Topic: base of the pyramid

Clean Power to the People

Tue, 01 Mar 2011 10:39:38 -0500

Bringing clean energy to India’s rural poor consumers creates cascading economic and social benefits, in addition to profits.

This piece originally appeared in The Economic Times (India).

The village of Rupahi, home to a small community of sugarcane farmers in Bihar, is too isolated to connect to a traditional electric grid. For cooking and lighting, its residents have traditionally paid — with cash or their time — for whatever was available. The options — kerosene, firewood, dung or diesel generators — left their houses dim and full of smoke. Many of the country’s 114 million poor rural households, comprising nearly 60% of the population, struggle with similar issues. Currently, 45% of the country’s rural poor cannot connect to a reliable source of energy. They spend an estimated $4.86 billion (INR 224 billion) each year on energy, mainly for fuels that are unreliable, harmful to the environment and hazardous to their health.

Yet, new research in a report, Power to the People: Investing in Clean Energy for the Base of the Pyramid in India, shows that demand for energy presents an opportunity for green business. If cleaner energy alternatives were available, there is a market willing to pay for them, even in very poor communities. The Washington-based World Resources Institute and the Centre for Development Finance at the Institute for Financial Management and Research in Chennai estimate the potential market for clean energy products and services among India’s rural poor at $2.11 billion a year (INR 97.28 billion). This conservative assessment of the market potential signals a huge opportunity for consumers and clean energy companies alike. Companies surveyed for the report that supply clean energy products and services to the rural poor have seen annual gross revenue grow by an average of 36% since 2004. As revenues have grown, so have the number of rural villagers with access to clean and reliable energy.

A new perspective that regards the rural poor as a customer base demanding functional energy solutions signals a very different approach to rural development.

Installed at the community level, small hydro and biomass gasification can supply electricity to an area not covered by the grid, and solar lanterns and energy-efficient stoves can replace ‘dirty’ fuels like kerosene and wood. In Rupahi, villagers now get their power from Husk Power Systems (HPS), a company that converts rice husk into electricity via 35-100 kW mini power plants. HPS provides villages in the country’s rice belt, like Rupahi, with cost-effective and environmentally-friendly electricity.

According to Gyanesh Pande, CEO of HPS:

At first, only 10 of the 32 households in Rupahi made the decision to take electricity from HPS. By the time the electric cables were being laid out, all 32 households had applied for HPS’ electricity services.

A new perspective that regards the rural poor as a customer base demanding functional energy solutions signals a very different approach to rural development. But it is an approach that, when combined with a focus on expanding clean energy and attention to business-NGO-government collaboration on creating an enabling policy and infrastructure environment, creates cascading economic and social benefits in addition to profits. Reliable electricity acts as an economic multiplier allowing businesses to stay open later and use refrigeration to keep products fresh.

In one small Indian market, a company rents solar lanterns to street vendors for a few rupees. According to Jigyesh, a vegetable vendor in Karnataka’s Hassan village:

The solar lanterns allow me to keep my stall open past dark and cost only INR 150 a month. The kerosene lantern I used earlier gave poor light and cost almost INR 500 a month. The solar lantern also produces less heat, so the vegetables stay fresh longer.

Clean energy companies have the technologies in place that provide strong potential for growth, but need to first overcome barriers in distribution and pricing of their products to be accessible to the poor.

Investors can assist the market’s growth by providing clean energy companies looking to scale with patient capital that will allow companies to improve distribution and develop innovative financing mechanisms, enabling consumers to purchase their products.

Intermediaries such as WRI’s New Ventures initiative for environmental entrepreneurship and CDF’s Rural Market Insight group, which works with HPS and other clean energy companies in India, can connect investors with promising emerging businesses in the sector. With the help of patient capital, clean energy entrepreneurs will have a significant opportunity to grow their markets and create profits while also providing rural Indians with access to clean, reliable and environmentally-friendly electricity.

Jamshyd Godrej is chairman of the board of Godrej & Boyce Manufacturing Co., and a member of WRI’s Board of Directors. This post was co-authored by Jessica Wallack, former director of the Centre for Development Finance.

Growing Optimism for “Impact Investing”

Tracy Elsen — Tue, 07 Dec 2010 18:35:30 -0500

Is it possible to do good in the world while also making a profit? A growing group of investors, known as “impact investors”, believe that it is.

This piece is cross-posted from the New Ventures website.

Impact investors aim to make positive social or environmental gains alongside profits through their investments. A recent report by J.P. Morgan and the Rockefeller Foundation estimates the value of this emerging impact investing sector to be between $400 billion and $1 trillion, with profit potential between $183 billion and $667 billion over the next decade. According to the report, “Impact Investments: An Emerging Asset Class”, impact investing constitutes a new asset class.

The report analyzes opportunities in five impact investing sectors – affordable urban housing, rural access to clean water, maternal health, primary education, and microfinance – that serve the global Base of the Pyramid (BoP) population. The BoP is comprised of those who earn less than $3,000 annually.

BoP markets are typically underserved by traditional business, which may exclude this population from being considered as part of a potential customer base. However, WRI research has shown that the BoP population will often manage its finances to buy affordable products or services improving their productivity and reliability of income.

This market introduces operational challenges to otherwise proven business models. For example, the challenges often require innovative approaches to accommodating unreliable income streams or delivering products and services to remote rural areas. While government-led or philanthropic solutions can go part of the way, impact investment can further help capital to flow to profitable businesses with positive environmental and social benefits.

Impact investing is gaining increasing traction among a wide range of debt and equity investors, including pension funds, family offices, private wealth managers, foundations, individuals, commercial banks and development finance institutions. Many impact investors choose to focus either in emerging markets or in developed markets. Part of the reason for this specialization is the significant regional differences that require local expertise. But another driver is investors’ value sets: some prefer to help the world’s poorest in emerging economies; others prioritize their local neighbors in need.

