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June 2009
Providing finance to emerging farmers : First National Bankʼs Supply Chain lending model

After a long and perhaps misguided emphasis on industrialisation as the preferred path out of poverty and towards development, agriculture is receiving renewed attention in development circles. The latest World Bank Development Report argues that agriculture “must be placed at the centre of the development agenda if the goals of halving extreme poverty and hunger by 2015 are to be realised. This has particular significance for the African continent, which despite rapid urbanisation remains the world’s most rural continent, and where the potential leverage of agriculture and rural development is the greatest.

May 2009
The Accenture Development Partnerships - Enabling development sector organisations to maximise their impact at the Base of the Pyramid

Even at the best of economic times, developmental challenges such as fighting poverty, providing access to health and education, protecting the environment and helping to create the right conditions for sustainable growth and prosperity is an uphill task. The worst economic crisis to hit the planet in at least two generations will make this task more difficult than ever, and increase pressure on all stakeholders in the field of development to channel their resources in the most efficient manner possible.

March 2009
SAB Miller – Integrating smallholder farmers into the supply chain of an MNC

From a business perspective, increasing economic opportunity at the Base of the Pyramid (BOP) is most often designed around three basic models : sourcing from, distributing through, or selling to the lower income segments. Many of our recent factsheets were variations of the « selling to » model, including for example Danone, Massmart, Sanlam or Vodacom, which have all approached the BOP by customising and innovating their products to make them more affordable and relevant to a low income customer base. The « sourcing from » approach, for its part, involves integrating the BOP into a company’s value chain by entering into partnerships with local suppliers from within the lower income segments, most often SMME’s (Small, Medium and Micro-entreprises). This approach makes particular sense for many firms involved in the food and beverage sectors, since agriculture is often the core economic activity of many at the base of the economic pyramid. Integrating the BOP into its value chain in a profitable way is also often referred to as so-called « inclusive business models » by the UNDP (United Nations Development Programme). ¹

March 2009
The Business Place – Helping to foster entrepreneurship at the BOP

Small, Medium and Micro- entreprises (SMME’s) form the backbone of South Africa’s economy, not just in terms of their contribution to national output, which stands at an estimated 39%, but especially in terms of employment. According to current estimates, a staggering 74% of South Africans active in the economy are employed by SMME’s. Given South Africa’s socio-economic structures and challenges, encouraging entrepreneurship is arguably a strategic national priority. SMME’s not only add value to the communities they serve in terms of providing goods and services, they empower these communities as they create employment, and their owners often act as role models within their communities.

February 2009
Learn to Earn - Helping people at the BOP achieve their full potential

There is a paradox in the South African job market caused by the skills gap. Millions of South Africans are unemployed, and yet there are many thousands of unfilled positions in the economy. The skills gap and its socio-economic consequences is perhaps one of the most damaging legacies of South Africa’s past. During apartheid, school boycotts in the black communities, combined with lower education standards and infrastructure, led to a lost generation for the country. Today, the country’s educational system, by many measures, is still failing to equip young people with usable skills. Of all income segments, people at the bottom of the pyramid have the lowest employability rate. But some organisations and NGO’s in South Africa are trying to fill the gap in South African education and helping to equip people with marketable skills¹.

January 2009
Market opportunity - Is solar energy an option in Southern Africa ?

The economic and environmental issues revolving around energy have perhaps never been quite as prominent as today. Global climate change, and its potentially devastating effects on our planet’s environment, have indeed injected an unprecedented sense of urgency in the search for clean, sustainable and renewable sources of energy. From an economic standpoint, wild price fluctuations, especially for oil, and disruptions in the supply chain (as witnessed, for example, by power cuts and load-shedding in South Africa in 2008), are just two examples demonstrating the importance of a reliable source of energy in ensuring economic stability and securing investment. Against this background, the question of how to satisfy the growing and largely unmet energy needs at the bottom of the pyramid (BOP), especially electricity, is the subject of many debates and studies.

December 2009
Safmarine - Providing tools to develop businesses in the BOP

A visitor to almost any South African township cannot fail to notice how many businesses are run from a recycled or converted shipping container. Across the country, old shipping containers are used to house enterprises as diverse as phoneshops, barbers, convenience stores, video renting outlets and even bank branches. Shipping containers are practical, demand minimal maintenance and can be moved fairly easily if needed. A typical example of a tools provider is Safmarine’s Community Container programme, through which over 8,000 retired shipping containers have been deployed across South Africa in a large variety of projects. Many of these projects directly facilitate business development, and direct employment to 5,000 entrepreneurs has been created.

November 2008
Psitek - Bringing affordable telecommunication to emerging markets

The emergence of mobile telephony and cellular technology over the last 18 years has had a major impact on the economies the emerging world, and particularly in Africa. Traditional landline technology was never widely available in Africa, for reasons linked to infrastructural constraints, the overall inefficiency of state-controlled national telephone companies and the prohibitive cost of telephone services. Demand for communications however was huge, and gradually unlocked by the emergence of mobile telephony and cellular technology. Despite a very strong growth in call volumes, as a result of mobile phone penetration, there remains a significant proportion of people in lower income segments in emerging markets who cannot afford their own handsets, or have limited access to telecommunication services. For these income segments at the base of the pyramid (BoP), solutions have appeared across developing markets in the form of public payphones, aimed at providing universal access to telecommunication services.

