This document discusses the evolving concept of financial sustainability in the context of telecentres. It begins by providing background on how telecentres originated in developed countries as public access points and were later implemented in developing countries through donor-funded pilot projects. Initially, financial sustainability meant being able to cover operating costs after donor funding ended. More recently, some telecentres have adopted a social enterprise model where local entrepreneurs operate telecentres as businesses to generate profit. This has expanded the definition of financial sustainability to include profit-making. The document argues that for long-term viability, telecentres need to be viewed as enterprises that can support the entrepreneur financially through revenue generation and profit.

1. TelecentrePaper2_Shipra Draft
Rethinking Financial Sustainability in the Context of
Telecentre as a Social Enterprise
Shipra Sharma
October 2011
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1. Context
A telecentre’s financial viability is seen as the most important concern in the telecentre field. In fact, being
financially unviable continues to be the major reason for the closure of many telecentres in India and
other developing countries. Therefore, financial sustainability is central to the continued existence of a
telecentre. In its absence, there are more chances of the closure of the telecentre, and with the closure of
the telecentre, the question of its social and development impact would be eliminated automatically
(Kumar, 2004).
An analysis of the telecentre literature reveals that over the years, financial sustainability has been
understood and interpreted very differently in the telecentre domain. To some extent, it was related to the
way telecentres were financed and run. It also determined the nature of the telecentre model adopted for
implementation and the success of telecentre scaling up in the developing countries. Therefore, it’s
important to understand how the concept of financial sustainability has been defined by various telecentre
researchers and practitioners over a period of time.
But, before delving into the issue of financial sustainability, it is essential to take into account the evolution
of telecentre as a ‘development paradigm’. This too reflects on the way financial sustainability has been
understood and interpreted in the telecentre domain. Over the years, the concept of telecentre has
evolved from being a ‘Welfare State’ public access programme in the developed countries to donor
supported pilot programmes in the developing countries (to enhance and accelerate Information and
Communications Technology or ICT enabled inclusive development) to the self sustaining social
enterprise model adopted by telecentre entrepreneurs in the Latin American and other developing
countries (Sharma, 2011).
It has been observed that the last one, i. e., the social enterprise model is the most sustainable financially
(Mayanja, 2006, Liyanage, 2009). Gradually, all telecentre models are gravitating towards it in other parts
of the world too. It beautifully aligns the entrepreneurial principles of profit making with community
development. Although profit making is generally frowned upon in the development sector, in the coming
years, it is essential to present a telecentre as a profit generating enterprise to the village entrepreneurs.
The same spirit invariably leads to innovation in terms of services and products to be delivered through
the telecentre, which has been the hallmark of telecentre success stories in the (Indian) rural areas
(Rangaswamy, 2006; Kumar, 2004).
2. Objective
Against this background, the main objective of this research paper is to understand the dynamics of a
telecentre’s financial sustainability definition over the years and its applicability in the present context. The
hypothesis presented here is that if a telecentre is considered as a ‘social enterprise’, which it essentially
is, the definition of its financial sustainability has to be expanded to include ‘profit making’ as an important
component. Only then, a telecentres will be able to fulfill its most important strategic objective of meeting
the access, information and skill development needs of its beneficiaries on a long term and in a
sustainable manner. A telecentre should not be allowed to cease its activities simply because it has run
out of money!
Another related objective of this research is to briefly throw some light on the concept of ‘social enterprise’
and how it is understood by the telecentre operators/ managers, the people who are directly engaged in
running and managing the telecentres. The researcher’s interaction with them over a period of time
reveals some interesting findings, which are open for further discussions and debate.
Here, it is also important to mention that the paper explores and explains the financial
sustainability of individual telecentres, not that of telecentre networks or organizations
implementing telecentre programmes. The target audience of this paper is mainly telecentre
researchers and practitioners.
3. Methodology
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The present research paper is based on the findings of desk based secondary research supported
through the author’s primary research in the telecentre field (mainly South Asian countries) for the last six
years under various ‘public access’ and ICT4D projects. The research methodology guiding this paper
has been a combination of exploratory and explanatory research. As an exploratory research, it seeks to
explore the sustainability challenge in the telecentre field, a problem that has not been clearly defined
although there are many explanations and research on the subject. It relied on secondary research, such
as reviewing available literature as well as primary research, such as discussions and interviews with
telecentre stakeholders on various occasions1. All these together have provided significant insight into the
given problem.
