LAST THURSDAYS with Anil Chitrakar, July 30, 2010.
The following is a transcript of Anil Chitrakar’s talk on “Last Thursdays” – talk with an Entrepreneur program, held at Dwarika’s on July 30, 2010 organized jointly by Entrepreneurs for Nepal, Samriddhi, The Prosperity Foundation, and Change Fusion Nepal. The program was attended by approximately 80 young entrepreneurs , professionals and students.
Anil starts, “Let me start with a mind set with which we have to attend a meeting like this. For example, oil was found in Saudi Arabia in 1930. So if you think about it, people go to gulf countries to work these days because oil was discovered there in 1930. That’s a very simple way to understand the world – oil created an economy there and 500 to 600 Nepalese go to Gulf everyday.
Now let me ask you a question. In thirty years of time, what do you think will be the principle source of energy or energy storage in the world? It could be solar, it could be wind or it could be hydro or a lot may be going through your mind. There is a country in South America called Bolivia and most people don’t know where Bolivia is because they don’t have a team in the world cup. Bolivia has a large deposit of lithium and the lithium is so important because the future batteries into which we will store energy will probably be lithium ion batteries. So if you know this you will start watching the economy of Bolivia because that’s where the next big economy of power is. So this is one way by which we have to go to interaction today. Lets not only think just oil or solar or tree but into the future.
Now the second thing is, in four years time there will be another world-cup in Brazil. Now who do you think made the money in South Africa? What about the vuvuzela manufacturer in China? Can you imagine that a small factory in China was producing 20,000 vuvuzela per day. So it’s not (just) South Africa that made the money, it’s (also) the vuvuzela manufacturer. Who else do you think made the money out of the world cup in South Africa? There is a Nepali manufacturer of the crazy hats who made hats of different country and its Nepali enterprises that made money. How much do you think Paul, the octopus made out of that world cup or the owner of that octopus? Did you know that the octopus is now going to be the Hollywood Star? The owner just got a contract to make a movie. So, how we need to attend a meeting like this is to ask ourselves how Paul the octopus made money but the green parrot in Ratnapark didn’t make the money. We could have used the green parrot at Ratnapark who could have predicted the world cup. All we needed was 32 cards and a parrot to choose the right one among the 32. More than that, you need the media. I don’t think it’s the octopus that did the trick, and it’s the media that did the trick. So, very often as we move into this discussion, we have to say, ‘I have a really good idea but the idea will work only if I know how to work with the media’. Having a great idea only is not enough, the relationship we establish with media is the key ingredient.
The other thing we have to understand is about the gambling …. that took place during world cup. Lots of gambling happens during the world cup and lot of people made money out of it. So again, for your discussion – do you think gambling is a good money making practice? Now if it is just money, then the answer will be yes. So if you look at how sophisticated gambling was in the world cup, they didn’t just bet on who would win but in how many minutes the first goal will be scored. So the Interpol, when they cracked down the gambling in Singapore and other countries, they arrested five thousand people in a single day. The reason why I raise this question is that now ethics becomes the key part of the discussion. So, even if you know you can earn money out of gambling, but should one do it or not, will be important question for the discussion.
So what are we talking about here? First, being able to see something in the future, second, having a new idea, third the kind of relationship that we need to make the idea happen and the next thing is ethics.
Now, to really have a discussion, in western Nepal, development agencies have made lots of money teaching people how to wash their hand. I just met the head of UNICEF here who visited those places recently and said people don’t have enough water to drink there, so they were not going to wash their hands. Now the question for each one of us here is, is there any business opportunity there? Obviously, shop is not going to work because there is no water. So the natural product that you see in the market is hand sanitizers. So, as you walked into this hotel, did you see any ingredient for a hand sanitizer? What is the key ingredient for hand sanitizers? Aloe Vera. In Nepal you have it everywhere but why have not Nepalese converted Aloe Vera into a product that could be found in the shelves? What is the gap between seeing the Aloe Vera and actually making hand sanitizers for the Nepali market? Knowledge. Knowledge about the fact that the plant actually has that use. The technology, because to convert that plant into the lotion, you probably have to distill the substance and distilling would be the technology. Action, you can talk about it, you can discuss it, you can go to more seminars but until you actually do it, it’s not going to happen. Some resources, you might need to plant a lot, so a piece of land would be a resource, may be you need a bottling system, you need resources for that. So, once you make these sanitizers, how do you know it works? A technical lab that certifies and says that this sanitizer will kill this much percent of bacteria. You can see in the labels of commercial where it says- kills more than 99.9% germs. So you need some sort of certification. The main point here is, we always talk about potential. Let’s get to the world cup one more time. How Nepalese can make money in the next world cup is by allowing the teams to come and practice at high altitude football fields in Nepal. You come and play in Thaplu airport and pay this much because if you could play at 20,000 ft you should be really good at sea level. The potential is there. So, what will it take to make that into reality? Infrastructure, as in the ability to bring them in Nepal, ability to house them, ability to feed them and a little bit of electricity. Marketing it to very specific groups like players, coaches who are seeking for special training grounds.
