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 elsewhere. 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 corporations? 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 value? 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. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: <[EMAIL PROTECTED]> To subscribe or unsubscribe, send a message to: <[EMAIL PROTECTED]>. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: <http://www.dot-com-alliance.org/archive.html>
