How do we as a community reach the Bottom of the Pyramid?

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Permalink Reply by David J on February 13, 2009 at 11:22pm

Ben,

Interesting topic to introduce. I'm curious as to what kind of impact your (possible) partner is alluding to in their question. The BOP demographic (especially in Africa) is pretty wide reaching and can be impacted in many ways. However, I do think it's pretty safe to assume that if you work in finance in the SME sector, you would have exposure to the BOP since SMEs are found to be drivers of higher levels of employment and typically affect the BOP. The work we do (on the finance and advisory sides) affects the BOP population both directly and indirectly. If you can elaborate on what types of impact your colleague is looking for, I can expand on some of my thoughts. A fantastic topic no less though....

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Permalink Reply by Bill Levine on February 15, 2009 at 9:15am

The BOP concept is a must for our world to turn things around.

The idea of "Micro loans" has been highly successful. I say add micro hydro-electric and micro wind along with the loans. Then you empower people—literally and figuratively— at the BOP on a bigger scale.

Projects like my Power Playground would work well with the BOP demographic.

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Permalink Reply by Ben on February 16, 2009 at 10:42am

Hi Bill,

Do you have more information on Power Playground?

Sounds interesting,

Ben

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Permalink Reply by Bill Levine on February 17, 2009 at 9:12pm

Sure, here's the file. We're offering our research for this one to anyone who wants to take on the project.

Attachments:

• Power Playground_PPT.pdf, 2 MB

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Permalink Reply by Ben on February 16, 2009 at 10:45am

Thanks David,

Please do expand on both the direct and indirect impacts. More specifically, what is then the role of this website and the members who are apart of it....Is this only a place where we can find and share information or are there ways this community can play an active role in this process? And if so, then how?

Ben

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Permalink Reply by Bram de Roos on February 16, 2009 at 11:55pm

I think the biggest challenge when dealing with BOP-markets is to recognize the BOP not only as potential consumers but also as key-players in other parts of the business model, ranging from design and production to distribution and perhaps recycling. In my opion, a BOP strategy can only be succesfull and have a positive impact if local stakeholders are involved in several aspects of the business. Do investors take this into consideration when they invest in emerging markets?

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Permalink Reply by Bill Levine on February 17, 2009 at 9:17pm

Exactly. Investors have to realize that only building up developed nations won't create a sustainable planet. We're all in it together, and the 5 billion people at the BOP must also learn sustainability. Population growth is not a problem at the BOP if they manage resources efficiently. Clean tech development for the BOP can help in this effort.

Here's another BOP tech: Compressed Air

Attachments:

• Compressed_Air_PPT.pdf, 4.3 MB

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Permalink Reply by Ben on February 18, 2009 at 1:07am

Thanks for these postings. Would be great to hear from some investors. To what extent does a positive impact play a deciding factor in the decision to fund a project?

Anyone have some views on this....

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Permalink Reply by Bill Levine on February 19, 2009 at 7:32pm

I've found in talking to investors that most of the time they want to hear about Returns on Investment and Profit Margins— even for their own starving country. This indicates that they lack a large enough compassion to actually want to help others. However, compassion alone is not necessary. It must be combined with wisdom, in this case in the form on BOP investments. I would argue that the new generation of Clean tech VC is also a new form of wisdom, not yet fully utilized in Africa.

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Permalink Reply by Ben on February 19, 2009 at 7:42pm

Is thinking on this not starting to change? That a return on investment needs to be measured in people and environmental terms as well? If the American financial crisis has taught us anything then I hope it is that the single pursuit of profit is no longer a viable model.

It would be great to start collecting information on this approach for an African context.

Anyone have some info for the group !?

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Permalink Reply by Jaxi West on March 10, 2010 at 6:28am

It is my belief and experience anyone interested in investing in Africa needs to understand that the ROI needs to factor in the people and the environment in place of dollars, because most likely anything they are investing in (because of the enormous undevelopment of many countries) IS so impacting on both.

