Growing interest, growing success in BOP markets

Business interest in BOP markets is rising. Multinational companies have been pioneers, especially in food and consumer products. Large national companies have proved to be among the most innovative in meeting the needs of BOP consumers and producers, especially in such sectors as housing, agriculture, consumer goods, and financial services. And small start-ups and social entrepreneurs focusing on BOP markets are rapidly growing in number. But perhaps the strongest and most dramatic BOP success story is mobile telephony.

Between 2000 and 2005 the number of mobile subscribers in developing countries grew more than fivefold—to nearly 1.4 billion. Growth was rapid in all regions, but fastest in sub-Saharan Africa—Nigeria’s subscriber base grew from 370,000 to 16.8 million in just four years (World Bank 2006b). Household surveys confirm substantial and growing mobile phone use in the BOP population, which has clearly benefited from the access mobile phones provide to jobs, to medical care, to market prices, to family members working away from home and the remittances they can send, and, increasingly, to financial services (Vodafone 2005).

A strong value proposition for low-income consumers has translated into financial success for mobile companies. Celtel, an entrepreneurial company operating in some of the poorest and least stable countries in Africa, went from start-up to telecom giant in just seven years. Acquired for US$3.4 billion in 2005, the company now has operations in 15 African countries and licenses covering more than 30% of the continent.

Not all sectors have found their footing in the BOP markets yet. The experience of private-sector municipal water systems has been mixed, with some notable successes in innovating to reach the poor, such as in Manila, but with political and financial setbacks elsewhere. The private energy sector has a better record in delivering grid-based rural services, but less success in affordable off-grid electricity. Nonetheless, new ventures and advances in technology are combining with BOP business models in ways that offer new encouragement for these sectors.