Mr. Karnani’s thesis deserves considerable attention. Yet his criticism is one that only address a certain type of BoP strategy. Some of the initial enthusiasts, I think, were guilty of overgeneralizing the way in which multinationals engage with the poor - they often made no distinction between selling to them as consumers and selling to them as producers. Mr. Karnani’s argument addresses the former, and importantly so. Selling alcohol to low-income consumers is quite obviously a bad poverty reduction strategy, and should be criticized as such.
But what of those companies - such as Amanco in the Americas - selling to producers? There is a real difference between selling beauty products to the poor, and selling irrigation kits to low-income farmers. Unlike beauty products, those irrigation kits are used as a factor input for future production, helping businesses grow. Amanco is a primary - albeit rare - example of this approach left ignored in Mr. Karnani’s analysis. The same can be said of medicines, technology, credit, etc.
Or what of more innovative inclusive business models that incorporate organized low-income producers into a company’s value chain? SMEs that supply to larger multinationals? Again, the author dismisses the wide variety of possibilities in engaging with BoP markets.
I also believe he is dangerously deterministic. Inserting the Orwell quotation (“poverty annihilates the future”) suggests that as long as one is poor, one cannot progress; and as long as one cannot progress, one cannot escape from poverty. Such a supposition is frightening in its cyclical and paralyzing reasoning. You only need to look around you for evidence to the contrary.
Lastly, I somewhat sympathize with Mr. Karnani’s concern that everyone is in a mad rush to adopt market solutions to poverty without due consideration for the proper role of government. Though in this case, he is the exaggerator—any glance at the current dominant initiatives of the development community, from the MDGs to Bono’s RED campaign, show that basic market mechanisms of feedback and accountability and profit generation are far from being widely adopted.
Nonetheless, it is critical that we recognize that government does have a role to play, and that the market is not the end-all solution (lest we forget the Washington Consensus). In that sense, the author’s words of caution about romanticizing market-based approaches should be heeded. After decades of patronizing language and programs from charities and development agencies, there is undoubtedly a tendency to take a 180-degree swing in romanticizing the poors’ ‘rational’ economic decisions. Tempering excitement with reality is important.
For those enthused with the possibilities of emergent inclusive business models, we should also couple our excitement with the expectation that real growth will occur when the West redesigns the international trading system, for example, letting Africa sell its agricultural products on the world market (lifting cotton subsidies will lift African GDP by the hundreds of billions, not BoP programs). Nevertheless, I still hold true that BoP strategies are one of many emergent ideas that have immense potential to positively contribute to providing the poor with the same opportunities we are granted, and should be recognized - with due caution - as such.
Firstly, in reality most commercial BOP programs do not target those in extreme poverty, they target those on or just above the poverty line; and many of the BOP programs do create jobs as they often employ the poor as effective distribution and sales channels.
Secondly, most of the poor who benefit from micro-credit are not entrepreneurs in a Western sense. They are often just farmers and use loans to breed more animals, grow more crops or maybe pay school fees. Neither requires vision, creativity or persistence necessarily -and the extra skills that might be needed (indeed that generally add more value than the loans themselves) are provided by the micro finance institution (in their own interest, since the more skills they provide, the more money the client makes and the better their repayment rate).
Of course, if Mr Karnani realized this, he would realize that micro-credit is actually helping the poor become producers; which Mr Karnani rightly points out, does add real value.
I would also request that Mr Karnani not use the terms micro-credit and micro-finance interchangeably. Micro-finance is a much wider term that includes other useful financial services such as insurance, financial transfer services and savings services.
A well written counter argument to what was/is considered as one of the major breakthrough in poverty eradication. I think Mr. Karnani looks at a small segment though in the BOP model- consumption. He has rightly pointed out the irrational choices that people with limited incomes can make and how businesses can exploit this in the name of market solutions for poor. But, as I said, this is only a small part of the BOP model. Access to economic services is an important area where the BOP model offers great potential. There are so many examples of it that I find it hard why the author does not take note of them: the Grameen, BRIs etc. have helped to create services which are valued by poor and low income households and which have brought economic benefits to them. We all however know that such market solutions are not enough to address structural poverty. Government can do a lot in this regard. But I believe market solutions to income poverty combined with government interventions are a better strategy. I also disagree with the notion that poor are not entrepreneurial. Entrepreneur does not necessarily mean someone who engaged in business. Entrepreneurism can exhibit itself in different forms. Poor suffer because they lack opportunities and access and that is what interventions- be it BOP or others- should try to address.
