So,
Pollinate Energy is basically awesome; for a whole bunch of
reasons. If you're into renewable energy, sustainable development, poverty
alleviation or any other change-the-world-fetish, go and check them out.
The
model is an innovative combination of micro-finance (a la the Grameen Bank),
small-scale renewable energy generation and LED lighting. Tent dwellers,
outside of the formal economy, get the opportunity for clean, free light with a
micro-finance loan over 5 weeks. Light allows study, cooking and family
activity after dark, without the health impacts and ongoing costs of burning
kerosene. Furthermore, Pollinate is set up to support the emerging business of
providing micro-finance solutions for clean energy products (rather than simply
retailing the products itself), showing good potential scalability and support
for local micro enterprise.
A
good news story all round.
That's
enough of a plug... The theme of this post is rather around some thoughts that the Pollinate approach has sparked for me:
models for delivering basic infrastructure services in informal settlements; because I believe that is one of the keys
to effective future urban systems.
I was fortunate to get the opportunity to mentor one
of Pollinate's interns, Glenda Yiu (@glendayiu), and the presentation of her
experience in Bangalore got me thinking about flexible, informal infrastructure
in ballooning emerging market cities.
There
is a stat I discovered while developing the WSP Future Cities programme in
Africa that floored me - less than 2% of the world's structures are designed by
architects... Wow. That probably means that less than 2% of the world's
structures include modern engineering, and that less than 2% of the world's
structures are connected to conventional urban infrastructure. Many of those
structures are in unplanned areas, outside the formal economy and knowledge
sector.
The
global urban world is predominantly informal. The global urban world emerges,
it isn't planned.
This
has profound implications for the formal property sector - from finance to
design, construction and leasing. Our industry requires stable governance
structures, private land ownership and high finance to function. Some, or all
of these things are typically absent in the development model likely to
dominate the engines of global growth for the next two decades - emerging
market cities (McKinsey and BCG
both estimate in excess of 40% of global GDP to come from these cities).
Most
of the urban world is informal. Out of the reach of the design professionals
who depend on it - engineers, architects, urban designers and planners. True,
as emerging cities grow, many will broaden the areas well suited to
conventional property investment, but there remains a large untapped
opportunity in the informal sector for innovation in the delivery of formal
services - either conventional 'property' services (like offices, markets,
places for entertainment) or infrastructure services (energy, water,
sanitation).
Listed
property funds dominate the commercial property sector, while governments and
large investment banks typically fund infrastructure. All of them have failed
the informal sector to a greater or lesser
degree and none have developed models for services that seem able to deal with
the scale and pace of urbanisation in emerging markets.
Which
brings me back to Pollinate - not just a renewable energy company, but a model
for delivering basic infrastructure services to an entire socio-economic
category currently unserviced by the formal economy. And a class which
represents one of the engines of global growth and prosperity.
One
of the big challenges that I foresee is the difficulty of applying the
Pollinate model to other utility services - water and sanitation. The
complexity of sanitation systems makes micro-finance more difficult and/or
inaccessible, but the potential benefits are extraordinary. Clean drinking
water and safe sanitation are two of the keys to unlocking the growth potential
of informal cities. It is here that project like The Future of the Toilet
(Gates foundation) and corporate innovation in decentralised infrastructure
could have a huge role to play.
As
the major global drinks retailers have learned, from Coca Cola to South African
Breweries , there is money in the informal sector. But it is thinly spread and
a challenge to access, requiring extraordinary distribution and logistics
networks to function profitably. Combining emerging tech with micro-finance is
revolutionary, but I have think there are real opportunities for refinement.
Another sector with some lessons that I think may be relevant is the mobile
phone sector, and particularly the M-PESA banking service that has engaged the
informal sector in Kenya (nearly everyone has a mobile phone, not everyone has
a bank account).
I
would not be surprised to see mobile phone/data companies providing the
framework for broader decentralised infrastructure services.
We
have seen the rise of multi-utility service companies - MUSCos - operating at the precinct scale (examples at
Marina Bay in Singapore, Elephant and Castle in
London and now Central Park in Sydney), supplying integrated municipal services
to large urban infill developments: energy, water, sanitation and data. The
mobile phone companies have already made the leap to decentralised
infrastructure models and micro-finance, so it's not too far a step to develop
energy and sanitation solutions to match.
If
the McKinseys and BCGs are right, and emerging market cities prove to be the
hub of future growth, then innovative solutions for informal, decentralised
infrastructure could be the critical component to unlock that growth; for
governments, corporates and service providers. And professional services
businesses that rely on formal property models will have to adapt very quickly
to the 'informal' to take full advantage of this next wave of global
prosperity.