As an explanatory research, this paper builds an argument around the findings of the exploratory
research. The researcher has tried to explain the concept of financial sustainability based on the findings
of the secondary and primary research on the subject and related issues. The desire to know "why", to
explain, is the main purpose of this paper as an explanatory research. Consequently, it goes on to identify
and explain the causes and reasons for the way financial sustainability has been understood and
interpreted in the telecentre domain and the way forward.
4. The Financial Sustainability Debate
Telecentres came into existence because initially in the early 1980s, even in the developed countries,
‘public access to computing’ was the only solution to the growing popularity and demand for computing
access and skill development. Computers were not yet common household items! Europe's telecottages
and Electronic Village Halls and United States’ Community Technology Centers (CTCs) were set up
mainly to fulfill these access and skill gaps.
For their continued existence, these telecentres banked upon effective partnerships at the local level
(Badshah and Garrido, 2005). For example, in Canada, telecentres were set up in a collaborative manner
involving the community (more specifically the community champions), local institutions and some
metropolitan agencies (for example, telecom companies), who saw opportunities in the rural "back of the
market" areas (Fuchs, 1997). Such telecentre programmes, more or less, were successful and
sustainable and they continued to exist because access to technology had become a necessity by then,
from being a luxury three decades back.
Riding on the mixed success of telecentres in the developed countries, they were transplanted in
developing countries of Asia, Africa and Latin America from the 1990s onwards. Its pertinent to mention
here that during this phase of telecentre growth in the developing countries, telecentres were also seen
as public access points helping the developing countries in achieving Target 8F of the eighth Millennium
Development Goal or MDG (Develop a Global Partnership for Development) - “in cooperation with the
private sector, make available benefits of new technologies, especially information and communications
(technologies)” http://www.un.org/millenniumgoals/global.shtml. In this way, they became an integral part
of ICT led development in these countries. Here, telecentres served as a knowledge centre that provided
not only access to technology and opportunities for skill building, but also instant access to knowledge
and information to the marginalized communities.
As mentioned, in these regions, the telecentres were introduced under pilot projects and as pilot projects,
they were financially supported by international agencies, like the International Development Research
Centre (IDRC), United Nations Educational, Scientific and Cultural Organization (UNESCO) and
International Telecommunication Union (ITU), who had a vested interest in learning from this pilot project
process so that the same could be generalized to other locations and applications (Fuchs, 1997). The
international donor agencies implemented these projects with the help of local organizations, for example,
1
During the course of six years, the researcher has worked on various ICT4D and public access projects, such as
BCO Voice Research; Enhancing ICT based Non-Formal Educational Modules, Building Multi-Stakeholder
Partnerships in ICT4D: Three Case Studies from India- Mission 2007, OneWorld South Asia and Datamation
Foundation Charitable Trust; Conducting extensive desk and field research on Mission 2007, the Indian telecentre
network; Training Commons Case Study, India; etc.
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the IDRC supported and MS Swaminathan Foundation (MSSRF) implemented Information Village
Research Project in India.
An overview of the mainstream telecentre literature suggests that financial sustainability attained
critical dimensions during the implementation of telecentre pilot projects in the developing
countries of Africa, Asia and Latin America (See the table below). Since the telecentres were donor
funded during this phase, it was evident that the donor-recipient relationships cannot last forever. The
donor agencies had their own well defined exit plans. It is in this context that the issue of financial
sustainability acquired an all time important status (Dagron, 2002; Harris et al, 2003; Harris, 2007). The
big question staring these pilot projects in the face was – what next? How are the telecentres going to
survive beyond the pilot phase without adequate funds? How will they sustain their operations in the rural
communities with limited purchasing power? Since sustainability was not central to the planning of these
telecentre projects, they were the hardest hit by this problem.
The dynamics of telecentres’ financial sustainability definition over the years
Sr. Phases of telecentre Countries Type of telecentre What did financial
No. movement growth project sustainability mean?