Any savvy investor would know this. The others are just money hungry - and riding on the old school train of PM and dollar value ROI's. Those things are important, I understand - not negating - it's just those types of investors aren't really welcomed in Africa anyway - if you really dig and ask the people of Africa. They just don't work well/gel with the type of person/character an African is by nature anyway - giving/caring and wanting to help others and make impacts on their communities not just in dollars.

Many investment projects in Africa aren't really your get rich quick opportunities either. They are for the basic human necessities of life or civilized life. About 70% of it is about having a heart, compassion and dignity of life. 30% is really the numbers. And if the numbers look right and you are providing a civility feature that you as the investor take for granted every day -then you are automatically making the right investment.

Or even if it isn't a civility item or such, the people in Africa will look out for your investment in their country or area b/c they are just grateful to have it. They are thankful that you, as an investor are willing to put their money into something for them, vs another opportunity you (as an investor) were probably shown. T

That is who they are about - their appreciation and gratitude is something we could all take a lesson from, even if only small. They will certainly do this more than a developed nation that will just say 'thank you' and take your money and walk away. Again, your savvy investor will know this - but your ammature (or ego centric investor) will not.

But I also believe it is up to the person with the investment project to educate the investor as well, b/c everyone starts off as an amature investor. So if they don't do a good enough job of educating or portraying this in their business plan, then they are just as much to fault. I tried to make this point to many of my clients.

Business plans for Africa projects need to be done/written in a slightly different way than others, and even other developing nations such as Latin America. It's a very unique situation in Africa and its very dynamic different countries and regions - and that uniqueness calls for a different method of telling your story, situation, reason and need for the money.

But I also took it upon myself as part of working the project do this also.... spending a lot of time educating others/investors, financiers on this point and I enjoyed it, and because it was part of my championing for Africa. (If we aren't standing up for their worth and value, who is? They need more voices such as ours) This community here is especially helpful and I think we do an enormous amount for the BOP.

Either way - enough of us already know -when you are talking about Africa, nothing fits in the typical boxed in 'project evaluating' mode of shoving it into a rating or statistical system for review - much like one is done for the UK or Mexico or America.

It is much more about interacting with the project head(s) and seeing the land/area/town yourself and seeing what you are investing in with your own eyes live -not on a piece of paper or on a website - because then you really see what you are investing in (the people, environment, the intense impact your dollar will make ) The ROI miraculously then becomes holistic and not just greedy number focused.

Not to offend anyone, but prime example is China. They have come in with their billions and bulldozing through. From my sources (reports on the ground) in various african countries: they are doing things half butt and making nothing African real/friendly/sustainable. Essentially they are giving a very loud message: not giving a hoot/care about the Africans themselves and it's all about the money return for them (and/or the race to beat Americans to it - another story of course)

From my experience in African and with the people there from different countries and with the people who are from there that live in other places now - the African's would rather wait another 6-9 months to have the right investor that comes in and communicates with them - that cares about them enough to factor their worth into the ROI equation - than have the money maker focused guy provide the money today.

But this is my knowledge/experience of 3 years and I do not profess to be an authority on it.

Jaxi :)

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Permalink Reply by David J on February 18, 2009 at 1:10am

Bram.... I think your statement is true in an ideal sense but it isn't necessarily the case in certain practices today. An example of a company that accesses the BOP without including them in the other aspects of the supply chain would be Kenya's Safaricom. Here is a quote from Michael Joseph, Safaricom's leader:

"“Vodafone’s bosses reckoned that the Kenyan market would top out at 400,000 customers. Yet Safaricom alone now has 10.5m. It is the most profitable business in eastern and central Africa, earning profits of $223.7m in the financial year to the end of March, up 16% on the previous year.”

and

“Michael Joseph quickly decided to go after “pay as you go” customers, who pay for mobile airtime in advance, and therefore do not pose a credit risk to the operator, though they spend much less than wealthier (and less numerous) contract customers. He introduced billing by the second—a big deal for those earning just pennies a month. And he revamped the firm’s brand, reasoning that the poorest customers are the most price-sensitive, and that a strong brand can help keep them loyal.”

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