Exploring the Bottom-of-the-Pyramid Proposition in Egypt

Can the Private Sector be the Solution to Youth Unemployment and Poverty?

May Nagy Assistant Lecturer at The British University in Egypt, Egypt.

PhD student at London Southbank University, UK.

Target 12%Actual 26%

No progress in employability since 201146% of those employed are working in the informal

sector

Who can solve this?

Government NGOs Private Sector

Who can solve this?

Private Sector

Who can solve this?

This paper will present a proposition that encourages the private sector to advance development, at profit.

RESEARCH PURPOSE

THE BOTTOM-OF-THE-PYRAMID (BOP) PROPOSITION

Enormous aggregate purchasing power, predicted at ($429 billion in Africa alone), mostly

consumed at the exploitive, fragmented, informal economy. When multi-national

corporations (MNCs) convert this purchasing power to the private, organised economy it will

lead to an increase in the income of BOP consumers, reducing levels of poverty.

THE BOTTOM-OF-THE-PYRAMID (BOP) PROPOSITION

Employment opportunities

and reduced

poverty ratesConsumersProducers

EntrepreneursPotential

Employees

CO-CREATION…

Private sector

BOP market is huge (17.5 million), young (25%), seeking employment and predicted to grow at a rate faster than any

other segment of the Egyptian market.

Will it work?

1

2Will it work?

Forecasts of Growth Indices of Fastest Growing Consumer Spending Categories: 2015-2030 (Euromonitor International from national statistics/UN/OECD)

Euromonitor forecasts for 2015-2030:- capacity of discretionary spending is expected to increase- growth is expected in household income and total consumer expenditure- young consumers will be driving growth

Egypt is an emerging, growing market, and only corporate market shares established now will grow with it.

2Will it work?

BOP consumers are quite spenders, who demand a variety of products across a variety of categories. Currently, their purchase power is almost exclusively directed toward the inefficient, informal sector (also from BOP market)3

Will it work?

egypt602 - table - 22/08/2016 12:46:36 Total SEC A B C1 C2 D EPercentage of purchases % % % % % %Salty snacks 131948 1 8 14 21 29 27Pasta 108601 1 10 15 25 25 24Detergents (HS/LS) 106816 1 7 14 24 27 27Tea 106392 2 9 14 24 25 26CSD 92650 2 13 15 25 24 21Skin Cleansers 86545 1 9 14 24 25 26Cooking Oil 81221 2 9 14 24 26 26White cheese 79866 2 10 15 24 25 23Dishwashing Liquid 74135 1 8 14 25 26 26Biscuits 68032 1 10 15 24 26 24Loose Milk 63192 0 9 14 27 26 23Yoghurt (spoonable) 58195 2 14 15 24 24 20Juice (RTD) 50670 3 13 16 24 24 21Bleach 39265 2 9 14 24 27 25Ghee 36374 1 9 13 23 27 26Bouillion 35655 2 10 13 25 26 24UHT Milk 30056 7 23 19 22 16 12Canned Tuna 25356 3 13 16 24 24 21Instant Coffee 24420 3 16 14 27 23 17Hair care: Gels cream oil 20524 2 10 13 24 27 24Shampoo 20258 3 13 15 25 24 19Processed Cheese 19520 5 19 16 25 20 16Chocolate confectionery 18648 5 19 16 24 21 15Feminine Protection 13713 4 15 15 24 23 19Jams 12639 6 17 15 24 21 16Toothpaste 11311 6 19 17 25 19 13Juice powder / cordials 9262 2 8 14 26 27 23SPECIALTY RTD MALT 7197 6 20 16 21 23 14Deodorants 7091 6 23 17 23 18 13Insecticides 5357 2 12 16 23 25 22

Hands & Body Lotions and Creams 5338 6 15 14 20 23 22Household cleaners 5085 8 18 15 22 22 15Powdered Milk 3732 4 17 21 25 18 15Yogurt drinks / Laban Rayeb 3622 6 20 15 27 20 12Flavored Milk 2531 17 26 14 24 14 6Canned Beans 1322 13 27 13 17 20 10

BOP consumers are quite spenders, who demand a variety of products across a variety of categories. Currently, their purchase power is almost exclusively directed toward the inefficient, informal sector (also from BOP market)3

We want such merchants to become part of the formal economy by engaging efforts with MNCs:- Will allow MNCs to, cheaply, outsource some of its to young

entrepreneurs - Will act as a source of stable business income for young BOP

entrepreneurs

Will it work?

List of

Recommendations

Policies need to focus on promoting Egypt to foreign investors, specifically to MNCs looking to expand.

Investment in infrastructure: With most of Egypt’s BOP reside in poor rural areas, they could be included into the formal economy if they became accessible.

Policies need to change how they address the informal economy: Build a bridging platform rather than trying to directly engage with the informal sector.

Policies need to be introduced that encourage MNCs to outsource their activities to local entrepreneurs: Promotion of young local entrepreneurs to new business entrants or through tax reductions.

Policies need to eliminate hurdles facing young BOP entrepreneurs, whether working on their own or with MNCs.

Policies need to support SMEs and micro-businesses. Financial support is important, but non-financial support is also essential, such as training, empowerment and follow-up.

Thank you…