1 1980s Scandinavian Telecottages, Being able to recover the cost
countries, Electronic Village Halls, of operations as a ‘public
USA, CTCs access space’
Canada, etc.
2 1990s Asia, Africa & Telecentre pilot Full donor funding and local
Latin America projects NGO support; so no major
financial sustainability issues
3 2000 onwards Asia, Africa & Telecentre pilot Being able to ‘break even’ for
Latin America projects after donor exit continued existence after
donor exit
4 2000 onwards Asia, Africa & Telecentre as a social Being able to generate surplus
Latin America enterprise run by a revenue/ to make profit to
rural/ urban support the entrepreneur and
entrepreneur his/ her family
4.1 Financial sustainability = ‘Breaking even’: the donor funding legacy
Since the telecentre was seen as a development project, during the implementation of telecentre pilot
projects, telecentres’ financial sustainability definition was influenced by how various bilateral and
multilateral donor agencies defined finanacial sustainability in the Non-Governmental Organization (NGO)
context. For example, USAID defines financial sustainability as the degree to which an organization
collects sufficient revenues from sale of its services to cover the full costs of its activities, evaluated on an
opportunity-cost basis (http://www.usaid.gov/pubs/sourcebook/usgov/glos.html).
Another definition states that “An organisation is financially sustainable if its core work will not collapse,
even if external donor funding is withdrawn” (http://www.mango.org.uk/Guide/FinancialSustainability). The
Australian Agency for International Development also defines it in the same way as "the continuation of
benefits after major assistance from the donor has been completed" (Australian Agency for International
Development, 2000).
The same thinking also influenced the way financial sustainability was defined during this period. It began
to be described as the capability of a telecentre project to survive beyond the “Pilot” phase when donor
funding was withdrawn (Dagron, 2002; Harris et al, 2003; Harris, 2007). A glance at the telecentre
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literature reveals that a number of studies viewed telecentres’ financial sustainability in this light (Dagron,
2002; Proenza, 2002; Harris et al, 2003; Harris, 2007; Khumalo, no date; Huda et al, 2010).
For example, Harris et al (2003) define “Financial viability (as) the capacity that a telecentre has for
generating sufficient income to cover its costs of operation, and/or the cost of initially establishing it.”
Proenza (2002), too, discusses full financial viability of the telecentre projects only in terms of equipment
maintenance and replacement. Another source opines that “In practice, telecentres may be seen as
financially viable if they cover their operating costs”
(http://www.ictseminar.org/Netgrowth/ICTWorkshop/FAQ_global.asp?CategoryID=NETa64&PartnerLong
=NetGrowth&Language=English).
Khumalo too, although he touches upon the sustainability issue very briefly, uses the same definition and
goes a little further to mention that “… the operator must generate revenue to cover the costs and make
a reasonable surplus” (Khumalo, no date). Therefore, financially, ‘breaking even’ and being able to pay
for all the expenses incurred in running the telecentre and maintaining the infrastructure available at the
telecentre was considered the main pursuit in terms of sustainability. It primarily referred to the capacity of
the telecentres to generate enough revenue to run successfully.
Hence, for all donor funded telecentre projects, financial sustainability was seen as very crucial and was
also considered as one of the most important success indicators after the donor’s exit, sometimes at the
expense of its social and development goals (Dagron, 2002). It’s important to note here that in the context
of the donor funded telecentre projects, since most of the telecentre projects were implemented under a
development programme coordinated by a local NGO, the emphasis remained more on inclusive
community development. All the products and services offered by the telecentres were available, more or
less, free of any kind of charges and the concept of ‘profit making’ was a taboo (for example, the
community model developed under the IDRC – MSSRF telecentre programme offered free services to the
community).
4.2 Financial sustainability = profit making: the paradigm shift
Around the same time, when the telecentre pilot projects were being implemented, some CSOs and
private sector companies were toying with the idea of telecentre as a ‘social enterprise’ wherein the
telecentre is managed as a business by a local entrepreneur and also brings in the benefits of the
knowledge society to the local community (Mayanja, 2006).
