NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The focus of the Base of the Pyramid (BoP) has been centered almost exclusively in the economic limitations of low-income communities. The development of business initiatives in the Base of the Pyramid are fundamentally focused in this premise, and function to elaborate on diverse strategies to affront income limitation.

In a recent report, titled “Understanding the BoP from an Access to Opportunities,” we expand this focus and recognize the multidimensional concepts of poverty, including an analysis of the BoP through their access to a joining of five basic necessities: water, energy, education, housing, and information and communication technology.

The analysis was carried out in five Latin-American countries (Argentina, Brazil, Colombia, Mexico, and Peru), and demonstrates that despite populations with similar income levels there are wide variations when it comes to access to basic necessities. This reality confirms that the dominating vision of the BoP in monetary terms should be complemented with a focus on basic necessities. This creates a frame in which politicians and businesses should develop strategies designed to reduce poverty.

A purely monetary analysis would indicate that Peru is the country with the highest degree of poverty, with 71 percent of its population with an income of less than US $8 per day. Directly behind Peru is Colombia (66.4 percent), Mexico (63 percent), and substantially further off are Brazil (54 percent) and Argentina (47 percent).

Conversely, an analysis according to access to necessity shows us a mosaic of larger and more varied difficulties. Mexico is the country with the lowest access to sanitary water, with more than 50 percent of the population without access to it. Peru, on the other hand, has the highest percentage of access to sanitary water among the studied nations, and a little more than 20 percent of the population is without access to electricity. With regard to living housing standards, Colombia has the worst results, being the country with the highest use of low-quality materials and with a higher percentage of the population in the BoP lacking access to a formal property home. In the field of education, Brazil is performing the worst with over 50 percent of the population unable to finance secondary education. Although the numbers aren’t all comparable, one can observe that in all cases, less than 10 percent of the population of the analyzed countries has Internet access.

These numbers confirm the degree of access to vital services varies substantially between countries. For this reason, it’s essential to avoid generalizations and to obtain a precise estimate of access to necessities, country by country.

As a result of our findings, our report offers a series of recommendations to create a more favorable environment for the developing inclusive businesses with the BoP. These include:

Creating better information systems. There’s no such thing as standard information sources that allow us to obtain precise and comparable information about the necessities and priorities of the BoP. We propose the creation of a platform of indicators that allows us to efficiently obtain all relevant information about accessing basic necessities in the BoP at the country level and regional level.

Itegrate the BoP in national development plans. It’s important to include specific details of the politics of the reduction of poverty, and make sure the basic needs and priorities of the BoP agree with the information obtained.

Promote platforms of shared knowledge about the BoP. Professionals and scholars dedicated to working with the BoP don’t always make access to their statistical information easy. An open platform that shares this information would be a very useful tool to improve the diffusion and exchange of the work developed in this area.

Apply a lifecycle analysis and value chain to improve access to opportunities in the BOP. Such methodologies identify and define the economic opportunities associated with the business processes and product life cycle. In this way, you can assess the involvement of the BOP, its impact on access to basic needs and analyze the potential of business to create economic, social and environmental.

Drawing multisectorial alliances to propel support programs in the BoP. Create a favorable environment so the different actors involved can outline programs and initiatives that favor the development of innovative models and attention to the necessities of the BoP.

In summation, we propose that you look at the BoP with a new focus, considering the perspective of access to basic necessities. Only if we are conscious of the fact that poverty reduction is a multidimensional challenge, and not only an economical challenge, we can develop new business models for the BoP and promote public development politics more effectively and integrally to advance toward a society that is more just, sustainable, and inclusive. The report can be found here or below: