Fbio Luiz de Oliveira Rosa Social Entrepreneur Today

Fábio Luiz de Oliveira Rosa Social Entrepreneur

Today we will discuss: • THE PROBLEM: Poverty in Brazil • THE STRATEGY: Fabio Rosa’s New Idea • THE IMPACT: Brightening the Lives of Poor and Rural Brazilians

Overview: Poverty in Brazil • The Facts: – With a population of 180 million, Brazil is home to extreme contrasts of wealth and poverty – The richest 10% consume 46. 9% of the income, while the poorest 10% get by on 0. 7% – 80% of the rural population (30 million people) live in conditions of poverty The Recife area is marked by the highest income inequalities in Brazil. These 2 pictures were taken less than 1 mile apart.

Interview: First Hand Perspective on Poverty in Brazil • Could you generally describe how you saw the disparity between the rich and the poor in Brazil? The issue is not the size of the pie, but how it is distributed. The border between wealth and poverty is strikingly apparent. • We are also focusing on the efforts made to get electricity in more homes in Brazil. How do you recall others struggle without electricity? I think this problem is more prevalent in the countryside. In the cities, most favelas illegally pull power cords down from the power network, so most houses have electricity “for free. ” In the countryside, however, it would be much harder to do so, so most people do have to live without electricity. Click here for full transcript of the interview

Fábio Luiz de Oliveira Rosa • WHO: A social entrepreneur and businessman (STA & IDEEAS) • WHAT: One of Rosa’s early successes has been the development of low-cost rural electrification models that improve the quality of life for the rural poor and slow urban migration • WHY: Surveys of poor rural Brazilians revealed that electricity was at the top of their list, even above better working conditions • HOW: In the late 1990’s, Rosa realized an opportunity to provide affordable energy when Brazil’s electric utilities were privatized

“I knew my work was important because two billion people still lacked electricity…. I became convinced that solar energy would prompt economic activity, improve education and health, decrease carbon emissions and relieve stress on overcrowded cities. ” -- Fabio Rosa

Why Focus on Electricity? Electricity is a root cause of poverty in Brazil. The use of electricity in rural areas can enhance: Education Health E G AR ME L I E T E FR S OF OR N CA UNT N LAB O AM UMA &H Safety Economic Wellbeing $

S T A I D E A A S

Agroelectric System of Appropriate Technology (STA) • For profit, for those who spend at least $11 per month • Promote and sell solar energy systems • Develop cost-effective solar systems at a low price • Manufacturing of energy components • Inform population about the benefits of solar energy • Focus on poor rural areas

Institute for Development of Natural Energy and Sustainability (IDEEAS) • Founded in 1997 as a non-profit organization, for those who spend less than $11 per month • Promote and install renewable energy in low-income areas in Brazil • Rural electrification • Social business model • Income generating schemes for those at the bottom of the pyramid • Combining high-efficiency and low cost technology

The Sun Shines For All (TSSFA) Business Model • TSSFA – A project under STA • Market research with Mc. Kinsey • Package deal • One time US $150 installation fee • Leased equipment • Flexible contract PBS Special on TSSFA and Rosa

TSSFA - Supply Chain

TSSFA - Basic Kit (US $10/ Month)

TSSFA - Kit 2 (US $16/ Month)

TSSFA - Kit 3 (US $24/ Month)

TSSFA - The Future • 12 V appliance store • Electronic bill pay kiosk • Project Quiron

Project Quiron

Program Impact • Triple Bottom Line – Financial • Break-even Analysis and projections – Social • Electric Power helps improve quality of life, offers opportunity for income generation, and helps reduce mass exodus to Brazil’s largest cities – Environmental • Reduction in carbon emissions

Financial Projections Total Number of Kits Leased Accumulated Number of Kits 2006 1, 000 2007 1, 500 2008 1, 740 2009 1, 880 1, 000 2, 500 4, 360 6, 100 The Sun Shines for All (TSSFA) estimates it will break-even at the end of 2009 with over 6, 000 customers GOAL FOR FUTURE YEARS: Reach over 100, 000 rural customers

Social Impact • People are more likely to stay in their local village instead of migrating to overcrowded cities or shantytowns • Solar-powered electricity eliminates the need for dangerous and unhealthy lighting products • Sourcing components of the energy kit from within Brazil benefits the local economy

Environmental Impact • The Agroelectric System of Appropriate Technology (STA) estimates that providing solar energy to 12, 900 families (52, 000 people) would save: - 9 million liters of kerosene - 4. 6 million kilos of liquefied petroleum gas - 46. 4 million wax candles - 9. 3 million radio batteries - 23. 2 million liters of diesel fuel • Reduce global warming

The Social Enterprise Spectrum Mostly Philanthropic Hybrids Mostly Commercial “Alleviating Poverty & Malnutrition: Successful Models” Financing and development aid, Nutrition and Food Fortification, Food Production & Distribution General Methods: Appeal to goodwill Non-pecuniary rewards Mission driven Mixed motives Some subsidy Impersonal exchange Arms-length bargaining Market driven Fabio Rosa, STA, IDEAAS, TSSFA, & Quiron Key Stakeholder Relationships Primary beneficiaries: Unclear or needy Not required to pay Subsidized pricing Price discrimination Third-party payers Customer able to pay Priced for profit Capital sources: Philanthropic Donations/grants Mixed debt & donations or subsidized investments Capital market rate Equity and debt Work force: Volunteers with high Commitment to social mission Mixture of volunteers, professionals, paid staff or belowmarket wages Paid employees, focus on financial rewards Suppliers: In-kind donations Discounts, or mixture of in-kind and full price Charge market prices Governance Mission-constrained Self-perpetuating Board stewardship Mixtures of representation and self -selection Balancing constituencies Board elected by owners Property rights Fiduciary responsibilities

For Profit & Non-Profit Social Alliance: Incorporating the Strengths of Both For-profit: STA & TSSFA NGO: IDEAAS & Quiron Strength $; Breakeven in 4 years; Alliances/understanding of local community and politics Poor as employees– sustainability; Empowering Weakness Size; Lack of experience compared to utility companies in the area $; Currently a start-up (challenges of a young business) Opportunity New technology can further reduce costs; Culture of constant innovation Can improve income and living conditions; Opportunity to reach the most poor; Social and environmental impacts Powerful utility co’s may extend grid into target area; Default risk; Political obstacles Reliance on livestock/ agriculture – risk of natural disaster or disease; Micro-lending (credit risk) Threat

Fabio’s Strategy: A “Better Mousetrap” Not simply a one size fits all strategy – different business models to target different segments Social alliances – incorporating benefits of nonprofits and for profits Culture of innovative thinking & creativity Passion and drive of Fabio Rosa Research & strong understanding of demographics and communities Prevents thefts Ease – un-installation FREE Perseverance, patience, quality, and attention to detail

“ Fabio has changed my life. He has allowed my family to not only survive, but to thrive. He is changing the lives of every rural community here in Brazil. ”

Questions?