This way of carrying babies is very common in Mozambique, south eastern Africa. It is relatively comfortable and versatile. Plus, all you need is a rectangular piece of cloth (and a baby, or course).
The baby in this picture is 9 months old. I have been carrying him using this technique since he was 1 month old. As he grew, my back got stronger!
Step 1: Find a rectangular cloth
The material should be sturdy but soft. Cotton works well. What is important is that it is rectangular and also big enough (about as wide as your arm span). The cloth pictured here is a Mozambican "capulana".