The World’s Poor: An Economic Opportunity

Manju George
Head, Strategy, Platform on Digital Economy, World Economic Forum
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The world’s poor do not want to remain poor. It’s an important lesson for anybody working in global development. Many a development project, corporate philanthropy and NGO are designed with the view of the poor as a ‘beneficiary’ and often fail to scale and create sustainable impact.

There are indeed development contexts that seek philanthropic capital to be put to work. And there are others where the poor are best served as economic actors, as clients of business models.  What many seek are opportunities to be created, taking away bottle necks that prevent them from using their human and economic potential to the fullest. They move out of the vicious cycle of poverty and become productive economic actors. You hear the same across geographies – be it young loan officer I met in Lagos who aspires for a better job or the woman in a Mumbai slum saving up to buy a computer for her son’s education and hence ‘securing’ his future.

Microfinance created one such opportunity for millions globally. Many microenterprises, jobs and wealth were created on the back on tiny loans made available to the poor across the globe. We know today that microfinance is not sufficient as a stand-alone measure but it does give us a glimpse of the human potential that can be unleashed when a simple innovative business model addresses a critical bottle neck for the poor – access to collateral-free finance.

The poor grab every opportunity they get to improve their economic potential. Today, even in remote, rural corners in India, it’s difficult to find a household without a phone. 97% of Indians are expected to own a mobile phone by 2014. Significant volumes come from small value, pre-paid users for whom it is a critical business tool –smallholder farmers and fishermen use it to compare prices across markets before choosing where to sell. Migrants use it to transfer remittances back to their families.

The poor already pay a premium for services that link them better with the economy. Families with annual incomes below US$ 120 are paying fees of anywhere between US$2-6 per month to private schools despite free or subsidized public education available. They believe a private school that usually uses English as the medium of instruction is a better investment.

‘Employment’ is a priority for countries like India with large and young populations. Dig a little deeper and you realize a key bottleneck – with a lack of good quality education, many job seekers are not what recruiters would call ‘employable’. There are millions of small holder farmers and artisans poorly connected to markets. Address some of these bottlenecks and the ‘base of the pyramid’ is not a development problem, it is an economic opportunity. There is indeed fortune at the base of the pyramid, and an equal opportunity to create fortunes for the base of the pyramid.

Photo Credit: Flickr user “Meanest Indian”

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