Clp v2


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Presentation about the IDB's Opportunities for the Majority Initiative

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Clp v2

  1. 1. Miami, July 19, 2010<br />
  2. 2. Changing the mid-set……..<br />Common perceptions<br />Our perspective<br />We think it is an important new market opportunity but simply don’t understand the segment so the risk of failure is too big<br /><ul><li>Poorpeople do pay…justnotall at once…needtoadapttoclient
  3. 3. Goodtrack record in microfinance, utilities and cellphonecompanies</li></ul>Too risky<br /><ul><li>Poorpeople are alreadypaying for veryhighprices for poorqualitygoods and services</li></ul>Poor people do not pay, they do not a have bank accounts<br /><ul><li>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</li></ul>Lack of information on consumer preferences, they are not reported in credit bureaus<br /><ul><li>While this may be true for people living below the poverty line, BOP customers represent a significant share of some sector’s total consumption </li></ul>Very difficult to reach them…limited access to distribution networks<br />It’s too expensive to serve these customers<br /><ul><li>Poorpeople are alreadypaying for verypoorqualitygoods and services</li></ul>There is no opportunity – people at the base of the pyramid have no money to spend <br /><ul><li>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</li></ul> public sector is responsible for poverty alleviation, the private sector should just make money<br /><ul><li>The futuremiddleclassis in the BOP…consumers are veryloyaltofirstcomers.Establishing brand loyalty could be a major competitive advantage as low groups’ income rises</li></ul>Poverty is an intractable problem<br />There are still more significant opportunities in the middle classes<br />IT IS POSSIBLE TO BE SUCCESFUL<br />1<br />
  4. 4. Mobile marketsize LAC<br />It is possible to be successful …. Mobiles<br />478 <br />million<br />2009<br />Today: the businessmodelis:<br /><ul><li>Lots of clients, lowmargins
  5. 5. Prepaid
  6. 6. Per second
  7. 7. A platform for otherservices (m banking etc.)</li></ul>1999<br />10 yearsago, the businessmodelwasbasedon:<br /><ul><li>Fewclients – highmargin
  8. 8. Multiyearcontracts
  9. 9. Per minute
  10. 10. Onlytelepohony</li></ul>10M<br />TWO KEYS<br /><ul><li>Adapt business model
  11. 11. Know your customer</li></ul>- 2 -<br />
  12. 12. Opportunities for the Majority<br />Launched by IDB President Luis Alberto Moreno in 2007.<br />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.<br />US$ 250 million set aside from the Bank’s Ordinary Capital.<br />Created to foster collaboration between the public and private sector, and civil society, to attract new resources to address poverty challenges in the region.<br />
  13. 13. Why work with the IDB? <br />Source of financing: The IDB is the main source of multilateral financing and expertise in Latin America and the Caribbean.<br />Regional footprint: IDB offices in 26 countries in the region. <br />Opportunities for the Majority: Dedicated team created to support the design and implementation of BOP business models with the private sector.<br />Resources for business innovation: Support the piloting of pre-commercial initiatives with the potential to scale. <br />Blended finance: Comprehensive financial options, including non-reimbursable resources to leverage lending products.<br />Public policy support: Partnerships with local and national/federal governments to facilitate project development and implementation. <br />
  14. 14. Available financing<br />Direct investments in market-based business models through the Opportunities for the Majority financing facility. <br />LENDING HIGHLIGHTS<br /><ul><li>Loans and Partial Credit Guarantees
  15. 15. US$5 and 10 million per operation (financing between 25% and 50% of the total project cost)
  16. 16. Long tenors
  17. 17. Market rates
  18. 18. Risk-sharing among partners
  19. 19. Co-financing opportunities through IDB’s syndicated loans</li></ul>ELIGIBILITY<br /><ul><li>Financially and structurally sound
  20. 20. Innovative with the capacity to be repeated and scaled
  21. 21. Sponsored by organizations with majority shares owned by an entity from one of the 48 member countries
  22. 22. Carried out in one of the 26 borrowing member countries. </li></li></ul><li>Luiz Ros<br />Francisco Mejia<br />Elizabeth Boggs-Davidsen<br />Lorenz Artaker<br />- 6 -<br />