Business must integrate the world’s poor as partners to get optimum growth mechanism working argued a UN report released in the first week of July, 2008 at multiple venues around the globe. Titled Creating Value for All: Strategies for Doing Business with the Poor, the report by the UN Development Program (UNDP) outlined roadmaps for the business to break free from the traditional mindset and opt for inclusive policies to take “the world’s poor as partners in growth and wealth creation.”
Commenting on the report, UNDP Administrator Kemal Dervi stated, “The power of poor people to benefit from market activity lies in their ability to participate in markets and take advantage of market opportunities. Business models that include the poor require broad support and offer gains for all.”
The report highlighted the raw potential of the poor for consumption, production, innovation, and business activity saying the more companies include the poor, the more likely they will contribute to economic growth and help reach the UN’s Millennium Development Goals (MDGs), global anti-poverty targets to be achieved by 2015. The report comes on the heels of the recent call by the UN Secretary- General Ban Ki-moon for action on the MDGs and demonstrates concrete ways the private sector can join in this vital effort.
Relying on case studies and business models, the report included five strategies private businesses used successfully in overcoming obstacles when doing business with the poor:

Adapting products and services

Investing in infrastructure or training to remove constraints

Leveraging the strengths of the poor to increase labour and management pool and expand local knowledge

Working with similarly-minded businesses, non-profit organisations or public service providers

Engaging in policy dialogue with governments

There is a vast untapped “potential for consumption, production, innovation and entrepreneurial activity,” and the report comes as a beaconing light to follow this path to “integrate and include the poor,” “to ensure the greatest good,” it was said. The report noted: “There is room for many more inclusive business models. There is room for more inclusive markets. And there is room for much greater value creation. In the words of Mahatma Gandhi, ‘The difference between what we do and what we are capable of doing would suffice to solve most of the world’s problems.’” Showcasing 50 case studies by researchers in developing and developed countries, the report demonstrated “the successful pursuit of both revenues and social impact by local and international small- and medium-sized companies, as well as multinational corporations.” Some of the cases are as follows:

In the Philippines, Smart, whose network covers over 99 percent of the population, offers low-cost, prepaid mobile phone airtime cards and eases financial transactions through the option to send remittances using short messaging service (SMS) technology.

Colombia, the Juan Valdez company is offering higher, more stable incomes to over 500,000 smallscale coffee growers. -In China, a company offered affordable computers and training to rural farmers via a low-cost operating system and software that is easier for customers with limited education, thus expanding its market base.

Cabo Delgado, Mozambique, the liquefied petroleum gas supplied by VidaGas improves the sterility of medical instruments used to deliver babies.

The Democratic Republic of the Congo (DRC), where the banking sector was decimated by years of war, a mobile phone company responded by offering encrypted short message service technology to allow customers to wire money. The company now has two million customers in the DRC.

Kenya, owner-operators of healthcare micro-franchises have increased their monthly incomes while treating about 400,000 patients in rural areas and urban slums suffering from malaria and other diseases.

Mexico, a construction company has helped more than 14,000 Mexican migrants in the United States build, buy or improve a house back home in Mexico. From 2002 to 2006, the company generated USD 12.2 million from construction material sales, and since late 2005, 200 houses have been sold.

Morocco, the subsidiary of a European water and waste company has dramatically increased the percentage of people with access to water and electricity in the shanty towns of Casablanca. By hiring and providing technical and management training to community representatives, the company ensured local oversight. Now more than 30,000 new households are connected to Casablanca’s electricity system, and monthly household expenses for energy in this area have dropped from USD 17 to USD 6.

In the Russian Federation, a microfinance NGO transformed into a bank to provide access to commercial capital and reach more clients. In 2006, the bank helped create 4,250 direct and 19,950 indirect jobs. In 2007, its loan portfolio was projected to exceed USD 60 million with net profits on those loans of more than USD 2 million.

In India, a sanitation company developed low-cost toilets for use among the poor, freeing up 60,000 people from work as “scavengers” in the field of human waste removal. Overall, 10 million people have benefitted from the toilets in homes and public places. The report noted that Sulabh’s revenues reached USD 32 million in 2005, with approximately USD five million in surplus. “The public toilets run by Sulabh break even within eight to nine months,” it added. “Facilities in prominent places were highly profitable.” There is ample scope for replication and even scaling up of the Sulabh model that its founder Bindheshwar Pathak started in 1970, UNDP said. The report not only gave examples of successful ventures but also offered new tools for interested businesses.

For example there is a strategy matrix to help businesses find potential solutions to common constraints, while another new tool, heat maps, offers a visual overview of the market or services landscape, and a first look at potential new markets. Citing the powerful example of Sulabh in India, the report noted that first there was a complete lack of market information, second an acute lack of widespread knowledge on propagating low-cost hygiene solutions and finally, perhaps the most critical factor: the poor did not have access to finance to provide sanitation.

But the report highlighted how Sulabh showcased the scheme in a pilot project in the urban areas demonstrating the popularity of pay-per-use toilet facilities, constructing a museum and planning for a sanitation university, then launched policy dialogue with governments.

“Sulabh influenced the central government and over 100,000 public toilets will be constructed in addition to local government’s provision of toilet-related loans and subsidies,” the report said. Concluding with a self-explanatory opportunity example from Guatemala, the report stated that in Guatemala’s western regions the heat map shows that 13 percent of people living on less than USD two per a day have access to credit, but that this figure drops to less than eight percent in the country’s eastern regions.