Latin American companies find new business partners in unexpected places

Wednesday, October 19, 2005

?We need to provide opportunities all the way down to the base of the pyramid to alleviate poverty?

International companies in Colombia and El Salvador are learning what it takes to do business with the low-income communities in their own backyards. Sustainable livelihoods is a practical way to do business in Latin America, says CECODES (BCSD Colombia) Executive Director Santiago Madri??n. ?For many of the companies in Columbia, this approach was new ? They found it very interesting to know it?s possible to work with the poor people as an essential part of their strategy.?

CECODES, the Colombian Business Council for Sustainable Development, recently held a workshop with the WBCSD during which several sustainable livelihoods case studies were presented. This was the first time that many local Colombian companies learned that there was an alternative to corporate philanthropy in terms of giving back to society, Madri??n says.

?This approach of integrating poorest people in the community will make the strategy more robust and be good business for the company.?

The Colombian ceramics company ColCer?mica provides a telling example of the changing mindset. The company, which makes sanitary devices like toilets and sinks, used to serve low-income customers with second-rate material. ColCer?mica has now come out with a line of new products to serve this clientele, who typically have modest houses in need of renovation. The company has also developed a new marketing strategy targeted to these communities, and is beginning to involve them in the supply process, Madri??n explains.

Luis L?pez Lindo, of CEDES, the Business Council for Sustainable Development in El Salvador, is also an advocate of expanding local businesses to incorporate low-income communities.

?We need to provide opportunities all the way down to the base of the pyramid to alleviate poverty,? he says.

Salvadorian cement company Cessa, a Holcim subsidiary, is making its technology available to small-scale brick producers to help improve their productivity. Where people use to make bricks out of mud, Cessa is now supplying cement which is transformed into bricks and roof tiles with a tailored piece of machinery which Cessa provides free of charge to help local entrepreneurs make the switch to cement. This increases efficiencies and sales levels and reduces the risks of respiratory disease caused by the fumes released during the fabrication process for traditional mud bricks. It also allows Cessa to reach lower-income customers.

?The workshop opened the minds of other members. With the leadership of [the Salvadoran Business Council], we hope they will incorporate sustainable livelihoods in their business strategy,? Lindo says.

But in order for this to occur, business must work in partnership with governments and civil society groups to understand the local situation, Madri??n says.

?Companies should make alliances with governments and civil society to learn from them about how the poor live and how best to reach them. I think NGOs know better than companies how best to reach poor people.?

Philanthropy is increasingly becoming the practice of rich individuals and families who feel they have a duty to help the less fortunate, Madri??n adds. Business has the ability to contribute more sustainable solutions. Colombian business leaders find the sustainable livelihoods approach ?a very practical way to deal with this huge problem of poor people in Colombia,? Madri??n says.

Source: WBCSD News (link opens in a new window)