Miami, July 19, 2010

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Changing the mid-set……..

Many BOP-targeted businesses have failed because they were based on what people need without understanding what they want. Customer insights and understanding of the ecosystem are key to success

There is no opportunity – people at the base of the pyramid have no money to spend

We think it is an important new market opportunity but simply don’t understand the segment so the risk of failure is too big

There are still more significant opportunities in the middle classes

Typically, business models successful in high income segments are not feasible for this segment. Companies need to innovate by leveraging technology and non-traditional partnerships to radically reduce cost

While this may be true for people living below the poverty line, BOP customers represent a significant share of some sector’s total consumption

Common perceptions Our perspective

Poor people do not pay, they do not a have bank accounts

Very difficult to reach them…limited access to distribution networks

public sector is responsible for poverty alleviation, the private sector should just make money Poverty is an

intractable problem

Too risky

It’s too expensive to serve these customers

Lack of information on consumer preferences, they are not reported in credit bureaus

Poor people do pay…just not all at once…need to adapt to client

Good track record in microfinance, utilities and cell phone companies

Poor people are already paying for very high prices for poor quality goods and services

Poor people are already paying for very poor quality goods and services

The future middle class is in the BOP…consumers are very loyal to first comers.Establishing brand loyalty could be a major competitive advantage as low groups’ income rises

IT IS POSSIBLE TO BE SUCCESFUL

2009Today: the business model is:

Lots of clients, low margins

Prepaid

Per second

A platform for other services (m banking etc.)

478 million

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It is possible to be successful …. Mobiles

Mobile market size LAC

199910 years ago, the business model

was based on :

Few clients – high margin

Multiyear contracts

Per minute

Only telepohony

10M

TWO KEYS

Adapt business model

Know your customer

Opportunities for the Majority

Launched by IDB President Luis Alberto Moreno in 2007.

US$ 250 million set aside from the Bank’s Ordinary Capital.

Set up as an incubator within the private sector to drive innovation and best practices in applying market-based solutions to advance economic and social development.

Created to foster collaboration between the public and private sector, and civil society, to attract new resources to address poverty challenges in the region.

Why work with the IDB?

Source of financing: The IDB is the main source of multilateral financing and expertise in Latin America and the Caribbean.

Opportunities for the Majority: Dedicated team created to support the design and implementation of BOP business models with the private sector.

Regional footprint: IDB offices in 26 countries in the region.

Resources for business innovation: Support the piloting of pre-commercial initiatives with the potential to scale.

Blended finance: Comprehensive financial options, including non-reimbursable resources to leverage lending products.

Public policy support: Partnerships with local and national/federal governments to facilitate project development and implementation.

Available financing

Direct investments in market-based business models through the Opportunities for the Majority financing facility.

LENDING HIGHLIGHTS• Loans and Partial Credit Guarantees• US$5 and 10 million per operation (financing between 25% and 50% of the total project cost)• Long tenors• Market rates• Risk-sharing among partners• Co-financing opportunities through IDB’s syndicated loans

ELIGIBILITY• Financially and structurally sound • Innovative with the capacity to be repeated and scaled • Sponsored by organizations with majority shares owned by an entity from one of the 48 member

countries • Carried out in one of the 26 borrowing member countries.

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Luiz Ros luizros@iadb.orgFrancisco Mejia franciscome@iadb.orgElizabeth Boggs-Davidsen elizabethd@iadb.orgLorenz Artaker Lartaker@iadb.org