The Small-Scale Sustainable Infrastructure Development Fund (S 3 IDF)

1. The Small-Scale Sustainable Infrastructure Development Fund (S3IDF) S3IDF – A Social Merchant Bank – S3IDF-US – Cambridge, MA, USA –a public charity under Section 501(c)(3) of U.S. tax code S3IDF-India – Bangalore, India –a Section 25 not-for-profit company with Section 80G tax exemption

2. India’s Poverty and Employment Statistics • 300 million living below poverty in India • About 9 million living below poverty in Karnataka state and about 35 million in South India; majority of the poor without infrastructure services necessary for development • India’s labour force is growing at a rate of 2.5% annually (~7 million) but employment is growing at only 2.3%(~6.4 million); plus there are previous back logs • 60% of India work force is self-employed – many of whom remain poor; nearly 30% are casual workers (get work only when they are able to get jobs – remain unpaid rest of the days); only about 10 percent are regular employees • 90% of labour force employed in unorganised sector – no social/job security; minimum wage act marginally implemented; In rural areas agriculture workers form bulk of unorganised sector while in urban, contract and sub-contract as well as migratory agricultural labourers • India’s Ninth Plan projects that at 7% growth rate per annum, the reduction in open unemployment rate from 1.9% (~7.5 million) in 1996-97 to 1.47% (~6.6 million) in 2007.

3. India’s Rural Infrastructure Statistics Infrastructure (electricity and productive end-uses, telecommunication, transport and drinking water and sanitation) is a necessary and critical ingredient for the economic growth and decline of absolute poverty • 18% of villages don’t have electricity and 46% of households are not covered – leads to no lighting, no productive end uses thus minimal economic activity – Requires Rs 1,07,823 crores for full coverage; average annual investments for last 10 years Rs 8,800 crores • Telecommunication – 1.9 per hundred of population; 98% of villages have public telephones but this is not sufficient; Rs 92,690 crores for full coverage; BSNL average annual budget Rs 2,700 crores • 44% of rural population not covered by road network and transportation; Rs 15, 643 crores for full coverage; average annual investments Rs 2,133 crores • 95% of rural population have access to some sort of drinking water source. The operation and maintenance is poor due to lack of funds. As is evident from the statistics above, the funds required to cover the demand is way above what the government (and grants from international funding agencies) alone can achieve. Hence the most plausible solution is for others to participate and for alternative sources of investment.

4. The Challenges Being Addressed • Millions of poor without infrastructure services necessary for development • More sustainable, innovative, business like approaches needed S3IDF’s Approach is to reduce poverty by… • assisting small enterprises to provide modern energy and other infrastructural services • specifically targeting poor people • supporting financially sustainable and environmentally responsible MSME (micro/small/medium enterprise) • covering the provision of services in electricity, water, sanitation, transport and telecommunications S3IDF facilitated a grass root NGO to provide lighting and cooking services in rural areas

5. Reliable and better lighting for hawkers transportation of batteries entrepreneur at the solar charging station Safe, Improved Lighting services to Hawkers For the light point projects, S3IDF arranged the business development, technology and financial assistance to help the entrepreneurs increase their income, generate employment and provide cost savings and improved lighting for working class hawkers. The Small-Scale Sustainable Infrastructure Development Fund, Inc

6. Low cost Lighting Services to Poor Un-electrified Hamlets Kerosene based open wick lamps typically used by the poor. The entrepreneur at the solar charging station Kerosene based lamps replaced by LED based lights Studying with the assistance of LED based lights LED based lights S3IDF arranged the business development, technology and financial assistance for accessing lower cost efficient lighting system by the households delivered at a cost equal to the current expenditure on kerosene lighting of less than Rs 2 per day The Small-Scale Sustainable Infrastructure Development Fund, Inc

7. The Model • The owner/operator must have some capital at risk (even ‘sweat equity’) • Supported by technology, financing arrangements and pre-investment analyses • Cash flow to cover all capital and operating costs. • The business must be explicitly pro-poor, environmentally responsible, and should demonstrate a high degree of replicability. • S3IDF produces a stream of fundable small scale for-profit infrastructure enterprises. A Solar powered computer kiosk run by entrepreneur in a rural village in Andhra Pradesh

8. Key Elements • Business Development Services (BDS) • Financial assistance and deal structuring geared to facilitating local FI co-financing • A revolving fund (debt, equity, partial guarantees, etc) • Independent evaluation • Lesson learning and dissemination Night Soil biogas in residential school Implementation Challenges • Cost recovery for BDS, evaluation and dissemination • Custom-design vs. replication with some adaptation (not quite cookie cutter) • Capacity Building Efficient ovens in silk reeling units

9. Examples of S3IDF Projects Based on market research of infrastructure-related activities that can have a significant impact on the poor, our current priorities are: • Lighting • Biomass energy • Silk production and processing • Distribution of modern energy sources (“last mile” supply of LPG and electricity) • Information and communications technologies (ICT) • Water and sanitation • Small/micro-enterprise based infrastructure • More than 65+ projects implemented that benefits more than 12,000 people • 100+ new projects are being examined • Total investments of about Rs 76 lakhs done till date and this has about Rs 33 lakhs of our money invested. Expected Rs 7 lakhs of returns through these investments.

10. Health hazards (from smoke and soot) from fuelwood cooking ‘Cookshop’ in use Fuelwood collected typically by women and children LPG Access for Cooking by Poor Households LPG Cookshop – a ‘common kitchen’ providing poor women with clean, convenient cooking made affordable by a pay-for-use operation. The Small-Scale Sustainable Infrastructure Development Fund, Inc

11. Energy-linked Information/Communication for Rural Schools Kondlahalli Rural School S3IDF’s innovative business and financial structuring helps rural schools introduce cost-effective computer education for students. S3IDF

12. Transport Micro-Enterprise: Bullock Cart U-Haul Partnership S3IDF’s financing support to a grassroots NGO helps local small holders and poor farmers rent a cart and lower the cost of transporting harvested crops. The Small-Scale Sustainable Infrastructure Development Fund, Inc

13. Areca Plantations Areca Leaf Products SME development – Areca plate and cup manufacturing S3IDF facilitates the business development, technology, financial and market assistance to help create Areca product manufacturing SMEs. The Small-Scale Sustainable Infrastructure Development Fund, Inc

14. Telecom Services in Rural Areas S3IDF enables local NGOs to access bank loan for the phone equipment and facilitates leasing of the phone equipment to small shops. The Small-Scale Sustainable Infrastructure Development Fund, Inc

15. Contact us S3IDF – US: The Small-Scale Sustainable Infrastructure Development Fund, Inc.The Carriage House, 5 Hastings SquareCambridge, MA 02139 USATel: +1-617-576-0652 Email: s3idf@yahoo.com S3IDF – India: The Small-Scale Sustainable Infrastructure Development Fund#800, 14th Cross, 1st Phase J.P. Nagar Bangalore – 560078 Karnataka, India Tel: 080-65902558  Email: info@s3idf.org For more information about S3IDF, visit http://www.s3idf.org The Small-Scale Sustainable Infrastructure Development Fund, Inc