BRIC’S and MINT’S: The Potential of The World’s Poorest
In the United Kingdom today inequality is a mounting issue, currently one in five people live in poverty and the five wealthiest British families are more affluent than the bottom twenty percent of its population. This is in light of the UK’s status as the world’s sixth largest economy according to GDP and its membership to the G8.
Although this in itself is a little unsettling, economic inequality is far from just a UK issue. A severe and far more contrasting scenario presents itself globally, where historically multi-national corporations (MNC) have overlooked approximately 4 billion of the worlds poorest, which are described to live with less than $2.50 U.S. dollars per day. These individuals are constrained by poverty and live in the absence of an inclusive capitalist system that encompasses opportunities towards reaching their human potential, and have subsequently been coined “The Bottom of The Pyramid” market by distinguished Professor, Coimbatore Krishnarao Prahalad.
In recent decades the world has experienced not only a change in sentiment to these emerging economies, but also experienced their rise as a powerful force in international finance, trade and production. The superior growth of BRIC nations and forecasted expansion of the newly termed MINT (Mexico, Indonesia, Nigeria and Turkey) economies underscores the lucrative potential of reinventing business models and attitudes, to tap not only the financial opportunities of serving the world’s poorest, but also development ones.
These individuals are excluded from much of the globalised civilised societies, which encompass consumption and choice. It is widely argued that this low-income target segment should be recognised for the creativity of its entrepreneurs, its value conscious consumers and the important value creating and corporate social responsibility (CSR) opportunities that it presents. The gradual commercialisation of micro finance, Santander’s decision to serve Brazilian slums, the application of mobile phone technology by M-Peza to increase the availability of banking services to the poor, along with Unilever’s development of an affordable cold water shampoo, are indicators that many organisations recognise the worth of the ‘Bottom of the Pyramid’.
However, aside from the obvious business incentives, it is often suggested that MNC’s should do more for societal welfare because of both their power and influence. Serving the base of the economic pyramid also offers the chance for MNC’s to enhance their reputation through the integration of CSR into its corporate strategy and in turn differentiate itself and build competitive advantage. Globally many industries are faced with the challenge of overcoming its negative connotations amid wide-spread allegations of unethical business practices, concerns for consumer and employee welfare.
The world’s poor are presented with the dilemma of having neither money nor the access to financial resources. Financial institutions and their corresponding markets are perhaps one of the best examples of an industry that is reinventing itself to service the poor, by overcoming asymmetric information and high fixed costs of small-scale lending, that pushes the poor towards financial exclusion. By doing this similarly to other industries these institutions act as an agent in societal transformation, by responding to public demand, to promote inclusion and sustainable development. However, what remains unclear is whether MNC’s will continue to profiteer at the expense of the impoverished or develop a conscience and appetite for positive change.