Title: Innovative Financing for ICT4D
1Innovative Financing for ICT4D
The Case of TARAhaat
2TARAhaat A Social Enterprise
- Objectives
- Sustainable Development
- Sustainable Business
- Using ICT
3Making Development a Good Business
- Creating Wealth
- Generating Public Benefits
4The Strategy
- To evolve a commercially viable ICT-based
enterprise - To deliver public benefits by satisfying private
needs
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6Problem 1 High Costs
- Costs set by the Global Economy
- Experts, staff, equipment, connectivity, power,
services - Costs increased by National Policies
- Tolls and Tariffs, Lack of Services to Rural
Areas - Costs added by the Need to Localize Solutions
- Content, Applications, Language
- Costs multiplied by Lack of Infrastructure
- Connectivity, Power, Fulfilment Systems
7Problem 2 Limited Revenues
- Revenues Limited by the Local Economy
- Purchasing power of less than 1 per day income
- Revenues Limited by Size of Decentralized Markets
- Small, remote communities
8Problem 3 Limited Capacity of Rural Citizens
- Lack of Familiarity with Technology
- Lack of Management and Marketing Skills
- Lack of Access to the National Economy
9Problem 4 Perceived High Investment Risk
- High Costs Low Revenue Potential Limited
Capacity High Expected Risk
Stage Problem
Start-up No seed money available
Early Sceptical, modest support
Development and Pilot (Proof of Concept) Suboptimal support
Deployment and Operation Restrained financing
10Opportunities I
- Large Numbers
- Economies of Scale
- Franchised Networks
- Low Cost Replication
11Opportunities II
- ICT
- Efficient Distribution
- Affordable Localisation
- Overcomes Communications Barriers
12Result
- All the market risks are compounded by the real
reluctance to finance such operations by - Public Funds Donors, Foundations
- Market Funds VCs, Banks, Financial
Institutions - ICT Corporations Equipment, Software
- Other Corporations Potential Strategic
Alliances - Opportunities are discounted
13The Enterprise Life Cycle
14TARAhaats Life Cycle
15TARAhaats Funding Challenge
16Lessons from TARAhaats Experience
- Donors and Foundations
- Must recognize that scalability and financial
viability involve the generation of profits,
which are necessary to raise market-based
financing - Access
- Speed of response
17Lessons from TARAhaats Experience
- International Institutions
- Improve outreach programmes
- Must accelerate response times
- Develop new tools for risk assessment of ICT4D
ventures - Support a commercial perspective
18Lessons from TARAhaats Experience
- Governments
- Recognise need for partnerships
- Eliminate tolls and tariffs on movement and/or
import of equipment, software, etc - Easier certification is needed for educational
programs delivered by ICT-based providers - ICT ventures should be used for the front end
delivery e-governance services
19Lessons from TARAhaats Experience
- Market Funds
- Venture Capital is not a player
- Third world risk (developing countries)
- Complexity of due diligence
- High Investment threshold
- Ascribe little value to social returns
- Banks and Financial Institutions
- Do not participate in early stage funding
20Lessons from TARAhaats Experience
- Corporations
- Must develop innovative mechanisms for vendor
financing - Need to establish special pricing mechanisms for
ICT4D - Should provide mentoring and technical support
- Need to recognise the market potential
21Lessons from TARAhaats Experience
- Civil Society
- Must recognize the importance and legitimacy of
financially viable strategies to scaling up and
ensuring continuity
22TARAhaats Call for Action
- Establish Two ICT4D Funds for Initiatives with
Development Potential - With clear long-term financial returns
- Without clear long-term returns
- Financial Packaging
- Public
- Private
23Benefits from ICT4D Mother Funds
- Consolidation of Efforts
- Sustained Financial Support
- Establish Best Practices
- Accelerate Delivery
- Metrics and Accountability
24ICT4D Mother Fund 1
- Create Fund
- Proactively finance viable initiatives
- Invest sufficiently to get to market financing
- Staff with Practitioners, not armchair experts
- Develop Best Practices and Systems to support them
25ICT4D Mother Fund 2
- Create Fund
- Identify ventures with substantial social
objectives and deliverables needing long-term
support - Support them
- Assist them to become financially viable
26Final Lesson from TARAhaats Experience
- The International Community
- Less talk, More action
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