid payment plan for voice, text, and data (airtime) for the now ubiquitous cellphone that has changed the landscape of the developing world.

To enable the lower income demographic’s ability to straddle the divide between their aspirations and their ability to afford them is empowering. One could say that:

Prepaid is a business model that empowers aspiration, through affordability, incrementally.

Instant gratification has never been within their purview.

Predictability is a business investment in the informal sector


New Delhi, India (Photo taken March 2017 by Niti Bhan)

Street vendors are often assumed to be livelihood actors, eking out a precarious living while darting in and out of traffic at the lights hawking their wares out of a basket or bucket. Not so in the south side of New Delhi where this trader in household linen and fine textiles has staked out his pavement storefront.

He’s not there everyday, unlike the fresh veg lady across the street, who has been there for the past thirty years, but he does show up every Saturday late in the afternoon, along with the housewares guys and stays until late in the evening. These vendors have been so predictable that they’re now known as the “Saturday market” although there are only three “shops” that one can see.

nightlightsHowever, each storefront is a joint effort by a number of vendors cooperating with each other to offer a larger, more attractive display and lights.

This predictability insures his reputation in the neighbourhood.

A matter of timing: seasonal opportunities


Temporary stall for festive goods (Photo: Niti Bhan, March 2017)

These stalls full of water pistols and balloons sprouted overnight a couple of days before the spring festival of Holi (March 13th 2017) – these vendors are neither local nor regulars in the market complex. They’re here to offer seasonal products and might even have been invited by the local shopkeepers to provide attractive temporary displays not unlike festival shopping at the mall.

IMG_7356Seasonal opportunities for special offers and custom products are not to be missed chances for a boost in sales. India’s FMCG majors can’t afford to ignore the seasons that guide the cash flow for the majority in the informal and rural economies over the course of the natural year.

India: Dragging the reluctant elephant into a digital, cashless future


Final processing for India’s digital identity platform Aadhaar, New Delhi on 3 March 2017 (Photo Credit: Niti Bhan)

My recent immersion in Delhi a mere four months after demonetization (or, notebandi as it’s locally known) was a bit of a letdown. Oh sure, there were numerous, visible changes in the 2 years since my last trip – mostly very clear indicators of India’s socio-economic development – but none of the sense of chaos that I was expecting, having relied primarily on third party news sources, that too, in English, in the weeks leading up to my departure.

The headlines would have it that people were dropping like flies on the streets. A grand total of 187* people died visibly due to notebandi, or so I heard. The two most common responses were either sympathy – people should not have had to die for something like this and it was a sad thing to happen; or pragmatism – “people die everyday, who knows why, maybe his time had come and he was standing in line.”

The overall atmosphere was one of energy – there’s less of a sense of lackadaisical chaos that used to characterise the neighbourhood market and it’s sleepy vendors waiting for the evening strollers. There’s a sense of purpose in the hustle, as though there was money to be made. Digital money.

IMG_6950The combination of a digital identity platform and the disruption of demonetization could indeed be said to describe ideal conditions for triggering cashless India. Cards are accepted far more easily than before. “Paytm” – a local payments app – is visible everywhere, from on demand cars (Ola, Uber, Meru, etc), small kiosks, through to shiny upmarket shops. As a taxi driver told me with a smirk, everyone’s using Paytm now, even the beggars.

Rural India is said to have suffered far more, according to the reports I’d read prior to my trip. This might be unevenly distributed according to geography and growing season – a factoryworker returning from his home village in Bihar said he’d attended a wedding with hundreds of people and surely someone would have had a sob story to share.

Instead, he’d heard it was the intermediaries in the farm to fork supply chain who purchase from myriads of small farms in order to aggregate in bulk prior to selling onwards towards the cities who’d been hit harder by the sudden lack of liquidity. They were caught in the middle of the cash based chain of transactions and had to carry the burden of wastage if they weren’t able to move produce fast enough. Anecdotes included them distributing potatoes freely to farmers to use as seed for the next harvest, and tomato prices crashing.

Articles in the news state that the economy was hit harder than people would admit to but none, as yet, have complimented the common man for his endurance under conditions of scarcity and hardship, nor praised the hardworking women who kept their families fed through their social networks of give and take.

All the papers – domestic and foreign – only go on about India’s GDP, the economy, the vast business sectors, and the politics. If at all the average Indian is mentioned it is through the lens of pity – “oh, the poor farmer is suffering” or some such heartrending sob story from the “informal sector” – there’s never any mention of their ingenuity in keeping things going without cash; or the way it was all held together under conditions of adversity and scarcity.

IMG_7319That, perhaps was my biggest takeaway from my open ended conversations with a wide range of people from different socio-economic strata, professions, backgrounds, and age groups.

Their palpable pride in themselves in having come through upheaval relatively unscathed, or having the wherewithal to manage.  All the rest of it, the Aadhaar digital ID, the use of technology for transparency and accountability, the mobile platform and its ubiquity, all of these and more, I believe, will sort themselves out in time.

