Micro finance is truly coming of age. It’s best known advocate is the Grameen Bank of Bangladesh, started in 1976 by Dr Muhammad Yunus, who found that poor women could break out of poverty by taking tiny loans to start or expand micro businesses. Today, many of the mainstream names like Deutsche Bank and Citigroup are firmly involved on an economically sustainable – not philanthropic – basis. The key for them is working with trusted intermediaries who can get close to the so-called ‘bottom of the pyramid’ through a cost-effective product distribution mechanism.There are lessons here for other sectors, especially basic consumer goods. CK Prahalad’s The Fortune at the Bottom of the Pyramid has become required reading both for CSR professionals and for canny business development directors as they eye up the market potential among the three billion who survive on less than two dollars a day. Some firms are reformulating products and reducing package size to get the entry-level cost down. But production is only a part of the whole value chain. The bigger issue, as micro finance has found, is how to strip costs from the distribution process. Here partnership mechanisms are the key to sustainable market-based solutions for the so-called ‘poorest of the poor’.
Corporate Citizenship Briefing, issue no: 85 – January, 2006