WRI Stories Feed: NextBillion: Development Through Enterprise

New Ventures Forum Addresses Challenges to Scaling Up Clean Energy Access in India

Tracy Elsen — Thu, 18 Aug 2011 12:34:59 -0400

New Ventures India, part of WRI’s center for environmental entrepreneurship, and CDF-IFMR convened a workshop in Mumbai earlier this summer to address the…

Video: Prahalad on Development Through Enterprise

Polly Ghazi — Thu, 26 Mar 2009 09:43:20 -0400

C.K. Prahalad discusses the future of sustainable, private sector-led poverty alleviation.

Mr. Prahalad is a WRI board member, professor, and author of the groundbreaking book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profit.

His work inspired the creation of NextBillion.net, a site where business leaders, social entrepreneurs, NGOs, policymakers, and academics can explore case studies and new ideas on development through enterprise.

In the interview, Mr. Prahalad encourages people to visit the recently redesigned site to share success stories and help bring about what he describes as a “fundamental change to the nature of poverty and poverty alleviation through market-based, private sector-oriented solutions.” He believes the site can demonstrate how “the poor can be extraordinarily good micro-entrepreneurs, micro-producers, micro-consumers, and micro-innovators.”

Full interview

Q: You were one of the pioneers of the term and the idea of the bottom of the pyramid, which inspired NextBillion.net. What are your views on the evolution of the concept since then and how it is being put into practice around the world?

PRAHALAD: The book is about five years old, so it is premature to judge both its impact and its diffusion. That said some very interesting things have happened since then. For example, all the multilaterals – the United Nations, World Bank, IMF - have accepted the idea of the role of the private sector in poverty alleviation. That is a big shift from the traditional ways of thinking. There is also significant attention from multilaterals, the large private sector, the World Economic Forum, and a wide variety of other groups. So today I can say that this is not a new idea. People accept the idea, and the goal is experimentation to see how to make it work.

Q: So looking ahead, how do you see the role of emerging markets as drivers of global innovation and sustainability?

PRAHALAD: Fundamentally, what has been shown is that new business models, new approaches to capital intensity, new ideas about affordability, can come out of the bottom of the pyramid. For example, the NetBook computer initially had its origins in making operating systems available for the poor…but two million NetBooks have been sold in the Western world. So I think some innovations will come from the poor countries and some innovations from the rich countries. It’s going to be a much more level playing field.

Sustainability is a different question. When you add an additional five billion people - as both producers and consumers - suddenly you have a very different equation regarding the ability of the planet to absorb the stresses, whether the cause is water, whether it’s packaging, whether it’s waste.

I think this is going to force a fundamental rethinking. For a long time, the debate has been about compliance and regulation. We are going to move into a territory where sustainability is looked at as providing potential opportunities for innovation. That, I think, is the key—to move from a compliance orientation to an innovation orientation, and I think the bottom of the pyramid will force it. For example, I expect to see waterless detergents. I expect to see biodegradable packaging. I expect to see construction which is totally green. I also expect to see a lot more renewable energy sources. I think the world is begging for new business models, and I think the pressure is on, and therefore I expect a lot of innovations.

Q: Can you give your views about how, through NextBillion.net, WRI could highlight good innovations and models?

PRAHALAD: We desperately need success stories. Success inspires others to follow. Part of it is good analytics, part of it is frameworks, but a lot of it is good models. Even if the model doesn’t apply to my company, the fact someone else has done it gives me the confidence to go try. So what we need is for iconic companies doing things at the bottom of the pyramid to be highly publicized. WRI can provide caselets that allow people to understand that this is a real market opportunity, that the poor can be extraordinarily good micro-entrepreneurs, micro-producers, micro-consumers, and micro-innovators. And that it is in the interest of the large company to participate in these markets. I think case studies should be an integral part of what we do because that motivates others.

Q: What do you see as WRI’s role in adding value and promoting private sector-led approaches to sustainable development?

PRAHALAD: WRI for me is a notable player in this game. We have the opportunity in the next ten years to make a fundamental change to the nature of poverty and poverty alleviation through market-based, private sector-oriented solutions—not exclusively, but in a significant way. Therefore, in order to motivate others, it is quite critical for those who have understood the problem, who have found solutions, to share it widely so that a larger group of people can benefit and participate in this process of making this world a different place, with more social justice and more inclusion. That’s a worthy cause. So I invite companies and managers, civil society organizations to share success stories with WRI so that it can diffuse this knowledge around the world, and motivate other people to do the same.

Makeover of Top Business Blog Looks Like a NextBillion Bucks

Paul Mackie — Thu, 26 Mar 2009 09:15:19 -0400

NextBillion.net - one of the Web’s top business blogs - today announced a new look intended to make it the go-to online resource for discussions about business-model development aimed at helping poor people.