Within the developing world, the growing suite of impact investors is focusing on particular regions and sectors. Gatsby Charitable Trust and the Bill & Melinda Gates Foundation direct some of their investment capital to positively impact the lives of smallholder farmers in sub-Saharan Africa. Gray Ghost Ventures, Acumen Fund, and Omidyar Network all have programs that actively invest in alleviating poverty by financing innovations directed at India’s low-income populations.

These trends, set against the backdrop of climate change, global population growth and finite resources, motivated New Ventures México to launch the first Latin America Impact Investment Forum. The forum, which will be held in Mérida, Mexico from February 2-4 2011, is designed to foster investments and alliances that will support impact investing initiatives throughout the region. It will provide an opportunity to celebrate the accomplishments and progress that the private sector and the investment community have made towards sustainable economic development.

New Ventures Mexico is part of the New Ventures Global Network, the World Resources Institute’s (WRI) center for environmental entrepreneurship, and is a leader in Mexico in promoting the growth of businesses that generate positive economic, environmental, and social impacts.

For more information about the Latin America Impact Investment Forum please visit www.inversiondeimpacto.org or write an email to inversiondeimpacto@nvm.org.mx

Leticia Gasca is the Manager of Public Relations and Communication at New Ventures Mexico.

Power to the People: Investing in Clean Energy for the Base of the Pyramid in India

Maggie Barron — Fri, 01 Oct 2010 12:52:23 -0400

Executive Summary

India, a rapidly emerging economy with the world’s second largest population, is facing a surging energy demand. Its rural Base of the Pyramid (BoP) consists of 114 million households, representing 76 percent of India’s rural residents and almost 60 percent of the country’s total population. Despite their low income, these households constitute a significant consumer market for the energy services and products required to provide daily necessities such as cooking and lighting. Using the most recent available expenditure data (2004/2005), we estimated that India’s rural BoP consumers spent INR 224 billion (US$4.86 billion) per year on their energy needs.

What is the Base of the Pyramid?

The Base of the Pyramid (also referred to as the Bottom of the Pyramid) refers to the estimated 4 billion people around the world who are poor by any measure and have limited or no access to essential products and services such as energy, clean water, and communications. Globally, people in this socioeconomic group earn US$1 to US$8 in purchasing power parity (PPP) per day. Yet these households often pay higher prices than wealthier consumers do for lower-quality goods and services because of uncompetitive markets.

Since this report focuses specifically on rural India, we define the rural Indian BoP market as households in the bottom four expenditure quintiles (based on data from the National Sample Survey Organization) that spend less than INR 3,453 Indian rupees (US$75) on goods and services per month. This definition represents a market of 114 million households, or 76 percent of the rural population.

In 2005, approximately 45 percent of India’s rural BoP households still did not have reliable access to electricity and relied on kerosene for lighting, and more than 85 percent of rural BoP households mostly used conventional free or inexpensive sources of fuel, such as firewood and dung, for cooking. These fuel sources, however, are not only harmful to users’ health but also contribute to pollution and environmental degradation.

A growing number of Indian companies see a market opportunity in providing rural BoP households with access to alternative cooking and electricity solutions and consequently are developing clean energy products and services for this market.

“Clean energy” refers to products and services that produce energy from renewable resources and emit fewer greenhouse gas emissions than does energy from conventional fuel sources. The lack of a reliable supply of power from the electricity grid and the availability of free and inexpensive fuels, such as wood and kerosene, are key influences on this market. In this report, we focus on two areas in this growing, high-potential market: clean energy electricity systems and clean energy cooking and light products. We examined a representative selection of companies selling solar lanterns, solar home systems, energy-efficient cookstoves, and electricity generated from decentralized sources, including small hydro power plants and biomass gasifier systems.

About this Report: Informing Investors

The goal of this report is to inform investors about the market potential of the clean energy industry serving India’s rural BoP market, by looking at its opportunities, challenges, and potential paths to growth. The purpose of our report is to present an overall picture of these growing clean energy sectors, rather than to provide investment advice on individual companies.

The potential opportunity for investors in the Indian clean energy market for the rural BoP is significant. We estimated the aggregated potential market for the four sectors studied in this report to be INR 97.28 billion (US$2.11 billion) per year, including INR 94.06 billion (US$2.04 billion) for decentralized renewable energy services and INR 3.22 billion (US$70.1 million) for energy products per year.

Our analysis shows that clean energy services and products may require an upfront investment three to ten times greater than that for conventional energy sources such as kerosene and firewood, which often are subsidized or free to India’s rural consumers. Yet despite these and other drawbacks, the average annual gross revenue of the companies profiled in this report has grown 36 percent since 2004.

Clean Energy Solutions Bringing Light to Millions of India's Poorest Households

Jonathan Lash — Wed, 29 Sep 2010 13:13:32 -0400

The under-served rural Indian market offers opportunities for investors to support the sustainable energy solutions of the future.

India is facing a severe energy crunch. Roughly four hundred million rural inhabitants – more than the entire U.S. population – still lack electricity, making energy access a development imperative. At the same time, economic growth is sending national energy requirements soaring. India’s GDP is on pace to grow by 8% in 2010, and domestic energy demand is predicted to more than double by 2030.

The energy shortage is most acute among India’s rural poor, the majority of whom rely on relatively inefficient, polluting and health-threatening fuels such as kerosene and firewood for their lighting and cooking needs. As India’s government and energy sector seek to provide more modern and reliable heating and lighting services to these communities, a fledgling market in cleaner, more efficient energy products is emerging. This huge and under-served rural Indian market offers significant opportunities for investors looking to support the sustainable energy solutions of the future.

Read the Report

In recent years, a number of domestic companies have developed clean energy products and services specifically targeting India’s rural “Base of the Pyramid” population – the 114 million households who spend less than US$75 a month on goods and services. About 45 percent of these families do not have reliable access to electricity and rely on kerosene for lighting, while over 85 percent largely rely on firewood and dung for cooking. Successful (though small scale) business models such as solar-based home electricity systems and lanterns, energy-efficient cookstoves, and electricity services generated from decentralized sources such as micro hydro and biomass gasifiers are increasingly finding a market among such households.