As an anti-poverty advocate, I appreciate his willingness to tell it like it is. Front-line groups like food pantries and soup kitchens - and their clients - are often much more willing to talk about personal/behavioral problems in the community than are the putative advocates for that community. And I think it enhances their (our) advocacy to admit when personal/behavioral deficits contribute to social problems like hunger, and incorporate them into our pitch when possible (stressing the structural factors of course).
But I’m not sure I agree with his conclusions about investment in poor communities. It’s true that not everyone can be an entrepreneur, but I think giving the ready few an opportunity to build businesses from the ground up is a more sustainable kind of community development in the long-run than just incentivizing big outside companies to swoop in and provide McJobs. In either scenario, increasing the quality of public education is key.
Those that are living on less than $2 a day could probably couldn’t give a tinkers’ about market strategies, or consumer demographics or any economy issue whatsoever. Why? They live on $2 a day. They are too busy trying not to starve to death. We think of five dollar dinners as being cheap, whereas the BOP lives on less than half of that per diem, and they probably have children to feed on that as well. When you can’t necessarily say that you’ll be able to not starve to death next winter if the harvest doesn’t come in well, the next wedding or funeral has a lot more importance and seems worth it to spend on events. And do poor people make bad choices at times? Sure, but then again, but if the people that preach stentorian from the mount about it were living in perpetual misery, they’d want to drink too. It’s like the stereotype of the perpetually drunken Irishman from the 18th century onward - if you lived your life in debilitating poverty, under an oppressive regime, you would want to drink too.
Dr. Karnani’s point about the poor not necessarily making the most informed decisions is spot on. On the other hand, the suggestion that the poor may not be as entrepreneurial as others is really not backed up by the Somali nomadic diaspora or the Western Sahelian Sarakole experience either. The poor as the Somalis have amply demonstrated for 20 years in fact can transfrom wealth on the hoof into houses and educations in a phenomenon that has taken them from the central rangelands to the Gulf States, London, Rome and Minnesota. Both as individuals and as families. All this while the World Bank had them listed in 1982 when the phenomenon really ratcheted up in significance as the poorest people on earth per their development index. In their case, lack of certain social capital did not hinder entrepreneurialsm and even a global perspective before it was chic. The Sarakolle/Soninke/Sahelian community generally ability to uproot and head for France to repatriate eearnings is arguably another example of BOPer entrepreneurialism in contexts of weak social capital.
I would argue as a complement to Dr. Karnani’s principal thesis that the lack of analytical capacity at BOPer community levels to identify optimal and feasible development and investment pathways for individuals and community’s as a whole, is THE major constraint to global development, and keeps BOPers poor. Until more sophisticated analysis of economic, social and ecological variables impacting communities and their individual members can be made, development will remain a piecemeal endeavor. This however would require a different strategic tack than donors are willing to take, as the facile reliance on “needs assessments” based on participatory rural appraisal methods would suggest.
The thesis is well written. But I assume you had not live near the BOP.
First, you can see the impact of a microcredit in somebody, who was not eligible to a job but he is enough entrepreneur to star his own business (informal business).
Second, I dont believe that your solution ( I will quote “The best way to alleviate poverty is to raise the real income of the poor by creating opportunities for steady employment at reasonable wages. Firms can do this by creating more employment opportunities in labor-intensive industries and investing in upgrading the skills and productivity of poor people, thus increasing their income potential.”) it is enough good in a time of economic depression.
What this text forgets entirely is the feedback effect it’s suggestions will create. The article unambiguously suggests that exposing people to the “vagaries of the free market” is somehow a crime.