This trend of viewing telecentres as a social enterprise has brought about a paradigm shift in the very
nature of the telecentres, especially in the telecentre 2.0 context2. They are no longer viewed only as
development projects, but as an emerging alternative livelihood option for the rural entrepreneurs.
Consequently, financial sustainability too has to be viewed in a different light, i. e., beyond the ‘breaking
even’ point as an enterprise that generates enough revenue to support the entrepreneur and his/ her
family. To achieve this, telecentres need to be viewed more and more as entrepreneurial spaces to tap
several commercial possibilities (Rangaswamy, 2006).
Cabinas publicas of Peru and TARAhaat and Drishtee telecentres, and more recently, the Common
Services Centres (CSCs) in India are such examples in sight (DIT, 2006). They brought in the concept of
telecentre as an alternative livelihood for the local entrepreneur. Since telecentres were adopted by
village level entrepreneurs as a livelihood, profit generation no longer remained a taboo. It broadened the
horizons of financial sustainability definition to include profit making as its essential component.
The above discussion shows that although financial sustainability has been something of a buzzword in
the telecentre domain, there is no agreed definition in the telecentre field. Sometimes, it has been
2
Telecentre 2.0 is a general model that does away with further piloting of telecentres as a development mechanism.
The Telecentre 2.0 model can help countries that do not have established telecentres on a country-wide basis in
doing so by drawing on previous and well-documented experiences from other countries (Harris, 2007)
http://www.unapcict.org/ecohub/resources/apdip-e-note-14-telecentre-2.0-beyond-piloting.
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discussed even without properly defining what is meant by it. Since ‘donor fatigue’ is clearly evident in
rich nations, people are increasingly talking about telecentres standing on their own two feet and
becoming financially sustainable. In these circumstances, in simple terms, financial sustainability
means being able to continue telecentre operation and being able to be there for the beneficiaries
in the long run by generating enough profit for the entrepreneur to continue it as a livelihood.
5. Telecentre as an (social) enterprise: challenges & opportunities
Theoretically, a social enterprise is started by a social entrepreneur or someone, who recognises a social
problem and uses entrepreneurial principles to organise, create and manage a business around it. His/
her main aim is to bring about community development and social change through his/ her enterprise.
Whereas an entrepreneur always thinks in economic terms, the social entrepreneur, in addition to
financial development, also includes activities related to social development as a part of entrepreneurship
http://en.wikipedia.org/wiki/Social_entrepreneurship. The question worth probing here is - How many
telecentre operators understand their telecentre as a social enterprise?
5.1 Telecentre as a social enterprise: a ‘top down’ understanding
It is observed that many telecentre operators (even those belonging to well known Indian telecentre
networks) understand the concept of ‘social enterprise’ or ‘social entrepreneurship’ in a ‘top down’ way.
They are taught that “you are a social entrepreneur and telecentre is a social enterprise”. Otherwise,
barring some cases, most of the telecentre operators don’t understand it. As mentioned earlier, they
consider it as yet another livelihood option3. This is because to them, a telecentre closely resembles its
much maligned urban counterpart, the ‘cyber cafes’ in terms of the available infrastructure and the
services and products offered on the counter, like access to computers and the Internet, skill
development, etc. Most of them face challenges in selling information as a commodity; and in many
developing countries, eGovernance is not mature enough to provide them a sustainable source of
income.
5.2 Challenges related to ‘commoditisation’ of information and knowledge
There are many challenges associated with the commoditisation of information and knowledge. After their
appearance in the rural areas, telecentres tried to emerge as an alternative to the conventional, rural
information sources, since selling information to the village community is an important component of
telecentre operations. Initially, the ‘commoditisation’ of ‘information’ or projecting ‘information’ as
something that sells was a huge challenge for the telecentres set up in rural and remote areas.
In the rural context, the determining factors for selling ICT based ‘information’ are – does information sell?
If yes, then, what kind of information sells in the rural communities? Moreover, how much can they afford
to pay for this information? The literature reflects on these dilemmas of selling information to the rural
communities. Although Kuriyan and Toyama (2007) give only a passing reference to this issue, it is
central to a telecentre’s financial sustainability. Traditionally, the rural communities were sourcing
‘information’ in a very different way from their peers, elders and other external sources deemed to be
creditable and respectable by them.