“What we need is for iconic companies doing things at the bottom of the pyramid to be highly publicized,” said University of Michigan business professor C.K. Prahalad, a fan of the site and author of The Fortune at the Bottom of the Pyramid. “NextBillion.net can provide stories that allow people to understand that this is a real market opportunity, that the poor can be extraordinarily good micro-entrepreneurs, micro-producers, micro-consumers, and micro-innovators.”

NextBillion.net serves as a resource for corporations, foundations, students and professors at business schools, poverty-focused non-profits, development organizations, and many others. Topic areas include telecommunications and IT, successful business models, policy, financial services, consumer products, agriculture, health, education, energy, and strategy.

Originally launched in May 2005, NextBillion.net now has 10 staff writers and editors and more than 40,000 unique visitors per month. Those visitors include employees from Fortune 500 companies like Google, SC Johnson, Lenovo, DuPont and Microsoft, to name a few.

NextBillion.net has a dual meaning: on the one hand, the phrase represents the next billion people to rise into the middle class from the base of the economic pyramid (BoP); on the other, it indicates the next billions in profits for businesses that fill market gaps by integrating the BoP into formal economies. The site highlights business strategies that open opportunities and improve the lives of the world’s approximately 4 billion low-income producers and consumers. Successful business models - inherently versatile, innovative, and driven by the profit motive - can sometimes tackle development challenges more quickly and effectively than government and aid mechanisms.

The Web site’s new look includes:

A newsroom with streaming mainstream-media articles about BoP issues
An interactive research report and publications section
A full Spanish version, with a team of writers from Latin America
A career center with jobs, internships and volunteer opportunities in the BoP sector

  <img src="/sites/default/files/Next%20Billion%20logo.JPG" width="167" align="right" height="61" />

“This is the online hub for all business innovation for poor people at the base of the pyramid,” said Francisco Noguera, co-editor of NextBillion.net and a research analyst at the World Resources Institute (WRI), which developed the Web site in partnership with Acumen Fund.

“The research and vast amount of ideas compiled at NextBillion.net over the past four years is extremely user-friendly and allows people to find each other and really be part of this business community,” added Robert Katz, co-editor of NextBillion.net and an associate at Acumen Fund.

The Web site redesign was completed by Modo Design Group and funded in part with a grant from The John D. and Catherine T. MacArthur Foundation.

Food Price Crisis Triggers Questions about Global Food Security

Zachary Sugg — Fri, 25 Apr 2008 15:00:17 -0400

Skyrocketing food prices have triggered riots across the developing world and forced the world’s largest food aid agency to confront a $500 million deficit. The media are focused on short-term consequences, but there are also concerns about the long-term forecast for global food security, poverty, and hunger.

A food line in Africa

Global food prices have been rising steadily since 2000, and are up almost 50 percent in the last year alone. Low-income countries that import more food than they export have been hit hardest. Thirty-seven countries—21 of which are in Africa—are in a food security crisis, according to the United Nations Food and Agriculture Organization (FAO).

The World Bank recently announced that the current food situation could push 100 million people into deeper poverty, undoing years of progress in the fight against global poverty and hunger. Poor households spend between 60 percent to 80 percent of their income on food, compared to only 10 percent to 20 percent in most industrialized countries.

FAO Food Price Index: February 2007 - January 2008.
Source: FAO, 2008

What Are the Causes?

Despite several record-breaking harvests, world cereals production between 2000 and 2007 fell well short of consumption. The shortfall has forced the depletion of world grain stocks—a useful proxy for global food security—which are now at their lowest levels in 25 years.

There are several commonly acknowledged drivers behind the current food price spikes, including:

High price of oil, manifested in increased fertilizer and fuel costs
Increased demand for meat and dairy products in the developing world, which requires more grain be fed to livestock
Diversion of crops for biofuel production
Adverse weather conditions, such as the recent six-year Australian drought that decimated rice production
Commodity speculation by investors, and
Lack of access to improved inputs and markets amongst smallholder farmers in the developing world—particularly in sub-Saharan Africa—which limits their ability to react to the incentives created by increased demand, and
Domestic policy responses to higher food prices in developing countries—such as export taxes, bans, or other restrictions—which exacerbate the problem.

These factors together have created a “perfect storm” that has driven food prices up. Although adverse weather conditions and commodity speculation may nudge food prices up in the short term, the rest of these drivers appear to be longer-lasting, and their effects are likely to be felt for several years.

Short-Run vs Long-Run Measures for Global Food Security

The FAO forecasts a 2.6 percent rise in cereal production in 2008, which would result in a record harvest of over two billion metric tons. If this prediction materializes—much depends on unpredictable weather—the current food crisis should ease somewhat. Even so, experts predict that prices will remain high at least through 2015, indicating that short-term policy interventions are necessary to combat hunger over the coming decade. These actions should include targeted safety nets for vulnerable populations, such as the urban poor; increased support for food aid agencies; and short-run trade policy measures, such as reducing tariffs and taxes on key staples.