But the vagaries of the free market are nothing more than actual, factual reality. Reality has many vagaries, from climate change (whether positive or negative), to natural disasters, population growth/decline. How exactly is exposing people to this and demand they find solutions for survival and productivity a crime ? If you see that then God, or nature itself (darwin if you like), or “gaia” if you’re so inclined is a criminal.
But the fact is, even a criminal God would simply be a fact of life. So it is useless to blame God, darwin, gaia or climate change. They’re reality, they’re fact. You HAVE to deal with them, just as you have to open a door before walking through it. It is that simple.
The alternative, of course, is to shield these people from reality. Of course, we ourselves are not isolated from reality. Our umbrella results from an excess capacity developed mostly by our parents and ancestors. Despite what it looks like it is not infinite, and it is not above the “vagaries of the free market”, whether that means climate change, or economic crisis, or banking collapses.
In other words, WE are not reliable. So let’s evaluate 2 scenario’s :
* we enable microcredit and demand people take care of themselves. We attempt to create a middle class, preferably a massively large middle class. IF it works, these people are more or less safe : they’ve learned to deal with the “vagaries of the free market”, and are perfectly capable of adapting themselves to whatever God, gaia and darwin might throw their way. Even if the worst happens, the people will deal with it as best as they can, or, if we’re lucky, as could as we could have dealt with it.
* we shield the poor from nature. We “extend our umbrella above them” so to speak. We provide food, clothing, everything. We use our umbrella (which means large third world factories) to do so, and we provide these products, grain, clothing, ... free of charge. The net effect is that we directly pit “free” grain against farms. Free clothes against local industry, and so on and so forth. And then ... Obama fails to prevent another banking crisis (or something else happens). So what happens next ? Well there are no farms for the poor, we outcompeted them with free grain. There is no industry, and therefore no clothes, since we destroyed every industrious local that produced them. There is ... nothing.
The carrying capacity of the land goes from “basically infinite” (since it simply depended on external help) to ... zero. So what happens next ? Can you say “Rwanda” ?
As everyone realizes but is afraid to say : ONE of these courses of action is sustainable, the other is a “let’s fix the next month, and leave the disaster we cause next year to next year’s politicians” policy. One of these policies results in mass casualties and war, the other results in a few very sad fotos of underfed children.
It is beyond obvious which of the two tactics would be the choice of a responsible adult. But it is also abundantly clear which policy democrats, and lefties in general, will choose. But don’t worry, you’ll feel good today, and when you send in the soldiers next year to rectify the situation after the massacre, halliburton (or whoever) will massively profit. And the bodies ? They’re not the result of the leftist policies, they’re the result of that one guy that killed the priest (or president, or orphan, or ...). Yes, yes, cleary he’s guilty. Clearly it was his “nationalist” attitudes. Clearly it was the result of the “nazis”, cleary ...
But lefties, lefties are innocent. Despite the mountains of corpses.
I was really surprised when I knew that 2.5 billion people worldwide live on less than $2 per day. How it possible. And in some countries as I know production of Unilever and S.C. Johnson counts as brand. I visited the site of professor C.K. Prahalad Nextbillion.net and I can say that it is a very good work he does. It’s obvious that the site was made by proffesionals and it is very informative. I saw that The United Nations’ Web site declares that microentrepreneurs are using small loans like payday loans online “to grow thriving businesses … leading to strong and flourishing local economies.”
Different kind of loans can really help to develov small business from little to middle or higher. If people don’t have their own reserves to invest in some projects only banks can help them. But it should be more privilege conditions of getting and paying off. It can really help some poor people become more richer.
this is only a small part of the BOP model. Access to economic services is an important area where the BOP model offers great potential. There are so many examples of it that I find it hard why the author does not take note of them: the Grameen, BRIs etc. have helped to create services which are valued by poor and low income households and which have brought economic benefits to them. We all however know that such market solutions are not enough to address structural poverty. Government can do a lot in this regard. But I believe market solutions to income poverty combined with government interventions are a better strategy. I also disagree with the notion that poor are not entrepreneurial.
