21.12.09 Forbes – Get Briefed: Nancy Lindborg

Intelligent Investing Briefing Book
Get Briefed: Nancy Lindborg
Alexandra Zendrian, 12.21.09,
6:00 AM ET

 

Interview conducted by Alexandra Zendrian

 

Forbes: How did you decide to get involved in Mercy Corps?

Nancy Lindborg: That story goes back 14 years. My
decision was based primarily on having the opportunity to join a pretty
small organization with a big vision. I also liked having the chance to
build something and working on problems that were compelling, such as
global poverty and conflict. Mercy Corps was in 10 countries when I
joined and had a small budget. I joined with the mandate to build its
presence in Washington D.C.

How do you work with policymakers in D.C.?

Mercy Corps hadn't been engaged in the policy arena previously. What
I found is by being able to translate our experience in the field and
make that relevant to people who are considering policy decisions; that
enabled us to have a seat at the table and have influence in how people
look at these things.

Mercy Corps has the advantage of a very well-rounded experience and
can be useful in Washington. Mercy Corps can get out to the countries
and even out of the capital cities of these countries.

What's your take on the health care debate?

Mercy Corps is not a big health care agency. We tend to focus on
health as part of a critical piece of local capacity. In Pakistan, we
work closely to help to increase the ability of health systems to
deliver services to communities. We don't provide direct health care
services.

How do you determine which areas to focus on where you can make a difference?

We're focused on what we see is greatest value of international
non-governmental organizations–to help catalyze social change after
you have a disaster or conflict. To help people organize for the change
that people want to see. We help people sustain the changes that they
want to see. Working in economic realm has led us to be social
entrepreneurs. When we look at projects, we look for innovations that
can begin in a community but also can have a scale.

How do you find those projects?

It's a longer process to really go to scale. For example, in
Indonesia, we have started working on economic development seven years
ago, shortly after financial meltdown in 1999. We were looking for what
ways could we revitalize economic activity at the local level. We do
micro-financing. There's already a widespread micro-financing sector.
And it became clear that sector is broad but it was stuck; it couldn't
provide credit that would enable growth at the community level. Two
years ago, we started the Bank Andara. It's a wholesale bank of banks
that tries to transform their microfinance sector. They put together
investment packages for people who otherwise wouldn't have this
service. That's how you take what's an understanding of the problem at
ground level and work with it to identify solutions.

Are you making any micro-financing plans or changes now?

You always look for next improvement. We have worked with
microfinance for over a decade and launched 13 microfinance
institutions globally.

We're focused on the next level. We're more focused now on access to
financial services. We think of it as a vertical chain. Some of its
microfinance, and we want to help small lending institutions, but we
want to have the chain so that they can move up to larger loans,
address cash flow issues, generate jobs, etc. We're trying to provide
additional services to a successful business; not just access to credit
but access to services to help them use credit well. We have panned
back and expanded our thinking and the action we've taken. It's not
just about microfinance but what will catalyze economy and unlock
opportunity.

What projects are you working on now?

I just returned from the Congo. I'm really excited about program
there. We're looking at critical challenges in the Eastern Congo;
there's lots of gender-based violence. We're thinking about creative,
sustainable solutions there, such as fuel efficient stoves. We're
working on training people to make them. The goal is to have a 70%
greater efficiency with this stove, as well as to reduce women's
exposure to rape and violence when they're looking for firewood. We're
also trying to reduce use of rivers as a resource. We negotiated a
carbon credit to finance those stoves. We've distributed 20,000 stoves
and counting in first phase. In the second phase, which is just about
ready to launch, there are conditional cash transfers that people would
receive on their cellphones through a cellphone partner. By making a
positive environmental choice, a woman would get a credit on her
cellphone that she can use like cash in the market. About 90% of people
in that area have no access to banks or financial services. So these
air credits on cellphones give them access to a savings mechanism.
Cellphones new wave of financial services.

How do you come up with solutions such as these–that a stove would reduce gender violence?

We have a team on the ground that has been working with the
displaced community in the Congo for the last two years. We sent out
from our support headquarters our climate change team and social
innovations team. We can work with teams on the ground. So we're trying
to determine what are the ways we can take this to the next step. How
do we move this from what we're doing now to something that moves the
frontier forward? We're trying to find innovative solutions.

You've done work with people in North Korea. How have you been able to accomplish what you have there?

Mercy Corps has worked there in response to the food crisis in 1990s
with the broad famine and death. We have continued to work there and
looking for ways to build humanitarian bridge; to get a better
understanding of each other. We are constantly bringing delegations of
people back and forth between the United States and North Korea. This
all underscores that you can work on problems that are more technical
when you don't focus on the political aspects of them. There are a lot
of macro issues but we try to keep the people-to-people channel open.

How do you suggest that people get involved in similar work to what you're doing?

