The Chicken Metric
“What poor people need most is a way to make money,” writes Martin Fisher, an engineer who lived in Kenya working on development initiatives for 17 years before plowing his accrued knowledge back into KickStart, the technology transfer organization he founded with partner Nick Moon. “One of the most fundamental lessons was that the poorest people in the world are also among the most entrepreneurial—they have to be just to survive,” he writes in the catalogue for Design for the Other 90% (DFTO90), a recent exhibit at the Cooper-Hewitt Design Museum that features products geared toward the billions of consumers with pennies a day, if that, of disposable income. “They do not want handouts,” Fisher writes. “They want opportunities.”
Opportunities have begun knocking, now that the financial services and private sectors have turned their attention to the massive aggregate market The Other 90% represents. The four billion consumers worldwide with the lowest disposable income are known by the World Resources Institute (WRI) as the “base of the pyramid,” or BOP.
The WRI released a report in March that calculated the estimated purchasing power of the BOP market at $5 trillion, with another $12.5 trillion in the mid-market population of 1.4 billion people, who have incomes between $3,000 and $20,000. The WRI Report is the first empirical, quantitative study of its kind. It draws upon income data from 110 countries and standardized expenditure data from 36.
The BOP market—now that it’s been identified and quantified—presents clear opportunities and a series of particular challenges for those seeking entry. Consumers in this market often subsist on two dollars or less each day, 1.4 billion on less than a dollar. Microscale, rapid ROI and local supply chains are critical constraints for any viable product, and the challenges of effective marketing to a huge, often dispersed, rural and largely illiterate population comprises an estimated 70-80% of the cost of bringing a product to market.
Nuggets of market wisdom
It is, ultimately, the market that will bring enduring improvements in quality of life to those struggling in the BOP—of this, Martin Fisher is convinced. Fisher’s many years of experience in development demonstrated emphatically to him that individual ownership and market-based incentives are what works. KickStart sells all its products.
Other aid organizations have reached the same conclusions. The Ceramic Water Filter project, an effort undertaken by Potters for Peace’s Ron Rivera, reflects the lessons echoed by KickStart and by Paul Polak’s International Development Enterprises. IDE designs low-cost, small-scale irrigation products such as the single-operator treadle pump and the quarter-acre drip irrigation systems featured in DFTO90. As Cynthia Smith, curator of DFTO90, relates:
For years [Rivera] would teach NGOs how to small-batch manufacture the water filters. He would come back after a couple years only to find the project abandoned. Only when the micro-enterprise component was added did the production become … sustainable.
The reports of entrepreneurial success are encouraging—the Mwanza family, for example, through use of IDE’s treadle pump, has gone from subsistence farming to a sustainable, profitable vegetable business. They recently purchased and planted of a grove of coffee trees, and entered negotiations to provide products to the European company Agriflora for export. By IDE estimates, “every dollar invested in the development of pro-poor markets has resulted in more than $50 of net additional income generated by smallholders.”
How do families such as the Mwanzas get started on less than $2 a day? Fisher writes that successful products for The Other 90% space “need…to sell for not much more than the price of a chicken in the local marketplace. A chicken is a luxury that even the very poor can afford from time to time.”
How do producers get started when the metric is so stringent?
Instead of developing a product and then identifying a potential market for it, products in the DFTO90 space are often designed the other way around—either to address a specific need within the BOP sector or from within the sector itself, spurred by necessity.