I’m minded to end this with a quote from Rositta J. Valiyamattam writing, ironically, on the topic of Indian fiction (page xii):

“Their novels testify to the amazing resilience of the masses in a nation wherein the commoner is rendered helpless by an often corrupt mighty polity. What stands out is the assertion of the individual will over uncontrolled powers and unfavourable circumstances. They salute the heroic struggles of ordinary Indians in times of extraordinary transformation.”



*Word of mouth number, every report has a different total, so whatever. All photographs not captioned were taken in Delhi by Niti Bhan during March 2017.

As global firms (MNC) pull back from emerging markets, what does this mean for Africa?

tumblr_nwsbz0ytDw1qghc1jo1_500Last week’s issue of The Economist drilled down deeper to cover the retreat of globalization – at least in the most visible form, that of the multinational brands dotting cityscapes around the world. The retreat of the global company, they trumpet, the end of Theodore Levitt’s vision.

Credit Suisse takes a concise yet comprehensive look at these weak signals in their well-written report that frames the situation as a transitional tug of war between globalization and multipolarity – an inflection point, rather than a retreat. They make it sound like missing the turn at an intersection and having to come back to the traffic lights to figure out which way to go.

Duncan Green of Oxfam captured the essence well:

But the deeper explanation is that both the advantages of scale and those of arbitrage have worn away. Global firms have big overheads; complex supply chains tie up inventory; sprawling organisations are hard to run. Some arbitrage opportunities have been exhausted; wages have risen in China; and most firms have massaged their tax bills as low as they can go. The free flow of information means that competitors can catch up with leads in technology and know-how more easily than they used to. As a result firms with a domestic focus are winning market share.

In the “headquarters countries”, the mood changed after the financial crisis. Multinational firms started to be seen as agents of inequality. They created jobs abroad, but not at home. The profits from their hoards of intellectual property were pocketed by a wealthy shareholder elite. Political willingness to help multinationals duly lapsed.

Of all those involved in the spread of global businesses, the “host countries” that receive investment by multinationals remain the most enthusiastic.

The first thing to note is that the global MNCs being considered by The Economist are primarily the legacy ones  – fast food chains like McDonalds and KFC (Yum Brands) – whose shiny logos used to represent the liberalization of the closed markets of India and China.

Even at powerhouses such as Unilever, General Electric (GE), PepsiCo and Procter & Gamble, foreign profits are down by a quarter or more from their peak.

or the few examples of emerging market brands that have gone global such as China’s Lenovo which purchased IBM’s Thinkpad and India’s Airtel which bought into the African market.

What’s being touted as their competition are regional brands, who aren’t as stretch out globally in terms of their supply chains, and less vulnerable to currency volatility. Further, the majority of these global brands are heavily dependent on their B2C marketing and sales – the question of whether they ever managed to understand their new markets is a topic for another post.

And so, we ask, what will this mean for the emerging economies of Africa, who are only now seeing the first fruits of FDI? Who will come and develop their consumer markets?

India and China apparently. And strategically – through unbranded affordable commodities and the acquisition of successful regional consumer brands – rather than the legacy MNC approach influenced by Levitt. Even Japan recognizes this, as they seek to piggyback on the Indian experience.The economics of scale that propelled the first rounds of growth for the manufacturers of washing machines and the automobiles never did make sense infrastructurally for the majority of the African consumer markets.

Instead, the patterns pointed out by The Economist and Credit Suisse imply that opportunities will lie among regional stars – Equity Bank of Kenya, for instance, whose regional footprint is surely but steadily creeping outwards across the East African Community and trading partners – or, the telcom brands such as Tigo (Millicom) who innovate for each of their local markets.

The jobs and exports that can be attributed to multinationals are already a diminishing part of the story. In 2000 every billion dollars of the stock of worldwide foreign investment represented 7,000 jobs and $600m of annual exports. Today $1bn supports 3,000 jobs and $300m of exports.

Godrej, for instance would be considered a regional Indian giant rather than a multinational in the conventional sense of a Unilever or P&G.

Where [MNCs] get constrained is, they are driven by lot of processes that are global. For a smaller organisation like us, we are completely empowered; decision-making is quick and we can initiate changes very fast. We are more agile and have an advantage over them.

Yet their expansion outside India shows a “pick and choose” strategy of markets they’re comfortable entering.

The group’s acquisition strategy hinges on identifying unlisted companies built by entrepreneurs looking for capital, picking up stakes and working with them to scale up their businesses.

At least two homegrown Kenyan FMCG brands – skincare by a global giant and cosmetics by private equity – have been acquired. As have snack foods, spices, dairy products, and other products that cater to local tastes. The best known being Fan Milk of West Africa. Private equity such as Abraaj make no bones about going after consumer driven opportunities.

Given these choices, sustainable African businesses who understand their consumer markets have an opportunity to establish their brands and grow – with the financial help that’s strategically becoming available.While Chinese imports make the market highly competitive and price conscious, fish and tyres are substitutable goods in a way skincare and cosmetics are not.

African consumer companies – formal, informal, or semi-almost there-formal – need to hustle right now.

The retreat of the MNCs offers a chance to exhale, and expand, and grow, but the advent of the East implies waking up to the need for serious strategic thinking about domestic comparative and competitive advantage – one of which is incomparable knowledge of local consumers, culture, and needs, and critically, experience of their vast informal sectors and cash intensive economies.