Mr Karnani’s description of the poor and the obstacles to their participation in market-based solutions, especially as consumers, is a needed dose of reality. While I fully support the use of social businesses to attempt to alleviate poverty, we should be aware of the unique challenges faced by the poor. In the long run, the most effective solutions will include a combination of market-based and non-profit/government policies. I agree with Mr Karnani’s assertion that government’s role is to create the infrastructure and stability required to allow the poor to act as rational participants in the economy and to regulate the market in such a way that prevents the kind of exploitation referenced in his story.
Karnani’s article takes the tone of “Patronizing the Poor” which is not much better than romanticizing them. I disagree with several of his comments and hopefully will have time to write a full counterargument soon.
“but even worse for the poor, who lack the resources—financial, psychological, social, and political”
I’m not sure that point of view on this is entirely accurate, we’re assuming people are psychology unequipped (aka too stupid) to make the choice to not buy tobacco, coffee, tea, etc…when they could save that money and spend it on something more valuable.
I would say this is just human nature, a certain percentage of people will spend money on vanity or addictive products even when logically we know it’s not the right thing to do.
Many of the arguments here are valid. In a way this article seems to imply though that poor individuals are incapable of making good decisions. I think that this is often not the case.
Also, this article implies that we all should have an innate ability to only spend money on things that make sense. But many people do not have and do not want to have this point of view.
I’m not necessarily sure that hand-holding the poor is the proper route to take on this subject. Poorer segments of the population probably manage their money better than most other segments as they have to successfully plan their financial futures with such a limited amount of funds. In my experience, this means that they will know with higher accuracy the exact amount of money in their bank account (as an example).
COMMENTS
BY CWV
ON December 28, 2008 08:12 PM
Mr. Karnani’s thesis deserves considerable attention. Yet his criticism is one that only address a certain type of BoP strategy. Some of the initial enthusiasts, I think, were guilty of overgeneralizing the way in which multinationals engage with the poor - they often made no distinction between selling to them as consumers and selling to them as producers. Mr. Karnani’s argument addresses the former, and importantly so. Selling alcohol to low-income consumers is quite obviously a bad poverty reduction strategy, and should be criticized as such.
But what of those companies - such as Amanco in the Americas - selling to producers? There is a real difference between selling beauty products to the poor, and selling irrigation kits to low-income farmers. Unlike beauty products, those irrigation kits are used as a factor input for future production, helping businesses grow. Amanco is a primary - albeit rare - example of this approach left ignored in Mr. Karnani’s analysis. The same can be said of medicines, technology, credit, etc.
Or what of more innovative inclusive business models that incorporate organized low-income producers into a company’s value chain? SMEs that supply to larger multinationals? Again, the author dismisses the wide variety of possibilities in engaging with BoP markets.
I also believe he is dangerously deterministic. Inserting the Orwell quotation (“poverty annihilates the future”) suggests that as long as one is poor, one cannot progress; and as long as one cannot progress, one cannot escape from poverty. Such a supposition is frightening in its cyclical and paralyzing reasoning. You only need to look around you for evidence to the contrary.
Lastly, I somewhat sympathize with Mr. Karnani’s concern that everyone is in a mad rush to adopt market solutions to poverty without due consideration for the proper role of government. Though in this case, he is the exaggerator—any glance at the current dominant initiatives of the development community, from the MDGs to Bono’s RED campaign, show that basic market mechanisms of feedback and accountability and profit generation are far from being widely adopted.
Nonetheless, it is critical that we recognize that government does have a role to play, and that the market is not the end-all solution (lest we forget the Washington Consensus). In that sense, the author’s words of caution about romanticizing market-based approaches should be heeded. After decades of patronizing language and programs from charities and development agencies, there is undoubtedly a tendency to take a 180-degree swing in romanticizing the poors’ ‘rational’ economic decisions. Tempering excitement with reality is important.
For those enthused with the possibilities of emergent inclusive business models, we should also couple our excitement with the expectation that real growth will occur when the West redesigns the international trading system, for example, letting Africa sell its agricultural products on the world market (lifting cotton subsidies will lift African GDP by the hundreds of billions, not BoP programs). Nevertheless, I still hold true that BoP strategies are one of many emergent ideas that have immense potential to positively contribute to providing the poor with the same opportunities we are granted, and should be recognized - with due caution - as such.
BY Dick Dassow
ON February 26, 2009 10:11 AM
What do you think of Paul Polak’s book: OUT OF POVERTY?
BY bsrmoni
ON February 28, 2009 07:00 PM
Generally well written, but with two major flaws
Firstly, in reality most commercial BOP programs do not target those in extreme poverty, they target those on or just above the poverty line; and many of the BOP programs do create jobs as they often employ the poor as effective distribution and sales channels.
Secondly, most of the poor who benefit from micro-credit are not entrepreneurs in a Western sense. They are often just farmers and use loans to breed more animals, grow more crops or maybe pay school fees. Neither requires vision, creativity or persistence necessarily -and the extra skills that might be needed (indeed that generally add more value than the loans themselves) are provided by the micro finance institution (in their own interest, since the more skills they provide, the more money the client makes and the better their repayment rate).
Of course, if Mr Karnani realized this, he would realize that micro-credit is actually helping the poor become producers; which Mr Karnani rightly points out, does add real value.
I would also request that Mr Karnani not use the terms micro-credit and micro-finance interchangeably. Micro-finance is a much wider term that includes other useful financial services such as insurance, financial transfer services and savings services.
BY Owais Parray
ON March 18, 2009 01:15 AM
A well written counter argument to what was/is considered as one of the major breakthrough in poverty eradication. I think Mr. Karnani looks at a small segment though in the BOP model- consumption. He has rightly pointed out the irrational choices that people with limited incomes can make and how businesses can exploit this in the name of market solutions for poor. But, as I said, this is only a small part of the BOP model. Access to economic services is an important area where the BOP model offers great potential. There are so many examples of it that I find it hard why the author does not take note of them: the Grameen, BRIs etc. have helped to create services which are valued by poor and low income households and which have brought economic benefits to them. We all however know that such market solutions are not enough to address structural poverty. Government can do a lot in this regard. But I believe market solutions to income poverty combined with government interventions are a better strategy. I also disagree with the notion that poor are not entrepreneurial. Entrepreneur does not necessarily mean someone who engaged in business. Entrepreneurism can exhibit itself in different forms. Poor suffer because they lack opportunities and access and that is what interventions- be it BOP or others- should try to address.
BY JC Dwyer
ON March 30, 2009 10:56 AM
As an anti-poverty advocate, I appreciate his willingness to tell it like it is. Front-line groups like food pantries and soup kitchens - and their clients - are often much more willing to talk about personal/behavioral problems in the community than are the putative advocates for that community. And I think it enhances their (our) advocacy to admit when personal/behavioral deficits contribute to social problems like hunger, and incorporate them into our pitch when possible (stressing the structural factors of course).
But I’m not sure I agree with his conclusions about investment in poor communities. It’s true that not everyone can be an entrepreneur, but I think giving the ready few an opportunity to build businesses from the ground up is a more sustainable kind of community development in the long-run than just incentivizing big outside companies to swoop in and provide McJobs. In either scenario, increasing the quality of public education is key.
BY Dr.S.K.Bharti
ON April 7, 2009 12:22 AM
The Microfinance and Livelyhoods programe will be very sucessfuly technic for sustanable development of the poor.
BY Retail Anarchy
ON April 21, 2009 05:26 PM
Those that are living on less than $2 a day could probably couldn’t give a tinkers’ about market strategies, or consumer demographics or any economy issue whatsoever. Why? They live on $2 a day. They are too busy trying not to starve to death. We think of five dollar dinners as being cheap, whereas the BOP lives on less than half of that per diem, and they probably have children to feed on that as well. When you can’t necessarily say that you’ll be able to not starve to death next winter if the harvest doesn’t come in well, the next wedding or funeral has a lot more importance and seems worth it to spend on events. And do poor people make bad choices at times? Sure, but then again, but if the people that preach stentorian from the mount about it were living in perpetual misery, they’d want to drink too. It’s like the stereotype of the perpetually drunken Irishman from the 18th century onward - if you lived your life in debilitating poverty, under an oppressive regime, you would want to drink too.
BY Michael Brown
ON May 13, 2009 02:04 PM
Dr. Karnani’s point about the poor not necessarily making the most informed decisions is spot on. On the other hand, the suggestion that the poor may not be as entrepreneurial as others is really not backed up by the Somali nomadic diaspora or the Western Sahelian Sarakole experience either. The poor as the Somalis have amply demonstrated for 20 years in fact can transfrom wealth on the hoof into houses and educations in a phenomenon that has taken them from the central rangelands to the Gulf States, London, Rome and Minnesota. Both as individuals and as families. All this while the World Bank had them listed in 1982 when the phenomenon really ratcheted up in significance as the poorest people on earth per their development index. In their case, lack of certain social capital did not hinder entrepreneurialsm and even a global perspective before it was chic. The Sarakolle/Soninke/Sahelian community generally ability to uproot and head for France to repatriate eearnings is arguably another example of BOPer entrepreneurialism in contexts of weak social capital.
I would argue as a complement to Dr. Karnani’s principal thesis that the lack of analytical capacity at BOPer community levels to identify optimal and feasible development and investment pathways for individuals and community’s as a whole, is THE major constraint to global development, and keeps BOPers poor. Until more sophisticated analysis of economic, social and ecological variables impacting communities and their individual members can be made, development will remain a piecemeal endeavor. This however would require a different strategic tack than donors are willing to take, as the facile reliance on “needs assessments” based on participatory rural appraisal methods would suggest.
BY Diego Ramirez
ON June 29, 2009 04:54 PM
The thesis is well written. But I assume you had not live near the BOP.
First, you can see the impact of a microcredit in somebody, who was not eligible to a job but he is enough entrepreneur to star his own business (informal business).
Second, I dont believe that your solution ( I will quote “The best way to alleviate poverty is to raise the real income of the poor by creating opportunities for steady employment at reasonable wages. Firms can do this by creating more employment opportunities in labor-intensive industries and investing in upgrading the skills and productivity of poor people, thus increasing their income potential.”) it is enough good in a time of economic depression.
BY tomcpp
ON March 20, 2010 01:56 PM
What this text forgets entirely is the feedback effect it’s suggestions will create. The article unambiguously suggests that exposing people to the “vagaries of the free market” is somehow a crime.
But the vagaries of the free market are nothing more than actual, factual reality. Reality has many vagaries, from climate change (whether positive or negative), to natural disasters, population growth/decline. How exactly is exposing people to this and demand they find solutions for survival and productivity a crime ? If you see that then God, or nature itself (darwin if you like), or “gaia” if you’re so inclined is a criminal.
But the fact is, even a criminal God would simply be a fact of life. So it is useless to blame God, darwin, gaia or climate change. They’re reality, they’re fact. You HAVE to deal with them, just as you have to open a door before walking through it. It is that simple.
The alternative, of course, is to shield these people from reality. Of course, we ourselves are not isolated from reality. Our umbrella results from an excess capacity developed mostly by our parents and ancestors. Despite what it looks like it is not infinite, and it is not above the “vagaries of the free market”, whether that means climate change, or economic crisis, or banking collapses.
In other words, WE are not reliable. So let’s evaluate 2 scenario’s :
* we enable microcredit and demand people take care of themselves. We attempt to create a middle class, preferably a massively large middle class. IF it works, these people are more or less safe : they’ve learned to deal with the “vagaries of the free market”, and are perfectly capable of adapting themselves to whatever God, gaia and darwin might throw their way. Even if the worst happens, the people will deal with it as best as they can, or, if we’re lucky, as could as we could have dealt with it.
* we shield the poor from nature. We “extend our umbrella above them” so to speak. We provide food, clothing, everything. We use our umbrella (which means large third world factories) to do so, and we provide these products, grain, clothing, ... free of charge. The net effect is that we directly pit “free” grain against farms. Free clothes against local industry, and so on and so forth. And then ... Obama fails to prevent another banking crisis (or something else happens). So what happens next ? Well there are no farms for the poor, we outcompeted them with free grain. There is no industry, and therefore no clothes, since we destroyed every industrious local that produced them. There is ... nothing.
The carrying capacity of the land goes from “basically infinite” (since it simply depended on external help) to ... zero. So what happens next ? Can you say “Rwanda” ?
