Markets and the poor – transforming the poor into consumers

This peculiar view of reducing the poor to mere consumers is essentially problematic. More on this later. In the meantime, I am posting this interesting article.

Business and Poverty: Opening markets to the poor by Djordjija B. Petkoski, V. Kasturi Rangan and William S. Laufer (Development Outreach)

Textile00 In recent years, business has played a significant role in alleviating poverty, especially in sectors such as telecommunications, information technology, and microfinance. Certain initiatives in these sectors, such as microfinance in urban Latin America and wireless telecommunication in Asia, have yielded impressive results, creating unrealistic benchmarks against which other corporate programs are being judged. Although businesses have made significant contributions in some sectors, in many others they have been unable to “move the needle” on poverty.(1)

There are many ways in which business can help in opening markets to the poor, ranging from multinational corporations (MNCs) and local small and medium enterprises (SMEs) to corporate foundations, business alliances, and small entrepreneurs from both developed and emerging economies.

It can be argued that the private sector may have contributed to broadening the gap between the rich and the poor and to environmental degradation, but business has also helped improve the quality of life in many low-income areas.2 There have been quiet but strong links among economic growth, innovation, and development. This article is not intended to defend once again the fundamental economic rationale for capitalism and its potential role in alleviating poverty. Rather it is meant to bolster that premise with current examples and practices and to urge businesses to adopt a more proactive role in the development of markets that benefit the poor. Our perspective is that a company’s responsibility is not only to increase its investors’ wealth, but also to help create wealth for the 4 billion or so people at the Base-of-the-Pyramid (BoP) who make do with incomes of less than $5 per day, as characterized in the article on the Next Four Billion.

Poverty is an economic, social, cultural, political, and moral phenomenon and we believe it is necessary to address these dimensions in an integrated fashion—one that contributes to sustainable global development. Nestlé’s Milk District Model illustrates this approach. By providing opportunities for training, education, and a steady income to poor rural farmers in exchange for a consistent milk supply, Nestlé effectively integrated poverty alleviation into a business model that was mutually beneficial: the company has been able to increase its supply of fresh milk and poor communities have benefited from job security, improved nutrition, and a better standard of living…

More here

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