India’s government has also facilitated the emergence of this rural clean energy sector by supporting distributed generation in the form of community-based, self-sufficient biomass and solar power. The recently launched National Solar Mission seeks to achieve 20 gigawatts of solar power by 2022, in part through the installation of rooftop photovoltaic systems. It also sets the specific goal of providing 20 million solar lighting systems in place of kerosene lamps to rural communities within the next dozen years. Such measures serve the government’s dual objectives of providing electricity to rural areas and reducing the trajectory of India’s greenhouse gas emissions. Several Indian states, including Andhra Pradesh, Gujarat and Haryana, are also encouraging development of the clean energy sector by instituting statewide renewable portfolio standards. These mandate that a certain percentage of electricity is generated by solar, wind or other renewable, non fossil, fuels.

Realizing this potential would be a win-win for investors, for India’s people and for the global climate: profit-making clean energy solutions bringing light to millions of India’s poorest households.

Against this encouraging backdrop, this new report by India’s Centre for Development Finance at the Institute for Financial Management and Research (CDF-IFMR) and the World Resources Institute’s New Ventures Program, seeks to enhance understanding of the investment potential of the clean energy industry serving India’s rural poor. Based on extensive field work with clean energy companies and rural BoP consumers as well as rigorous secondary research, the report showcases eleven companies selling innovative products and services to sustainably meet the energy needs of the rural poor. It also analyzes both the market opportunities and the challenges to scale up that the industry faces.

WRI and CDF-IFMR hope that these research findings and recommendations will help investors – both in India and abroad - better understand the enormous potential of this market. We believe the expansion of this sector is highly achievable through the development of more efficient business models, additional favorable national policies, and increased, targeted capital. The potential opportunity for investors is significant. We estimate the aggregated potential market for clean energy consumer products and services to be INR 97.28 billion or USD 2.11 billion per year.

This piece originally appeared as the foreword to Power to the People: Investing in Clean Energy for the Base of the Pyramid in India.

Jessica Seddon Wallack is Director of the Centre for Development Finance.

The Centre for Development Finance at IFMR is a non-profit action research think tank focused on improving government systems and markets capacity to channel finance into sustainable, holistic development.

The Rural Market Insight group at CDF develops key insights using qualitative research methodologies and traditional market research tools to help companies and investors understand what it takes to create sustainable and scalable social enterprises in the rural context.

Q&A: Clean Energy for India’s ‘Base of the Pyramid’

Saurabh Lall — Tue, 28 Sep 2010 16:38:06 -0400

WRI’s new report, in collaboration with CDF-IFMR, looks at the market potential for clean and renewable energy in rural India.

Why did you decide to research market opportunities for clean energy in rural India in your new report, Power to the People?

There’s a serious need to look at how better energy solutions – energy that is clean, reliable, and affordable – could be provided to low-income populations in rural India. Because grid electricity isn’t consistently available in rural areas, people meet their basic energy needs with sources like kerosene, diesel generators, firewood, and dung. These fuel sources are cheap, but they’re also unreliable, highly flammable, and harmful to people’s health – the World Health Organization estimates that indoor air pollution from smoke causes 1.6 million deaths per year around the world. Cumulatively, these fuel sources are also very polluting and damaging to the environment.

Read the Report

At New Ventures, WRI’s center for environmental entrepreneurship, we provide business development services for many great environmentally-focused companies that are coming up with innovative solutions to this problem, with solar lanterns, energy efficient cookstoves, and other renewable energy technologies. We realized that if renewable energy is going to provide a clean and cost-effective solution for poor rural households, all of these companies that New Ventures and other organizations support are going to need to scale up.

One of the critical elements in any scale-up is investment. So we collaborated with CDF-IFMR to find out more about the market opportunity and investment potential of companies operating in this sector as well as the challenges they face reaching their potential. How well are these companies serving this market? How can investors help them? The combined research and market expertise of New Ventures/WRI and CDF-IFMR allowed us to produce a report that will help investors understand the opportunities and challenges of the clean energy sector serving the rural poor in Indian.

Why can’t rural households simply depend on the electrical grid?

Rural electrification has been growing in recent years, but it’s still pretty slow. From 2000 to 2005, the percentage of electrified rural households in India only increased from 48 to 55 percent. Even households that are connected to the grid often find that their electricity is poor quality. Cities are the priority when providing electricity, and so rural areas only get a few hours of electricity a day, and it’s a very low voltage. In some cases it’s barely enough for a light bulb.

If there are renewable products and services available, there is a market and people willing to pay for them, even in very poor communities.

In your report you find that despite low incomes, poor rural households are a significant consumer market for clean energy. Why is that?

About 45% of the 150 million rural households in India do not have a reliable source of electricity. In this report, we focus on the very poorest sectors with monthly spending below $75 per month that represent the rural “base of the pyramid” (BoP) in India. This portion of the population amounts to 114 million households.

A communal cooking oven for a small village in the Kutch, Gujarat, India. Photo credit: flickr/orange tuesday.

In our research we found that the rural BoP is willing to pay for energy services. They see the benefits and consider energy to be essential. Right now, the Indian BoP already spends $4.8 billion per year on energy usage, and that’s mainly for potentially harmful and inefficient fuels like firewood, kerosene, diesel generators, and biomass for cooking. The main takeaway from our report is that if there are renewable products and services available, there is a market and people willing to pay for them, even in very poor communities.

Which sectors did you study?

We honed in on four specific sectors that offered the most potential for growth in the rural BoP market. At the individual household level, we studied solar lanterns and energy efficient cookstoves. And at the community level, we looked at small hydro and biomass gasification, which can supply energy to a local area without depending on the grid. The market for decentralized renewable energy generation has the largest potential because it mimics grid based electricity, which is what consumers want.

What are some of the benefits of meeting the energy demands of rural communities in India?

Shopping by lamplight at a roadside fruit and vegetable market. Photo credit: flickr/Artiii.

