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Eradicating Poverty through Profit - Making Business Work for the Poor
An International Conference on the Private-sector Approaches to Development
By Hyewon Jung
The World Resources Institute Conference on Eradicating Poverty through Profit, which was held in San Francisco from 12-14 December 2005, convened business leaders from multinational companies in finance, technology, consumer products, agriculture, energy, and natural resources; entrepreneurs and executives with hands-on experience of proven, profitable, and innovative approaches; and senior policy makers who can play a key role in fostering conditions for beneficial business presence at the base of the economic pyramid.
The conference explored the following fundamental questions: "Can private sector activity have a major impact on poverty alleviation? If it can, what are the business models that work, and where are the success stories?" With keynote addresses and panel discussions, presentation on case studies, sector or interest-specific workshops and exhibits, the conference attracted more than 800 participants. Featured plenary speakers included renowned author C.K. Prahalad and representatives from multinational companies, including Hewlett-Packard, Visa International, Vodafone, Chevron Texaco, Microsoft, DuPont, ABN AMRO, and Citigroup.
C.K. Prahalad gave a powerful analysis of the business opportunities in serving the bottom-of-the pyramid (BOP) market, and the novel approach to development that can be provided by the private sector. He highlighted the fact that a majority of poor people are caught up in the high-cost economic system, where the costs of credit are often 50 times higher, the price of water 37 times higher and health services 10 times higher than the equivalent services in the developed world.
Representatives of companies operating in the BOP arena shared their experiences of finding themselves not just in new markets, but in new businesses. For example, an oil company may find itself selling agricultural products or providing microfinance services, and a financial services firm may find itself building and operating hospitals or schools. Significantly, some of these unlikely ventures make money.
Participants agreed that the high start-up costs for many projects, understanding the target market, and finding the appropriate business models that can deliver effective results through studies on past experiences of success and failure were identified as key challenges. Christopher Rodrigues, President and CEO of Visa International and member of the Advisors Group to the International Year of Microcredit, highlighted the opportunities connected with developing business services that specialize in "banking for the unbanked." Emphasizing the importance of understanding local markets and finding local solutions, he explained the role of electronic payment in increasing the much-needed financial services to BOP clients, who are often natural entrepreneurs.
The two-day conference provided a platform for a wide-range of stakeholders to recognize the business potential of the BOP market and to re-invent their role in collaborating on the success of achieving the goals of sustainable livelihood and poverty eradication.
Most importantly, the conference highlighted the need for international agencies to target the specific interests of the private sector in the BOP market, and to identify the specific areas of private-public collaboration to successfully achieve human and economic development objectives.
On 31 October 2005 in Frankfurt, Germany, a follow-up event will be held to examine how concrete actions are leading to sustainable business growth. Further information on the conference is available at http://povertyprofit.wri.org
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