Media in developing countries get tech support

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by Bruno Giussani

(IDG) -- Just off Prague's Old Town Square, an innovative organization is transforming the way news is distributed in developing countries.

The Media Development Loan Fund, backed by some of the world's largest philanthropies including the MacArthur and Soros foundations, lends money at low interest rates to news organizations in developing countries and helps them use technology to facilitate the flow of information.

Two years ago, for example, MDLF helped journalists in Indonesia create the country's first independent radio network following the downfall of the dictator Suharto. During Suharto's 31-year rule, privately owned radio stations existed all over the vast archipelago, but they were confined to broadcasting reports from the state-run news agency. Those controls disappeared when a popular uprising toppled the Suharto regime in 1998 and local radio stations basically were free to gather and broadcast the news themselves. "But most didn't know what to do or how," explains Martin Hala, project director at the Center for Advanced Media, a training facility in Prague operated by MDLF.

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Hala, in partnership with Indonesia's Institute for the Free Flow of Information, stepped in to provide technical training and loans to radio stations around the country. He helped assemble a group of journalists in Jakarta to produce national news and enlisted 230 affiliate stations to share their regional reports. Rather than beam their reports via satellite, the stations transmit audio and text files via the Internet, creating a network that covers most of the country. Using the Web allowed the stations to avoid buying expensive radio transmission equipment and also got them around the need for a national broadcast license, which is still difficult to obtain. Now MDLF is transferring that model to other developing countries such as Angola and Nepal.

Using technology to reduce costs and cut through government bureaucracy is only part of MDLF's mission. It also strives to help independent media organizations with the business of providing news, explains the fund's founder Sasa Vucinic, who was previously a top editor at B92, an opposition radio station in Belgrade, Serbia. 'Only when a media company is capable of sustaining and developing its activities with its own revenues can it be free of outside influences and truly independent,' he says.

Even though MDLF's primary activity is making low-interest loans, in some ways it functions like a venture capital fund. In fact, the fund's director of finance, Jaroslaw Gora, is a former venture capitalist in Poland. People seeking a loan must submit a detailed business plan that gives a realistic appraisal of their commercial situation. Sometimes during this phase, the fund restructures companies in the way a venture capitalist might tweak a firm before investing. And, like many startups, executives at MDLF-supported organizations are often allowed to become shareholders in their companies.

Once it makes a loan, MDLF provides technical assistance to borrowers via e-mail, and often brings journalists to Prague for computer training.

Every month, all borrowers are required to file a detailed report. 'We are committed to having our loans repaid, and we don't hesitate to be tough,' says Vucinic. "But we are also committed to ensuring the success of our borrowers.'

MDLF has loaned $12 million to borrowers in about 30 countries since it was founded four years ago. About $2 million has been repaid so far and only one borrower has been taken to court for default. That's not a great financial return. But for these venture activists helping to spread news in Indonesia and other developing countries, the investment is its own reward.

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Media Development Loan Fund
Institute For the Free Flow of Information
The Macarthur Foundation

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