Electricity acts as an economic multiplier. It has a huge impact on productivity and living standards. For smaller shops, dependable energy means they can keep their shops open longer, and they can use refrigeration to keep products fresher. In our research we came across a company that rents solar lanterns to street vendors. Vendors pay a few rupees to rent a lantern, and they can keep their stalls open later into the night, increasing trade.

With electricity, you also see people adding more value to what they sell—farmers can process their crops and sell the resulting products for more money. Electricity also improves education standards by providing students with better light for studying. This will have a long term impact on families’ economic status.

Why has it been difficult so far for renewable energy companies to grow in rural areas?

The biggest challenge at the moment is distribution. Companies producing solar lanterns and energy efficient cookstoves are having trouble establishing rural retail networks that can effectively penetrate the rural BoP market. There’s also the challenge of maintaining and servicing products over such a far-flung customer base, which is essential to keep customer’s confidence in the technology. Some companies are solving this problem by partnering with NGOs and Market Development Organizations (MDOs) who already operate in rural markets. They have the retail distribution chains to promote socially and environmentally beneficial products, and they can also offer financing to consumers. For investors looking for new opportunities to invest in the clean energy market, while creating a positive environmental and social impact, we think this is a key success factor to look for in companies – strong partnerships with on-the-ground MDOs that can raise awareness and build the market.

In terms of policy, the Indian government provides a number of incentives such as capital subsidies, tax holidays and low-interest loans for renewable energy companies, which have really helped the sector grow in recent years. But there are still subsidies and government policies that contradict these incentives. The government heavily subsidizes kerosene, for example, which undermines the market for competing clean products like solar lanterns. It’s a challenge to sell a solar lantern for $10 when a family can get kerosene for much less than that, even if in the long term the solar lantern would be a better investment. Poor families have uncertain periods of income, so it’s hard for them to make a significant up-front investment in any energy solution.

What policy solutions do you recommend?

Since so many people are dependent on the kerosene subsidy, the government can’t just cut it off. But we recommend that the government shift to an open-ended lighting based subsidy, to allow people to choose which technology they want to use, including solar lanterns and other clean lighting solutions. This would incentivize people to try new technologies that they might not be familiar with, and that actually work much better than kerosene or firewood.

The Indian government also has certain “priority lending sectors” that Indian banks are required to lend a certain amount of money to, like education, microfinance, and rural banking. It would be great if renewable energy was included in this group, especially since it’s one of those sectors that has a spill-over effect into the overall economy.

What is your advice to interested investors?

At this stage, the sector needs patient capital and pragmatic expectations. Some companies also need short-term debt financing to free up cash flows so they can expand their businesses. The decentralized renewable energy (DRE) sector is the most mature, and appears ready to absorb mainstream capital.

While the demand for solar home systems, solar lanterns and energy efficient cookstoves is currently limited, it has the potential to grow significantly as upfront product prices are reduced through design and manufacturing advances, lower distribution and marketing costs through partnerships and the availability of consumer financing options.

Investors can assist market growth by providing capital as well as more strategic, nonfinancial resources such as business expertise and access to networks. If market challenges are overcome, the future rewards for investors and benefits to India’s rural consumers are likely to be significant.

For more information on investing in companies that serve the Base of the Pyramid, check out the New Ventures website.

NEWS RELEASE: The Clean Energy Market Expands to India’s Rural Poor

Jessica Forres — Mon, 27 Sep 2010 17:35:05 -0400

The market for clean energy products and services is increasing among India’s rural poor, and according to a new analysis, could potentially grow to more than USD 2 billion per year.

Demand for clean energy products is rising among India’s rural communities, according to the Power to the People analysis released today by Centre for Development Finance at the Institute for Financial Management and Research (CDF-IFMR) and the World Resources Institute(WRI). The study focuses on the energy needs of India’s rural poor, or those living at the Base of the Pyramid (BoP) in rural areas, which make up more than 114 million households and nearly 60 percent of India’s total population. The analysis finds that companies supplying clean energy products–including solar lanterns and energy efficient cooking stoves–to the rural BoP market, have seen annual gross revenue grow by an average of 36 percent per year since 2004.

“Clean energy firms in India can capture the market that serves the BoP by providing environmentally and user-friendly energy solutions that will reduce health problems through lower air pollution, and lower fuel costs, while generating additional public benefits, such as lower greenhouse gas emissions,” said Kirsty Jenkinson, director of the Markets and Enterprise Program at WRI. “This report will help investors recognize the tremendous market opportunities in this nascent, but fast-growing sector.”

To estimate the current state of India’s clean energy market and potential for growth, CDF-IFMR and WRI conducted field research among rural BoP consumers in 26 small towns and villages in India and across four other countries. The teams also collected financial data from 15 Indian companies across four sectors–small decentralized renewable electricity producers, home-scale solar electricity providers, solar-powered lantern manufacturers, and energy-efficient cooking stove producers.

According to David Fuente, program head for the Infrastructure and Governance Group at CDF-IFMR, “The report builds on global work in the sector and presents a granular, grounded picture of the very real challenges and opportunities of investing and doing business in the clean energy sector that serves India’s BoP.”

While rural electrification in India has been growing in recent years, this growth has come at a very slow rate. Moreover, most rural areas only receive a few hours of electricity a day, which is of a very low voltage. Households connected to the grid often find that the electricity is of poor quality and, according to those interviewed, the rural BoP want a dependable source of electricity.

“Most people we talked to in rural communities consider energy to be essential,” said Saurabh Lall, a research officer at WRI. “If there are high quality renewable products and services that meet consumer demand available, there is a market for them, even in the very poorest communities.”

Currently, the Indian BoP is spending USD 4.8 billion per year on energy, mainly for fuels that are harmful to the environment and hazardous to personal health as well as for services that are unreliable. Installed at the community level, small hydro and biomass gasification can supply energy to a local area without depending on the grid. At the individual level, solar lanterns and energy-efficient cook stoves can replace dirty fuel sources such as kerosene lamps and cooking stoves fired by wood or dung. The transition to clean energy sources among India’s rural poor offers significant growth potential for investors while also promising to provide tangible environmental, health and lifestyle benefits to the rural BoP in India.

