a login and password to the article would help better respond to your post perhaps?

This is a great post and a fascinating article - however, I have one correction. Aneel Karnani is not a Managing Director at FSG Social Impact Advisors, nor is he affiliated with us. Thank you, Samantha Nobles-Block, Consultant, FSG Social Impact Advisors

In order for it to be sustainable there has to be profit. With out profit there will not be enough products and services to cover the needs of all poor people. Profit is the logic of a market system.

Concerning needs, one must make an etical distinction. Alcohol and cigarettes are less important. A useful yardstick to measure needs is Maslow’s famous hierarchy of need. Thus, if products and services cover the physiological needs such as food, water, shelter, clothing etc. they would according to Maslow reduce pain, anger, frustration and fear amongst the poor.

Moreover, the virtues of the MNCs are know-how, economic power, manpower and organization to mastermind a successful project of scale. The poor themselves are less likely to be successful. As a result, MNCs entering the BOP market gives hope.

Below are two cases to emphasize the point.

1) Ex. Hopeless

Recent visits by journalists to Fair Trade, Max Havelaar, tea plantations in Sri Lanka, Kenya and Indien reveals that the workers despite ‘Fair Trade’ work and live under the same horrible conditions as in Non-Fair Trade plantations. Problems are that they lack know-how, reforms, leadership, investments etc. to run a competitive business. http://www.dr.dk/Nyheder/Indland/2008/11/25/111526.htm

2) Ex. Hope

Fan Milk International A/S is a Danish company from 1960, started in Western Africa by a group of Scandinavian investors. Fan Milk produce and sell various milk products including ice cream, yoghurt and ice lollies. The products are produced with local milk and with local employees. The products are sold via a vast network of self-employed milk men.

Fan Milk cover rational needs among the West-African peoples, and hereby in accordance with Maslow, Fan Milk’s products help reduce pain, anger, frustration etc. among the people living here. In addition, they have created 12.000 jobs in the region. Fan Milk is a modern, competitive company and therefore profitable and sustainable. http://www.ifu.dk/en/Material_Folder/Pdf/Fan_Milk_West_Africa Fan Milk is also a part of BOP Learning Lab – Denmark.

Thanks for the PDF, Rob. I hadn't meant to come across as Anon ;p its autofilled in the fields and I hadn't noticed ~ Niti

After reading Dr Karnani's key points in the article, it seems to me that his essential argument is against the focus on the "bottom line" alone, that is, profits, by corporates seeking to enter these new markets and thus expressing the need for more holistic business models and strategies that take the development of those at the BoP into account. To be truly effective across all the touchpoints mentioned by Dr Karnani, strategies need to ensure that the products and services they develop are 1. Designed to be affordable, relevant and appropriate 2. Distributed and thus accessible to those for whom they are meant (supply chains are a major challenge in these new markets) 3. that there is a Demand for the product or at least awareness created about their relevance and value, in a manner that resonates with the value system of those at the BoP 4. that these products, services or programs focus on development of the target audience i.e. improving their wellbeing or livelihoods (not just the cigarettes and liquor Dr Karnani references in his article) and finally that they be user centered, ensuring the 5. Dignity of the people they are intended for. Simply focusing on Dollars alone won't cut it. Thanks for sharing hte PDF, Rob.

terima kasih, gregor
i think that we tend to put the company or its needs for profits i.e. be sustainable at the center of the development process when creating our strategies and not the end users, i.e. those at the bop
perhaps if we reversed the focus, we might find we're actually making more profits ;p

Even if I don't share all the points raised by Mr. Karnani, I have to say that his article summarizes pretty well my doubts about the market-based approaches to poverty alleviation. As I have had the chance to verify first-hand on the field, and as logic suggests, the poor are often trapped in too many difficulties to be seriously considered as "creative entrepreneurs and discerning consumers". There may be some of them who could really fit the market-based approach, but most of them simply will not. I am still a "fan" of the market-based approach to poverty alleviation in general, but I am convinced as well that it will be only a marginal part of the solution. Stefano, Italy

I've noticed some companies just: a) subsidize less than 50%, which is what Paul Polak advocates (probably far less for him) b) subsidize part, such as the marketing which would otherwise make the devices non price competitive This seems to be consistent with the principle of: >>>Simply focusing on Dollars alone won't cut it.

I don't share Karnani's view of the passive, unreasoning poor. In my work in both the northern highlands and the capital of Peru I met a disproportionately high amount of dedicated micro-entrepreneurs, some of them running several businesses at the same time. There might be a straight-forward explanation for this entrepreneurial spirit among the poor: In the West people's life is being structured from the childhood on (one goes to the kindergarten, then to school, maybe to a university and finally he applies for a job at an already established employer). In contrast people in poverty (whose lives are considerably less structured) learn from the beginning to use their creativity in order to succeed in their daily struggle for food.

Al Hammond, staff writer at NextBillion.net and a well-known BoP expert, faces off against Aneel Karnani, author of "Romanticizing the Poor" and BoP critic, in these two posts:

Hammond vs. Karnani Part 1

Hammond vs. Karnani Part 2

Be sure to check them out, as there's an ongoing debate happening there as well.

You may also be interested in staff writer Moses Lee's post, "Are the Poor Really Entrepreneurial?"