Market-Based Solutions: The Unfulfilled Promise
Half the world lives on less than $2.50 a day. That’s over three billion people. Nearly a billion of them entered the 21st century unable to read a book or sign their names. Over a billion have inadequate access to water, and some 2.6 billion lack basic sanitation. Every third child in the developing world does not have adequate shelter. The sheer scale of the problems of global poverty is overwhelming.
In the fight against global poverty, one of the most exciting developments in recent years has come in the form of a new kind of business: this goes by many names, including social enterprises, inclusive businesses and market-based solutions to poverty. In an attempt to create sustainable social impact, these enterprises employ innovative business models to provide the poor with beneficial products and services, or create improved livelihood opportunities. Market-based solutions to poverty are being deployed today in a wide range of areas, from healthcare to education, sanitation to housing.
The reality, however, is that while the proliferation of new market-based solutions is encouraging, not many of them have made a significant impact on the problems they seek to address. In 2011, our colleagues surveyed 439 market-based solutions in Africa and found that a mere 13% of them had achieved significant scale.
The challenge of scale is therefore one of the most urgent obstacles that those interested in market-based solutions to poverty must address, given the magnitude of the problems of poverty. What are the barriers keeping these innovations from achieving their potential and how can we overcome them?
Our upcoming report, Beyond the Pioneer: Getting Inclusive Industries to Scale, is motivated by the need to address this challenge. Over the past year, we have deepened our understanding of the challenges of scaling and how we can overcome them. We have studied many enterprises, conducted hundreds of interviews, made dozens of site visits, and drawn on our own experience of scaling market-based solutions on the ground. We hope that Beyond the Pioneer will be the start of an important conversation about what all of us—foundations, aid-donors, mission-driven intermediaries, multilateral development agencies, impact investors, host governments and companies—need to do to fulfil the exciting promise of market-based solutions for the poor.
In the next part of this three-part blog series, we will introduce our framework for understanding the real barriers that stand in the way of getting market-based solutions to scale.
Harvey Koh is a Director at Monitor Deloitte and is the lead author of Beyond the Pioneer
Ahmed Irfan is a Senior Consultant at Monitor Deloitte
This was originally posted in the Alliance Magazine blog and can be accessed here