Last March, the Monitor Group published Emerging Markets, Emerging Models, an analysis of the opportunities and challenges to apply market-based models to better serve the world’s poor as suppliers and customers. I have discussed the failure of supply-side aid economics in the past, and the Monitor Group’s findings illustrate the danger of assuming that your outside opinion of a low-income group’s needs matches their wants.
“We want gold on credit. Everyone in our village does,” Monitor Focus Group, Andhra Pradesh, India
Microfinance has been getting negative attentions from all corners for its debatable impact on economic advancement, but part of the problem may be that it it swimming upstream:
Status symbols matter everywhere. It is no western slight to readily accept that this phenomenon translates from Trump Tower to Bacongo; on the contrary, it’s a necessary precondition to creating a successful market strategy for your social intervention:
Yet our study found many examples of enterprises and inventors who focus on the development of novel technologies, products, and services the poor are presumed to need and want. Like the NEST solar lantern or the Venus burner, products well-designed for low- income markets often still fail to sell in significant volume, flouting Business 101 in obvious ways: by misperceiving what low-income consumers want to buy when they can afford it or have access to credit; and by misunderstanding their cash flows, or absolute ability to pay.
Disclaimer: This is not intended as a slight against microfinance or support for “Sun King” philanthropy. I simply point out that the intended beneficiaries of many a social entrepreneur’s benevolence are oft treated as passive recipient abstractions that reflect the entrepreneur’s own hopes and concerns, rather than real, independent-minded human beings who should be accorded (at the very least) the respect of a paying customer.