Question: Going by the well known predicaments of the private sector in Nigeria, in line with your propagation thus far [about Bottom of the pyramid (BoP), markets for poor or inclusive market], is it not time for this sector to adopt what’s happening elsewhere – Evolving business models that suit this concept, as respite? Please assist with education on what an interested entrepreneur should expect – M. Ibrahim
In continuation with hints on what intending private sector operators must uphold in the last piece, such must realise that to make marketing system work for both the rural and urban poor in Nigeria, the government and non-profit organisations, should be involved to whatever extent, to facilitate this.
Any private sector concern around contemplating getting into Bottom of the pyramid (BoP), markets for poor or inclusive market must not fail to recognize, and uphold, the following as phases of business development, in order to operate successfully in this terrain: Identify opportunities; analyze the market; find solutions; develop the product; secure funding; engage partners; leverage local capabilities; test the model; understand the impact; adapt the model; expand locally; and transfer to other environments.
Opportunities in the BoP market are vast, and so are the obstacles. It is evident that rural villages and urban slums are challenging environments for doing business. Systems rarely exist for collecting and delivering goods and providing services. Vital market infrastructure is limited or nonexistent. Without working financial systems, the poor inhabit a cash economy. Lack of reliable police and legal systems makes all market actors find it an uphill task or even impossible to enforce contracts. Always bear in mind that business with the poor will not be business as usual. A major obstacle is the lack of information about the poor, such as on goods and services they require; how much is affordable to them, the type of goods they could produce and also services the poor could provide.
For areas of constraints that may come the ways of new business ventures in BoP, have these in mind as likely stumbling blocks: Limited market information [businesses not knowing much about the poor—low consumers’ preferences, level of their affordability, capabilities (for products and offerings as employees, producers and business owners)]; Ineffective regulatory environments (BoP markets often lack regulatory frameworks which allow business to work; non-enforcement of rules and contracts; then lack of access to opportunities and protections afforded by a functioning legal system);Inadequate physical infrastructure (lack of good roads and supporting infrastructure hamper effective transportation; water, electricity, sanitation and telecommunications networks are lacking most of the time);Lack of adequate knowledge and skills (poor consumers may be ignorant of the use and benefits of certain products, or may lack knowledge on how to use such effectively; poor suppliers, distributors and retailers are likely to also lack same and skills to deliver quality products and services always, promptly and at appropriate pricing); Limited access to financial products and services (due to expected lack of credit, poor producers and consumers are not likely to afford financing investments or make large purchases; insurance, often being out of reach, the poor can not protect their meager assets and income against contingencies. In the absence of transactional banking services, financing is insecure and expensive).
Unlike what such ventures must have been used to in typical ‘every-day mode’ of operating business concerns, BoP business models thrives on collaboration efforts (with the government and non-profits) for effective proliferation and growth. With this, markets will incorporate more poor people, create value for all (e.g. profits, increased incomes, and then empowerment of the poor through engagements in vital productive system). This must be without exploiting the poor, but rather bringing such out of poverty to impact on the country’s economy generally.
It is essential for you to always realise that for success in inclusive markets, private sector ventures need to completely re-think and re-design the business model, and not just for product offering. Moreover, there must be elements of a disruptive approach (like, ‘thinking-out-of-the-box’) for BoP friendly business models to be successful. What is required here is a complete shift from traditional ways of thinking about customers, product features and pricing.
If it means Nigerian entrepreneurs becoming “Copy Cats” to adopt BoP (a well known general tendency here), so be it. Businesses here tend to lookout for how lucrative a new business model becomes, to prompt a rush into the same business model immediately after its success – To even ‘out-perform’ the original inventors of the new concept. Now that BoP is fast gaining ground in other parts of the globe, and Nigeria obviously out of the picture, if it requires private sector concerns in Nigeria replicating business models as successfully applicable elsewhere (I am aware that most being applied elsewhere seem quite suitable to the Nigerian environment), I give a ‘thumbs up’ for such a move.
From more than 100 case studies I have access to, interested parties should consider these as insight to areas the “Copy Cat” tendencies could even be directed at, provided it favours the Nigerian poor:
- - A multinational company (MNC), growing businesses for impoverished rural women through retailing of health and hygiene products in India.
- - Treadle pump in Bangladesh, India and Nepal, to aid small farmers’ participation in agricultural value chain for increased incomes.
- - Affordable eye-glasses production in India, by a renowned eye care system.
- - A Dutch based MNC’s yoghurt production and sales scheme, for child development, using well-organized network of women in Bangladesh.
- - A leading provider of cement in Sri Lanka, addressing housing needs of the poor.
- - Technology for the production of energy bar from Spirulina (a blue-green algae) in India.
- - An international bank’s infusion into “Susu” microfinance and traditional collection services (quite familiar to Nigerians, and serve as banks for the poor) in nearby Ghana.
- - A super-market chain (with presence even in Nigeria) supporting small-scale farmers for fresh fruit and vegetable needs. (To be continued)
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