The bottom of the pyramid

Bruce Nussbaum of BusinessWeek is talking about a little boy in Manila selling gum in the street. He is only selling one type and brand of gum. Where does he get it ? How does he sell it ? The subject of our session today is the bottom of the pyramid and how to help the poor participate in the global market place and reach self sustainability.

If you ask any poor his immediate priorities, he will probably answer:
-feeding my family,
-educating my kids,
-basig healthcare.

If you now ask him what he needs to achieve these, the solution is often "I need a way to make money" to buy that .

Nick Moon, social entrepreneur in Africa, asks "how can we create wealth from the bottom up ? We need to enable people to make money. Nick has created a micro irrigation pump that he calls a money maker for the farmers entrepreneurs. This pump enables many farmers to become entrepreneurs.

"The solution that we saw is people need to make money and we approach them as investors"

70% of Africans are people who know farming. Irrigation is the best way to create new entrepreneurs.

A women farmer is a good example of how many people can become an entrepreneur in Africa. The first year she made $3200 in revenues with this micro irrigation pump. 7 years later she runs a shop and she is a young women leader. 36 000 people generated 32M$ a year in profit and employ 35 000 other people using this pump.

We should aim at fully sustainable markets, not only at sending funds to help the poor countries. 9000 enterprises a year are created this way. There is no reason why the same approach can be used in a broader way.

Rajendra Pawar, India, is adressing the key issue of education. Rajendra's initiative has educated hundreds of thousands of children in developing countries.

The goal is to release the natural energy and hunger for education of the kids, release their willingness of collaborating, not fighting against each other. The Internet is a key piece of this network. Bottom up small groups of people have to be the basis.

C.K. Prahalad of Michigan Business School reminds us that 6 years ago 5 billion people were not in many minds. Today 5 billion people out of 6 on earth came back on the radar screen.

Call it globalization 2.0, it is the opening of a huge 5 billion market where the people we are still calling the poor will be able to participate.

-5 billion people should not be looked at the same, they are very different so we need to segment it in a very granular way
-all development work has been based on income statistics and it is mostly wrong because it is self reported income. Statistics are often wrong.
-The people we call "the poor" don't want the basic, they want to be more like you and me. Some have a TV but not drinkable water every day.
-they have tremendous capability towards technology use. They don't have a legacy mindset. We don't understand their rules.

It is not only the company and the entrepreneurial part. Civil society and companies private sector have to come together at the bottom of the pyramid. We should all focus on ecologically sustainable models and financially sustainable models. Nobody should see this as donations or non profitable business only, self sustainability can be achieved by trying to find business models where the local entrepreneurs can become independent, we can't see this as a loss making only model.

This is not about charity but about entrepreneurship and enabling the largest single opportunity for organic growth, call it globalization 2.0.

We have to figure a way of engaging in a productive way, not only and anymore as a charity.

The room agreed that we should not use the word poor at all. Consumers always get respect and choice. How can we restore dignity, not tell them what we think they should have but empowering them as entrepreneurs and consumers.

Comments

[Vincnet]

3L1t3 ?

[Olivier Quotidien Durable .Com]

Thanks loic for this feedback.
Thomas, the concept of social entrepreneur has been well developed by Ashoka. www.ashoka.org.

----
Ashoka's mission is to develop the profession of social entrepreneurship around the world.

Ashoka invests in people. It is a global organization that searches the world for social entrepreneurs—extraordinary individuals with unprecedented ideas for change in their communities. Ashoka identifies and invests in these social entrepreneurs when no one else will.
------

[thomas]

Interesting perspectives, thanks Loic.

I would be interested to hear more about how the concept of "social entrepreneurship" was seen by the participants of that panel/workshop. Very often I find it to be misinterpreted (in my opinion) as "taking a business approach to running an NGO" (as in using business plans, proper accounting, marketing strategies, etc.) I think a more powerful and useful concept would be to set up "companies" who mainly generate social welfare as their profits (and financial profits only as much as they need them to sustain themselves, hence not relying on external donations).

However, here are some useful links on the broader economic context of this issue:

1) the World Resources Institute's "Eradicating Poverty through Profit" programme:
http://povertyprofit.wri.org/index.html

2) An interesting weblog on that matter is the "Base of Pyramid Resource Center":
http://baseofpyramid.org/