NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, April 2, 2008

Growing up in Calcutta (now Kolkata) I saw poverty first hand, so I naturally admired my father’s commitment to implementing social justice to helping the poor citizens. Dad’s opposition to Prime Minister Indira Gandhi’s economic and social policies landed him in jail during India’s Emergency rule in 1975.

I moved to the United States in 1984 and experienced the benefits of capitalism. I watched with excitement India’s move to globalization and hoped that this also would benefit the less fortunate. Like many, I’ve believed that although the private sector can’t solve the poverty problem, poverty can’t be solved without the private sector.

However, I became disillusioned with the efforts made by existing corporate and individual wealth to have a sustainable impact on poverty. I remember a brief, discouraging conversation with Mother Teresa in a year before her death in 1997 about the role of the private sector in poverty alleviation.

I first heard the term Base of the Pyramid a decade later when I met University of Michigan professor and global corporate strategist C.K. Prahalad, who wrote the book The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits. The core concept involves reaching the roughly 4 billion people with per capital incomes below at or below US$1,500 and bringing them into the formal economy. In Latin America that amounts to about 25 percent of the total population.

It was all new to me, although I had been in the US private sector and government for more than 20 years. Now I find myself wondering why so many individuals with long involvement in economic and social development field are equally ignorant about this concept. Since the idea was introduced, the list of corporations changing their business models to reach the majority market has expanded. Business-NGO partnerships are becoming common as well as business-NG0-government partnerships. But there is still plenty of poverty around the world, and in most impoverished communities, effective business remains alien.

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