Unforeseen outcomes of India’s demonetization shine light on the value of our design philosophy

Informal Economy, Market Analysis and SegmentationLatest news on India’s demonetization informs us how the rural economy is bearing the brunt of this initiative.

The action was intended to target wealthy tax evaders and end India’s “shadow economy”, but it has also exposed the dependency of poor farmers and small businesses on informal credit systems in a country where half the population has no access to formal banking.

The details shed light on the consequences of implementing interventions without a holistic understanding of the landscape of the operating environment. In this case, it is the rural, informal cash intensive economy.

…the breakdown in the informal credit sector points to a government that has failed to grasp how the cash economy impacts ordinary Indians.

“It is this lack of understanding and not appreciating the importance of the cash economy in India on the part of the government that has landed the country in such an unwarranted situation today,” said Sunil Kumar Sinha, an economist and director of public finance at India Ratings.

This lack of understanding the dynamics of the cash economy (I don’t mind calling it the prepaid economy, in this context) and it’s role in the rural Indian value web has led to unforeseen challenges at a time when farmers are planting seeds for the next harvest, hampering the flow of farm inputs as traditional lines of credit face the obstacle of an artificial shortage of liquidity.

I want to use this clear example of systems design failure to explain my philosophy and approach to our work in the informal economies of the developing world. I’ve written often enough about what we do, now I have an opportunity to explain why we do it, and why it’s important.

Read On…

Insights on the psychology of cash money – Demonetization vs Financial Inclusion

moneyThe flurry of commentary on the Great Indian Demonetization of November 2016 has thrown up some nuggets of insight worth considering more deeply.

Santosh Desai explores the psychology of cash money in the Times of India blog, linking the need for tangible evidence of income to physical labour, as opposed to those of us with the contextual knowledge to understand the virtual concept i.e. digital currency.

“…there is another aspect of this situation that needs more reflection- the nature of the relationship we enjoy with cash. Cash is not merely a symbolic representation of value. Cash is the idea of value captured and owned. It is the product of labour that is an entity by itself and becomes much more than what it can buy. Sitting on a pile of cash gives pleasure both metaphorical and real.”

“…there is some value that is placed on the device of currency notes over and above the value that it signifies.”

This aspect has not been looked at deeply enough, imho, when financial inclusion is talked about, particularly in the context of digital solutions. I suspect that therein will lie behavioural insights that could conceivably drive design changes that lower the barriers to adoption in the strategies to introduce digital currencies and mobile monies to hitherto unbanked populations.

Earning money needs to be signified concretely. Those whose life’s earnings are in the form of a few high value currency notes, do not decode demonetization in quite the same way as those used to money in its conceptual form. The idea that it is possible to de-legitimise their life’s labour is to shake the foundations on which one’s life is constructed. What if some money is not exchanged? What if some paperwork, that bane of those living on the margins, is incomplete?

What if the mobile phone’s battery dies? Do my hard earned monies disappear like other unsaved data?

Trust in technology is a function of our contextual knowledge – our immersion in an environment saturated with electronic communication and screens of all types and purposes provides us with conceptual frameworks that are entirely different from someone whose daily labour is on the farm, or at a mechanic’s garage.

While those who are financially excluded might not face demonetization i.e. the de-legitimization of their labour, as Desai mentions above, the current attempts to convert their cash intensive habits into digital form via various “cashless” initiatives overlook the psychology of cash. Regardless of locale, those at the margins (the excluded) have high levels of mistrust in the system, through their experiences with institutions and the system, over time and history.

The talk of ‘cashless’ is easy, but it ignores that there is a cultural dimension to the physicality of cash. Digital wallets operate on a transfer of intention, where a promise to pay gets converted into an intention to buy. For this to work at scale, one needs to have become comfortable with the idea of surplus and develop the confidence that money will come without having to struggle or having to think about it all the time. One needs to develop trust in institutions, in a context where the evidence around is overwhelmingly to the contrary.

I suspect that if this subject was explored further, we would discover that where mobile money has succeeded, such as in East Africa, the institution that was trusted was the telco – the mobile service operator, and that the early stages of adoption have a different narrative from that being used currently in entirely new markets where mobile money still struggles to penetrate. India and South Africa are two such places where the unbanked and the financially excluded have reasons of history to develop high mistrust of the systems of the privileged.

To convert one’s worth into worthlessness, even if for a small period is to make everyone nervous. Psychologically, money works on a convention of mutual deception. We agree to call something money, and that is good enough. But to have the thinness of this convention exposed in such a way is to cause great anxiety.

The transition to a cashless future can be made gentler and more accommodating to their fears and concerns, generating a sense of security and commitment, with some empathy for an entirely different world-view and life experience.

An economy of trust

_92445052_02Cash on credit is the caption given to this cartoon by the BBC. Neighbourhood groceries are offering their regular customers cash advances in addition to bread and milk.

While the media is filled with a plethora of stories of heartbreak, my own suspicion is that we’ll discover the resilience of the cash intensive informal sector lies in the relationships between people, once the hubbub has died down.