“Eliminating energy poverty in a sustainable way is one of the most significant development challenges of our time,” said Jessica Seddon Wallack, Director, Centre for Development Finance. “We require innovation at all levels, from lowering the costs of renewable technologies to creating business and policy models for generating and disseminating energy and ensuring its efficient use to understanding the intricacies of consumer demand.”

Expanding the Market for Clean Energy in Rural India

Saurabh Lall — Wed, 01 Sep 2010 09:47:16 -0400

SBA Hydro is just one of the many companies starting to bring clean energy to India’s rural poor.

This post is the first of a series by WRI and CDF-IFMR on the market for clean energy for the base of the pyramid in India.

Just over a year ago, I was sipping tea at a roadside stall near the village of Thatulkod, in Himachal Pradesh, India. This small farming community lay far from the tourist trail in the Kullu valley, almost a hundred kilometers from the nearest town. I listened to Subhash Chand, a local apple farmer talk about the quality of electricity in his village:

Most houses have electrical connections, but what is the use? We have power for a few hours a day. Even when there is electricity, it is barely enough to operate one or two light bulbs. We cannot rely on it.

Over more cups of tea, other villagers told their stories – a college student trying to study under the dim light of a kerosene lantern, a small hotel that relied on an expensive diesel generator because of the frequent power outages, and farmers who had no alternative but to use conventional fuels like kerosene, diesel and firewood for their energy needs. In addition to exposing these households to dangerous toxins and pollutants such as carbon monoxide, these fuel sources also contributed to pollution and environmental degradation. Not only did they suffer from the poor quality of electricity, but the residents of Thatulkod were also beginning to raise concerns about changes in the climate – many farmers complained about the warmer winters negatively affecting their apple harvests in recent years.

Villagers from Thatulkod. Photo credit: Saurabh Lall

These stories repeat across thousands of Indian villages with little or no access to electricity. According to analysis from our forthcoming report, India’s energy shortage is most acutely felt by its rural poor – the 114 million households that spend less than US$75 on goods and services per month (known as ‘Base of the Pyramid.’) About 40 percent of India’s rural households do not have access to electricity, and more than 85 percent must depend on “dirty” kerosene for lighting and firewood for cooking.

The people of Thatulkod are more fortunate than many of these households – over the next year, a company called SBA Hydro will construct a small hydro-electric power plant nearby, which will supply sustainably generated electricity to Thatulkod and several neighboring villages. These power plants are constructed along the run of the river and range in size from 100 kW to 1000 kW –sufficient to generate electricity for local needs with minimal impact on the environment. SBA Hydro currently operates two similar power plants near the towns of Sainj and Raskat in Himachal Pradesh which supply electricity to over 2500 rural households.

SBA Hydro founder S.K. Sharma (right) reviews plans for a new 100KW micro hydro plant. Photo credit: Saurabh Lall

As India struggles to provide cleaner and more reliable sources of energy to its rural poor, a growing number of innovative small companies, like SBA Hydro, are selling clean energy products and services directly to India’s rural ‘Base of the Pyramid’ (BoP) population. These new technologies include solar-based home electricity systems and lanterns, energy efficient cookstoves and decentralized electricity services generated from micro hydro and biomass gasifiers. However, most of these companies remain small and face considerable challenges penetrating the market because of poor rural distribution and retail networks.

In late 2008, India’s Centre for Development Finance at the Institute for Financial Management and Research (CDF-IFMR) and my team at the World Resources Institute’s New Ventures Program recognized the immense potential of this market and began analyzing the investment outlook for the clean energy industry serving India’s rural poor. To ensure we captured successful practices from other parts of the world, we also looked at clean energy companies serving rural markets in other countries that could provide valuable lessons to their Indian counterparts.

SBA Hydro’s other power plant in nearby Sainj provides 1MW of renewable energy. Photo credit: Saurabh Lall

Together with colleagues from CDF-IFMR, we conducted field research with 15 clean energy companies (11 Indian and 4 global), across seventeen cities and twenty-six small towns and villages in India and four other countries: Bangladesh, Brazil, Cambodia, and Kenya. We interviewed company staff, including executives, middle managers, and field staff, as well as their distribution, retail and financial partners and also organized forty focus groups made up of more than 240 rural BoP users, and nonusers, of clean energy products and services.

The result is our forthcoming report Power to the People: Investing in Clean Energy for the Base of the Pyramid in India. The report analyzes the challenges as well as the market opportunities to help investors – both in India and abroad – better understand the enormous potential of this market. Despite the barriers companies face, the report details significant opportunities for growth in the BoP market.

The next few posts will dive deeper into our methodology, the sectors we profiled as well as consumer insights gained from our focus group discussions with BoP users. We believe that increased, patient capital can greatly expand the reach of companies like SBA Hydro, and provide clean energy solutions for the villagers in Thatulkod, and beyond, in a profitable and sustainable manner.

Santosh Singh is a Senior Researcher and Sreyamsa Bairiganjan is a Researcher in CDF-IFMR’s Rural Market Insight Group.

Small Companies, Big Impacts

Maggie Barron — Mon, 19 Oct 2009 11:37:18 -0400

The New Ventures directors answer questions about what small, sustainable companies can do to boost local economies and protect the environment.

One company supplies solar lanterns to communities without electricity. Another refurbishes discarded copy machines and resells them to companies that couldn’t otherwise afford them. Another turns coffee waste into ethanol. Small and medium enterprises (SMEs) are the engines of local economies. They drive innovation, spur equitable growth, create jobs, and supply poor communities with better products and services. But many small entrepreneurs have trouble bringing their ideas to fruition, and most will fail within the first few years. For sustainable SMEs – those that manufacture and market environmentally friendly products and serve low income communities – the challenges can be particularly daunting.

WRI created New Ventures to help sustainable SMEs build their capacity, learn key management skills, and connect with investors. Working in six of the worlds’ emerging economies – Brazil, China, Colombia, India, Indonesia, and Mexico – New Ventures helps these countries develop their economies while protecting their environment.

