Abhatoo - Centre Nationale de Documentation

Leading management thinker C.K. Prahalad argues that selling consumer goods to fourbillion poor people at the bottom of the economic pyramid (BoP) both generates sizeableprofits for large businesses and eliminates poverty. A welcome, innovative and influentialperspective, but an opportunity missed, I argue here. First, selling to the poor may dolittle to eradicate poverty, but potentially hurts small businesses and threatens local jobsand incomes. Second, a more precise analysis using household surveys shows a muchsmaller BoP market size, less than 5% of previous estimates. Third, virtually everyone indeveloping countries is classified as a ‘poor’ consumer in much of the BoP literature.The focus and the bulk of Prahalad’s new purchasing power rests with the emergingmiddle class in India, China and Brazil, while the 2 billion people below $2 a day,especially those in Sub-Saharan Africa, are marginalised in this debate. Data forconsumer prices confirms that the true challenge is to serve the latter group, those thatare completely cut off from the global marketplace. This paper concludes that bigbusinesses have a central role in shaping and expanding these future markets bygenerating employment and incomes.