1 July 200., New
York — Creating Value for All: Strategies
for Doing Business with the Poor, a new and groundbreaking
report released today by the UN Development Programme (UNDP) offers
strategies and tools for companies to expand beyond traditional business
practices and bring in the world’s poor as partners in growth and wealth
creation. Part of UNDP’s Growing Inclusive Market’s initiative, the report
draws on extensive case studies and demonstrates the effectiveness—both for
human progress and for wealth creation—of more inclusive business models.
UN Secretary-General Ban Ki-moon recently issued a call
to action on the Millennium Development Goals (MDGs), urging an international
effort to accelerate progress and to make 2008 a turning point in the fight
against poverty. This report demonstrates concrete ways the private sector can
join in this vital effort.
The poor have a largely untapped potential for
consumption, production, innovation, and entrepreneurial activity. But the more
business models integrate and include the poor, the more likely companies
successfully pursuing revenues will also help in fulfilling the MDGs.
Yet the private sector cannot meet the needs of the
poor nor overcome all the obstacles to doing business with the poor alone. The
report outlines what businesses, governments, communities, non-governmental
organizations (NGOs), donors and international organizations can do to ensure
the greatest good.
As UNDP Administrator Kemal Derviş writes, “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.”
Creating Value for All
highlights five strategies that private businesses have successfully used to
overcome the most common obstacles to doing business with the poor:
- adapt products and services;
- invest in infrastructure or training to remove constraints;
- leverage the strengths of the poor to increase labour and
management pool and expand local knowledge;
- work with similarly-minded businesses, non-profit organizations or
public service providers;
- engage in policy dialogue with governments.
As the authors note, “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.’”
Creating Value for All showcases 50 case
studies by researchers in developing and developed countries. These studies
demonstrate the successful pursuit of both revenues and social impact by local
and international small- and medium-sized companies, as well as multinational
corporations.
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.
In 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.
In 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.
In 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 US $12.2 million from construction
material sales, and since late 2005, 200 houses have been sold.
In 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 $17 to $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 $60 million
with net profits on those loans of more than $2 million.
In addition
to examples from the 50 case studies, Creating Value for All offers new
tools for interested businesses. A strategy matrix helps 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. For example, in Guatemala’s western regions the heat map
shows that 13 percent of people living on less than $2 per a day have access to
credit, but that this figure drops to less than 8 percent in the country’s
eastern regions.
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The
report will be unveiled in Paris,
France, on 1
July 2008 followed by more than two dozen regional and national launch events
across the globe.
For further
information please contact:
In New
York: Cassandra Waldon, Tel: +1 212 906 6499
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Heather Bourbeau, Tel: +1-212-906-5797
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The Growing Inclusive Markets Initiative, led by
UNDP, is a platform to facilitate the engagement of all actors for more
inclusive business models so that the pursuits of wealth creation and human
progress can work to mutual advantage. It gathers relevant information,
highlights good examples, develops practical operational strategies and creates
space for dialogue. For more information: www.growinginclusivemarkets.org
UNDP is the UN's global development network,
advocating for change and connecting countries to knowledge, experience and
resources to help people build a better life. We are on the ground in 166
countries, working with them on their own solutions to global and national
development challenges. As they develop local capacity, they draw on the people
of UNDP and our wide range of partners. www.undp.org
01.07.08