I recently sat down with the six New Ventures country directors at their annual meeting in Washington, DC and asked them to explain why these small companies can have such a big impact:

What challenges do small and medium enterprises (SMEs) face?

Sanjoy Sanyal, India: In the developing world, SMEs lack one very critical resource: credit and financial resources to grow. They may also have access challenges, such as access to markets, access to the right kind of talent, but fundamentally the lack of access to credit and financial resources can be a debilitating obstacle.

Diyanto Imam, Indonesia: There’s also the challenge of capacity building. In terms of technical knowledge, these people know what they are doing. They know how to develop efficient machines, they know how to create a formula for an organic pesticide or herbicide. But many of them don’t know how to run a company, they don’t know how to develop a balance sheet, or they don’t even know what a balance sheet is.

Diyanto Imam

They don’t have the business skills to begin with, and for green SMEs in particular, they also need to educate their customers about their products. Most people in Indonesia don’t really differentiate between green products and conventional products. They equate green products with a premium price and don’t understand the other benefits.

Andre Carvalho, Brazil: In Brazil, it’s very difficult to attract investment. Many companies don’t know how to market themselves. They don’t know what “green” means exactly, or they’re green and they don’t even know it. These companies need investment, they need resources, they need networking opportunities, and they need media attention.

Why is it so important to help SMEs?

Sanjoy Sanyal, India: In developed countries like the US or in Europe, SMEs contribute a substantial percentage of the gross domestic product. So vibrant SMEs, when they’re well managed, have the ability to radically reshape a country’s economics. At the same time they have these challenges. So it’s really fertile ground for intervention.

Diana Gaviria, Colombia: It’s not only important to help SMEs, it’s important to help green SMEs. In many ways, in our country, SMEs are the motor of the economy, and by having green SMEs that are successful, we’re promoting more sustainable societies and showing the world in general that having a sustainable business model is something not only viable but that can also promote economic development.

Can helping SMEs also help the poor?

Andre Carvalho, Brazil: Yes, definitely. SMEs can work more directly with smaller suppliers than big companies can. The majority of suppliers to big companies have to be big themselves in order to keep up. If we help SMEs develop, they can act as suppliers to big companies and also develop relationships with smaller and local suppliers and bring more business to them. The business model is more inclusive.

Andre Carvalho

Diyanto Imam, Indonesia: They provide employment, which is particularly good for Indonesia because for the last thirty years, the center of economic activity has been in the capital in Jakarta. 70% of the money circulates in Jakarta, and that’s not good for the economy. So SMEs can really help develop the economies of smaller cities.

Sanjoy Sanyal, India: Most of our SMEs have base-of-the-pyramid strategies, where they either provide services to poor communities or low-cost products. They do help the poor, not necessarily because they are small, but because of the nature of the business they do.

Sanjoy Sanyal

The type of companies we work with are the ones that sell solar lanterns, or energy efficient cooking stoves for poorer people, poorer women in particular. These products help bolster local economies in both a socially and environmentally constructive way.

What does New Ventures do to help?

Weijia Ye, China: We help sustainable SMEs grow by getting them the right type of funding. We work with them to develop their business plans and help them network with a range of mentors whom they could not access by themselves.

Rodrigo Villar, Mexico: We are also trying to convince people that being an entrepreneur is better than just having a regular job. We don’t really have any entrepreneurs in Mexico. There is a negative connotation to what “businessman” means there; usually it makes people think of rich men who have stolen money. So no one wants to be an entrepreneur. Everyone wants to get a university degree and then work for a big company. And when you talk about environmental entrepreneurs, it’s even harder. We have to convince people to go into environmental areas and industries, because they can make a profit and help their society develop.

Diana Gaviria

Diana Gaviria, Colombia: One of the most important things we do is act as an honest broker and help these companies get to investors and institutions that can aid them in their process of acceleration. We’re trying to promote a climate where individuals of high net worth can invest in companies rather than just big institutions that come in and do all these very demanding due diligences and long processes for riskier business.

What are some examples of the companies in the New Ventures portfolio?

Sanjoy Sanyal, India: One company that comes to mind is called Sumaya HMX Systems. They make energy efficient air conditioning systems. India and large parts of the developing world are hot and tropical, and air conditioning is by now a mandatory requirement for most workplaces, but at the same time they consume loads of energy, and are a big source of carbon emissions. This company uses a technology that allows adaptive cooling – a more efficient cooling system – which brings the temperature to only a couple of degrees above what you’d expect in a conventional air conditioning system. It’s still comfortable, but it obviates a lot of the energy usage and carbon emissions in more conventional AC systems. It’s a great technology; it’s very useful and appropriate for large parts of both the developing world and the developed world. I think New Ventures’ intervention in this company was at a very interesting point. We were able to get the company a corporate investor, which took on a simple majority stake in this company, and helped the innovation reach a very large audience because of their marketing and technical service operation.

Diana Gaviria, Colombia: In Colombia we work with a man who had his own water treatment company that mainly served affluent neighborhoods. He wanted more out of his business, and so he investigated technologies and came up with one that would provide water to communities that currently don’t have any access to water at a very low cost, much less than what people were already having to pay. When he first came to us we weren’t sure if his proposal was viable. He wanted the communities to manage the whole operation, so he not only wanted to sell to them but he wanted them to be involved in the management of the business. We had many discussions with him and finally we were convinced. And so with the help of students from the Cornell MBA program and business mentors, we put together a viable business model, where he is able to produce portable water treatment plants that can be run and operated in local communities.

Rodrigo Villar

Rodrigo Villar, Mexico: We work with a company called Biofabrica Siglo XXI. They came to us four years ago. The owner of this company was an agronomist, he didn’t have any experience with business, and he was using this technology to change chemical fertilizer into biological fertilizers. So we helped him with the business plan, and now, four years later, this company is worth $7 million, and over 200,000 hectares are using his bio-fertilizers instead of the chemical ones, and he was able to drop the price of his product too, so he continues to get new clients.

