How ICT Can Have Socioeconomic Impact on Base of the Pyramid Consumers

May 10, 2015 Editor 0

ICT has long been talked about as a lever that would enable developing countries – and particularly the least developed ones – to take “shortcuts” to development by using the latest generation of equipment and software, hence avoiding the decades of trial and error that developed countries have gone through.

Indeed ICT has potential for a multiplying effect due to its ability to deliver information and expertise to people who do not have either physical or financial access to these resources. ICT can help remote BoP citizen consumers and entrepreneurs make significant improvements in their lives – in areas such as education, health, finance and agriculture.

The study Leveraging ICT for the Base of the Pyramid aimed to learn from “what works” in terms of full projects (as opposed to technologies) combining both an economically viable model and socioeconomic impacts on their end-users, in the field of ICT for development (ICT4D).

15 of the most ground breaking market-based business models, with a proven scale and results on the ground showing that ICT can be a lever improving the living standards of the BoP, are analysed in depth in the report to support the main conclusions.

ICT for BOP Challenges

However, ICT is no “silver bullet.” While there is a wide variety of viable or partly viable business models, it is clear that work remains to be done to fully leverage the power of ICT4D and make solutions sustainable over the long term. More than half of the 280 projects screened (including some of the best practices studied here) were still young and/or not financially sustainable.

The field of ICT4D is nascent, from the oldest proven projects using computers (such as eChoupal and Drishtee for example) dating back to the early 2000’s to the new business models of today taking advantage of the recent spread of mobile phone – the prominent tool of ICT4D. Projects that have reached the “million customer landmark” remain the exception. As mobile phone development is recent and on-going, it is still too early to speak about results in a definitive manner.

Additionally, many ICT4D projects have a short lifespan, many being donor-funded and donor-driven pilots lacking an identified, economically viable, long-term value proposition. Many ICT4D initiatives completely rely on donor funding for financing (136 initiatives studied here), while some use some measure of subsidies in their operating models (35). The remaining projects, though possibly market-based today, often have used grants in their initial phases to grow.

Many projects have mistaken population need for consumer demand, providing a service that the targeted end-users or beneficiaries were not willing to pay for. The result is the creation of business models that, while well intentioned, were not sustainable.

Another key challenge faced by ICT4D projects and their proponents is that the direct impact of ICT on development projects is challenging to single out and measure. By nature, even projects that would not have been possible without ICT encompass other dimensions beside the technologies themselves, and often the ICT component is not entirely devoted to social purposes.

For example, Drishtee, an Indian social enterprise which has set up rural IT kiosks, uses its computers for ICT training, but also as internet spots for other purposes for villagers, and at the same time the Drishtee model encompasses non-ICT services such as the physical delivery of goods. This makes it difficult to assess results of ICT itself and take action to improve the ICT component of development projects.

Status of ICT for BoP by Sector

While not always the panacea, a number of the cases studied in Leveraging ICT for the Base of the Pyramid can have a significant social and economic impact, from lower costs of money transfers to increased agro-productivity and revenues to enabling cardiac care for the poorest or educating the most remote. The different sectors studied (finance, agriculture, health and education) have shown different levels of maturity for ICT4D business models.

• In finance, momentum is building in the range of services delivered to the BOP as well as in the number of initiatives: money transfer systems are being complemented with account holding, lending, and insurance (at least 3 programs of insurance via mobile phones were launched in the past 6 months). There are now more than 80 mobile money services around the world, purely market-based. Successful projects have grown to reach more than 5 million customers each (up to 28 million in the case of FINO).
• In agriculture and rural development, a variety of fairly large-scale and mature ICT-enabled projects demonstrate economic viability and provide significant social and economic value. Such projects are directly linked to income-generating activities (for example providing better selling opportunities for agro-products), making their value easily visible for end-users. In our study, 30 projects out of 53 agro projects identified were partly market-based and still running. The largest projects have impact on several million people.
• Healthcare is an extremely dynamic sector of ICT4D, but to date most projects were grant-based. Out of the more than 100 projects in ICT4health identified for this study, only 20 were at least partly market-based and had survived the pilot phase. While donor projects were often focused on awareness campaigns or healthFinancial services” is the most mature area in market-based ICT4D projects data gathering and analysis, market-based approaches focused on remote diagnosis (Narayana Hrudayalaya Hospital – NHH, HealthLine, Healthpoint Services) or drug authenticity verification (mPedigree). They serve up to a few million clients in the case of basic information, and several hundred thousand customers in the case of specialized remote diagnosis.
• Education is at the other end of the spectrum, with very few truly market-based approaches targeting the poorest. We found only 21 ICT4D projects specifically focused on education, less than half of which had at least some market-based component. Education was included in the business models of specific projects mostly as training and to help build the capacity of adults. However, some not-for-profit projects (e.g., MoMath) and the success of BBC Janala have demonstrated that demand for general education support is emerging. Yet without government procurement it remains to be proven that there is sufficient purchasing power at the Base of the Pyramid to pay for the development costs of ICT-based education (support) services.

Go to SourceReprinted from ICTWorks

Categories: ICT

Tags: base of the pyramid, bop, ict