Blog

As an economist and self-styled BOP researcher, I've always been interested in the effect of technology on efficiency, price competition, and cost-of-living at the BOP. WRI, through its now-sunset Digital Dividend project, studied the effect of technology on low-income communities for years, and results pointed to a consistently positive relationship between access to information and greater efficiency, lower COL, etc. Mobile phones, in fact, have always been a favorite technology around here - low start-up cost, relatively minor literacy barrier, shared-use potential, etc. A great BOP technology - and one that's growing fast.

So you'll understand my excitement when I ran across the GSM Association's report, "Tax and the Digital Divide." A robust, regression-based analysis of the effect of taxation on mobile phone penetration!? A BOP economist dream come true.

Continue reading this article

Trendwatching.com recently posted a good piece on Sachet Marketing, a BOP strategy already being used successfully to sell a variety of consumer products ranging from soap to cell phone minutes. The approach involves serving up products, services and loans in affordable portions, sachets or sizes, so that consumers get to know and like a brand. The practice was named after Hindustan Lever's successful introduction of single-use shampoo sachets in India.

The strategy of miniaturization provides an easy inroad to the BOP for companies wary of the perceived risks and uncertainties of entering this new market. I think of it as the low-hanging fruit, or BOP-lite, in that there really isn't much product innovation involved. Rather, it's simply repackaging or tweaking the distribution of what a company is already doing.

Continue reading this article

A controversial title, to be sure. The Myth of CSR (PDF), published in this month's issue of Stanford Social Innovation Review, identifies a key truth about corporate social responsibility while failing to take the next step. Deborah Doane hits quickly on CSR's underlying fallacy: "ultimately, trade-offs must be made between the financial health of the company and ethical outcomes. And when they are made, profit undoubtedly wins over principles." Bravo, Deborah!

After that, the article takes a turn for the worse, although I don't necessarily disagree with it. Doane identifies 4 "Key CSR myths":

• Myth 1: The market can deliver both short-term financial returns and long-term social benefits.
• Myth 2: The ethical consumer will drive change.
• Myth 3: There will be a competitive "race to the top" over ethics among businesses.
• Myth 4: In the global economy, countries will compete to have the best ethical practices.

Continue reading this article

The World Bank's annual Doing Business report carries the subtitle "Creating Jobs" this year (free overview available - PDF). Its indicators - using data comparable across a remarkable 155 countries - can be used to analyze how governments encourage or inhibit investment, productivity, and growth, i.e. job creation. These data further operationalize Peruvian economist Hernando de Soto's theories on dead capital and legal reform. If you're a multinational corporation and want to do business at the BOP, this report should be required reading - how easily can we set up in country X? (Quick answer: if X is in Eastern Europe, relatively easier than if X is in Africa - but read the report for why). If you're a local enterprise, it might be useful to find out which countries have comparable regulatory environments - and then check the Activity Database for successful models that have worked under those regimes. And for b-school students and professors, the aid community, and investors, your input on the report is encouraged by the authors through an online discussion. There are already 26 well-written comments and good back-and-forth from the experts. More commentary can be found on the PSD Blog. No matter your background, its time to get down to "doing business" in 2006.

All Paths Lead to the BOP, by Jeb Brugmann originally appeared in the September issue of Alliance Magazine.

While the media and public discourse has been accentuating the divide between the private sector and civil society, the trend in practice has been towards convergence. NGOs and communities are now more enterprising, while business is more socially innovative. This convergence opens opportunities for breakthroughs in development practice that have evaded the international community for decades. If the trend holds, it will have important implications for international development initiatives like the Millennium Development Goals (MDGs).

Continue reading this article

At last week's Clinton Global Initiative in New York, NextBillion.net's Al Hammond had the chance to sit down with Emily Gertz of WorldChanging. They discussed some of the "tools, models and ideas for building a better future" - and how they relate to the BOP - in an extended interview.

The interview touches on everything from leapfrogging to exploitation of poor consumers to efficacy of official development assistance. Read the full text at WorldChanging - and consider keeping them on your radar for your daily fix of stories documenting a bright green future.

Continue reading this article

The Financial Times’ Special Report on Business and Development, published today, pulls together a host of NextBillion strategies, anecdotes, and prescriptions in one well-written package. Available to subscribers only, the 15-page section can be read by non-subscribers using a free trial subscription – well worth it. Excerpts from the paper:

• “...the overriding obstacle [to further investment] is a lack of imagination on the part of companies.” – Mark Davies, IBLF
• “The companies that get on the ground, establish these relationships, and develop trust and understanding among local people. There’s definite early-mover advantage here.” – Stuart Hart, Cornell
• Projects in Senegal and South Africa have shown that cheap point-of-sale machines in local shops or gas stations can bring financial services within the reach of the very poor by enabling them to make deposits or withdrawals as part of their shopping, the shopkeeper receiving a fee for each transaction.
• ...the [Shell] Foundation discovered that while businesses thought that the lack of finance was their main constraint, the reality was that inexperience in business was at least as important.

Read more at the FT site. What do you think of the article on Jeffery Sachs’ “Millennium Promise” project? Are companies right to focus these efforts within CSR departments? What will the 2006 version of this special report say – what progress will it have to report?

The BOP Conferences in Brazil and Mexico were a tremendous success. Brazil attracted over 550 attendees; Mexico over 300. WRI’s New Ventures project and our in-country partners (Fundacao Getulio Vargas and Fondo Mexicano para La Conservacion de la Naturaleza), with support from Ashoka and the Multilateral Investment Fund, invited an excellent lineup of speakers that included several CEOs, Presidents, and Ministers. (See conference proceedings for full details, including PowerPoint presentations).

The BOP cases presented in the thematic concurrent sessions were inspiring and noteworthy: Life insurance for low-income consumers, microfinance, remittances (Visa), savings cards for immigrants, low-value or prepaid credit cards, low-cost computers, telecom, great consumer products (George Carpenter from P&G), solar ovens, wind-up radios, low-cost pharmaceuticals, eye care, neonatal care, mortgages, solar lighting for rural areas, efficient housing, adobe brick machines, cable TV by and for shantytown residents, cosmetics, and more.

Continue reading this article

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.

Continue reading this article

This morning I read an article in the New York Times about a company that is providing English tutoring services to teenagers in California. What's interesting is that the teachers all live in India, and communicate with their students using the Internet. Growing Stars pays its teachers a monthly salary of 10,000 rupees ($230), twice what they would earn in entry-level jobs at local schools.

The article reminded me of another one I had seen about Chida Soft - a village BPO doing coding on legal paper for an US client. It is one of India’s first BPOs in

Continue reading this article