Over the long-run, ensuring global food security will require greater effort. While most experts believe that the world’s agro-ecosystems, coupled with improved technology, have the physical capacity to satisfy demand through the 21st century, this will not happen if current circumstances prevail. Agricultural trade barriers, environmental degradation, and the under-performance of African agriculture, energy efficiency, and the restoration of marginal lands must all be addressed.

Furthermore, climate change threatens to exacerbate food insecurity in the world’s poorest regions. The Intergovernmental Panel on Climate Change (IPCC) predicts that rising temperatures will decrease yields in 40 developing countries, mainly in sub-Saharan Africa, and that three degrees Celsius of warming will increase the price of food by 40 percent. Without concerted global action to help vulnerable populations adapt to a warming climate, while also addressing the other drivers of food security described above, global hunger will not be tackled this century.

*Photo by Peter Casier via Flickr

Franchise Model Takes On Infectious Disease in Africa

Nate Kommers — Tue, 08 Apr 2008 13:48:33 -0400

The latest What Works case study from NextBillion looks at a business that is fighting infectious disease in Ghana by providing much-needed health care to the base of the economic pyramid.

In April 2002, Ghana Social Marketing Foundation (GSMF) founded CareShop as the first project of GSMF’s wholly owned for-profit subsidiary, Ghana Social Marketing Foundation Enterprises Limited (GSMFEL). CareShop is a franchise of licensed chemical sellers (retailers of over-the-counter drugs) designed to improve the quality, accessibility, and affordability of essential medicines across Ghana on a for-profit basis. CareShop uses market forces to improve health outcomes across the country and seeks an alignment of interests across franchisors, franchisees, and patients.

While Ghana’s health care infrastructure includes a multitude of public, NGO, and private institutions, the private sector is often better suited to meet patient demands, with far greater geographic accessibility throughout the nation and more consistent availability of essential drugs. Roughly [65 percent] (http://www.psp-one.com/files/2685_file_wB_ppp_paper_Marek_et...) of all treatment seeking behavior in Ghana occurs in the private sector. The first point of care is often a drugstore run by a licensed chemical seller (LCS), and stocked with the most common over the counter medications.

LCS are not always structured or regulated to provide the quality, accessibility and affordability that patients require, especially in rural areas. LCS lack standardization, and while they are an indispensable part of the health care system, some also present a threat to public health through the provision of incorrect, expired, substandard, or counterfeit drugs.

CareShop unifies and standardizes the fractured LCS sector in Ghana through conversion franchising. Individual franchisees operate as profit centers, contractually bound by clearly defined, strict regulations on diagnosis, quality, and pricing of a specific list of drugs. When properly functioning, the CareShop franchise makes it more profitable to comply with government and franchise regulations than to break them.

Over CareShop’s five-year history, it has made great progress in building its network and business, but has also faced formidable challenges. Today, its network of 276 franchisees continues to operate, but the franchisor, GSMFEL, has failed to turn a profit.

For more, read the complete case study.

Exploring the Green-BoP Nexus on NextBillion.net

Derek Newberry — Mon, 10 Mar 2008 17:15:43 -0400

Where do the interests of environmental protection and the base of the economic pyramid coincide–and where do they clash?

2008 has brought with it a significant change for NextBillion.net staff, and visitors will notice a difference in some of the ideas we explore in our posts. We will increasingly be exploring the “Green-BoP” nexus.

To start off the new discussion, here is a two-part post on how New Ventures and NextBillion.net are navigating this space, and how we address the intersection between environment and poverty.

A Nano-Sized Car Reveals Macro-Level Rifts

Here is how the interests of the BoP and the environment might collide. The launch of the Tata Nano, the ridiculously low-priced car that could open a floodgate of new drivers in India and elsewhere, is undoubtedly one of the milestone innovations marking the early years of the 21st century. This is not just because of the unprecedented feat of technological and design innovation it represents but because of the huge rift it exposes in the public debate over the linkages between two crucial concepts, poverty and environment.

Businesses Bridging the Divide

By contrast, here is how the interests of the BoP and the environment coincide well. Far away from the Nano controversy in the rural Yunnan province, the Yunnan Zhenghong Environmental Protection Company is making affordable, high-efficiency biomass ovens that improve human health and reduce stress on natural resources.

The Most Influential Management Gurus in the World

Nate Kommers — Fri, 16 Nov 2007 16:29:44 -0500

“The Thinkers 50” biennial poll of the most influential business people in the world is topped by WRI board member C.K. Prahalad. The recognition speaks volumes about business-led approaches to sustainability around the world.

Prahalad’s work on harnessing the power of markets and capitalism to help the poor has been one of the driving intellectual forces of WRI’s NextBillion.net web site and blog since 2002, when he co-published an article titled The Fortune at the Bottom of the Pyramid. He also reviewed the recent WRI/IFC publication, The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid.

Bill Gates and Alan Greenspan round out the top three.

Prahalad is not the only person affiliated with WRI to make the list. Another WRI board member, Al Gore, comes in at number 41. Jeff Immelt, honored at WRI’s 25th anniversary for his commitment to sustainable development, is number 31.