On March 19, I attended the meeting IDB organized in connection with the Annual Board of Governors’ Meeting in Cancun on The Role of the Private Sector in the Economic and Social Development of Latin America and the Caribbean. As part of this event, the Opportunities for the Majority initiative organized a panel titled “Scaling the Impact of Market-based Business Models with the Base of the Pyramid.” We showcased three models, one from Brazil, one from Mexico and a regional model. While each model was selected due to its potential and ability to scale, what I came away with after the panel was how much traction the concept of business models for the BOP has gained over the last two years. Not only are companies interested in new business models to reach low income markets, they are networking to achieve needed scale and reach.
In the case of Mexico, the panel featured Pegaso Banda Ancha, a telecom company that is piloting a rural connectivity model in Mexico. A 6 month pilot financed by the IDB is underway to help Pegaso better understand demand for internet usage, price points, and how to construct a viable business model through microcredits. Through the partnerships formed over the last year, the company is now interacting with new distribution opportunities and clients that are part of the IDB’s network in Mexico. Mi Tienda, a company sponsored by private Mexican and international social investors and a new member of the Opportunities for the Majority Dialogue, supplies hundreds of small grocery stores in rural communities. Mi Tienda is transforming the distribution networks of its stores by establishing regional warehouses, streamlining the delivery of food, household goods and other products, making it possible for the stores to offer a wider variety of products at lower costs. Mi Tienda currently supplies over 800 stores but is expected to expand its distribution network to 22,000 stores in the coming years. Thanks to connections fostered by their mutual involvement with the IDB, Mi Tienda is now a potential source of distribution for Pegaso’s connectivity.
I see similar partnership possibilities growing for Conversion Sound, the regional model that participated on the panel, which promises to enable affordable hearing devices for the hard of hearing. It is now entering discussions with Mexican and international social investors that are also part of the Opportunities for the Majority Dialogue, to enable its distribution potential.
Yet another positive outcome is a new relationship for CEMEX, Mexico’s leading cement manufacturer. CEMEX entered into the world of social investing over a decade ago when it launched home improvement microfinance initiatives, and is now partnering with the IDB in an innovative program that allows residents of low-income urban neighborhoods to invest in the infrastructure of their own communities by pooling individual microloans to fund street paving. What is new, however, is that CEMEX, as a result of its participation in the Opportunities for the Majority Dialogue, is also exploring the possibility of selling materials for concrete flooring through Mi Tienda’s networks, which would help rural residents make their homes safer and more sanitary.
Additionally, Mi Tienda is interested in working with the “Construction Doctors” project, our third panelist in Cancun, to learn more about how they partner with hardware stores to offer training sessions to construction workers.
Seeing these new connections starting to form is very gratifying, as this is exactly why we started the Opportunities for the Majority Dialogue. When we work together and share our resources, all of our efforts are multiplied and we can reach scale that much faster. I look forward to following these new connections and to seeing some of them turn into real partnerships.
