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ENTREPRENEURSHIPAT THE BOTTOM OFTHE PYRAMID

Carol Dolglish and Marcello Tonelli

$) Routledgefi \ Taylor & Francis Croup

NEWYORK AND LONDON

First published2017by Routledge71 1 Third Avenue, New York, NY 10017

and by Routledge2Park Square, Milton Park, Abingdon, Oxon OX14 4RN

Routledge is an iupint of the Taylor €.s Francis Croup, an inJorma busiwss

@ 2017 Taylor & Francis

The right of Carol Dalglish and Marcello Tonelli to be identified as

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".*.,,-o,

ISBN: 978-1 -1"38-84654-8 (hbk)ISBN: 978-1-138*84655-5 (pbk)ISBN: 978-1 -31,5-727 4l-7 (ebk)

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DEDICATIONS

This book is dedicated to Tole, Jonas, Francis, Rosa,Rambique and Ta Deu, the'tearn in Beira where thisjourney began.

Special thanks to VorlDynarnics Pty Ltd for providingall the beautiful photos presented in this book[www.worldynarnics. corn] .

ffiYNAMICS.8,J

CONTENTS

Ust of Figures

Lkt of Tables

t:

1 Introduction to the Bottom of the Pyramid (BoP)

The Bottam af the furanid iBeing Part af the Global Economy 5The Geagraphy and Nature of the BoP 9Case Stwdy: Despertai Mozambique (Awaken Mozambique) 14

Conclusions 17

2 What is Poverry?Introduction 20Types of Pouerty 22The Faces af Pouerty - Fast Facts (Millenniarn Project) 24Causes of Pouerty 27Case Studyr Nati&al Geographic - The Future of Food i4Conclusians i5

3 Entrepreneurship r

Introduction i7Definitions oJ Entrepreneurship 3 B

Aspeds of Entrepreneurship Theory 38The Role of Entrepreneurship, 42

xxi

2A

37

viii Contents

Entrepreneurial Actors 44

Who Encourages and Supports l-ocal Micro-Entrepreneurs? 48Case Study: COOPI (Paraguay) 50Case Study: I-aBL (India) 52Case Study: IKEA (Pakistan) 55

4 Factors Impacting Entrepreneurial Success

lntroduction 50Enablers of and Barriers to Micro-Entrepreneurial Aaiuitry at

the BoP 61

Case Study: Reuters Market Light (India) 65Case Study: African Agricultural Growth Conidors

(Mozambique / Tanzania) 67

Case Study: Commurcity Health Deliuery (Uganda) 70

Case Study: System of Rice Intensification

(Madagascar/India) 72

Case Study: Despertai Mozambique (Awaken

Mozambique) 74

5 The Informal SectorIntroduction 77

What Does the Term Mean? 78

Why the InJormal Sector Exisfs and What the Future Holds 8A

Case Study: Ghana (Based on the Work of Obeng-Odoom) 81

Prafiling the Informal Sector Entrepreneur 82

The Role of the Informal Sector in Poor Deueloping

Countries 84The Strengths and Limitations of the Informal Sector as a

Context for Entrepreneurship 86Case Stwdy: Despertai Mozambique (Awaken

Mozambique) 87Conclusions 90

6 Micro-CreditIntroductian 92The History of Micro-Credit 93 ,''The Case For Micro-Credit 95The Case Against Mkro-Credit 97Case Study: Despe$ai Mozambiqwe (Awaken

Mozambique) 99Conclwsions 104

60

77

92

7 Models to Support Entrepreneurial Activities inDeveloping Countries: Community DevelopmentIntroduction 108Mennb er- Bas ed As s ociations and Worker- Owned C ooperatiues

Case Snrdy: International Potato Center (CIP) and the Papa

Andina Initiatiue (Pu*) 110

MBOPs as Interlorutorsfor Innouation 111

Case Study: The Maize Storage Project (ToSo) 111

Commwnity-Driuen Deuelopment (CDD) Approach 1 1 2Case Study: Gwnung Kidul Agricultural Deuelopment Project

(Indonesia) 1.15

Conclusions L20

B Models to Support Entrepreneurship Activities inI)eveloping Countries: The Role of Large CorporationsIntroduction 125

Corporate Social Responsibility (CSR) 125

Role af Multinational Corporations 129

Case Study: MNC Processa - Deuelopment oJ CSR in Angola

Case Study: The Tata Croup (lndia) 135

Conclusions 138

9 Models to Support Entrepreneurship Activities inDeveioping Countries: The Role of Aid Agencies and

Non-Goverrlment Organisations (NGOs)What Is Aid? 14A

Benefix of Aid 142Dawnside of Aid 144

Aid and Entreltreneurslrip 146

What Do Non-Couernment Organisations Do? 146Case Study: Kiua 149

Conclusions 152

10 Models to Support Entrepreneurship Activities inDeveloping Countries: The Role of GovernmentIntroduction 15 5Legacies From the Past (Mozambique) 1!9Case Study - 'Doing Business' Refarms (Tanzania) 162

Conclusions 167

1,1, Conclusions

Index

Contents lx

108

109

125

131

155

170

180

140

FIGURES

1.1 Types of BoP Business Models

1,.2 Map Illustrative of the'World Population Living with Less

Than $1/Day1.3 Life at the BoP

2.1 The Faces of Poverry

3.1 OpportunityRecognition3.2 Development Curve of Survival Enterprises vs Tradirional

Starr-Ups

3.3 Micro-Entrepreneurs in Action3.4 Different Stakeholders of the BoP4.7 Access to Funding Allows New Start-{Jps to Be Born5.1 Coloun and Forms of the Informal Sector

6.1 Micro-Credit Makes Products and Services Aff:rdable-6.2 Collaboration Berween Organisations

7.1, Conversion from Dryland into Green Vegetation within a

One-Year Period7.2 Livestock Farming, Fishery Farming, Fish Floss, and Organic

Fertiliser Production'7.3 The Utilisation of Livestock Dung for Eiogas (Cooking and

Electricity)7.4 High School Students Undertaking,Classes and Vocational

Training8.1 The Palpable Presence ofMNCs at the BoP9.1 Aid is a Necessity for those Facing Extreme Poverry

10.1 The Poor at the BoP Cannot Rely on Govemment Assistance

11.1, The Great Diversity Oft'ered by the BoP

7

15

16

JJ

39

45

47

48/aOJ

85

96

142

118

12A

121

1.21

L31

144

158

175

TABLES

1.7 Income1.2 Sanit*ien r: ,,,... r.

!: r;,:-trir .:-l: :.: i:r :i.'t',: .],il .. ,:., :t - . :.itr:r: i: :...1 rir rr;ir_ _::::iil:rl i.-t .r:

I.3 UrbanP<rv'gft ,,'' '.1:

,.. ,,ir 1t .l'.' i' ;r' .:i ,,. 1i .:1.4 Access to Eleeidcity1.5 Infu*Deqtlrst .,,, . ,..,. , .,. ,,, ,..,,,,r.., , r rr.., :,,,.1.6 Access to the Internet3.1 Proportion of Nascent wecessity Entrepreneun ty DtAy '

Income and Global Region10,1 The Poor at the BoP Cannot ReIy on Governrnent

Assisance

u

10

t111

T2

1,3

t4

40

161

1

INTRODUCTION TO THEBOTTOM OF THE PYRAMID (BoP)

lntroduction

Despite the growth in trade and intemational aid, the number of people livingin poverry around the world is increasing, particularly in Afrjca. This book is

about understanding that micro-entrepreneurial activities at the bottom or 'base'

of the pyramid (B"P) offer a fundamental mechanism to assist with the survival

and life improvement of many poor communities. Most of these micro-enterprises are to be found in the informal economy. They take many forms,

often providing services to other poor people. They can be minor manufactur-

ers, crafts people or retailers in a range of market settings.

In some respects, entrepreneunhip at the BoP is not that different from what

we witness in developed countries: there are few barriers to entry, there is fierce

competition and only a few succeed whether based on either individual

strenEhs and/ or third party support. Flowever, entrepreneurs at the BoP also

tace a range of other challenges that are not seen in the developed world. These

chalienges have often led to entrepreneurs in poor countries being excluded

from entrepreneurial research because of lack of data and a dift-erent perception

of those who enter business ior survival reasons. This is what makes successful

entrepreneurship at the BoP such an interestingtopic.There are important examples of organisations, public and private, large

and small, established and new, that seek -t<i promote inclusive entrepreneur-ship practices, specificaliy targeting those most in need. In order to dissemi-

nate the knowledge gained by these institutions and improve on their efforts,

it is important to introduce books that explicitiy address this subject into busi-ness libraries, universiry courses and aid agencies. This is not always easy

because the data comes from communities that are not in a position to