How is the economic crisis impacting your country?

Weijia Ye, China: It’s different for different industries. In general it’s hard to say “Now it’s ending.” I would be pretty cautious and wait another half year or year. This crisis is so different from previous ones because no one can predict it. Some of them are doing pretty well, but it doesn’t mean it’s the end of the crisis. I think the current financial crisis is sending a very strong, clear signal that there is something fundamentally wrong with this current regime of the market economy.

Rodrigo Villar, Mexico: Between the economy, the H1N1 flu scare, and the drug problems, it’s been a tough year for us. But a recession can be a good time for entrepreneurs. Companies are growing. If they can make it work now, they’ll grow even more as the economy recovers.

Can green companies be competitive in the current economy?

Sanjoy Sanyal, India: These are early days. But I think there clearly is an understanding that yes, green companies can be competitive. A lot of it is coming from the fact that, while the US is still struggling with its economy, it is still clearly signaling to the world that businesses need to develop a more sustainable model. So whether it’s Walmart or a Cisco, people are saying that we need to incorporate energy efficiency and climate into our business thinking. Another thing the US is signaling to the world, which I think emerging economies are picking up on, is the fact that consumers are willing to vote with their wallets that they would like to spend more on goods and services that have a clearly professed environmentally positive, or at least an environmentally neutral effect.

Andre Carvalho, Brazil: Six years ago the community of investors in Brazil thought that sustainable business was only something very small, and that it couldn’t be scaled up. But New Ventures has been showing them that there are a lot of opportunities, and showcasing successful fair trade models that are part of a new history that’s being written right now. We are showing the mainstream that there are other ways to think about community development.

Weijia Ye

Weijia Ye, China: We want our SMEs not only to be producing green products, but also to have strong values. I believe that the future of the world depends on all companies becoming sustainable. There’s a call for a new generation of enterprises, which should be different from Henry Ford’s generation. Because at the time, if you look at the management of these original industries, they were quite brutal. We’re at the stage where we should not be doing the same things as we did before. We are ready to develop new models.

What motivates you in your work at New Ventures?

Diyanto Imam, Indonesia: You get to meet these great individuals with ideas, with fire in the belly. They have amazing passion. I like to meet with these entrepreneurs simply because they are passionate about what they do. They have this belief that they can change the environment and affect the people around them in a good way. The spirit is there. In Indonesia, life is tough. But these people see opportunities.

Weijia Ye, China: My wish is for the next generations of big companies to be fundamentally different from current versions. They should not be developing Corporate Social Responsibility plans only when they become big. They should have these plans in their DNA from the very beginning. It should be incorporated into their way of doing business. These small companies we work with have the right core values now, and when they grow they will be part of the next generation of business.

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.

What Works: CareShop Ghana. Improving Access to Essential Drugs Through Conversion Financing

Derek Newberry — Tue, 08 Apr 2008 13:05:46 -0400

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 healthcare 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 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 healthcare 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. In this case study, we will explore the CareShop business model and the challenges it faces today.

Bill Gates Calls for Capitalism That Serves the Poor

Allen Hammond — Thu, 24 Jan 2008 10:29:42 -0500

In a speech at Davos today, Bill Gates called for a more inclusive capitalism that “would have a twin mission: making profits and also improving lives for those who don’t fully benefit from market forces.” That is a major milestone in the evolving thinking of perhaps the most influential philanthropist of our time.

In 2000, I organized a conference in Seattle on Creating Digital Dividends at which Mr. Gates, in a keynote address, famously said that “poor people don’t need computers” and rejected a business approach to alleviating poverty. Within a year, however, he had changed his mind, and Microsoft became a leader in seeking ways to provide affordable services to low-income populations—in some small measure with WRI’s help.

The beginnings of a more full-fledged belief in inclusive capitalism, according to the WSJ today, came at a dinner in Seattle, organized by WRI, in which Mr. Gates spent several hours talking with BOP guru C.K. Prahalad (in his capacity as a WRI Board member). I was also at that dinner, and remember Mr. Gates saying to me that the question was how far towards the bottom of the pyramid could business approaches go—not too far, was his assessment. But again, his thinking evolved.

Now Mr. Gates is arguing that capitalism, appropriately pursued, is in fact the best hope to bring services and improve productivity and create opportunity for the world’s 4 billion poor—and that, accordingly, the world needs to invest much more heavily in the micro, small, and medium-sized enterprises that are close to the poor. If Mr. Gates puts the muscle of his foundation behind such enterprise development—which we have long argued is the principal bottleneck to a successful BOP business approach—then perhaps the world will really change.

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.

