Wednesday
November 25
2009

Diana Hollmann

If You Saw Money Lying on the Street, Would You Pick It Up?

Though broad business opportunities exist in the largely untapped markets at the base of the pyramid, few multinational companies have taken advantage of them. So what does it take “to pick up that money lying in the street”? And is it really that easy to seize those opportunities?

In their new publication “Entwicklungsgeschäfte – Geschäfte machen gegen Armut” (German for Inclusive Business – Doing Business to Fight Poverty) the Emergia Institute, a Berlin-based think tank and consultancy, summarizes everything that one needs to consider when doing business with the poor. In roughly 90 pages, companies, entrepreneurs and development practitioners gain comprehensive insight into the “what?”, the “how?” and the “where?”:

  • To address the “what?”, the authors introduce the concept, opportunities and challenges of doing business with low-income communities and declutter the numerous terms used to describe the interconnection of business and development.
  • The “how?” is broken down into key success factors, the dos and don’ts, practical tools (such as the Sustainable Venture Crosshairs from the UNEP Towards Triple Impact report and the UNDP Strategy Matrix), and case examples; all along the lines of a 3 phases x 4 steps model (see graph below).
  • Finally, the “where?” is described with key data on promising markets (Brazil, China, India, Mexico, Russia, South Africa) and sectors (energy, financial services, health, ICT, food and agriculture, water, construction and housing).

The concept of doing business with the poor is still not widely known or discussed in Germany, though a few companies are taking first steps towards targeting low-income markets with more inclusive business models. Similarly, the German Federal Ministry for Economic Development Cooperation (through agencies like GTZ and DEG) has supported several Public Private Partnerships aiming to serve people in poverty. Examples range from systemic approaches across countries to local interventions. For example, the SAFO initiative with German chemical giant BASF enables local companies in various countries to fortify staple foods with vitamin A; the start-up company INENSUS implements an off-grid wind power project in Senegal; Bosch und Siemens Hausgeräte (a corporate group stemming from a joint venture between Bosch and Siemens) brings energy-efficient and low-emission plant oil cookers to people living in poverty.

Considering that Germany is the world’s leader in exports, however, there is still considerable potential for more companies to deliver goods, services, and income opportunities to those living in poverty. “Entwicklungsgeschäfte” provides a solid basis of relevant knowledge, contacts and references to promote increased involvement in those low-income markets.

The publication is only available in German for now – but that is good news (the Emergia Institute is currently looking for partners to translate the publication into English)! It shows that the idea of approaching development with an entrepreneurial mindset is also spreading in Europe. Publications such as “Entwicklungsgeschäfte” present available data and know-how in a way that appeals to local business mentalities and provides references to local institutional frameworks, making it much easier to create awareness amongst relevant stakeholders. Companies, entrepreneurs and development practitioners may use this as an inspiration for innovation and collaboration, tailored to their needs and their environment.

The report highlights that there is still a long way to go in order to bring business and development closer together. Hopefully, addressing stakeholders in their language will make it easier to discuss opportunities in untapped markets and jointly meet potential challenges. Only through experimentation and collaboration will we learn what works and what doesn’t.

On this note and to quote the concluding words of the publication:

“Weiter geht’s!” / “Let’s keep going!”

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