We have started action centers in New York and Portland, Ore.
They're connected to actioncenter.org. These groups are predicated on
the notion that global poverty and hunger are solvable problems and
that all of us have a role to play. Whether it's something you do in a
few minutes or dedicate your life to, there's something we can all do.

The Lindborg Interview

Aid For The Long Term

Steve Forbes: Nancy, good to have you with us.
First of all, just an observation about philanthropy. Obviously, it's
serving the needs and wants of others, as free markets are supposed to
do. What does Mercy Corps do? What does it do differently? And how
would you define "social entrepreneurship"?

Nancy Lindborg: Sure. Mercy Corps is a global aid
agency. We work in 40 countries around the world, and we have a
workforce of about 3,700 people. And we work in transitional
environments, places that have experienced some sort of shock, whether
it's natural disaster, economic collapse, or conflict.

And we aim to be there for about 10 to 15 to 20 years to foster a
faster and more durable recovery. And we do that with programs that are
community-driven and market-led. We very much believe that by fostering
local entrepreneurship that we can help communities recover more
quickly, both with rebuilding their social capital, but also get their
markets re-stimulated.

Forbes: What do you do differently than, say, other NGOs?

Lindborg: You know, Mercy Corp's distinctive is
that we go in and are able to work during those really tough emergency
moments. But we do so in a way that more quickly lays the groundwork
for longer-term recovery.

Forbes: So it's not just bringing in assistance?

Lindborg: Sometimes you need that at the very early
stages. But a good example is the tsunami in Aceh, which the world
watched that tragedy. After the first three to four weeks, we realized
that, on the other side of the water-damage line, were functioning
markets. And that it was important to switch as quickly as possible
from bringing in things to enabling people to rebuild. So we shifted
all of our activities to something called "cash for work", which is a
little bit like the old WPA program here in the States that gave people
cash in their pockets so that they had a choice and a voice in their
own recovery and could also help the local markets recover.

Forbes: How do you define "social entrepreneurship"? You refer to yourselves as of trying to foster social entrepreneurship.

Lindborg: You know, we see the hallmarks of
entrepreneurial behavior as seeing opportunities where others don't,
having a little bit of a higher tolerance for risk, being able to move
quickly when you see an opportunity, and building on those places where
you see success. So we really envision Mercy Corps as a global platform
for action. Where we are in our 40 countries, it's a platform for
social entrepreneurs to understand what's needed in that context,
understanding that you need to have that distributed model to solve the
problems that are particular to each environment.

Fostering Microfinance

Forbes: Now, you've been a real advocate of
microfinancing. How did you come upon it? And what are you doing to
foster it? And then, how do we go beyond the traditional?

Lindborg: Well, I think we've already gone beyond.
Microfinance, you know, really emerged a couple of decades ago. Mercy
Corps, in the last 13, 14 years, has founded 12 different finance
institutions. And I'm dropping the word "micro" because "micro" has a
very specific set of definitions and loan sizes. And we actually focus
on access to financial services as the critical element for helping to
move people out of poverty. And we will tailor what is needed to that
particular environment.

Forbes: Can you give some examples?

Lindborg: I can. Among our microfinance
institutions, or our finance institutions, we have a variety of lending
models. Some of them do small loans, in groups of about $100 per person
within a group, and others have loans for individuals that are much
more focused on stimulating small businesses, enabling them to have the
cash flow to expand their inventory, for example. Those loans might be
in the $3,000 to $4,000 on average. So you look for different models.

In other environments, when there's already a vibrant microfinance
sector and a good banking system, we will sometimes look to create a
loan guarantee system, where we'll provide loan guarantees for a bank
to lower their loan windows so that there's lower collateral needs,
lower amounts that they'll give to people. Because, in that way, we get
people into the banking system. It's about creating that ladder of
engagement where you come in at the earliest stages and you create
stepping stones to help people revive their asset base.

Lessening Congo's Violence

Forbes: Now, you mentioned you go into areas that
have had some trauma of one sort or another, but yet, you stay for
years. One area of the world, which people know about but really don't
grasp the magnitude of the disaster is Congo, where upwards of 3 to 5
million people have perished since the mid-1990s. How long have you
been in Congo? And then, can you share with us your insights on the
stove?

Lindborg: I'd love to. I actually just came back
from the Congo, and it's an amazing place of contradictions–extreme
beauty and lots of conflict simmering.

We have been in the Congo for the last two years. And we went in, as
you said quite rightly, there's been years of conflict. Because our
strategic focus is on areas in transition, we went in a little over two
years ago as a transition seemed possible. And we see our greatest
added value as an international agency going in when there's that
opportunity for positive change.

Forbes: Let me just interrupt. How do you determine
that? Because, in the Congo, it's been that countries are involved sort
of like The Thirty Years War in Europe three centuries ago. Chaos,
roaming bands, rule of law is absent in much of the area. How do you
determine whether you can go in and survive?

