Approach

Expanding Access to Markets for Business and People living in Poverty

The process of globalization continues at a rapid pace. The exchange of information, goods, and people around the globe is increasing by the day. This broadening and deepening economy improves our productivity. Within the past 60 years, more wealth has been generated than at any other time in history.

Still, billions of people remain excluded from this broad and deep economy. In the rural villages and urban slums of the world’s developing countries, 2.7 billion people live on less than 2 dollars a day. Globalization can be an opportunity for them as well, if they get access to markets and participate in trade as producers, consumers, employees and business owners.

For business, these markets in the developing world are still largely untapped. Innovative business models can allow businesses to become first movers into these markets and reap the benefits of profitability and long term growth. The innovations they make on the way may well generate competitive advantage in established markets.

Innovative Solutions can Overcome Market Constraints

However, doing business in the rural villages and urban slums is not business as usual. These environments typically lack the market infrastructure that enables business activity: it is difficult to find detailed information about the targeted market environment, regulation can be burdensome while at the same time property rights and contracts are not effectively enforced; the people one seeks to include as consumers, producers, or employees have little access to the skills and information as well as the credit, insurance or banking services they would need to become business partners. In short, the situation can be quite challenging.

Nonetheless, these constraints can be overcome – through innovation. Product innovations, such as LED lights instead of kerosene lamps, provide cheaper, more useful and less resource intensive goods and services. Process innovations, for example those leveraging information and communications technology, increase efficiency and reduce transaction costs. Business model innovations, like microfranchising or joint consumption, can help to achieve scale and reach in untapped markets.