October 2008
Collect-a-Can - Working with the BOP to help protect the environment

Over the past few decades, rising population numbers and rapid economic growth has led to an explosion in the consumption of the planet's natural resources, and put huge pressure on the global environment. Even the most sceptical among policymakers now agree that human economic activities are an important factor in accelerating global warming and the ensuing climate change. Recycling is one of the responses to these environmental concerns. The benefits are clear, as processing materials for re-use most often result in saving precious resources and energy: in fact according to some studies, up to 95% less energy is used to recycle steel, for example, than to produce it from scratch.

September 2008
ABSA - fostering entrepreneurship at the base of the pyramid

Encouraging and nurturing entrepreneurship arguably form a crucial part of any economic development strategy for an emerging country such as South Africa. Given the immense challenges the country faces in terms of poverty alleviation and unemployment, small entrepreneurs, especially in the so-called "informal" economy, provide income, jobs, and essential services in lower income segments at the base of the pyramid (BOP). In South Africa, as in other emerging markets, government, private sector and civil societies can achieve very encouraging results in helping people in the lower income segments to lift themselves out of poverty. This may especially be true when, as we will argue in this factsheet, an integrated, holistic and well thought strategy is adopted.

August 2008
Offering Micro-insurance products for the BOP - A Sanlam Initiative

The insurance industry in South Africa, as in many other countries around the world, has gone through momentous changes over the last decade or two. One of the main forces the industry has had to deal with was increasing deregulation of financial services, allowing banks and insurance companies to offer similar services and compete for customers in each other's backyards. Another change that has gained momentum is the increasing offering of insurance products to cater for the needs of lower income segments at the base of the pyramid (BOP). This trend is not unique to South Africa as many other emerging countries have seen a strong development of so-called micro-insurance. Micro-insurance refers to insurance policies covering risks with relatively small payouts for very low premiums, providing affordable insurance products for lower income.

August 2008
Low Income does not mean No Income - A Vodacom Initiative

Mobile telephony has undoubtedly transformed communications in almost every country of the world over the last decade and a half. Where historically traditional landline phones were accessible and used almost exclusively by middle and higher income segments, mobile telephony has made it technologically and financially viable to provide access to telecommunications to lower income segments as well, and the response from this market exceeded all expectations. Over the last few years mobile phone companies across the globe have often measured spectacular growth rates in terms of subscriber numbers. In Africa in particular, the market has not nearly reached the saturation levels of more well-established markets. In fact the industry expects the African market in particular to reach 250 million subscribers or a quarter of the continent's total population by 2010¹. This would amount to a 100% growth rate in the space of five years.

July 2008
An Efficient, Modern and Affordable Road Public Transport System - The Golden Arrow Challenge.

The structures and organisation of public transport in South Africa are still heavily influenced by the historical legacy of separate residential areas along racial lines. Spatial development in urban areas typically involved the formation of largely white, high-income, low-density residential areas and "satellite" low-income, high density black townships, with industrial zones often marking a clear separation between the two areas. In many cases, especially the larger South African cities, distances between such two areas can be significant (about 30km for example between Cape Town and Khayelitsha), so the need for efficient mass transit transport networks is evident. Yet despite considerable demand for public and commuter transport, especially from lower income segments, poor policy planning over decades has led to generally inadequate and unintegrated.

June 2008
Danone - Bringing healthy nutrition to the BOP

As nutrition is a basic, universal need, food companies logically count among the first category of businesses that can benefit from the opportunities at the Base of the Pyramid (BOP) income segment, while simultaneously contributing to socio-economic development. According to the Standard Bank Group Economics Report (2005), in South Africa, food expenses typically account for at least 60% of total spending in the poorest 20% of households. The socio-economic benefits of good nutrition are huge and go far beyond the fulfilling of a biological need. Well-fed people are healthier, leading to lower medical expenses, and well-fed children do better at school, thereby increasing their prospects for succeeding economically in the future.

June 2008
From Informal to Formal, How to uplift your Sales Network - An SABMiller South Africa Initiative

For decades already, alcoholic beverages, and beer in particular, have been among the few products with almost universal appeal across income segments in South Africa, including the Bottom of the Pyramid (BoP). And despite being long established, the market is far from being saturated: in fact according to some studies South Africa’s liquor industry is the fastest growing in the world. However, good prospects for growth cannot conceal the fact that the industry is facing a number of important challenges over the coming years, including increased regulatory pressure to reach transformation objectives, ethical issues surrounding responsible drinking patterns, and pressure to introduce more competition in a market dominated by a few players.

April 2008
Bridging the gap between the wholesaler and the rural retailer - A Massmart Initiative

South Africa’s population has been urbanising at a rapid pace over the last few decades, but despite this fast growth around the country’s main urban centres, at least 40% of the people still live in rural areas. This translates today into almost 20 million people, and South African retailers have been increasingly searching for ways to improve the servicing of this market and unlock its full potential. For both formal and informal retailers, rural areas present specific challenges in terms of infrastructure, income levels and customer needs.

High impact development projects for the Tourism Market

Responsible Tourism
Tourists traveling to developing countries are increasingly choosing to become actively involved in social and environmental development projects in the countries they visit.
This trend is motivated by a growing awareness in the Western world of the resource gap between developed and developing nat ions and is further strengthened as more and more tourists experience a sense of unease at simply enjoying the tourist attractions in developing countries without giving something back.

Responsible tourism takes many forms and can range from simple donations to a worthy cause whilst on holiday to a lengthy period of volunteer service being the primary motivation for traveling to a foreign destination. In some cases, individuals may wish to offset the carbon emissions from their air travel by planting trees or investing in a voluntary carbon reduction project. Others ndividuals however, may place a higher value on making a difference in the lives of underprivileged people through community development initiatives.