Beyond income: Understanding the BoP from an access to development perspective
No matter how much practitioners agree on quantifying the Base Of the Pyramid (BOP) based on their access to development and basic needs, we still seem to be loosing the battle against income threshold fundamentalists. Beyond the traditional controversies calculating purchasing power parity (PPP) income measurements, due in part to the lack of comparable basket of goods among countries, the multidimensionality of poverty demands a much broader look into who are the poor and what are their needs.
Academics have documented endlessly why 4 dollars a day in Sao Paolo are not comparable to 4 dollars in the Altiplano of the Andes for example, and not only due to purchasing power. The level of achievement of development goals and the access to basic needs in each local municipality are essential considerations for policy making and conceptualizing development programs.
Our report "Understanding the BOP from an access to opportunities perspective" aims to extend this approach, recognizing the relevance of the multidimensionality of poverty when understanding BOP communities, analyzing five Latin American countries (Argentina, Brazil, Colombia, Mexico and Peru) in terms of their access to a set of five basic needs: water, energy, education, housing and information technology and communication.
The analysis conducted shows how similar income levels between countries do not necessarily translate into the same level of access to basic needs. This fact confirms that the dominant view of the BOP in monetary terms must be complemented with a focus on access to basic necessities. This should be considered a must in order to allow devising a more comprehensive policy framework for the formulation of public policies and business strategies aimed at poverty reduction.
As the report portrays, purely monetary analysis would indicate that Peru is the country with the highest levels of poverty, with 71% of its population with incomes below US $ 8 a day, behind Colombia (66.4%), Mexico (63%) and substantially away from Brazil (54%) and Argentina (47%).
However, a more in-depth analysis according to access needs shows us a wider and more diverse reality. Mexico for example, is the country with the highest limited access to water sanitation infrastructure, with more than 50% of the population without access to them. Peru, however, has the highest percentage of population without access to electricity, just over 20%. In the housing sector, Colombia is the country with the highest use of low quality materials and without access to formal housing property. In the field of education, Brazil has the lower access, with just over 50% of its population without having completed secondary education, and in terms of access to information technology, the data regretfully is not comparable, but we can see that in all cases, less than 10% of the population of the countries surveyed have Internet access.
This data confirms that similar income distribution patterns do not necessarily lead to the same lack of access to basic needs, and thus, the degree of access varies substantially between countries. Therefore, it is essential to avoid generalizations and perform the necessary screening of access to basic needs country to country, ideally also considering decentralization by region, before in engaging in BOP programs.
Based on these results, the report provides a series of recommendations to create enabling ecosystems conducive to the development of inclusive business, such as creating better information systems to provide accurate and comparable information on access to needs and priorities; integrate the BOP interests in national development plans; promote shared knowledge platforms for professionals and academics engaged in field to improve dissemination and work sharing done in this area; apply lifecycle analysis and value chain systems to improve access to opportunities; and design cross-sectoral partnerships to create a favorable environment for the different stakeholders engaged.
The report Understanding the BOP from an access to opportunities perspective has been written by Fernando Casado, Pablo Sánchez and Jordi Vives; designed by Marta Gualtero Soriano and edited by Michael Strelow.
Download the report at: http://www.globalcad.org/Infocad/UnderstandingBOP.pdf
Or read the report online at: http://issuu.com/globalcad/docs/understandingbop
Follow Fernando Casado in Twitter: @Fernando_Casado