Private Utilities and Poverty Alleviation
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Private Utilities and Poverty Alleviation

Market Initiatives at the Base of the Pyramid

Edited by Patricia Márquez and Carlos Rufín

Drawing on cases from electricity distribution and other infrastructure industries, and from experiences spanning Asia, Africa and Latin America, this book examines new business models to bring basic utility services to the four billion people comprising the base of the socio-economic pyramid.
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Chapter 2: Reaching Scale: Utilities as Platforms to Provide Opportunities for the Majority

Francisco Mejía


Francisco Mejía1 THE CASE FOR PLATFORMS This chapter focuses on the potential of utility distribution networks as platforms to overcome barriers in improving the lives of millions at the base of the socio-economic pyramid, disrupting existing market conditions and leapfrogging existing competitors. Since the publication of Prahalad’s and Hart’s seminal article (Prahalad and Hart, 2002), the idea of developing appropriate business solutions that serve the poor, while staying profitable, has taken hold and developed into a new field in business strategy, public and social policy, and development economics. Nevertheless, reaching these 4 billion neglected consumers, producers and suppliers in a fast, efficient and scalable manner remains a significant challenge. Companies that wish to reach scale fast and overcome competitors in the creation of new consumer bases have the option of tapping into existing networks. These networks have the potential of catalyzing and accelerating market penetration by leveraging their existing majority customer base and providing a platform to reach scale very fast. In many urban areas in the developing world, the most ubiquitous services are energy (electricity and gas), water and sanitation, and telephony (fixed and mobile). These utilities have massive consumer bases. Offering additional and complementary goods and services by building on and leveraging this consumer base provides a unique opportunity for profits, growth, innovation and social impact. The pioneering models to provide access to financial services through mobile banking, or access to consumer and capital goods through energy distribution networks, or health services through water and sanitation provision,...

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