Base of the pyramid initiatives and the importance of measuring impact
By becoming BCtA members, our companies commit to improving the lives of low-income populations through commercially viable business models. The work of BCtA members benefit people at the base of the pyramid (BoP) in many sectors, from agriculture to energy to education to health and nutrition.
Our first flagship report, Breaking Through discusses in detail some of the unique challenges and strategies that BCtA members in each sector are implementing, and how they are benefiting the BoP. But what exactly are these benefits?
With a diverse mix of companies represented in BCtA’s portfolio, which vary in size, sector and location, it can be challenging to define and measure precise impact. It is, however, important to think carefully and creatively to measure the benefits at the BoP to build evidence around the notion that the businesses can indeed do good for society.
Through our research, we estimate that over 40 million households, or 200 million people, have benefited from BCtA initiatives to date. But the nature of these benefits depends on whether the beneficiaries are consumers, or suppliers or employees of the companies. As consumers, people benefit from access to quality and affordable products, like clean cooking stoves and nutritional supplements.
About three quarters of BCtA’s 94 initiatives serve the BoP as consumers and users of essential products and services. On the other hand, people at the BoP can also benefit from earning an income or gaining access to a market as suppliers or employees of the companies. A quarter of BCtA initiatives reach the low-income populations this way.
The benefits that people receive as consumers or suppliers and employees are very different and meaningful comparisons cannot be made. For low-income households that lack basic human needs, gaining access to clean energy, quality healthcare, and saving and credit products obviously help improve their quality of life. The consumer focused model also tends to reach larger number of beneficiaries, offering greater ‘breadth’ of impact (numbers reached).
Impact on the BoP households, however, can be even greater if they benefit from having new income earning opportunities as employees, or as suppliers for companies. The employee-focused model tends to create greater ‘depth’ of impact, or contribute more to life-changing human development, by providing some forms of employment opportunities for the poor. The different nature of benefits these models provide make comparisons very difficult across inclusive business initiatives.
For example, Vortex Engineering estimated that 15 million people have used their solar powered ATMs in India, providing access to cash for those living in rural areas of the country. Ballarpur Industries Limited (BILT) reported that hundreds of pulp suppliers and thousands of associated workers are earning a living from their pulpwood initiative in India. The former reaches more BoP households, but the latter is more likely to lift a family out of poverty. Each of these initiatives provides different reach and depth of impact, and it is misleading to rank them.
Ultimately, the impact of inclusive businesses needs to be evaluated in the local contexts where they operate. The first step to measure such context-specific impact is to gather useful data on business operations and beneficiaries. To support our members in this effort, BCtA will roll out its new service aimed at providing mobile-enabled survey tools for a select number of members to facilitate collection of key operational and social performance indicators from different stakeholders.
Through collecting and analysing customised and in-depth data from our companies, we hope to be able to have more nuanced understanding of how different inclusive business models benefit people at the BoP.
About ‘Breaking Through’
‘Breaking Through: Inclusive Business and the Business Call to Acti... is authored by Caroline Ashley and Suba Sivakumaran, in conjunction with Tomohiro Nagasaki, Lara Sinha, Suzanne Krook and Tom Harrison. Joe Shamash conducted the online survey and led the data analysis. Five years on since BCtA was launched, it reviews progress made by BCtA members and the strategies they are adopting. The report covers BCtA members’ 94 initiatives and draws heavily on surveys and interviews conducted with 49 initiatives during mid-2014. Join our discussion on social media using #BCtABreakingThrough
Launched at the United Nations, the Business Call to Action (BCtA) is a global alliance hosted by the United Nations Development Programme Headquarters in New York. Follow: @BCtAInitiative
Tomohiro Nagasaki is impact measurement consultant at BCtA