On June 27 and 28, the IDB’s Opportunities for the Majority Initiative held its first major international conference in Sao Paulo, Brazil. The BASE Forum drew an overflow crowd of almost 800 registrants from a variety of backgrounds, including business, international development, government, and nonprofits, all eager to learn about the concepts behind base of the pyramid business models and how they are playing out at companies throughout Latin America.
The first day of the forum offered a half-day of speakers and panels with a very specific focus: SMEs for the BOP, in other words, small and medium-sized enterprises that serve the base of the pyramid. Small businesses, embedded as they are in communities, have deep knowledge of the specific needs of their customer base, and are therefore uniquely positioned to meet the gaps in delivery of quality, affordable goods and services to low-income individuals and families. Additionally, many entrepreneurial-minded members of BOP communities may have viable business concepts, but lack the resources and know-how to go beyond the informal or microenterprise level. Small businesses have always been vital to a healthy economy, but it’s now increasingly clear that they also have a part to play in development at the base of the pyramid.
Two panel discussions focused on the specific strengths and challenges of the SME sector when it comes to dealing with the BOP. As one panelist, Rodrigo Villar of New Ventures said, it’s important to speak of success stories in order to inspire other entrepreneurs. The companies represented on the panels certainly know success, but they have worked hard and overcome difficulties to get there.
Up to 600 small-scale entrepreneurs in Brazil will soon benefit from a new project announced at the BASE Forum. The IDB’s Inter-American Investment Corporation, Banco Itau, the Republic of Korea’s IIC Korea SME Development Trust Fund and Endeavor Brazil are joining forces to develop resources and training programs to support Brazilian SMEs interested in launching or expanding BOP business models.
Also on Monday, a panel of executives from funds and foundations talked about the field of impact investment, or investment in companies that promise not only financial returns but also social impact. Though, as Aavishkar’s Vineet Rai acknowledged, human impact is not measurable in the same way as profits are, a growing number of investors are seeking out that “double bottom line” of simultaneously making money and changing lives. On Tuesday morning, before the second day of the Forum opened, a select group of executives learned more about the U.S. State Department’s impact investment program, “20ii,” and its plans to launch a network in Brazil to promote investment in the BOP.
Tuesday’s official program was broad in scope, designed to have something for everyone from businessmen who know little about BOP business models, to managers already deeply involved in such projects. Executives from many leading regional and international firms, including DuPont, Walmart, Novartis, Procter & Gamble, CEMEX, LEGO ZOOM and PepsiCo, addressed the gathering, offering examples of their companies’ interactions with the base of the pyramid. Some were quite clever, such as a story told by Tarek Farahat, head of Procter & Gamble Brazil, about increasing market share among low-income consumers from 5 to 30% by promoting its extra-absorbent diapers as better for parents who had to share a room with their babies and also had to get up very early for a long work day. Others were inspirational, like LEGO ZOOM CEO Mary Anne Amorim, who talked about how her company had to let go of all preconceived notions and really listen to and learn from low-income communities as they developed their early education products.
Two sets of simultaneous breakout sessions explored issues in depth, such as housing, the digital divide, and working with partner organizations to reach scale. There were also several networking opportunities throughout the day, including coffee breaks, lunch, and a festive closing cocktail party.
One issue that arose in many discussions over the two days was the need for an “ecosystem,” or support system that would better enable the establishment and growth of business projects that involve the BOP. Financial institutions are starting to embrace the possibilities of taking on low-income customers and participating in the financing of projects ranging from small-sized mortgages to college loans. Leaders of several of the region’s leading banks: Banco Itau, Santander, Tribanco, made it clear that BOP projects are becoming part of their core strategies. But the ecosystem in which market-based poverty solutions will thrive is extremely complex and includes businesses, banks, federal and local governments, nonprofits, academia, development institutions and much more. As Michael Chu, Harvard Business School professor and founder of the IGNIA Fund said, “A market without regulation is a jungle in which only the fiercest beast will survive.” Developing the kind of regulations that will support, not constrain, the interactions between all these different actors is a work in progress.
The size and scope of the first BASE Forum underscored the IDB’s stated commitment to work toward doubling its annual investment in BOP business projects through its Opportunities for the Majority initiative. But the real legacy of the event will be the new business models that grow out of ideas discussed in the plenary hall or over lunch. Keep reading MajorityMarkets.org to learn about innovative market solutions for the BOP in Latin America and the Caribbean.
