IDB President Moreno Calls for Market-Based Solutions for Providing Basic Services to Low-Income Con

Tuesday, September 11, 2007

Announces partnerships with the World Business Council for Sustainable Development, SNV-Netherlands Development Organization Ann Arbor, Michigan ? IDB President Luis Alberto Moreno today called market-based solutions the key to providing water, housing and electricity and other basic services to low-income consumers in Latin America and the Caribbean.

Speaking at a conference entitled “Business with Four Billion: Creating Mutual Value at the Base of the Pyramid” Moreno urged the business and academic communities to look beyond the retail sector, where private companies are increasingly willing to offer products that improve the quality of life of the poor.

“Throughout Latin American and the Caribbean, millions of people in large urban slums can buy bottled water or shampoo?but they don?t have access to running water and sanitation,” Moreno said. “Millions more can now afford TVs and DVD players?even though they lack a safe and legal connection to the electricity grid. And while many people can obtain a consumer loan for a $200 refrigerator?very few can get a $20,000 mortgage that would allow them to live in a decent house.”

Moreno acknowledged that the business of providing water, electricity, housing and other essential services presents unique financial and political challenges. But he said Latin America offers many examples of creative public-private partnerships that are helping to extend these services to the poor.

Moreno cited the case of Hogar de Cristo, a Jesuit charity in Guayaquil, Ecuador, that sells prefabricated one-room houses for $530 on a three-year payment plan. The organization has sold more than 120,000 units in the last 20 years and still can?t keep up with demand, Moreno said. He mentioned Colceramica, a Colombian ceramics manufacturer that has prospered by marketing flooring tiles specifically for low-income consumers. And he described water companies that serve poor customers Colombia and Bolivia and are using innovative strategies to extend coverage and facilitate bill payment.

The IDB intends to explore and apply such “base of the pyramid” business strategies across all its operation sectors, according to Moreno. The Bank last year launched the Opportunities for the Majority Initiative to catalyze these strategies and finance projects that apply market-based solutions to a wide range of services.

To leverage its efforts, Moreno said the IDB is actively forming partnerships with governments, companies and institutions that share similar priorities. During his speech, Moreno announced the formalization of a new partnership between the IDB, the World Business Council for Sustainable Development (WBCSD), and SNV-Netherlands Development Organization. The three organizations “will be joining forces to catalyze and scale-up inclusive business opportunities that will benefit the majority,” Moreno said.

Bj?rn Stigson, president of the WBCSD, welcomed the memorandum of understanding between his organization, SNV and the IDB. “With this MOU, we underline the WBCSD’s belief that business is part of the solution in the fight against poverty,” Stigson said. “We are fully committed to catalyze, develop, execute and scale up inclusive business opportunities, and look forward to working with the IDB and SNV to make business an even more powerful force for economic development in Latin America.”

W. Robert de Jongh, Regional Director, SNV ? Netherlands Development Organization, said: “SNV believes that the persistence of poverty and inequity in Latin America cannot be abated without inclusive economic development strategies that empower the poor, leverage private sector engagement and strengthen the business climate. This IDB partnership with SNV-WBCSD Alliance is a bold attempt to catalyse sustainable and scaleable solutions through business that will be a real boon for development in the region.”

The World Business Council for Sustainable Development (WBCSD) is a CEO-led, global association of some 200 companies dealing exclusively with business and sustainable development. Members are drawn from more than 35 countries and 20 major industrial sectors. The Council also benefits from a global network of about 55 national and regional business councils and regional partners.

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Source: Inter American Development Bank- Press Release (link opens in a new window)