Microsoft’s Public-Private Partnerships Empower Underserved People Around the World

REDMOND, Wash., March 20, 2007 – In 2003, all government procurement in Chile was moved online through a portal called ChileCompra. Not only did it make every transaction transparent, resulting in improved accountability and cost savings for the government, but it also created a central online location for all businesses across the country looking to bid on any and all government contracts. Since the portal’s introduction, the number of bids per government project has more than tripled — from 1.7 to 5.7, and the total number of companies registered to bid has grown to more than 200,000. Increased competition and efficiency saves taxpayers US$60 million a year, the government estimates — good for the government and good for the vendors. The one catch – businesses must have access to technology, or they can’t participate in the online e-procurement portal.

The government of Chile recognized this issue and worked with Microsoft and other partners to create a solution to ensure greater access to ChileCompra and government business. Beginning next month, tens of thousands of small- and micro-business owners in Chile who don’t own PCs will no longer be left out or have to make frequent trips to their local icafe to find and bid on government projects. Instead, a Microsoft Partnerships for Technology Access (PTA) program, called “Mi PYME Avanza” (My Small Business Grows) will provide affordable access to PCs, the latest software and training through low-interest, unsecured loans.

The program is one of more than 50 now underway or planned – from Egypt to Argentina, Mexico to South Africa – since Microsoft introduced the PTA initiative at the Microsoft Government Leaders Forum (GLF) Americas in March 2006. The initiative combines the know-how and resources of governments, technology companies, banks and non-governmental organizations (NGOs) to provide creative micro-financing and purchasing arrangements, along with training and other resources, to people and business that can’t otherwise afford PCs.

The programs are designed to increase economic and social opportunity through increased access to technology. Many address longstanding, local challenges within their regions such as education reform in Guatemala, and senior citizen access to government programs and services in Argentina.

By June 30, 2007, Microsoft expects the initiative to have introduced 500,000 PCs in these underserved segments worldwide, as well as created an untold number of new jobs and other economic opportunities.

“Providing access to technology for underserved citizens is an important goal for Microsoft,” says Diana Pallais, PTA Director at Microsoft. “When we do it in partnership with governments, and we embed the initiative in the context of an existing government priority or program, the benefits are amplified beyond the benefit of putting a PC purchase within reach of a low-income citizen. We can also help the government agency improve the way they serve their constituency and innovate on their service delivery menu. The PC in essence becomes a vehicle for the citizen to be better served by a government agency that has vital significance to them — the pension agency for retirees, the education bureau for teachers, the procurement portal for small businesses.”

Creative Financing Expands PC Access

In the November 2005 issue of The Economist, an article titled “Hidden Wealth of the Poor” noted that five out of six people in the planet fall into the “unbanked” category of people who do not have access to credit by the formal financial sector. This is due to a combination of market and regulatory failures (such as insufficient asset assurance, identification methods, credit assessment, or repayment methods). Taking this into account, Microsoft works with the government to usher in the right level of confidence or incentives for financial institutions to enable fresh access to credit to large segments of the “unbanked.” The company does this worldwide and varies its engagement depending on the market’s needs.

In Chile, for instance, Mi PYME Avanza offers a favorable interest rate on a 36-month loan. The small- and micro-business owners don’t have to offer any form of collateral.

“Without Microsoft’s leadership, this partnership would not have existed,” says Tomas Campero, Chilean government director of Acquisitions and Public Procurement. “They built a consortium where each of the stakeholders contributes its expertise and products with a reasonable expected return on investment.”

In Argentina, technology access wasn’t the primary challenge to helping small- and medium-sized business more effectively use IT. Many already own PCs, but few use them for mission-critical tasks such as tracking sales, inventory planning, or create e-commerce Web sites, says Esteban Corio, executive director of a non-profit agency that serves small businesses, FUNDES Argentina.

Helping these businesses grow is vital to Argentina’s future. Since the collapse of the country’s financial markets in 2002, these businesses have created 95 percent of new jobs in the country, he says. Corio approached Microsoft and Intel in 2005 with a plan that has morphed into a PTA program called “Transformación PYME” or Transforming the SMB.

The program provides the businesses a free assessment of their basic business skills, technology accommodations for workers and its IT infrastructure. Those that choose to make the recommended technology upgrades are eligible for government-subsidized, low-interest loans.

When Corio needed funding to create a pilot program, Microsoft and Intel split the $35,000 cost. The companies also recruited the provincial governments of Buenos Aires and Santa Fe to pay for half of the cost of the consulting for the first 1,000 companies. “Microsoft is very active, very quick,” Corio says. “It is committed to make this work.”

In Egypt, families in the Nation online: 2010 program can use their home telephone service to secure their loan. In Mexico, all 2,000 homes in a housing development for low- and middle-income families outside Mexico City come with a PC and broadband Internet access. PTA partners with Infonavit, a federal government mortgage agency, and housing developer Real Paraiso Residencial Inc, to build the cost of the PC into the 25-year home loan.

Government-backed loans funded the majority of a new PTA program in Guatemala, providing low-paid public school teachers access to PCs, technology training on demand and a modern classroom curriculum that will help them innovate. President Oscar Berger deems the program so vital to Guatemala’s education reform plan that the government has agreed to cover 80 percent of the costs for the first phase of the program, which will serve 9,000 teachers. Interest-free loans are available for the remainder of the cost.

Making Computing Affordable and Accessible

In addition to focusing on making technology affordable and accessible, Microsoft’s PTA program also helps design and deliver solutions that reflect local needs and public policy priorities.

In Egypt, PTA programs have helped foster the growth of locally developed software and hardware. The selection of Egyptian programs has quadrupled to more than 1,200. Educational software programs, particularly that for learning languages and computer skills, are now big sellers, as are titles that deal with Egyptian culture, religion and sports, says Mohamed Azzam of E-Learning and Business Solutions Union (eLABs), a nonprofit organization representing more than 35 Egyptian software companies and involved in several PTA programs.

Marketing, technical and other assistance from Microsoft and other PTA partners has helped Egyptian PC manufacturers get their PCs into “hypermarket” superstores, where people can purchase them while shopping for shoes, towels or other household supplies.

The assistance has helped Overseas Computers of Egypt increase sales and the size of its manufacturing crew five-fold. Company owner Islam Gabr takes pride in the people who have been introduced to the power of computing through his PCs. He recounts how one customer used an Overseas Computing PC that he purchased when he was out of work to create a thriving business, typing letters and other correspondence for his neighbors. The man now owns five computers and employs four additional people.

“I am happy for myself, for my people, for my country,” Gabr says. “Every day I go to work, I know I am upgrading the lives of the people who use my PCs.”

Microsoft’s Pallais feels the same way about the PTA program. According to Pallais, the PCs that the company is introducing around the world are doing much more than simply bridging the digital divide that has separated developed and developing parts of the world for decades.

“Digital inclusion by itself isn’t enough,” Pallais says. “With this program, we’ve found a way to combine the vast knowledge and resources of public and private organizations to tap the benefits of public agencies, and in the process help government agencies innovate in their service delivery. The result is a holistic solution where the PC is a means to a socio-economic end, and the benefit chain accrues to win-wins across the board. All it takes is concerted commitment, creativity, and a vision that starts with the priorities set by governments as stewards of economic development.”

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