So, lets take this discussion further and categorize the world in two ways. One category is the un-served market, the example of hand sanitizers. Let’s take an example of solar tukki. It is possible in Nepal to provide solar lighting to almost every home in the country because we have good sunshine all the time. I just want to say how the business plan is made. In Nepal, the poorest family spends Rs.7/- a day on light and communication. Let me explain what that means. Light means to buy kerosene to light the tukki and the communication would be the disposable battery for their radio. So when we did the survey in the Nepali market, people are willing to pay Rs.7/- a day on communication and lighting. The solar tukki that we have designed has a three watt solar panel, two sets of LED’s and it has battery storage to play the radio. To make business sense, we need to sell this at $50 or Rs.3, 500/- which no Nepali, espcially in rural areas, has. How can you design a technology that cost Rs.3, 500/- and sell it to the people who can pay Rs.7/- a day. So, if I wanted to sell it directly to the people, there is no market. What I need is to work with those people who will generate cash over a certain period, and the answer is saving and credit groups. So we sold the technology to the saving and credit group, they then give it to the families on credit and everyday the families deposit seven rupees with the group. This is how it works- the technology we have designed is for five years. The solar panel is good for 15-20 years, the batteries are nickel metal hydrate batteries which has three or four years life and the LED’s are warranted for ten thousand hours, so its a pretty good system. So, how the market understands the technology is that, I get clean light and I have unlimited radio for five years which is almost 1600 nights for Rs 3,500. So if I use this technology for five hundred nights and pay seven rupees a day for five hundred days, the technology is free for me for eleven hundred more night. This way, the willingness to pay comes about. People say everyday I deposit seven rupees so in five hundred nights I have paid for the technology but the technology is so good that it going to work eleven hundred more nights. This is how we are able to expand our business through saving and credits groups. Adding to that, the eleven hundred night are free, now would you like to charge your mobile phone with the technology too? Mobile phone is a fascinating technology because it has the built-in battery already. So to charge this during the day while the sun is shining, there is no extra cost. People in the villages during the day use small connector and they can charge there mobile phone using the same technology. Now we took the next step i.e. the chlorinator- if you take table salt and mix water and you put three watts of energy into it, then the sodium chloride will become chlorine. So, with one liter of chlorine we can treat four thousand liters of drinking water. If you put a drop of chlorine with the Aloe Vera and make it into a lotion, it will become a hand sanitizer. This is not rocket science. The point is how much you understand the market. If you understand the market, its willingness to pay only Rs.7/- a day and how do you finance it over a long period, it pays for itself.
The cost of a solar panel is quite high because the three watt panels are quiet expensive, so what we did in those villages where people couldn’t pay Rs.7/- a day, is that we put the panel on the school roof and all the children got one tukki each. So the children go home and they read on the clean light and they also listen to the radio with their tukki charged the other day at school. So, the next morning, if they want to listen to the radio, they have to go to the school and charge it. I don’t know how much ADB or World Bank spends to get children to schools but believe me, solar tukki is the best way to make children come to school everyday. In those schools, where there are collective charging stations, you can get hundred percent enrollment. So that’s another way to expand your market. This is just an example to show how things work. So, if we say in Nepal, solar energy has potential, it means you are just romanticizing. You can create electricity from potato or from cow dung, but it’s not so practical. You have to find things that are practical for people and solves a real problem.
There’s another example of bio gas. Bio gas is such a simple technology. In 1990, when I was the head of IUCN, we had a big problem of parks and people. People who lived outside the national parks had to enter the national park because they needed firewood and needed to graze their animals. So, the idea of methane gas or bio gas comes as a simple technology, where if you put the cow manure on a pan, it generates methane gas and with methane gas, you can cook. We wanted to start a bio gas plant and called for volunteers. We were happy to see big crowd gathering because I thought there were so many people who wanted to learn about bio gas plants. But I found out the crowd was there to beat us up. They thought that we were there conspiring against giving electricity to them. When we started making a dome for the biogas plants, people looked at the domes and said we were going to steal the money and go away and the dome was going to collapse. When the gas was actually out and some of the plants were functioning in some of the places, I thought the people would be happy when they would see that the technology kept their houses, the women’s clothes, pots and pans clean. But people again complained that only people close to ruling party got it. Now, the lesson to understand is that, in business, the initial phase won’t be easy (especially in Nepal where many people are skeptical of new ideas and change). So, with the solar tukki who do you think became enemy number one in the village? Its the kerosene dealer. He looks at it as a threat. The business plan would be to turn the kerosene dealer into a solar dealer. Every time there is a petroleum crisis, he can suggest his kerosene customers to use the alternative.
