04 May 2006

Social Entrepreneurs: What is Base of the Economic Pyramid?

Base of the Economic Pyramid or BOP for cute and short, is a growing movement designed to alleviate poverty while generating sustainable profits for companies both large and small. The concept was popularized by Stu Hart and C.K. Prahalad. It is an idea for where we are right now.

As Robert S. Katz of the World Resources Institute says, BOP practitioners are social entrepreneurs who "seek a middle ground where the private sector's power is brought to bear on persistent social, economic, and environmental problems."

Katz, writing in GreenBiz.com (a web publication for which I also write) this past March, makes the point that "social entrepreneurs need to be grounded in reality." The reality is, non-profit development -- and, for that matter, non-profit conservation -- is proving that it just doesn't pay. In developing countries, even places with burgeoning economies like India and China, the largely rural poor are cut out of the economic equation. They "need money to send their kids to school, buy medicines, and put food on the table," as Katz writes.

Katz points to two social entrepreneur-led organizations as examples of entities that are trying to right this wrong. He cites KickStart, not the Chuck Norris-led organization that uses Martial Arts to empower youth, but a Kenyan company formerly known as Approtec. Founded by "former aid workers searching for an alternative to top-down poverty alleviation strategies," the company develops and promotes technologies, including oilseed presses and water pumps known as "MoneyMakers," which help farmers increase yields and income using recharge waters.

Aavishkaar is another company discussed by Katz in his GreenBiz article. The rural India-based micro-venture capital fund provides capital to create, in the words of Upendra Bhatt, and quoted by Katz, "an enabling ecosystem of entrepreneurs, whom no one else is willing to fund."

Katz, a research analyst at the World Resources Institute focused on BOP business approaches to poverty, is an editor and contributor to NextBillion.net, a web site and blog devoted to "development through enterprise."

As Katz sees it, there is "a vital new approach to business and to ecosystem management. Natural resources are still -- and will remain for the foreseeable future -- the primary assets of the rural poor. Proper Management of these assets is critical not only to those who rely directly on agricultural land, or forests, or freshwater or oceans, but also of course, to all of us."

For those of us seeking an alternative to "top down" strategies for improving ecosystem health and well-being, this reminder of the base of the pyramid is timely and welcome.

Read more at Base of the Pyramid.

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