Rob Katz

Are Pedicabs a Bottom of the Pyramid Business Model?

Pedicabs in ChengduOver on The City Fix, author Benjamin de la Pena discusses? what a post-car future might look like – and he thinks it looks like a pedicab. Also called cycle rickshaws, pedicabs are green (human-powered) alternatives to motorbikes and cars, to be sure. But are they a “bottom of the pyramid” business, as de la Pena suggests?

Yes, BoP ’entrepreneurs’ do rent/own and operate most pedicabs in the developing world. (Side note: check out this interesting article about the rickshaw bank.) To determine if they are really a BoP model, I asked myself – do pedicabs address the BoP penalty (price, quality and access)?I suppose pedicabs are a lower-cost alternative to car or motorbike ownership, a higher-quality transport option compared to walking, and a more accessible form of transport as well. Answer: yes, pedicabs do address the BoP penalty in a way.

But pedicabs fail to capture an important aspect of the successful BoP business model – fulfilling the aspirations of poor consumers and producers with dignity. The BoP wants cars – not motorbikes, not pedicabs – because owning a car means you’re in the middle class. And driving a pedicab is not a job with dignity – at least not yet.

Car ownership is simple – and scary. From an environmental (and traffic, and economic) perspective, massive car ownership among the BoP in India, China, Brazil, etc. is a terrible idea. Already, at $100/barrel oil, it makes little or no sense for an emerging middle-class Indian to own an internal combustion, gasoline powered car. He’ll have to divert spending from other areas in order to fill it up. That’s on top of the traffic and pollution that growing car ownership will bring on.

Yet despite the environmental, social and economic costs of car ownership, emerging middle class folks worldwide want cars. Heck, NextBillion’s articles on Tata’s $2000 (1-lakh) car are among our most popular pieces ever. And what’s more, the BoP want jobs with dignity. I’m not convinced that owning a pedicab is a dignified job in the eyes of the BoP.

How do you balance the aspirations of an emerging BoP consumer (car ownership) with smart growth and a “post car future”? Pedicabs may be part of the answer, but I don’t think they’ll be enough.

(For more on the market for transportation in base of the pyramid communities, see Chapter 5 of The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid)