BFP: What do you do?
SO: I am a Lead Specialist in the Inter-American Development Bank’s Opportunities for the Majority (OMJ) Initiative. The aim of the OMJ is to provide financing, risk sharing facilities and technical assistance for private companies to develop and scale innovative business solutions that reach the base of the pyramid (BoP), with social impact. The IDB was the first international multilateral financial institution to create a dedicated unit and allocate funds specifically for private sector BoP market development. The OMJ was originally set up as a pilot within the IDB, with a budget of $250 million to develop a project portfolio, but our mandate was recently renewed with an indefinite time frame and resources.
I play an advisory role at the OMJ, on the one hand engaging companies to convince them that there is good business to be done at the base of the pyramid in developing new business models to target the 75% of the population in the low income bracket that are currently vastly underserved in terms of access to quality goods and services, as well as income earning opportunities. This involves brainstorming to get fresh ideas and brining different parties together to facilitate “cross-fertilisation” between companies in various countries and sectors.
On the other hand, for those companies that are already engaged in this space, we provide support in the implementation of their innovative business ideas, for example through providing finance or loan guarantees or another form of risk sharing. We acknowledge that there is a lack of information about markets and doing business at the BOP, which often results in bottlenecks to company implementation and/or creates hurdles to implementing or scaling up good ideas. As a result these financing projects are most often combined with technical assistance which is vital to “grease the wheels” of the new business prototype, whether through piloting new partnerships, performing market segmentation studies or training actors involved in the value chain or economic model.
In keeping with the IDB’s broad regional scope we deal with companies active in Latin American and the Caribbean, and across a large range of sectors, including infrastructure, health, education, nutrition, housing, IT and financial services.
We remain close to the projects that we finance or guarantee for the duration of that support, and then we also track the impact of those projects using existing impact indicators such as those measured through PULSE or the IRIS system, which has been adopted by the Global Impact Investing Network (GIIN). In a number of cases we would also do a full impact evaluation, especially for projects in the social sector, such as health or education.
BFP: What is the best part about your job?
SO: For me the best part is seeing companies change their mindsets, acknowledging that the top of the pyramid is basically saturated and that the base of the pyramid is where the opportunities lie. Once they realize this fact they take it as a core business project and put their best people onto it to do serious planning for a project launch – this is very exciting! It is very gratifying to work with companies that are seriously committed to making their business work at the BoP while optimizing their social impact.
BFP: What has been your greatest challenge?
SO: It’s the flip side of what I refer to in the previous question: to make this business with impact mindset happen! Too many companies still think of projects involving the BoP in terms of CSR, or “nice” things to do that look good in their company’s annual report. Many implement highly subsidized models that cannot survive on their own. But the needs in this sector are so great and the challenges so significant that we need sustainable core business models that can go to scale if we are to have any meaningful and lasting impact.
BFP: How have you overcome these challenges? What is the secret of your success?
SO: In my experience the most effective tool to challenge entrenched mindsets is to bring people along on field trips – where this is practical and possible of course. For example, in Argentina we were working on a project to develop a market for student loans; in this country there is no culture of banks making affordable loans available to students, so we plan to arrange for the group to travel to Mexico where the IDB recently financed a financial services project to make microloans available to students. With this corporate exchange methodology companies learn from each other, by the example of other businesses that have overcome the initial obstacles to developing a BoP model – and earned business success. In addition to bilateral field trips between countries in certain sectors we also facilitate cross-sectoral trips, where one industry can gain valuable insights from similar experiences in another. Where visits are not feasible, we arrange events where corporate business leaders are the speakers, again creating opportunities for them to share their credible experiences.
BFP: If someone wants to work with you, where should they start?
SO: Write us, visit, call… We want to build an industry of professionals dedicated to serving the Base of the Pyramid with sustainable business solutions, so more is better! More information on engaging with the MOJ is available at http://www.majoritymarkets.org/ and in this brochure, which also contains a number of project videos.
BFP: What do you hope to get out of being part of this community?
SO: As any development professional would say: you hope to see at least some people’s lives changed as a result of the projects that we structure and support. We won’t do away with poverty in my lifetime, but if each project can truly make a positive difference for as many beneficiaries as possible, that’s a good start.
Thank you to Susan Olsen for taking the time to do this interview.