Lindborg: Well, we went in at the point where
President Kabila had been elected. So there was some hope that if there
could be traction on this opportunity of a democratic election, that
that would be the time for us to assist. We sent teams in. We've got a
courageous group of folks who work for Mercy Corps all around the
world. And, in the Congo, we sent a team in who went in and did an
assessment and spoke to all the local community leaders and others who
were there on the ground. And from that, we realized that we might be
able to do an interesting program that solved a number of the critical
problems. And those problems include women are extremely vulnerable to
abuse and rape when they go out to collect firewood. The use of wood is
rapidly deforesting an important resource, not just locally, but
globally, the Congo River basin forest.

And most of the people are desperately poor, and they have no access
to assets. Most of them have no access to banks or any kind of
financial services. So we put together a very low-tech but
high-efficient stove design that we tested, did market testing with the
local communities, because lots of stove projects, but you've got to
make sure that people actually use it.

Forbes: Now, the focus on the stove was that they wouldn't have to go out so much to get the wood? Or use the wood?

Lindborg: There's 70% efficiency on the stoves. So,
instead of going out every three days, women can go out every week.
Much less wood is used. They're safer.

And we've been able to negotiate carbon credits from the wholesale
carbon market as a means of helping to support the program. So we're
looking at what are the market mechanisms that can help support this
kind of project, because there's a value to the forest that is enabling
it to remain intact. Now we're working with a local cellphone company
to provide air-time credits, which are just like cash, almost, that
women can save and trade.

Cellphone Credits

Forbes: So how does that work? A woman has a cellphone, and what happens?

Lindborg: They can, for making an environmentally
sustainable choice, the stove use, these bio fuel briquettes, which can
displace the wood altogether, they can receive air time on their mobile
phone. A lot of women, even in these villages, have a cellphone hanging
around their necks. And it's a source of income. They're entrepreneurs
in the middle of these villages and that's their asset. So by trading
air time credits, they don't have access to banks, but they can save
the credits. And you begin to get people into a savings situation.

Forbes: And what has been the result? What kind of scale have you been able to achieve in the Congo?

Lindborg: Well, right now, we're working on the
first phase, which is the stoves. We've distributed about 25,000 in
this first phase. And I was just out there to see, you know, kick the
tires a little bit, see how they're doing. And we're just beginning the
second phase with using the mobile phones and the air-time credits.

Forbes: And any preliminary results, in terms of
not just the efficiencies of the stove, but in terms of social
interaction, violence, safety?

Lindborg: Well, the women are far less exposed to
violence, because they only go out once a week now instead of every
three days or so. At the same time, there has been a calming in Eastern
Congo. So I think that the levels are stabilizing. But it's still a
severe threat in that part of the country.

Work In North Korea

Forbes: You go into some other unusual areas. Or I
should say dangerous areas, or not that Westerners can normally get
into. One is North Korea. How did that come about? And what have you
been able, allowed to do?

Lindborg: You know, we've been working in North
Korea for about 14 years now. And we really started in response to the
food crisis of the mid-'90s, at the request of the North Koreans.

Forbes: How did they know who you were? How was that contact made? And why you?

Lindborg: They actually called a number of
organizations. And we were one of the groups that responded. We said,
"Uh-huh, we can do something about that." Our co-founder, Ells Culver,
was a remarkable social entrepreneur and saw the opportunity to make a
difference in a place that was asking for some help. And since then,
we've moved from food assistance to really working on agricultural
possibilities: apple trees and fish farms. And it's almost a sister
city relationship with Portland, Ore., where we're headquartered, and
have had many, many delegations back and forth, where North Koreans
will come to Oregon and we'll bring delegations over to North Korea.
And it's about citizen engagement; I think that has an important
component.

Forbes: And so, you're allowed to show people in North Korea better agricultural techniques, different crops to plant?

Lindborg: Yes. And actually, our university partner
in Oregon is very interested in some of the techniques they've
developed for organic practices. So it's been a bit of a sharing that
has been quite useful.

Myanmar Efforts

Forbes: Another area that has been in the
headlines, not always for the right reasons–Burma, Myanmar. What have
you been able to do there? And how long?

Lindborg: Well, again, we entered Myanmar after
Cyclone Nargis, and went to work in the delta area, again, focusing on
helping the rice farmers get back up and going. So helping the paddies
be replanted, focusing on a recovery approach that would have
long-term, sustainable benefits to those communities and get their
markets back up and running. It's very dependent on the rice in that
area where the cyclone really hit. We've been able to do those
operations and work closely with the communities and community leaders.

Establishing Relationships

Forbes: And when you go in an area, how do you
establish working relationships with local officials? How do establish
the rules of the game, so to speak?