Research on the information seeking behaviour of the rural and marginalised communities suggests that
they seek information either within the community as traditional knowledge or from trusted and reliable
external sources (Rangaswamy, 2006). The ‘state’ is also bound to provide ‘information’ to the rural and
marginalised communities under its welfare agenda and such information too is respected. Traditionally,
rural communities have been sourcing information from:
 Their peers, village elders
 The government – through its health, agriculture, rural development extension workers.
 The private sector – Lately, the private sector also joined the above as an information provider
(most of the times as a free incentive), because it had to sell its products in the rural areas.
3
This is how an average Indian telecentre operator understands the telecentre enterprise in majority of the cases.
This opinion was shared with the author during her interaction with the Indian telecentre operators in the course of
several field visits between 2005 and 2009.
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 NGOs – Driven by their own development goals, the NGO sector has also emerged as an
important information provider on agriculture, health and sanitation, etc.
In addition, the ‘information’ provided by the above mentioned agencies was ‘free’! Moreover, perceiving
the telecentre as an “alien source” of information further complicated the issue (Kuriyan and Toyama,
2007). In such a scenario, footfalls will increase and telecentres will become sustainable only when the
‘information’ sold by the telecentres attains respectability and credibility among the rural communities.
Hence, one of the prime objectives of some of the first such initiatives was to show and prove that
“information sells.” While analysing telecentre case studies from India, Harris et al (2003) also express the
same thought, “By remaining in operation, Samaikya... demonstrate(d) that development information can
be sold and that a potential source of revenue exists for telecentres that provide information services that
its customers are prepared to pay for.”
5.3 Struggling with technical and infrastructure issues
In addition to the challenges mentioned above, some of the earliest telecentre social entrepreneurs had to
face severe challenges with regard to connectivity, appropriate, affordable and robust infrastructure and
technology to function properly in the rural and remote areas. It adversely affected their telecentre
operations. In fact, lack of telecommunication infrastructure and connectivity was one of the main
challenges to telecentre’s financial sustainability leading to the closure of many telecentres in the early
years of telecentre experimentation in the developing countries (Proenza, 2002; Wellenius, 2003;
Jauernig, 2003).
5.4 The opportunities
In such a scenario, it was imperative for the telecentre entrepreneurs to think out of the box and innovate
in terms of the services and products to be sold by the telecentre and generate income. The following
picture shows the display of products and services sold at a TARAhaat telecentre, an initiative of
Development Alternatives
(http://www.devalt.org/), which generate
income for the telecentre owner. All these
services too add to the social capital of the
community. Because such telecentres are
situated in the rural areas, the youth don’t
have to venture out of their village to
acquire such skills.
In fact, there are many examples to show
how the telecentres are providing other
kinds of digital services to the rural
community and they are profitable.
Therefore, there is a need to view the
telecentres, more and more, as
entrepreneurial spaces to tap several
commercial possibilities to stay
operational (Rangaswamy, 2006). Studies
have revealed that except for the
telecentres run and managed by NGOs, the private sector or the government agencies, the most
successful telecentres are the ones, which are run by business driven entrepreneurs, who are interested
in the commercial success of this enterprise…. (Kuriyan et al, 2005).
A telecentres is essentially an enterprise. Because of the technology at its disposal, it has the capacity to
generate revenue. And, invariably, whether the operator/ manager runs it as a social enterprise or not, all
telecentres, including the cyber cafes, help in bridging the digital divide. They are providing access to
technology because, still, in many developing countries, computers and broadband access is not
universal and the ITU figures justify it (http://www.itu.int/ITU-D/ict/statistics/).
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As far as ‘inclusion’ is concerned, even the most community development oriented telecentres are not
always 100 per cent successful. Moreover, financially, they fail miserably and cease to exist. On the other
hand, the cyber cafes are more successful world wide because they have the most replicable and
sustainable governance structure known, i. e., the privately owned business, which also makes them
financially more sustainable. Ignoring cybercafés means missing an opportunity to learn important
lessons about policy and managerial approaches that contribute to overall telecentre sustainability
(Proenza, 2002).