Now going back to the bio gas, so what if you built ten bio gas plants? Any body can do it. Nepal is one of those countries which is full of pilot and demonstration projects. So last thing people want to see is another pilot project. So to make it a successful and complete project, what we did was – I went to a parliament at that time and there was a natural resource committee and we convinced the committee to change the National Park act. If you look at the new act, it says- 30-50 percent of money generated by national park will go to the community living next to the national park and with this money, we started building many-many biogas plants. Today, I think there are around thirty-seven companies that make biogas plants and I will challenge you to show me one house that don’t have a biogas plant in the Terai protected areas. In fact, of the two-hundred-thousand biogas plants we have, we are getting seven dollars per ton of methane we displace from the carbon credit mechanism. For my solar lamp, I sold the initial hundred thousand solar lamps credit to the company in the UK called ERM and they bought the kerosene offset for carbon dioxide for a hundred thousand dollars. So what did I do with the money, I put it in ACE development bank. That’s my mortgages and I draw 90% of that in Nepali currency to finance the warehouse for the lamps. So now it has started getting complicated but it started with a simple idea- let’s make a hand sanitizer, let’s make a solar lamp or let’s do biogas. Understanding the things in pieces, in the case of biogas, policy has to be looked at and the policy was the national park act. In the case of solar you have to look at saving and credit groups and see how business can be made possible. In the end, its a partnership that we have to establish.
The point I have to make here is that many of us have very good education and we develop certain skill set that are only useful to sit in front of computer and write emails. Most of us are really good at writing proposal, responding to an e-mail and things like that. The reason I said this is that you go down to Baghmara, community forest in Chitwan National Park (and I have done this math many time), it has 43 elephants. Each elephant does four trips a day into the forest. Each elephant carries three tourists, and every tourist pays Rs.1500/- . Now if you multiply 43*3*4*1500- when you come up with the amount, it happens to be ten thousand dollars a day. One community is earning ten thousand dollars a day. Now the question in this room would be how many people in this room know how to ride an elephant? So, if you do not know how to ride an elephant, it is a problem. So the argument of Nepal being poor and not having any potential to make money is ridiculous. But if you don’t have the right skill set then that’s a problem. For example Appa Sherpa climbs Everest and I think he has climbed Everest for like 20 times. I know from a business perspective, if you take two expeditions to Everest, you can buy a house in California. So, Appa has taken 20 expeditions to the Everest and made lots of money. Now the question again in this room is, how many of you know how to climb Everest? So, its not that Nepal is a problem, its not that Nepal doesn’t have the potential, we need to develop the right skill set to match that potential. So that is what we really have to think of as we go forward as a society.
So, to wrap this up, lets go back to football. Why is it so fascinating to spend one month, loosing all that sleep, watching football? Why is it our passion to watch football? There are three things. The first one is, rules are same for everybody, if the rules were different for different people, it would be no fun watching it because it would be like Nepal. Now Robin Sayami, cartoonist of Republica, in one of his cartoon showed Paul the octopus being asked, who will be our next prime minister? And the answer of the octopus was, I can predict only in a fair game. So take that context and you apply to Nepal- it has to be the same rule and that’s why we enjoyed football. Now the next thing that we have to understand is that there are consequences. For example, the linesmen who did not see the ball cross the line, resulting in England loosing; for him, there is a consequence. The guy lost his job. If you are a lines man and your job is to watch a line, there has to be a consequences if you aren’t able to do it properly. If you play foul, what is the consequence? You get a yellow card and if you do it again, you get a red card and then you are out of the game and then further consequences apply. So, in the country like ours where there are no consequences, what happens is not fun. We don’t like to watch it because so many have come and gone like Rayamaji Aayog, this aayog that aayog, but no one was punished. So if there are no consequences, why are we talking?Now the third part is the word ‘competition’. In this competition, 32 teams play, but the beauty of the game is that, if you take Serbia as a country, it has a population of people in the jails in United States but Serbia was able to beat the United States. Spain became the world champion but Switzerland beat Spain. Why? Because it is a competition and in a fair competition, size does not matter. So, Korea had a team, Japan had a team, Serbia had a team, Switzerland had a team but China, Nepal and India did not have the team. This again is the key point of discussion- can we became team players? I think only in those countries where team culture exists, you can have a world cup football team. Countries which are extremely individualistic, say Chinese winning ping-pong, high diving, swimming is no surprise. But there is no team in football there. Two million people and no football team. So it is also the reflection of our culture. Are we willing to work with eleven people to make something happen?
