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Sustainable business at the base of the pyramid - a new opportunity for development

Emerging markets in developing countries represent an important economic opportunity for multinational companies, as these make up around 70 percent of the world's population.

However, the role of people in low-income communities as consumers, producers, business partners and innovators is often ignored or undervalued by conventional business models. At the same time, governments and other public and private actors are opening up to new approaches to development aid which in its current form has been insufficient in eradicating poverty.

Grameen Danone Foods produces and distributes an affordable nutritionally enhanced yoghurt in Bangladesh

So-called 'base of the pyramid' (BoP) initiatives are about creating sustainable businesses that directly benefit communities in developing and emerging economies. They are based on a win-win-win approach: a win for the company, a win for development and government partners, and a win for the population benefiting from the programme.

Win-win-win strategies

Base of the pyramid programmes aim to provide people with low incomes access to products and services that address their basic needs for hygiene, nutrition, education, mobility, communication and employment.

In India, Unilever has launched new products which contribute to public health campaigns on hygiene and water sanitation, reaching out to 44,000 villages and around 100 million people.

Procter & Gamble has developed a water purification product to provide families in developing countries safe drinking water at very low cost. The purifier is sold in small sachets, each cleaning and sterilising 10 litres of water, and distributed in collaboration with local NGOs in Africa, Asia and Latin America.

Providing market access is also crucial to helping people who live in conditions of poverty to become agents of change and thus benefit from the processes of globalisation.

Grameen Danone Foods, a joint venture established by Danone and the Grameen bank in Bangladesh, is designed to create a maximum of new jobs within the local community through the production and distribution of a yoghurt product specifically designed to respond to the nutritional needs of Bangladeshi children at an affordable price.

Vodafone's M-PESA enables customers to transfer money via SMS

In Africa, Vodafone has introduced mobile banking products aimed to facilitate access to basic financial services. Many mobile banking customers are self-employed people who need the ability to transfer money to grow their businesses.

Fostering the development of local economic activity is also a key goal of Microsoft's Unlimited Potential programme in Uganda, where the company has partnered with the UN industrial development organisation to set up eight business information centres for SMEs.

Exploring synergies

Efficient synergies between public and private spheres are fundamental to the success of these new business models. Currently, there are only a few public-private partnerships based on win-win strategies but there is no doubt of their potential, particularly in areas such as health and education.

In this context, CSR Europe is facilitating a CSR Laboratory project aiming to enhance synergies between the public and the private sectors, accelerate the creation and scaling-up of base of the pyramid initiatives.

BoP Laboratory at GAIN Global Forum, May 2008

Led by Danone, Unilever, Microsoft and Vodafone, this working group brings together companies such as BT, Nestle, Novartis, GDF SUEZ and France Telecom, as well as stakeholder representatives from the Global Alliance for Improved Nutrition (GAIN), the European Commission (Directorate General for Development and Humanitarian Aid), the World Bank's International Finance Corporation, ACP Business Facility, and GTZ (Deutsche Gesellschaft für Technische Zusammenarbeit).

The Laboratory participants work together to gather information on existing base of the pyramid and development initiatives, analyse barriers and gaps across these initiatives, and provide policy recommendations for better partnerships.

The exchange of practical experience helps to identify concrete areas for cross-sector cooperation and further develop new business models that address socio-economic challenges in a sustainable manner.

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Text: Laura Maanavilja/CSR Europe

This post is part of Blog Action Day 08 - Poverty

15 October 2008