As everyone realizes but is afraid to say : ONE of these courses of action is sustainable, the other is a “let’s fix the next month, and leave the disaster we cause next year to next year’s politicians” policy. One of these policies results in mass casualties and war, the other results in a few very sad fotos of underfed children.
It is beyond obvious which of the two tactics would be the choice of a responsible adult. But it is also abundantly clear which policy democrats, and lefties in general, will choose. But don’t worry, you’ll feel good today, and when you send in the soldiers next year to rectify the situation after the massacre, halliburton (or whoever) will massively profit. And the bodies ? They’re not the result of the leftist policies, they’re the result of that one guy that killed the priest (or president, or orphan, or ...). Yes, yes, cleary he’s guilty. Clearly it was his “nationalist” attitudes. Clearly it was the result of the “nazis”, cleary ...
But lefties, lefties are innocent. Despite the mountains of corpses.
BY Sam F
ON May 24, 2010 12:51 PM
I was really surprised when I knew that 2.5 billion people worldwide live on less than $2 per day. How it possible. And in some countries as I know production of Unilever and S.C. Johnson counts as brand. I visited the site of professor C.K. Prahalad Nextbillion.net and I can say that it is a very good work he does. It’s obvious that the site was made by proffesionals and it is very informative. I saw that The United Nations’ Web site declares that microentrepreneurs are using small loans like payday loans online “to grow thriving businesses … leading to strong and flourishing local economies.”
Different kind of loans can really help to develov small business from little to middle or higher. If people don’t have their own reserves to invest in some projects only banks can help them. But it should be more privilege conditions of getting and paying off. It can really help some poor people become more richer.
BY Mike STephen
ON July 7, 2010 07:37 AM
this is only a small part of the BOP model. Access to economic services is an important area where the BOP model offers great potential. There are so many examples of it that I find it hard why the author does not take note of them: the Grameen, BRIs etc. have helped to create services which are valued by poor and low income households and which have brought economic benefits to them. We all however know that such market solutions are not enough to address structural poverty. Government can do a lot in this regard. But I believe market solutions to income poverty combined with government interventions are a better strategy. I also disagree with the notion that poor are not entrepreneurial.
BY Jeff Y
ON November 19, 2010 06:33 AM
Mr Karnani’s description of the poor and the obstacles to their participation in market-based solutions, especially as consumers, is a needed dose of reality. While I fully support the use of social businesses to attempt to alleviate poverty, we should be aware of the unique challenges faced by the poor. In the long run, the most effective solutions will include a combination of market-based and non-profit/government policies. I agree with Mr Karnani’s assertion that government’s role is to create the infrastructure and stability required to allow the poor to act as rational participants in the economy and to regulate the market in such a way that prevents the kind of exploitation referenced in his story.
BY Laura H
ON September 27, 2012 10:35 PM
Karnani’s article takes the tone of “Patronizing the Poor” which is not much better than romanticizing them. I disagree with several of his comments and hopefully will have time to write a full counterargument soon.
BY Subprime
ON October 31, 2013 03:09 PM
“but even worse for the poor, who lack the resources—financial, psychological, social, and political”
I’m not sure that point of view on this is entirely accurate, we’re assuming people are psychology unequipped (aka too stupid) to make the choice to not buy tobacco, coffee, tea, etc…when they could save that money and spend it on something more valuable.
I would say this is just human nature, a certain percentage of people will spend money on vanity or addictive products even when logically we know it’s not the right thing to do.
BY Jennings R
ON December 3, 2013 05:46 PM
Many of the arguments here are valid. In a way this article seems to imply though that poor individuals are incapable of making good decisions. I think that this is often not the case.
Also, this article implies that we all should have an innate ability to only spend money on things that make sense. But many people do not have and do not want to have this point of view.
BY CedricD3
ON March 29, 2015 09:55 PM
I’m not necessarily sure that hand-holding the poor is the proper route to take on this subject. Poorer segments of the population probably manage their money better than most other segments as they have to successfully plan their financial futures with such a limited amount of funds. In my experience, this means that they will know with higher accuracy the exact amount of money in their bank account (as an example).