Let me just recap. Making money is a good thing, the vuvuzela- you can make money out of it. Now if you make money out of gambling, the question would be- is it an ethical way to earn money? That has to be part of the discussion. New ideas are abundant, everybody comes up with a new idea but to make a product out of an idea takes a lot of relationship building, networking and basically going to other people who have other skills like the media, the saving and credit groups etc. Going to the football, the idea of competitions, fighting for level playing field where the rule applies to everybody else but there is also understanding consequences are just the basic things that I want to put on to the table so that we can start a discussion. The last point would be, the potential in this country is huge. This morning I had a meeting with the President of Asian Development Bank. In that meeting, the same discussion was there. The potential is there. The Asian Development Bank is going to give Nepal 21billion rupees a year which is a lot of money. But don’t tell me that there is potential and there is money, yet nothing happens. So these things we discussed are probably the variables that we have to work on. There are 28 commercial banks and all of them are looking for a good project. Now this month I am doing the World Bank’s investment for Nepal and guess how much the World Bank is giving in next two year for Nepal ? One billion USD. So don’t ever say that Nepal lacks money because one thing that we have in abundance here is money. The fact that we don’t spend it, the fact that we have not been able to convert it for something in return is the real challenge and I think a conversation like this can actually break some of that stereotype thinking that we are caught up in.
Questions and Answers
What about the remote areas of Nepal where subsistence farming still exists?
In the poverty alleviation fund, the whole idea is to take the poorest family in Nepal and make three interventions. The first intervention is to take them out of exact poverty. Let’s say, goat grazing to take you out of that poverty. But what we have seen is that the second level of prosperity indicator is opening of the retail store. Suddenly from the goat keeping, they can move to a retail store in the village. Now the third indicator that people look for is empowerment. We can just raise goats and more goats and after ten years, more goats. This is not the way to look at it. The way to look at it is, if they start from the goats, then they progress into opening a retail stores or a health post or a medicine store and the third part is to be the head of a users committee which can be called empowerment. That’s the ideal situation. Now the flip side of this is if you go to many villages where there is goat raising, once they started making money from the goats, the boys were removed from the village school and put into English boarding schools and the girls were taken out of the school to look after the goats. So this is also something you have to be careful of, money does result in new types of exploitation. So, making money doesn’t mean solving the problem. We have seen this a lot, so we have to be careful.
Should we be excited on knowing ADB and World Bank is giving billions of rupees to Nepal? Does aid really work for the development?
Without going into a long debate, I have no problem standing here and saying I am the result of foreign aid. Because my engineering degree was paid by foreign aid and my energy planning degree was also paid by foreign aid because there is no way that a student from Nepal can go to Pennsylvania and study with his own money. Norway was built by foreign aid, Germany was built by foreign aid, Korea was built by foreign aid and Japan was built by foreign aid. So, let’s not have this notion that aid doesn’t work. Now the question is why it is not working here and that’s the bigger question we have to ask. To ask if the gun is good or bad, the answer will always depend on who is carrying it. Aid is also how we use it or how we manage it. If we took an academic stand, where you say lets have a discussion or lets have a seminar on effectiveness on aid, it doesn’t go very far. For example, we are going to borrow lots of money to save the tiger. So it might sound very strange- Nepal borrowing for tiger but you will be really surprised if I ask you a really simple question, ‘How many Nepalese have a job because we have tiger?” If you look at a travel agency, there is a poster of a tiger. They sell the tiger to generate the income. So don’t tell me the tiger is not productive, it is very productive. So, the question would be, we have to be able to identify those things that will generate resources in the long run, but in the short run, we don’t have the resources to put in infrastructure, so that’s why more aid are for infrastructure. For example, look at Buddha air, its borrowing from IFC to buy the airplanes and they have just started their service to Bhutan. That’s a wonderful example to show how aid can be used. In fact Buddha air has now taken Sikkim’s Surya air on management contract, which is a capacity issue also. I agree with you that we have not used it well.”