polis: a collective blog about cities worldwide

‘Doing Business with the Poor’

by Katia Savchuk

Last month, CIVICUS highlighted a notable UNDP report that profiled 50 examples of business models that successfully integrated the poor. “Creating Value For All: Strategies for Doing Business with the Poor” looked at businesses across the globe that constructively involved poor people as clients, customers, producers, employees or business owners. “Successful” models were those that could be profitable for poor people and that promoted human development.

The report ran through a typical list of challenges to the economic inclusion of low-income populations – much of what keeps people poor in the first place (limited market information; ineffective regulatory environments; inadequate physical infrastructure; missing knowledge and skills; restricted access to financial products and services).

More interestingly, the report took the case studies and distilled strategies that successful business models used to get past the constraints:

    •    Adapting products and processes (e.g., developing intuitive software for computer-illiterate Chinese farmers)

    •    Investing in removing constraints (e.g., investing in dairy facilities for Mauritanian herders to address inadequate infrastructure)

    •    Leveraging strengths (e.g., tapping social networks for micro-credit schemes)

    •    Combining capabilities and resources with other organizations (e.g. CEMEX in Mexico partnering with Mexican consulates in U.S. cities to do market research)

    •    Engaging in policy dialogue with governments (e.g. Filipino entrepreneur convincing the government to study possible uses for discarded coconut husks)

These case studies seem like win-win situations, and it is refreshing to see examples of models that are working rather than focusing on seemingly insurmountable obstacles.

The report is based on this principle: “The value of including in functioning markets the billions of people that are now shut out of them can hardly be overestimated. Such value will accrue to business, to the poor and to society at large.”

Does this economic ideal hold up? Do the poor really end up as winners in all of these models? Can the poor win by being integrated into existing markets? How can they avoid being co-opted? 

Credits: Images from the UNDP.