Lindborg: Well, every country is different, and
every community is different. But we, our vision for change is that we
go in and help communities organize, rebuild that social capital, help
them organize for the change they would like to see, and focus on
connecting to both government and business as the longer-term view and
vision.

And that requires that we understand what's happening in the
marketplace and in the government and seek to foster those connections.
So the rules of the game partly emerge from having lots of tea with
lots of people. But you go and have systematic meetings with people.
And you need to have working understandings of what is it that we're
there to do? What's our mission? And build some trust.

Bank Andara

Forbes: And what's been your biggest success, in
your mind? What gives you, it doesn't have to be in terms of scale, but
in something that hadn't been done before that you feel, "Boy, we've
really pioneered something that others can replicate" and we learned
from failure, so what's been the biggest setback that was a good lesson
for you?

Lindborg: Well, on success, you know, we are always
looking for scale. We have our global platform, and we can distribute
solutions along that platform and achieve scale that way. So we have a
social innovations group that's always looking for where are those
great ideas that are bubbling up that can be taken to scale.

We know we have to get serious about these global problems. We're
very excited about something called Bank Andara, which is a bank of
banks in Indonesia. We went into Indonesia after the economic collapse.
They have an active microfinance sector, 50,000 microfinance
institutions, but they were hitting a ceiling.

So we've established a bank of banks that is a wholesale facility in
a technology platform that will serve those 50,000 microfinance
institutions and really transform that sector in Indonesia. Because
there are 40 million Indonesians who are reached right now by
microfinance, and another 45 who are not. So there's still huge
opportunity to make a difference there.

Forbes: So what services is your bank of banks able to provide these micro financiers that they didn't have before?

Lindborg: Well, they serve the institutions, and
they give them working capital, oftentimes these microfinance
institutions were limited by the amount of capital they had to on-lend
to their clients. And we are establishing a technology platform so that
these small, microfinance institutions can connect into many more
advanced ways to serve their clients. And this is done in partnership
with the IFC, the Gates Foundation. So it's about partnerships, it's
about finding those great ideas that can go to scale. And we're now
looking to replicate this in the Philippines and pieces of it in other
countries where we work.

Aid Corruption

Forbes: Well, given your lifetime experience here,
years of experience, have you drawn conclusions about what enables some
societies to advance more quickly than others, what barriers that are
there when you're there, on the ground, and away from the classroom, of
how you make things actually work?

Lindborg: That's a really important and wonderful —

Forbes: Right. Several books on it.

Lindborg: Right. That's right. So I would just
offer a couple observations. The first is that I think we really need
to always keep in mind the complexity of the ecosystem. I don't think
there's a one-size-fits-all that will globally fix everything. And that
includes the importance of both bottom-up solutions, where you really
activate the communities and help them become constituents for change;
you activate the social entrepreneurs that live throughout a country.

But also, the top-down. People say that Africa is not a poor
continent, it's just poorly governed. And so, you need to have all
those elements working together. You need a strong civil society, a
strong marketplace and a strong government able to work together. And
that solution will look different in every place that you enter.

Forbes: And going to the more macro, people like
Bono say, and others have made the point, that corruption is a huge
problem, and lack of property rights, and things of that sort. Do you
find, on the ground, that you sometimes reach a ceiling where, "Yes,
we're doing things right on the ground, but other things have to be
done to get to the next level of development?"

Lindborg: Absolutely. And that's where those kinds
of partnerships are so important. In Guatemala, for example, where we
have worked for a number of years, part of what we've ended up doing is
mediating a number of the land conflicts. Because without getting
title, the farmers weren't able to really go to the next step.

So we've mediated between the farmers and the landholders and gained
title for a whole community in the central highlands of Guatemala. And
on the basis of that, we were able to help them get into the
marketplace with their organic produce, with huge increases in sales
and income of what were previously landless subsistence farmers. That
takes partnerships, again, and the ability to be there long enough so
that you can change what you do to match where the community is in
their evolution.

Forbes: And there's been a controversy about
foreign aid, especially with Africa. Again, we can write books on this,
but what, in your mind, works, and what doesn't work, in terms of
outside assistance? Is it people like yourselves on the ground who can
actually see that resources are put to work effectively vis a vis
others that it just seems to disappear?

Lindborg: Well, I think, again, it's a combination.
I don't think there's one silver bullet where one thing will change all
the problems and eliminate hunger and poverty. We do need to be smarter
about activating market mechanisms so that you don't inadvertently
squash a budding entrepreneur or a market sector. At the same time, we
need to understand how those investments of aid can foster that in
partnership, perhaps, with a private sector. You bring the best of the
private sector along with what can be done with the public sector, and
look for those solutions that can be appropriate for each country.
You've got to work with civil society. And we've got to eliminate
corruption.

Forbes: Nancy, thank you.

Lindborg: My pleasure. Thank you.

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