Last week, GKD members discussed some of the benefits that can be gained
from "pro-poor" business strategies, along with some examples, and the
striking challenges to creating and implementing those strategies. This
week we examine profit, and the functional, and dysfunctional, role it
can play in promoting activity that provides real value to the poor.

Telecenters are a telling example. During the past decade, international
donors have spent tens of millions of Euros/dollars to fund telecenters
throughout the developing world. Yet most telecenters have failed to
become sustainable. Worse yet, subsidized telecenters often drive out
for-profit companies that cannot compete with the subsidized prices.
When the donor funding ends, the telecenters often founder and fail, and
the community is left with nothing.

A couple of years ago, GKD received a message from an enterprising young
Nepali, describing a striking contrast. He had established a cyber-cafe
(i.e., for-profit telecenter) in a small town, and explained how he had
made his company successful. Initially, he followed the standard
approach: put out some signs, talked to some of the town leaders, handed
out some flyers. But few people came and he faced failure. He decided to
take a new approach. He visited people at their homes and shops to find
out what they were interested in. Then went back to the cafe and
searched the web for relevant websites. When he had collected enough
material, he invited them to the cyber-cafe to review the material
(sometimes with his accompanying translation) for free -- the first
time! His driving motive: profit.

The story has been repeated with other products and services. This kind
of experience has convinced some that profitability is essential for
sustainability. They argue that profit provides the incentive needed for
the kinds of effort and investment needed to make enterprises
successful. Further, the need to make a profit forces all companies --
large and small -- to identify and deliver products and services that
are valued by customers, i.e., that customers will pay for.

Others harshly criticize the recent emphasis on "public-private
partnerships." They feel that for-profit firms inevitably place profits
above the well-being of poor communities. They charge that companies,
especially international corporations, will make the investments needed
to serve the middle and upper class, but not the poor. They argue that
for-profit companies are less likely to provide sustainability, because
they will desert a poor community as soon as higher profits can be found

Key Questions:

1) Is profit important -- even essential -- to successful and
sustainable "ICT for development" activities?

2) Do you know of large or small local companies that have used ICTs to
serve the poor while making a profit? How about multinational

3) How do we ensure that the profit motive drives companies to provide
ICT goods and services with real value for the poor? To succeed in
selling to the poor, do companies have to create trust by providing real

4) Are there ICTs that offer entrepreneurs from poor communities a
chance to create successful small enterprises, either free-standing or
as franchisees of a larger entity?

5) When large corporations seek to serve the poor, who are the "winners"
and "losers"? What "win-win" models are possible?

This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative
Agreement with AED, in partnership with World Resources Institute's
Digital Dividend Project, and hosted by GKD. and
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