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Selling consumer products to the Bottom of the Pyramid

02/04/2012 03:08 (753 Day 03:01 minutes ago)

The FINANCIAL -- A new in-depth analysis of a rural door-to-door goods distribution system in Bangladesh examines key issues associated with so-called Bottom of the Pyramid schemes.

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Professor Linda Scott, Dr Catherine Dolan and Mary Johnstone-Louis of Saïd Business School, University of Oxford, have completed a four-year research project on CARE International’s Rural Sales Programme  - a distribution system which has developed from a modest pilot scheme in 2005 involving 49 local women, into a sales network of 2,640 women working in 80 districts, carrying goods from seven companies. From this fledgling NGO programme, CARE International and danone.communities have announced the formation of a joint venture named ‘JITA’ – a groundbreaking NGO-private sector hybrid with the goal of employing 12,000 women and reaching 10 million customers in Bangladesh by 2014.

According to Saïd Business School, working with companies including Unilever, Danone, Grameenphone, Bic and local producers, CARE International has used its deep insight and experience of working within communities in rural Bangladesh to establish a network of women to sell and distribute a changing basket of mixed goods, which includes consumer products, medicines, food, apparel and agricultural items.

‘These women have a right to financial security and economic empowerment, and the CARE Bangladesh sales network has successfully provided some of the country’s poorest women with a regular income to support their dependents,’ says Professor Scott.

 

‘We know that investing in women is the most efficient way to improve national welfare, but little research has been done on the impacts and sustainability of BoP systems. The RSP scheme has not developed without significant difficulties and setbacks and we wanted to examine this system closely to identify how it evolved, and how it tackled the many issues such partnerships face – from local cultural traditions which discourage women from working or purchasing goods; reputational concerns of both the NGOs and their commercial partners; the sheer challenge of logistics on the ground; and the wider social, economic, political and environmental consequences of such schemes. There is a great deal to be learned from this example for both multinational corporations who want to access the large potential markets of these rural communities, which are otherwise difficult and expensive to reach, and for NGOs whose work with the world’s poorest might be significantly boosted by commercial partnerships of this type.’

Dolan, Johnstone-Louis and Scott have developed a case and teaching notes on the CARE RSP programme to be taught to MBA students at Saïd Business School, University of Oxford, which charts the development of the initiative and discusses many of the critical issues which arise in such BoP schemes. They have also published an academic paper which discusses the extent to which such schemes offer a viable model for women’s empowerment.

Christine Svarer, Head of Private Sector Engagement at CARE International UK, said: ‘JITA has pushed the boundaries of the relationship between business and development, demonstrating the potential for market-based approaches to provide economic empowerment for poor women.

‘We should strive to go beyond traditional donor-based solutions to poverty to inclusive models that combine business knowledge and dynamism, with core NGO skills of engaging with communities, understanding their needs and recognising their capacity to be active participants in development solutions.’

On 29 March Professor Scott joined senior representatives from Unilever, Danone and DFID in a panel discussion on CARE RSP and the issues surrounding BoP initiatives during the Skoll World Forum on Social Entrepreneurship at Saïd Business School, Oxford. The discussion was hosted by Jo Confino, Executive Editor of the Guardian and Chairman of Guardian Sustainable Business, with an introduction from Dr Helene Gayle, President of CARE USA.

Saïd Business School will also host a debate Thursday 3 May on the implications of the BoP model for sustainable development titled, ‘The BoP Approach: Responsible Capitalism or Business as Usual?’. The event will bring together influential figures in the field to discuss the ethics of business engagement at the BoP. You are invited to attend this session.

BoP schemes raise numerous concerns among the development community, policy makers and those who see such partnerships as cynical marketing ploys on the part of the companies involved. Questions arise concerning the ethical and environmental implications of pursuing development through the increased consumption of consumer goods by some of the world’s poorest communities. Some fear that NGOs will lose autonomy from partnering with the private sector and will increase the reputational risks with both donors and the communities they serve.

 

In establishing Jita, CARE has sought to establish a sustainable business model that can continue to flourish without relying on donor funding, but changes of policy within companies may mean such models are no more sustainable for NGOs than current donor requirements. Issues of scale also arise as a region will only be able to support a certain number of sales women before margins and earnings erode, or others step in to take over what is seen as a lucrative business.  Moreover, not all women are able to become such ‘micro-entrepreneurs’ and may lack the resources, education or ability to make a living in this way.

‘These questions are legitimate,’ says Dr Dolan, ‘but we also need to acknowledge the benefits such schemes can provide. The CARE RSP has delivered significant social and economic benefits for the women in the programme: monthly income nearly trebled from an average of £3.42 per month to £10.20, while most women also reported an improved sense of inclusion and respect from their community, particularly given the marginal status of many of the women upon entering the programme.  In the long run it may also reduce CARE’s dependence on donor funding and improve the NGO’s financial security, furthering their mission. While BoP systems are not a panacea, in a context where many development interventions have failed, their potential to improve the economic and social circumstances of households should be taken seriously.’

The new joint venture with danone.communities – JITA – is a social business dedicated to creating new employment opportunities for women, and to improving access for Bangladesh’s most marginalised communities to health, hygiene, nutritional products and communications services. If JITA goes out of business, it can have no social benefits. ‘It will be interesting to see how this groundbreaking venture between a multinational corporation and an NGO progresses, and if it will also offer a further model for equitable, sustainable development which others can replicate,’ said Professor Scott.

 

 

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