Let’s Talk: IDB Inaugural BoP Forum Highlights SME Growth, Network Connections
The 1st IDB Forum for the Development of the Base of the Pyramid in Latin America and the Caribbean kicked off Monday in Sao Paulo, Brazil. As a media partner, NextBillion Brasil is bringing live coverage of the event through social media, as well as summaries of each of the discussion rounds. The following post, which originally appeared in NextBillion Brasil in Portuguese, can be found here.
Luis Alberto Moreno, president of the IDB, opened the conference by stressing the importance of establishing a meaningful dialog between all of the sectors currently involved in BoP business.
And as a strong sign of the potential for the growing cadre of businesses focused on low-income customers, the IDB group plans to double its investments in businesses that provide solutions to improve living conditions of people living at the base of the economic pyramid across Latin America and the Caribbean. Through its Opportunities for the Majority Initiative, IDB plans to invest $100 million in 2012 to expand and develop businesses providing high-quality goods and services, but also improved earning opportunities for the region’s low-income population.
“About 360 million people in the region, or 70 percent of the population, are underserved and pay very high prices for services such as health, education and housing,’’ said Moreno. “Governments and civil society cannot meet these demands alone. There is a tremendous opportunity for the private sector to provide market-based solutions to enhance the living standards of this important segment of the society and help combat poverty.”
(See the full announcement here).
Geraldo Alckmin, the governor of Sao Paulo state, highlighted various examples of the IDB’s important contribution and its role in finding synergies between organizations promoting income generation, not only in Sao Paulo, but in the rest of Brazil and indeed all of Latin America. Alckmin added that these networks are creating a strong foundation to increase social inclusion across the continent.
Growing SMEs that Serve the BoP
The first panel, which focused on growth and development of SMEs serving the BoP, included Jacques Rogozinski, general manager of the Inter-American Investment Corporation; Sang Shik Park, consulate general of the Republic of Korea in Sao Paulo; Ricardo Marino, CEO of Itaú Unibanco Latin America; and Luiz Ros, manager of the IDB Opportunities for the Majority initiative.
Ros was delighted to see this event bringing together leaders from business, government and civil society, along with others interested in the IDB’s Opportunities for the Majority program. Ros affirmed that the creative capacity of the private sector, together with the capacity of the public sector and new BoP business models, are fundamental to the development of the field. Although people often think that only large companies are capable of implementing BoP business, Ros believes that SMEs deserve special attention for being in direct contact with low-income population centers, allowing them to better distribute appropriate products and services at scale, while offering a new model for large-scale production for the region.
Saug Shik Park believes that cooperation between sectors has made winning partnerships possible, helping to create events such as this one and generating new ideas. In 2005, South Korea created a partnership with the IDB, strengthening its relationship with Latin America and the Caribbean. Park explained that, having once been devastated itself by war and poverty, the country now wants to be a partner in the construction of a better world. He shared his vision that the partnership is a powerful tool in increasing economic cooperation between the two regions. It will, he explained, allow companies to evaluate their current actions and create new plans for the future; a program focused on action and results, with real and lasting benefits for participating companies in the whole region.
Jacques Rogozinski pointed out that it’s not easy to bring such a group of experts together in one place, but that in this case, the dialogue around this topic has been growing for several years. Rogozinski believes that SMEs often are the first kind of businesses to be launched, but often the last to benefit from the results. One reason is problems in financing. To address the gap, he wants the Inter-American Investment Corporation to reach the milestone this year of investing $1 billion in SMEs. He also wants a part of this investment to be used to support entrepreneurs in reaching out to investors, and in better explaining the development of their business and how it can grow.
Ricardo Marino reminded us of the wealth of data showing the role of SMEs in a country’s economy, and explained that, from Itaú’s perspective, both new business creation and strengthening of established companies are important. The amount that Itau lent to SMEs in 2010 was 31 percent higher than in 2009, and to support this the bank offered a series of 21 meetings in 15 cities on topics such as financial education, insurance and use of new technology, reaching more than 20,000 entrepreneurs in total. Additionally, Itau’s website includes a portal where entrepreneurs from all over Brazil can share information, share best practices and generate new business between them.