Innovative Financing for ICT4D The Case of TARAhaat

Innovative Financing for ICT4DInnovative Financing for ICT4D

The Case of TARAhaatThe Case of TARAhaat

TARAhaat: A Social EnterpriseTARAhaat: A Social Enterprise

ObjectivesObjectives Sustainable DevelopmentSustainable Development Sustainable BusinessSustainable Business

Using ICTUsing ICT

Making Development a Good BusinessMaking Development a Good Business

Creating WealthCreating Wealth Generating Public BenefitsGenerating Public Benefits

The StrategyThe Strategy

To evolve a To evolve a commercially viable commercially viable ICT-based enterpriseICT-based enterprise

To deliver To deliver public benefits by satisfying public benefits by satisfying private needsprivate needs

Problem 1Problem 1 High CostsHigh Costs

Costs set by the Global EconomyCosts set by the Global Economy Experts, staff, equipment, connectivity, power,Experts, staff, equipment, connectivity, power,

servicesservices Costs increased by National PoliciesCosts increased by National Policies

Tolls and Tariffs, Lack of Services to Rural AreasTolls and Tariffs, Lack of Services to Rural Areas Costs added by the Need to Localize Solutions Costs added by the Need to Localize Solutions

Content, Applications, LanguageContent, Applications, Language Costs multiplied by Lack of InfrastructureCosts multiplied by Lack of Infrastructure

Connectivity, Power, Fulfilment SystemsConnectivity, Power, Fulfilment Systems

Problem 2Problem 2 Limited RevenuesLimited Revenues

Revenues Limited by the Local Revenues Limited by the Local EconomyEconomy Purchasing power of less than $1 per day Purchasing power of less than $1 per day

incomeincome Revenues Limited by Size of Revenues Limited by Size of

Decentralized MarketsDecentralized Markets Small, remote communitiesSmall, remote communities

Problem 3Problem 3 LLimited Capacity of Rural Citizensimited Capacity of Rural Citizens

Lack of Familiarity with TechnologyLack of Familiarity with Technology Lack of Management and Marketing Lack of Management and Marketing

SkillsSkills Lack of Access to the National Lack of Access to the National

EconomyEconomy

Problem 4Problem 4 Perceived High Investment RiskPerceived High Investment Risk

High Costs + Low Revenue Potential + High Costs + Low Revenue Potential + Limited Capacity = High Expected RiskLimited Capacity = High Expected Risk

StageStage ProblemProblem

Start-upStart-up No seed money No seed money availableavailable

EarlyEarly Sceptical, modest Sceptical, modest supportsupport

Development and Pilot Development and Pilot (Proof of Concept)(Proof of Concept)

Suboptimal supportSuboptimal support

Deployment and Deployment and OperationOperation

Restrained financingRestrained financing

Opportunities: IOpportunities: I

Large NumbersLarge Numbers Economies of ScaleEconomies of Scale

Franchised NetworksFranchised Networks Low Cost ReplicationLow Cost Replication

Opportunities: IIOpportunities: II

ICTICT Efficient DistributionEfficient Distribution Affordable LocalisationAffordable Localisation Overcomes Communications Overcomes Communications

BarriersBarriers

ResultResult

All the market risks are All the market risks are compounded by the real reluctance compounded by the real reluctance to finance such operations by:to finance such operations by:

Public FundsPublic Funds – Donors, Foundations – Donors, Foundations Market FundsMarket Funds – VCs, Banks, Financial – VCs, Banks, Financial

InstitutionsInstitutions ICT CorporationsICT Corporations – Equipment, – Equipment,

SoftwareSoftware Other CorporationsOther Corporations – Potential – Potential

Strategic AlliancesStrategic Alliances Opportunities are discountedOpportunities are discounted

The Enterprise Life CycleThe Enterprise Life Cycle

TARAhaat’s Life CycleTARAhaat’s Life Cycle

TARAhaat’s Funding Challenge TARAhaat’s Funding Challenge

Lessons fromLessons from TARAhaat’s ExperienceTARAhaat’s Experience

Donors and FoundationsDonors and Foundations Must recognize that scalability and Must recognize that scalability and

financial viability involve the generation financial viability involve the generation of profits, which are necessary to raise of profits, which are necessary to raise market-based financingmarket-based financing

AccessAccess Speed of responseSpeed of response


International InstitutionsInternational Institutions Improve outreach programmesImprove outreach programmes Must Must accelerate response timesaccelerate response times Develop new tools for risk assessment of Develop new tools for risk assessment of

ICT4D ICT4D ventures ventures Support a commercial perspectiveSupport a commercial perspective


GovernmentsGovernments

Recognise need for partnerships Recognise need for partnerships

Eliminate Eliminate tolls and tariffs on movement tolls and tariffs on movement and/or import of equipment, software, etcand/or import of equipment, software, etc

Easier certification is needed for Easier certification is needed for educational programs delivered by ICT-educational programs delivered by ICT-based providersbased providers

ICT ventures should be used for the front ICT ventures should be used for the front end delivery e-governance servicesend delivery e-governance services


Market FundsMarket Funds Venture Capital is not a playerVenture Capital is not a player

• Third world risk (developing countries)Third world risk (developing countries)• Complexity of due diligenceComplexity of due diligence• High Investment thresholdHigh Investment threshold• Ascribe little value to social returnsAscribe little value to social returns

Banks and Financial InstitutionsBanks and Financial Institutions• Do not participate in early stage fundingDo not participate in early stage funding


CorporationsCorporations Must develop innovative mechanisms for Must develop innovative mechanisms for

vendor financingvendor financing Need to establish special pricing Need to establish special pricing

mechanisms for ICT4Dmechanisms for ICT4D Should provide mentoring and technical Should provide mentoring and technical

supportsupport Need to recognise the market potentialNeed to recognise the market potential

Lessons fromLessons from TARAhaat’s Experience TARAhaat’s Experience

Civil SocietyCivil Society Must recognize the importance and Must recognize the importance and

legitimacy of financially viable strategies legitimacy of financially viable strategies to scaling up and ensuring continuity to scaling up and ensuring continuity

TARAhaat’s TARAhaat’s Call for Action Call for Action

Establish Two ICT4D Funds for Establish Two ICT4D Funds for Initiatives with Development PotentialInitiatives with Development Potential With clear long-term financial returnsWith clear long-term financial returns Without clear long-term returnsWithout clear long-term returns

Financial PackagingFinancial Packaging PublicPublic PrivatePrivate

Benefits from ICT4D Mother FundsBenefits from ICT4D Mother Funds

Consolidation of EffortsConsolidation of Efforts Sustained Financial SupportSustained Financial Support Establish Best PracticesEstablish Best Practices Accelerate DeliveryAccelerate Delivery Metrics and AccountabilityMetrics and Accountability

ICT4DICT4D Mother Fund 1Mother Fund 1

Create FundCreate Fund Proactively finance Proactively finance viable initiativesviable initiatives Invest sufficientlyInvest sufficiently to get to market to get to market

financingfinancing Staff with Practitioners, Staff with Practitioners, not armchair not armchair

expertsexperts Develop Develop Best Practices and SystemsBest Practices and Systems to to

support themsupport them

ICT4DICT4D Mother Fund 2Mother Fund 2

Create FundCreate Fund Identify ventures with Identify ventures with substantial social substantial social

objectivesobjectives and deliverables needing long- and deliverables needing long-term supportterm support

Support themSupport them Assist themAssist them to become financially viable to become financially viable

Final Final Lesson fromLesson from TARAhaat’s Experience TARAhaat’s Experience

The International CommunityThe International Community Less talk, More actionLess talk, More action

Documents

Innovative Financing for ICT4D The Case of TARAhaat