Thursday, June 9, 2011

Scaling up innovating local practices: Role of private and public partners in Bangladesh

One of the important problems plaguing the social development in Bangladesh has been the poor penetration of private sector and life-transforming low-cost and climate-friendly technologies. The reasons for poor penetration of low-cost technologies are listed below:

1.       Poor purchasing power of rural communities which has acted as disincentive for the private sector to see rural areas as market areas for their produce which in turn hindered in producing suitable products.
2.       Poor education and skill levels of rural communities which couldn’t be directly utilized by the private sector to establish rural industries those could produce low-cost climate friendly technologies.
3.       Poor incentives from the government: Though there has been several developmental programs implemented by the national and local governments, these are often based on technologies that are already available, suffer from poor reach through hierarchical government systems and often have been far from successful in addressing local needs. In addition to government’s own initiatives, the support to private sector in innovating and spreading low-cost climate-friendly technologies has been far from sufficient.
4.       Lack of mechanism that identifies and promotes local innovations.
This project aims to address some of the above issues through the approach of identifying and deploying low-cost climate friendly technologies in rural Bangladesh. The approach has been based on the fact ‘seeing is believing.’ The project provides several lessons for developmental workers, private sector and government to learn and improve the existing practices in low-cost technology development and diffusion. From the experience of this project and review of other experiences in Bangladesh and elsewhere, we derive the following recommendations for consideration of different stakeholders in low-cost technology development and diffusion.

·         Recognize the potential of low-cost technologies: There is a huge potential for low-cost technologies in terms of spread and revenue generation in Bangladesh. With more than 70% of people living in rural areas who are eager to get out of poverty, any low-cost climate-friendly technologies that addresses the local needs would be quickly be adopted.
·         Promote appropriate technologies: The project has shown that the technologies with income generation potential will have more potential than those technologies and tools that aid in day-to-day life. Some of such technologies include bio-energy (e.g. bio-gas plants where households can sell excess biogas to their neighbors), food production (e.g. floating cage fisheries), and food processing and preservation (e.g. solar driers).
·         Scaling up in adoption: Scalability of a technology is an important aspect to be considered. A technology that is low cost, in the socio-economic context of rural Bangladesh, easy to use, and efficient can be easily be scaled up in adoption. A simple scalable characteristic of a technology alone may not be sufficient since there needs to be some enabling environment and achieving economies of scale are crucial to maximize this potential.
·         Collaboration for Reaching Economies of Scale: Economies of scale refers to the phenomenon of reduced unit cost of a product with increasing production. A simple example of Grameen phone in Bangladesh tells us the story of the potential of converting high cost technologies into low-cost through the economies of scale. Several of technologies promoted today suffer due to the reason that the proponents of these technologies have failed in reaching the economies of scale. Economies of scale can be reached by expanding the production in tandem with a vigorous marketing strategy that can impress potential adopters of the benefits of technology so that the breakeven point can be quickly reached. The production process should consider usage of local materials and the using the abundant rural labor. We see that many technologies showcased by the Change Maker have high potential to be scaled up soon reaching economies of scale. For such a thing to happen, it is imperative that various stakeholders work together which can set an appropriate enabling environment for enhanced adoption of the technology.

As Enabler: Government should play a role of enabler, by providing enabling environment for promoting the actions of the private sector in reaching out to the rural market places. Enabling environment could be created by:
·         Establish incentive mechanisms:
o    Tax benefits for climate friendly and low-cost technology producing firms and entities including rural groups.
o    Subsidies for climate friendly technologies for consumers (especially those focusing on farmers groups and for those technologies that have income generating potential)
·         Promoting public-private partnerships where government supports research and development of low-cost technologies while private sector focuses on scaling up and reaching out to the rural markets.
·         Establishing a technology fund that can be used for providing grants and low interest loans to institutions and individual innovators for showcasing the low-cost and climate friendly technologies.
·         Revisiting the rural development programs for local innovation: The current rural development programs are designed in such a way that there is only a one-way flow of information and it often see the rural communities as ‘receivers’. The capacity development aspect of rural development is mainly focused on simple ‘use’ of ‘a’ technology with no emphasis on how to promote local innovation. The potential for paradigm shift here is to introduce educational and training programs that can help generate local innovations.
·         De-regulation: Governments often fail to see the full potential of markets by putting in place several regulations. The experience from elsewhere has proved that the de-regulation and open market conditions help in spreading the technologies through private sector.
·         Create Rural Tech Institutions: Currently, there are no public owned research and educational institutions that engage in developing and diffusion of climate friendly low-cost technologies in the country and there is a very high need for establishing such an institute at the national level that identifies and improves the local innovations and links public with the private sector entities.
·         Rules and Regulations: Certain rules and regulations within banking industry have become hindrance in adoption of technology. One such rule that hindered the uptake of technology was the condition of income generation for issuing loans to biogas plants. The banks could issue loans both for biogas plants and cattle, where cattle alone can be considered as income generating component. Excess cattle could have helped the loanee to generate excess biogas and sell to the neighbors.  The combining of bank loans with other government developmental programs could be another way of improving the rural energy security through biogas plants where bank provide loans for biogas plant while the developmental programs of the government help in obtaining improved cattle breed.
·         Coupling with innovative financing programs including Microfinance: Diffusion of climate-friendly technologies be effectively coupled with the microfinance programs offered by banks and other microfinance institutions. Income generating technologies such as solar driers and biogas plants could be effectively promoted. In addition, obtaining loans require one to mortgage certain assets. Since most of the rural poor are devoid of ‘mortgagable assets’, obtaining loans for initiating an income generating activity becomes a difficult proposition. There is a need that banks recognize the importance of promoting adoption of climate friendly technologies and provide special provisions for these sections of people. One of the ways is to provide group loans and to design loan projects that fully engage low-cost and climate friendly technologies.

·         Be a catalyst: NGOs play a catalytic role and can fill the gaps that government and private sector cannot effectively fill. Most effectively, developmental agencies should help governments and private sector with understanding the local needs, help uptake of local wisdom and innovations into government run research and developmental programs and educate communities about various ongoing initiatives for development.
·         Have better understanding of local needs: Since NGOs work closely with the local communities, the main role expected from these developmental agencies is to have better understanding of local needs in terms of technologies and identify strategies to organize communities to take benefit from the private sector and government initiatives.
·         Technology targeting through promoting participation: NGOs should help communities identify appropriate technologies by educating them and help choosing the one that is suitable to their socio-economic conditions. Here, NGOs play an important role in converting the unfelt needs into felt needs which is necessary in initial technology acceptance.
·         Combining technology demonstration with facility to uptake: The often missing component in the ongoing technology demonstration activities is the missing facility for the potential adopters to uptake the technology. It is advised that NGOs should bring together the technology provider and financer together and design a package that helps in easy diffusion of technology. The design factor here could consist of organizing communities to accept group loans in order to buy a technology that helps in group income generation.

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