Reaching the Bottom of the Pyramid: New Business Models to Drive Sustainable Growth
Plenary Session Summary
Tuesday, February 9, 2010 | 4:30 p.m. to 6:00 p.m.
Speakers:
- James Boateng, Managing Director, Cadbury Ghana (Kraft)
- Paul Ryan, Director of External Affairs, Vodafone Ghana
- Prishani Satyapal, Head of Sustainability and Community Affairs, AngloGold Ashanti
- Lord Hastings of Scarisbrick (CBE), Global Head of Citizenship and Diversity, KPMG
Chair: Natalie Africa, Programme Manager, Business Call to Action, UNDP
Key Insights:
- Across industries, businesses are developing innovative new models that leverage core operations to achieve both commercial and development goals.
- Partnerships with other private sector partners, government or donor organizations are critical to the successful implementation of these “inclusive” business models.
- Customers, or communities, need to be at the center of a company’s long-term growth strategy.
Session Overview:
Natalie Africa introduced the Business Call to Action initiative, which is a multi-stakeholder initiative that encourages companies to develop business ventures or models that achieve both commercial and development goals. The Business Call to Action counts among its members some of the world’s largest companies including Cadbury, Vodafone, The Coca-Cola Company, Tata, and Yara. These companies and many others are engaging more productively with base of the pyramid markets who are suppliers, workers, and customers by integrating inclusive business models into their daily operations. Ms. Africa introduced the four panelists and asked each to describe their efforts to realize business and development goals.
Cadbury (Kraft)
James Boateng outlined Cadbury’s philosophy: Business should be the driver or economic development and growth. Cadbury has a 100-year history in Ghana, sourcing 70 percent of its cocoa from the country, so it made sense that the company would invest in the nation’s agricultural sector.
What’s more, the Ghanaian cocoa industry is declining in productivity. Ghanaian cocoa production is currently at levels that are approximately 40 percent of its potential and the average cocoa farmer cultivates just 6 sacks of cocoa per year.
To enhance cocoa productivity and improve the lives of farmers in cocoa producing communities, Cadbury developed its Cocoa Partnership initiative. This 10-year initiative was created in collaboration with the Ghana Cocoa Board, the United Nations Development Programme and a number of other international and local organizations to provide farmers with training and technical assistance in cocoa production, access to finance, and enterprise development assistance. Just a year into this initiative, Cadbury is already working in 100 cocoa farming communities.
So far, the most important lessons from this initiative have been:
1. Partnerships are critical to this program’s success.
2. Communities must be included in developing the appropriate interventions.
3. Must take a long-term approach to this work as success cannot be achieved over night.
KPMG:
According to Lord Michael Hastings, KPMG’s philosophy for reaching the base of the pyramid markets is simple: Sustainable jobs are going to drive growth. Four billion people in the world live on less than $2 a day, representing a huge, untapped market. To unleash this market potential, people first need to be economically empowered.
At KPMG, the firm is trying to empower base of the pyramid communities by identifying potential investment opportunities that could benefit this market. The reports are meant to encourage and attract investment in a particular project. One investment report focuses on the potential of a bamboo bicycle industry in Ghana. KPMG hopes that investments such as the bamboo bicycle will provide the tools and resources that improve the lives of the poor.
Vodafone:
Paul Ryan said that Vodafone is investing $350 million in developing its market in Ghana. Vodafone’s philosophy is that every country has to localize its initiatives to better reach and serve base of the pyramid markets. This effort has resulted in three new products developed specifically for Ghana.
- SIM-only phones. Vodafone has developed a type of payphone that accepts SIM cards. Users simply put a chip in a payphone and they can make and receive calls.
- Internet enabled mobiles. In Ghana, Vodafone is selling a $23 phone in Ghana that is Internet enabled. Since computer penetration is only 3 percent, these mobile phones will allow more Ghanaians to access the Internet.
- 1 GH Top-Up Cards. Vodafone is selling prepaid, top-up cards for 1 GH (66 cents). These cards allow users to make free unlimited calls to Vodafone landline numbers for one day.
Vodafone is also developing new products specifically for the government and educational institutions. The company is working with universities and schools to increase access to information and communications technology and providing the government with low cost product bundles such as web enabled phones, computers, etc.
Mr. Ryan also touched on Vodafone’s efforts to scale up its MPESA mobile banking platform in new base of the pyramid markets.
AngloGold Ashanti:
Prishani Satyapal discussed AngloGold Ashanti’s (AGA) strategy to build local communities in Ghana through enterprise development. AGA is dependent upon its relationships with host communities to continue successful operations. The company understands that it needs to provide communities in mining regions with other options for maintaining livelihoods because AGA’s competitiveness is directly linked to the economic well being of the host communities.
AGA has developed an adaptable business model that links its core operations strategy to its environmental and social impact, relationships with the community and local governments. The guiding principles of this strategy are to promote development to meet the needs of the wider community and to take into account the existing social, economic and environmental realities and dependencies of these communities. AGA achieves this by building partnerships with international and local development organizations.
