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Entrepreneurship at the Bottom of the Pyramid

Book · August 2016

DOI: 10.4324/9781315727417

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Carol L. Dalglish Marcello Tonelli

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 0
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ENTREPRENEURSHIP
AT THE BOTTOM OF
THE PYRAMID

Carol Dolglish and Marcello Tonelli

$) Routledge
fi \ Taylor & Francis Croup

NEWYORK AND LONDON

First published2017
by Routledge
71 1 Third Avenue, New York, NY 10017

and by Routledge
2Park 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

authors of this work has been asserted by them in accordance with
sections 77 and 78 of the Copyright, Designs and Patents Act 1988,

Ail rights reserved. No part of this book may be reprinted or reproduced

or utilised in any form or by any electronic, mechanical, or other means,
now known or herea&er invented, including photocopying and
recording, or in any information storage or retrieval system, without
permission in writing ftom the publishers.

Trad.emark notice: Prodvct or corporate names may be trademarls or

registered tademarks, and are used only for idenri{ication and
explanation without intent to in-fringe.
Library of Congress Catalogtng irr. Publication Data
A catalog record for this book has leen requested
".*.,,-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)
"
Typeset in Bembo o

by Wearset Ltd, Boldon, T1.ne and'Wear

DEDICATIONS

This book is dedicated to Tole, Jonas, Francis, Rosa,

Rambique and Ta Deu, the'tearn in Beira where this
journey began.

Special thanks to VorlDynarnics Pty Ltd for providing

all the beautiful photos presented in this book
[www.worldynarnics. corn] .

ffiYNAMICS
.8,J
CONTENTS

Ust of Figures x
Lkt of Tables xi
t:
1 Introduction to the Bottom of the Pyramid (BoP)

The Bottam af the furanid i

Being Part af the Global Economy 5
The Geagraphy and Nature of the BoP 9
Case Stwdy: Despertai Mozambique (Awaken Mozambique) 14
Conclusions 17

2 What is Poverry? 2A
Introduction 20
Types of Pouerty 22
The Faces af Pouerty -
Fast Facts (Millenniarn Project) 24
Causes of Pouerty 27
Case Studyr Nati&al Geographic - The Future of Food i4
Conclusians i5
3 Entrepreneurship r
37
Introduction i7
Definitions oJ Entrepreneurship 3 B
Aspeds of Entrepreneurship Theory 38
The Role of Entrepreneurship, 42
viii Contents

Entrepreneurial Actors 44
Who Encourages and Supports l-ocal Micro-Entrepreneurs? 48
Case Study: COOPI (Paraguay) 50
Case Study: I-aBL (India) 52
Case Study: IKEA (Pakistan) 55

4 Factors Impacting Entrepreneurial Success 60

lntroduction 50
Enablers of and Barriers to Micro-Entrepreneurial Aaiuitry at
the BoP 61
Case Study: Reuters Market Light (India) 65
Case 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 Sector 77

Introduction 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 84
The Strengths and Limitations of the Informal Sector as a
Context for Entrepreneurship 86
Case Stwdy: Despertai Mozambique (Awaken
Mozambique) 87
Conclusions 90

6 Micro-Credit 92
Introductian 92
The History of Micro-Credit 93 ,''
The Case For Micro-Credit 95
The Case Against Mkro-Credit 97
Case Study: Despe$ai Mozambiqwe (Awaken
Mozambique) 99
Conclwsions 104
 Contents lx

7 Models to Support Entrepreneurial Activities in

Developing Countries: Community Development 108
Introduction 108
and Worker- Owned C ooperatiues 109
Mennb er- Bas ed As s ociations
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 2
Case Study: Gwnung Kidul Agricultural Deuelopment Project
(Indonesia) 1.15
Conclusions L20

B Models to Support Entrepreneurship Activities in

I)eveloping Countries: The Role of Large Corporations 125
Introduction 125
Corporate Social Responsibility (CSR) 125
Role af Multinational Corporations 129
Case Study: MNC Processa -
Deuelopment oJ CSR in Angola 131
Case Study: The Tata Croup (lndia) 135
Conclusions 138

9 Models to Support Entrepreneurship Activities in

Deveioping Countries: The Role of Aid Agencies and
Non-Goverrlment Organisations (NGOs) 140
What Is Aid? 14A
Benefix of Aid 142
Dawnside of Aid 144
Aid and Entreltreneurslrip 146
What Do Non-Couernment Organisations Do? 146
Case Study: Kiua 149
Conclusions 152

10 Models to Support Entrepreneurship Activities in

Developing Countries: The Role of Government 155
Introduction 15 5
Legacies From the Past (Mozambique) 1!9
Case Study - 'Doing Business' Refarms (Tanzania) 162
Conclusions 167

1,1, Conclusions 170

Index 180
FIGURES

1.1 Types of BoP Business Models 7

1,.2 Map Illustrative of the'World Population Living with Less
Than $1/Day 15
1.3 Life at the BoP 16
2.1 The Faces of Poverry JJ
3.1 OpportunityRecognition 39
3.2 Development Curve of Survival Enterprises vs Tradirional
Starr-Ups 45
3.3 Micro-Entrepreneurs in Action 47
3.4 Different Stakeholders of the BoP 48
4.7 Access to Funding Allows New Start-{Jps to Be Born
/a
OJ
5.1 Coloun and Forms of the Informal Sector 85
6.1 Micro-Credit Makes Products and Services Aff:rdable- 96
6.2 Collaboration Berween Organisations 142
7.1, Conversion from Dryland into Green Vegetation within a
One-Year Period 118
7.2 Livestock Farming, Fishery Farming, Fish Floss, and Organic
Fertiliser Production' 12A
7.3 The Utilisation of Livestock Dung for Eiogas (Cooking and
Electricity) 121
7.4 High School Students Undertaking,Classes and Vocational
Training 1.21

8.1 The Palpable Presence ofMNCs at the BoP L31

9.1 Aid is a Necessity for those Facing Extreme Poverry 144
10.1 The Poor at the BoP Cannot Rely on Govemment Assistance 158
11.1, The Great Diversity Oft'ered by the BoP 175
TABLES

1.7 Income 10
1.2 Sanit*ien r: ,,,...
r;,:-trir .:-l: :.: i:r .],il .. ,:.,
r.
:.itr:r: i: :...1 rir rr;ir_ _::::iil:rl i.-t .r:
t1
!:
I.3 UrbanP<rv'gft ,,'' ,.. ,,ir 1t .l'.'
:i.'t',:
i' ;r' .:i ,,. 1i .:
:t - .
11
'.1:
1.4 Access to Eleeidcity T2
1.5 Infu*Deqtlrst .,,, . ,..,. , .,. ,,, ,..,,,,r.., , r rr.., :,,,.
1,3

1.6 Access to the Internet t4

3.1 Proportion of Nascent wecessity Entrepreneun ty DtAy '
Income and Global Region 40
10,1 The Poor at the BoP Cannot ReIy on Governrnent
Assisance 161

u
 1
INTRODUCTION TO THE
BOTTOM OF THE PYRAMID (BoP)

lntroduction
Despite the growth in trade and intemational aid, the number of people living
in 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

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