NextBillion: Development Through Enterprise

admin — Thu, 27 Sep 2007 14:53:47 -0400

C.K. Prahalad on Development Through Enterprise

Nextbillion.net The Development Through Enterprise interactive portal disseminates news, best practices, and conference/workshop resources and facilitates discussion, sharing of experience, and networking. It builds on the Eradicating Poverty Through Profits conference and extends the dialog and sense of community to an on-line area and aims to be a primary source for information on private sector approaches to poverty and development. The site maintains a database of innovative enterprises. We also maintain an archival database, the Digital Dividends Clearinghouse, has data on more than 1200 internet and communications technology (ICT) enabled enterprises that serve poor communities. These sites, and associated email newsletters, are part of our communications strategy, but they also help us identify trends and best practices for serving bottom of the pyramid (BOP) markets.
Case Studies and other Research Development Through Enterprise manages an annual process of case study research and writing intended to document innovative business models. We contract with business school students at four top business schools, Columbia University, Cornell University, University of Michigan, and University of North Carolina. The selection procedure for research positions is very competitive, resulting in the selection of student teams that not only have outstanding academic credentials, but often also have applicable cultural and language abilities. Case study research includes a thorough review of the business model, operations, markets, finances, as well as in-depth on-site interview with managers, executives, and customers. Case studies and other research reports are actively disseminated on our websites and email newsletters and serve as the intellectual base for corporate strategy articles in prominent journals.
The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid Four billion low-income consumers, a majority of the world’s population, constitute the base of the economic pyramid (BOP). New empirical measures of their aggregate purchasing power and behavior as consumers suggest significant opportunities for market-based approaches to better meet their needs, increase their productivity and incomes, and empower their entry into the formal economy. This volume, based on unique access to the household income and consumption surveys of developing and transition countries, offers a new and compelling perspective on low-income communities worldwide. Drawing on income data from 110 countries and standardized expenditure data from 36 countries across the globe, The Next 4 Billion is an important first look at the market opportunity represented by four billion individuals who make up the BOP. The analysis for the first time provides a quantitative assessment and characterization of BOP markets.
Corporate Engagement Based on case study and structure of poverty research, as well as corporate strategy articles, we partner and work intensively with a small number of multinational companies to catalyze the development of bottom of the pyramid business models that provide needed services in poor communities; with WRI Markets & Enterprise Program colleagues, we also prepare and conduct in-country workshops for local companies. Both types of engagements are intended to raise awareness, facilitate development of appropriate business approaches, and catalyze investment and new business formation.
Development Agency Engagement Based on case study and structure of poverty research, and the broader intelligence gained from our BOP databases, we engage and advise bilateral agencies in implementing more effective development strategies, including incorporation of bottom-up models and more effective use of private sector roles in development.
Conferences and Workshops Building on the momentum created by the success of the December 2004 WRI global conference, “Eradicating Poverty through Profit: Making Business Work for the Poor,” we organize regional conferences, workshops, and laboratories to explore the role the private sector can play in poverty alleviation and in achieving the Millennium Development Goals.

Photo credit: flickr/barefootcollege

The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid

admin — Thu, 01 Mar 2007 00:00:00 -0500

Join the community of BOP experts at NextBillion.net
Browse a range of environmental and social indicators at EarthTrends

Four billion low-income consumers, a majority of the world’s population, constitute the base of the economic pyramid (BOP). New empirical measures of their aggregate purchasing power and behavior as consumers suggest significant opportunities for market-based approaches to better meet their needs, increase their productivity and incomes, and empower their entry into the formal economy.

This volume, based on unique access to the household income and consumption surveys of developing and transition countries, offers a new and compelling perspective on low-income communities worldwide. Drawing on income data from 110 countries and standardized expenditure data from 36 countries across the globe, The Next 4 Billion is an important first look at the market opportunity represented by four billion individuals who make up the BOP. The analysis for the first time provides a quantitative assessment and characterization of BOP markets, at several levels of analysis:

How large is the BOP and what is its income-by country and region?
What is total market size and consumer ability to pay within a number of critical sectors, including water and sanitation, energy, IT/telecom, healthcare, and financial services?
What is nature of the penalty faced by BOP consumers in the form of higher prices, poorer quality goods and services, or lack of access to services? What does the BOP penalty imply for needed policy reforms or opportunities for market rationalization?

The Next 4 Billion would not be possible without the support of the following organizations. Visit their sites for more information on BOP market-based approaches.

Like consumers everywhere, the poor are constantly looking for products and services that improve their quality of life at an affordable price. The poor are also vital producers and distributors of an immense range of goods. Companies that are smart enough to tailor their offerings to the needs of low-income consumers and entrepreneurs will thrive in the 21st century. As illustrated in this important volume, The Next 4 Billion, companies that provide affordable solutions in areas such as housing, sanitation, public transport, and connectivity will also make a vital contribution to human development.
Luis Alberto Moreno
President,
Inter-American Development Bank

C.K. Prahalad and Stuart Hart’s ground-breaking work alerted private sector businesses to the importance of the market at the base of the pyramid. Now, for the first time, we can express that importance in hard numbers—a 5 trillion dollar, 4 billion person market. That represents a massive opportunity for private sector firms to engage in ways that improve poor peoples’ lives.
Michael Klein
Vice President, Financial and Private Sector Development,
International Finance Corporation and World Bank, and
Chief Economist, International Finance Corporation

Global productivity, education, and the sciences have advanced at an increasingly fast pace due to information technology and access to the Internet. Yet, most of the world’s population who inhabit the middle and bottom of the “economic pyramid” is being underserved in realizing the transforming benefits of IT. The IT industry can narrow this gap by helping local communities evaluate and pursue inventive approaches to realizing the benefits of technology, and through co-creation of new business endeavors with NGO and public sectors that focus specifically on the needs of middle- and bottom-of-pyramid customers.
Will Poole
Senior Vice President
Microsoft Corporation

It is very clear that the private sector has an important and constructive role to play in addressing the needs of the poor and disenfranchised. The Next 4 Billion lays the foundation for the empirical, market-based approach necessary for private enterprises to bring scale and sustainable solutions to heretofore intractable problems.
John Elkins
Executive Vice President
Global Brand and Marketing
Visa International

It is great to see an extensive study correlate the facts that The Next 4 Billion are a viable market place and that private sector engagement with the BOP can help drive sustainable growth and capacity building for these new economic actors.
Willy Agatstein
Vice President Sales and Marketing Group,
General Manager Emerging Markets Platform Group,
Intel Corporation

Market of the Majority: The BOP Opportunity Map of Latin America and the Caribbean

admin — Fri, 02 Jun 2006 00:00:00 -0400

The base of the economic pyramid (BOP) is a socio-demographic designation describing both the development needs and the market potential of about 4 billion people worldwide. The Market of the Majority documents the size and scope of the base of the pyramid market in 20 Latin American countries, using an analysis of household income and expenditure surveys. WRI’s analysis, using a methodology developed with World Bank and Inter-American Development Bank economists, defines the BOP as those earning less than $3260 USD (PPP, 2005) per year. In Latin America, that definition means that the BOP is 361 million people whose income is $510 billion. The Market of the Majority is among the first efforts to systematically document the size and scope of the market using statistical analysis. The Market of the Majority was launched by WRI president Jonathan Lash during the Inter-American Development Bank’s “Building Opportunity for the Majority” conference, June 11-14, 2006.