News Roundup: NextBillion Consumers at the Bottom of the Pyramid
NextBillion posted three recent news stories yesterday; the three of them address the fact that the four billion people in the world living in poverty are indeed an excellent market. Investing in the BOP has proven to work for multinational corporations. More than ever, the BOP hypothesis is gaining momentum:
Microfinance Draws Mega PlayersBusiness Week draws attention to the fact that big hedge funds, venture capital firms, and other big investors are starting to gear into this business:
If you think microfinance is the exclusive domain of do-gooders seeking a free-market cure to global poverty, think again. While much of the money flowing into loans for the working poor is indeed ponied up by people with high-minded goals, these days its coming increasingly from those with a sharp eye for the bottom line?raising new questions over how to balance the altruistic mission of microfinance with the pursuit of profits.
?The thing about poor people is that they pay for services,? says Allen Hammond of the World Resources Institute. ?How else are they going to get them??
Fortune’s opinion article on the approach of selling services to the world’s poor and how this does not necessarily need to be seen as a ?charitable? activity, but because it makes ?business sense.?
This article from Business Day analyzes the new trend of the idea that money can be made from the poor. They cite a specific successful case in which Casas Bahia (the retail company of household goods in Brazil) caters to the low-income population and sells home goods at small high interest payments, while making incredible profits:
The idea that money can be made from the poor has attracted much interest in the past couple of years, fuelled by books such as The Fortune at the Bottom of the Pyramid and Banker to the Poor.
After all, we do live in a capitalist world, and if corporations, hedge funds, and other big investors are starting to consider and invest in the BOP market, maybe it is the poor who benefit. The difficult part is developing the kinds of business models that will create a win-win scenario, for both the world’s poorest as well as for the big companies.