Facing global challenges while turning a profit
Monday, July 10, 2006
Excerpt: Eighteen months ago two veteran business executives, Brian Richardson and Charles Rowlinson, set up a cellphone-based banking company with the sole purpose of serving the estimated 16 million poor people in South Africa who do not have access to basic banking facilities – around 60 percent of the population.
Today Wizzit employs 800 previously unemployed “Wizzkids” to promote its product. The company is on target to break even this year.
Many companies and investors now recognize the value of combining commerce and social development. Your Money asked investors and academics to consider three major global challenges, and to name companies that are poised to make a lasting difference while turning a profit.
The numbers make for uncomfortable reading: more than 4 billion people live on less than $2 a day, according to the World Bank. But consider the aggregate buying power of “bottom of the pyramid” markets – a term coined by C.K. Prahalad, a business professor and expert on multinational marketing at the University of Michigan – and the picture is not as bleak as it might first appear.
According to Allen Hammond, vice president for innovation at the World Resources Institute, the buying power of these poorer markets weighs in at a staggering $15 trillion a year. To put this figure in perspective, Hammond, in partnership with the World Bank, has mapped out consumption patterns in individual markets like Latin America and India, illustrating where the best business opportunities lie.
Their report, “Tomorrow’s Markets,” set to be published in September, will be a wake-up call for many business leaders who still view poor people as a nonviable market, Hammond said.