Proenza was writing at a time when a telecentre’s ‘development’ component weighed down its ‘profit
making’ spirit unfavourably, and cyber cafes were completely excluded from the telecentre fraternity. But
currently, even the government initiated telecentre projects are in favour of an entrepreneurial approach
to telecentre management and operation to make them financially sustainable, for example the Indian
government’s CSC programme (DIT, 2006). The same spirit is responsible for the success of the Cabinas
Publicas de Internet in Peru because they are run as family enterprises by entrepreneurs. Their main
concern is to generate enough profit to continue Cabinas Publicas as a family enterprise and also pay for
its maintenance and the staff hired to run it, as mentioned by Ana Maria Fernandez-Maldonado (Badshah
and Garrido, 2005).
Once the telecentres are comfortable selling the digital services needed by the rural communities, they
can sell information too in due course of time. For selling information, it is important to raise awareness
about ‘information’ and ICTs as a valuable resource for individuals, families, organisations and
communities (Roman and Colle, 2002). The telecentre managers and operators have to convince them
about how these are going to help them improve their lifestyle and add to their community’s development.
Generally, people don’t see a significant connection between a computer and their family’s or
community’s development. Persuading the community to accept the ICT based information, services and
products in itself is a huge task for the telecentre social entrepreneur.
Therefore, it is imperative for any telecentre programme, whether initiated by the government or the
private sector, targeting popular participation in the Information Society to consider planning vigorous
campaigns to illustrate the benefits of information as an important resource for daily living (Roman and
Colle, 2002). Only then, information will sell! Moreover, for information to sell, it has to be relevant,
contextual, appropriate, affordable and available in local languages (Heeks, 1999; Proenza, 2002; Harris
et al, 2003; Kuriyan and Toyama, 2007).
6. Conclusion
The above discussion can be concluded by citing Rangaswamy’s observations (Rangaswamy, 2006): “….
to pay for useful information, say to browse the web for a new cropping pattern or a pesticide or even
employment opportunities may still be a difficult response (from the rural communities). People continue
to depend on traditional knowledge bearers and social networks to extract and pass this kind of
information. However, it is highly probable that one will happily pay for a marriage to be digitally
documented, for astrological charts or making a family film (or even for acquiring computer skills)!”. This
observation still holds good when telecentres are being seen more and more as enterprises. Recognizing
and accepting this fact has been the way forward for attaining financial sustainability for many successful
telecentres. The best practices from the social enterprise model should be followed to achieve financial
sustainability. For telecentres to function as knowledge centres, they need to develop relevant back end
channels through which they can appropriate useful and creditable informations sought by villagers.
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sustainability: a case study of six telecentres in the Limpopo Province. Communicatio: South African
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19. Proenza, Francisco J (2002) Telecentre Sustainability: Myths and Opportunities in Bridging the
Rural Knowledge Gap: Information Systems for Improved Livelihoods, Dixon and Wattenbach (eds).
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University, Ithaca, New York.
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11. TelecentrePaper2_Shipra Draft
Websites:
1. Wikipedia contributors, "Sustainability," Wikipedia, The Free Encyclopedia.
http://en.wikipedia.org/w/index.php?title=Sustainability&oldid=416122900 (accessed January, 2011).
2. http://www.ictseminar.org/Netgrowth/ICTWorkshop/FAQ_global.asp?CategoryID=NETa64&Partn
erLong=NetGrowth&Language=Englis
3. http://www.sustainableicts.org/Sustainable.htm
4. http://africa.rights.apc.org/alerts-content.shtml?x=63597 Online Conference on: Telecenter
Sustainability in Developing countries 1st - 30th July 2005.
5. A discussion posted by Fatema Begum Labony on the www.telecentre.org website (dated July
2009). Social Sustainability vs. Financial sustainability, which one is appropriate for telecentre initiatives?
http://www.telecentre.org/forum/topics/social-sustainability-vs
6. http://en.wikipedia.org/wiki/Telecentre
7. http://www.orphanit.com/sustainabletelecentres.html
8. http://www.choike.org/2009/eng/informes/3084.html#Evaluation and sustainability
9. http://sustainabilityfirst.blogspot.com/
10. http://ittripura.nic.in/CSC/CSC_Guidelines.PDF
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