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In "The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid," the authors analyzed several markets. However, only one market - financial services - was not estimated in terms of exact size and scope.

Financial services can be a fiendishly hard thing to measure, but is at the same time a crucial tool to develop markets for BoP customers. In fact, financial markets often help other BoP markets flourish. Data measuring access and efficiency in financial markets are notoriously hard to come across in emerging countries, because most of these markets lie under the cover of informal economies.

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Cheikh Mbengue, an expert from Abt Associates on community-based health insurance (CBHI) schemes in Africa, said something that perked my ears last Wednesday at a USAID After Hours Seminar on microinsurance. He said that he thinks CBHIs can't function effectively without subsidies. No one has really talked about subsidies in the BOP space. The message is always, "get prices down low enough, quality up high enough, distribution wide enough, and you've got a market at the BOP."

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"Last year, global insurance giant American International Group Inc.opened a garage-size office in this dusty town of about 50,000. Coming up soon here: a policy that insures a cow for a $10 annual premium. "

This opening in WSJ article "Insurers Seek Growth in Developing Markets" captures best how the world is changing.

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"It's a moment to balance the global with the local." - Dr. Abhay Bang, director of SEARCH

NextBillion’s news section contains 4 new items, all of which pertain to “risk” in relation to the BOP community. But this risk I am referring to is two-fold. These news items address the wrongly perceived notion by commercial banks and insurance companies that the poor are 'high risk.' But the flip side, the newsworthy aspect, is that now these companies are seeing opportunity instead of risk. In fact, they are making it their job to reduce the risk to the poor using multiple approaches.

Micro Health Insurance
For years, the poor were considered uninsurable, both for the barrage of risks they face and for being either unwilling or unable to pay for disasters in advance. Micro health insurance plans, such as the one provided by UpLift India Association, aim to provide quality healthcare at low premiums on a community-level scale. Undertaken with creative planning, this initiative can provide the same protection against risk for the poor that it does for the rich. In countries such as India (the world leader in this emerging field, with 5 to 10 million people enrolled in micro health insurance nationwide) where the poor usually work in informal jobs or are self-employed, they are highly unlikely to be included in employment-related plans. In addition, about one-fourth of hospitalized Indians fall below the poverty line as a direct result of their hospital expenses, according to a 2002 World Bank report. Many people take out steep loans or sell their homes in order to pay. And for the poor, losing even a day's wages while waiting in the hospital can be devastating. According to an article by The Christian Science Monitor...

Nandakumar Rajeshirke, a stone carver in India, bought coverage for his whole family at 50 rupees ($1.10) per person annually and renewed the plan for several years in a row. In 2005, his gamble paid off. Rajeshirke's wife needed a hysterectomy, a procedure that would normally cost 20,000 rupees ($446), one-third of his yearly salary. "Without insurance," he says, "I would have had to sell some things from my house or get a loan from someone at high rates." Instead of facing financial ruin, he paid 6,000 rupees ($134) total and had help navigating the long process through diagnosis, surgery, and medication.

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Having worked for Nextbillion and scoured news sources every day for two months, I've been surprised at how seldom any Middle-Eastern, BOP-activity makes the news, compared to, say, Bangladesh or Uganda. (Perhaps I am looking in the wrong places? If you know good SME/BOP-related news sites for the Middle East, please let me know!)

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This post is part of my continuing series about financially sustainable models that provide healthcare to the poor.

In developing countries, there is a strong correlation between access to finance and access to healthcare. Getting the poor to bank, and bank profitably, could push rural finance and healthcare past a tipping point: from philanthropy with a hint of business logic to real commerce with a hint of compassion. To test this assumption, a number of new initiatives are using private sector strategies to increase the availability of both.

One such model in Africa is piloting an approach to health insurance arising from principles of solidarity and mutual assistance. With support from USAID, groups called Mutual Health Organizations (MHOs) are being set up in 11 countries to provide affordable general and reproductive healthcare to women. Their structure is similar to microfinance self-help groups (SHGs), where women make monthly or semi-annual contributions that are pooled to cover future expenses of its members. The Organizations also leverage their combined bargaining power to negotiate better rates for a predetermined set of health services provided by affiliated clinics and hospitals.

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NextBillion.net is pleased to announce the creation of a new Resources section of the site. Content is organized into five categories:

* Featured Content: Research and interviews produced exclusively by the Development Through Enterprise team.

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The Nextbillion.net Team is pleased to announce the launch of our new BOP Activity Database. The Database tracks innovative enterprises that offer products and services to underserved communities in developing countries, and is searchable either by keyword or through a variety of pre-defined categories. It is meant to serve as a knowledgebase for those interested in researching and developing sustainable business models that address the needs of the world’s poorest citizens. You can access the Activity Database by clicking on the link above, or by clicking here.

The 200 activities currently in the database represent only a small fraction of the creative work being done today. Do you know of a relevant BOP enterprise that should be included? Please tell us about it online. Once you are logged in, click on 'Submit an Activity' and then enter in the pertinent information.

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How much credit should banks extend to the BOP? Are insurance policies appropriate financial instruments for low-income communities? For the last few weeks, the editorial page of South Africa’s Business Day has taken up the debate. On the one hand, the paper reports on expanded access to credit in poor townships. A few days later, the editors urged “credit caution.”

Yesterday, the debate moved from credit to insurance. According to the paper:

The industry is proposing affordable short-term householders' and cellphone owners' policies that would provide basic risk cover. The target is to raise those in the lowest income brackets with short-term insurance from 0,2% to 6% over the next three years. There are also proposals for affordable death and disability products that would extend such cover to 1.7-million more low-income earners in the next decade.

While praising the proposal, the editors urge caution – how much insurance do low-income South Africans really need? I think the editors make some valid points, and I’m interested to see how this debate plays out in the paper in the coming weeks.