Session Title:
Managing Business at the BOP
Managing Business at the BOP
Date of talk or publication:
2005
2005
Speaker Name / Title:
Frederick Ahwireng-Obeng & Mthuli Ncube
Frederick Ahwireng-Obeng & Mthuli Ncube
Organization:
Wits Business School
Wits Business School
Description:
South Africa is a bizarre case of socially engineered, inter-generationally transmitted and large-scale chronic poverty. The poverty landscape is uneven by racial distribution, the black population bearing the brunt of worsening inequality within and between the various population (race) groups. The historical antecedents to this situation include deliberate stripping of the black population of basic livelihood (entrepreneurial) assets—financial, human, natural, social, political, and cultural—and their exclusion from mainstream economic activity. Even though these entitlements have been restored since the country achieved political independence in 1994, the majority of blacks still lack the opportunity to empower themselves with the capability and security that should enable them to escape poverty. The South African government is determined to transform society by redressing inequality and alleviating poverty largely through fiscal transfers and basic service provision. But its efforts are paralyzed by resource constraints and poor service delivery. Meanwhile, the white-dominated, well-developed, growing private sector is seeking to expand its domestic market in the face of increasing global competition.
A business solution to the South African poverty problem is possible if business will review, re-orient, strengthen, and expand its somewhat antagonistic relationship with the bottom of the economic pyramid (BOP), or poor sector, in innovative, entrepreneurial ways that develop and transmit entrepreneurial (livelihood) assets to the poor without compromising the commercial motive of private business. Such an entrepreneurial approach to poverty alleviation is mutually beneficial to the extent that transmitting entrepreneurial assets that sustain the capability of the poor to access resources, institutions, and basic needs fuels innovation, cost-reduction, and revenue growth in the business. This proposition is demonstrated through two case studies of South African companies – Anglo America and South African Breweries – that have developed commercially profitable programs that stimulate entrepreneurship in ways that alleviate poverty among previously disadvantaged persons. A third case study reviews the South African banking sector’s development of a commercially viable product for the poor, not only to boost their saving habit, but also to stimulate an investment culture among them. The policy implication of the paper is that poverty alleviation strategies can be effective and sustainable if they incorporate private sector approaches that foster the development of entrepreneurship within the target population.
South Africa is a bizarre case of socially engineered, inter-generationally transmitted and large-scale chronic poverty. The poverty landscape is uneven by racial distribution, the black population bearing the brunt of worsening inequality within and between the various population (race) groups. The historical antecedents to this situation include deliberate stripping of the black population of basic livelihood (entrepreneurial) assets—financial, human, natural, social, political, and cultural—and their exclusion from mainstream economic activity. Even though these entitlements have been restored since the country achieved political independence in 1994, the majority of blacks still lack the opportunity to empower themselves with the capability and security that should enable them to escape poverty. The South African government is determined to transform society by redressing inequality and alleviating poverty largely through fiscal transfers and basic service provision. But its efforts are paralyzed by resource constraints and poor service delivery. Meanwhile, the white-dominated, well-developed, growing private sector is seeking to expand its domestic market in the face of increasing global competition.
A business solution to the South African poverty problem is possible if business will review, re-orient, strengthen, and expand its somewhat antagonistic relationship with the bottom of the economic pyramid (BOP), or poor sector, in innovative, entrepreneurial ways that develop and transmit entrepreneurial (livelihood) assets to the poor without compromising the commercial motive of private business. Such an entrepreneurial approach to poverty alleviation is mutually beneficial to the extent that transmitting entrepreneurial assets that sustain the capability of the poor to access resources, institutions, and basic needs fuels innovation, cost-reduction, and revenue growth in the business. This proposition is demonstrated through two case studies of South African companies – Anglo America and South African Breweries – that have developed commercially profitable programs that stimulate entrepreneurship in ways that alleviate poverty among previously disadvantaged persons. A third case study reviews the South African banking sector’s development of a commercially viable product for the poor, not only to boost their saving habit, but also to stimulate an investment culture among them. The policy implication of the paper is that poverty alleviation strategies can be effective and sustainable if they incorporate private sector approaches that foster the development of entrepreneurship within the target population.
