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Copyright ©2007 World Resources Institute. All rights reserved.
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IV
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International dollars (purchasing power parity exchange rates) are used throughout this report
unless otherwise specified. Market figures and household income and expenditure measured by
household surveys are given in 2005 international dollars.
Current US dollars means 2005 dollars.
For convenience, however, BOP income figures used to describe BOP income segments or the
BOP and mid-market income cut-offs are measured in 2002 international dollars (purchasing
power parity dollars or PPP), since 2002 is the reference year to which the surveys used in this
analysis were normalized. The BOP population segment is defined as those with annual incomes
up to and including $3000 per capita per year (2002 PPP). The mid-market population segment
is defined as those with annual incomes above $3,000 and up to and including $20,000 PPP. The
high income segment includes annual incomes above $20,000 PPP. The report and accompany-
ing country tables use annual income increments of $500 PPP within the BOP to distinguish six
BOP income segments, denoted as BOP500, BOP1000, BOP1500, etc.
In 2005 international dollars, the cutoff for the BOP and the mid-market population segments
are $3,260 and $21,731.
I\^`feXcX^î\^Xk\j
Aggregate data are presented for four developing regions—Africa, Asia (including the Middle
East), Eastern Europe, and Latin America and the Caribbean as well as for the world as a whole.
The report refers to surveyed countries, which includes 110 countries for which household sur-
vey data were available. (See Appendix A for a list of countries by developing region and for ad-
ditional countries.) The report also refers to measured countries as those for which standardized
survey data on household expenditures were available. (See Appendix B for a list of countries by
region.)
DXib\k:fdgfj`k`fe
The report analyzes market composition in terms of total annual income or expenditures by
BOP income segments. The graphics representing the data, in 2005 PPP dollars, are scaled to
j B 6 3 < 3 F B " 0 7 : : 7 = <
produce figures of workable size, but show accurately the relative total household spending by
income segment.
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The report also analyzes household spending in terms of average annual per household expen-
ditures. Again, the graphics representing the data are scaled, but show accurately the relative
household spending for each BOP income segment.
LiYXe&IliXc8eXcpj`j
The report illustrates the market composition by urban and rural locations, both for the total
BOP market and by BOP income segment. The graphics representing the data are scaled, but
show accurately the relative urban and rural spending. (
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Four billion low-income people, a majority of the world’s pop-
ulation, constitute the base of the economic pyramid. New
empirical measures of their behavior as consumers and their
aggregate purchasing power suggest significant opportunities for
market-based approaches to better meet their needs, increase
their productivity and incomes, and empower their entry into
the formal economy.
The 4 billion people at the base of the economic pyramid (BOP)—all
those with incomes below $3,000 in local purchasing power—live in rela-
tive poverty. Their incomes in current U.S. dollars are less than $3.35 a
1
day in Brazil, $2.11 in China, $1.89 in Ghana, and $1.56 in India. Yet to-
gether they have substantial purchasing power: the BOP constitutes a $5
trillion global consumer market.
3 F 3 1 C B 7 D 3 A C ; ; / @ G j B 6 3 < 3 F B " 0 7 : : 7 = <

The wealthier mid-market population segment, the 1.4 billion people
with per capita incomes between $3,000 and $20,000, represents a $12.5
trillion market globally. This market is largely urban, already relatively
well served, and extremely competitive.
In contrast, BOP markets are often rural—especially in rapidly growing
Asia—very poorly served, dominated by the informal economy, and, as a
result, relatively inefficient and uncompetitive. Yet these markets rep-
resent a substantial share of the world’s population. Data from national
household surveys in 110 countries show that the BOP makes up 72%
of the 5,575 million people recorded by the surveys and an overwhelm-
ing majority of the population in Africa, Asia, Eastern Europe, and Latin
America and the Caribbean—home to nearly all the BOP.
Analysis of the survey data—the latest available on incomes, expendi-
tures, and access to services—shows marked differences across countries
in the composition of these BOP markets. Some, like Nigeria’s, are con-
centrated in the lowest income segments of the BOP; others, like those in
Ukraine, are concentrated in the upper income segments. Regional dif-
ferences are also apparent. Rural areas dominate most BOP markets in
*
Africa and Asia; urban areas dominate most in Eastern Europe and Latin
America.
Striking patterns also emerge in spending. Not surprisingly, food
dominates BOP household budgets. As incomes rise, however, the share
spent on food declines, while the share for housing remains relatively
constant—and the shares for transportation and telecommunications
grow rapidly. In all regions half of BOP household spending on health
goes to pharmaceuticals. And in all except Eastern Europe the lower in-
come segments of the BOP depend mainly on firewood as a cooking fuel,
the higher segments on propane or other modern fuels.
That these substantial markets remain underserved is to the detri-
ment of BOP households. Business is also missing out. But there is now
enough information about these markets, and enough experience with
viable business strategies, to justify far closer business attention to the
opportunities they represent. Market-based approaches also warrant far
more attention in the development community, for the potential ben-
efits they offer in bringing more of the BOP into the formal economy and
in improving the delivery of essential services to this large population
segment.
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89FGGfikiX`k
The development community has tended to focus on meeting the needs
of the poorest of the poor—the 1 billion people with incomes below $1
a day in local purchasing power. But a much larger segment of the low-
income population—the 4 billion people of the BOP, all with incomes
well below any Western poverty line—both deserves attention and is the
appropriate focus of a market-oriented approach.
The starting point for this argument is not the BOP’s poverty. Instead,
it is the fact that BOP population segments for the most part are not inte-
grated into the global market economy and do not benefit from it. They
also share other characteristics:
• Significant unmet needs. Most people in the BOP have no bank
account and no access to modern financial services. Most do not
own a phone. Many live in informal settlements, with no formal
title to their dwelling. And many lack access to water and sanita-
tion services, electricity, and basic health care.
• Dependence on informal or subsistence livelihoods. Most
+ in the BOP lack good access to markets to sell their labor, handi-
crafts, or crops and have no choice but to sell to local employers or
to middlemen who exploit them. As subsistence and small-scale
farmers and fishermen, they are uniquely vulnerable to destruc-
tion of the natural resources they depend on but are powerless to
protect (World Resources Institute and others 2005). In effect,
informality and subsistence are poverty traps.
• Impacted by a BOP penalty. Many in the BOP, and perhaps most,
pay higher prices for basic goods and services than do wealthier
consumers—either in cash or in the effort they must expend to
obtain them—and they often receive lower quality as well. This high
cost of being poor is widely shared: it is not just the very poor who
often pay more for the transportation to reach a distant hospital or
clinic than for the treatment, or who face exorbitant fees for loans
or for transfers of remittances from relatives abroad.
Addressing the unmet needs of the BOP is essential to raising welfare,

productivity, and income—to enabling BOP households to find their own
route out of poverty. Engaging the BOP in the formal economy must be a
3 F 3 1 C B 7 D 3 A C ; ; / @ G j B 6 3 < 3 F B " 0 7 : : 7 = <

critical part of any wealth-generating and inclusive growth strategy. And
eliminating BOP penalties will increase effective income for the BOP.
Moreover, to the extent that unmet needs, informality traps, and BOP
penalties arise from inefficient or monopolistic markets or lack of atten-
tion and investment, addressing these barriers may also create significant
market opportunities for businesses.
Perhaps most important, it is the entire BOP and not just the very poor
who constitute the low-income market—and it is the entire market that
must be analyzed and addressed for private sector strategies to be effec-
tive, even if there are segments of that market for which market-based
solutions are not available or not sufficient.
KXbè^XdXib\k$YXj\[XggifXZ_kfgfm\ikpi\[lZk`fe
Analysis of BOP markets can help businesses and governments think
more creatively about new products and services that meet BOP needs
and about opportunities for market-based solutions to achieve them.
For businesses, it is an important first step toward identifying business
opportunities, considering business models, developing products, and
expanding investment in BOP markets. For governments, it can help
,
focus attention on reforms needed in the business environment to allow
a larger role for the private sector.
BOP market analysis, and the market-based approach to poverty re-
duction on which it is based, are equally important for the development
community. This approach can help frame the debate on poverty reduc-
tion more in terms of enabling opportunity and less in terms of aid. A
successful market-based approach would bring significant new private
sector resources into play, allowing development assistance to be more
targeted to the segments and sectors for which no viable market solu-
tions can presently be found.
There are distinct differences between a market-based approach
to poverty reduction and more traditional approaches. Traditional ap-
proaches often focus on the very poor, proceeding from the assumption
that they are unable to help themselves and thus need charity or public
assistance. A market-based approach starts from the recognition that
being poor does not eliminate commerce and market processes: virtu-
ally all poor households trade cash or labor to meet much of their basic
needs. A market-based approach thus focuses on people as consumers
and producers and on solutions that can make markets more efficient,
competitive, and inclusive—so that the BOP can benefit from them.
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
Traditional approaches tend to address unmet needs for health care,

clean water, or other basic necessities by setting targets for meeting those
needs through direct public investments, subsidies, or other handouts.
The goals may be worthy, but the results have not been strikingly suc-
cessful. A market-based approach recognizes that it is not just the very
poor who have unmet needs—and asks about willingness to pay across
market segments. It looks for solutions in the form of new products and
new business models that can provide goods and services at affordable
prices.
Those solutions may involve market development efforts with ele-
ments similar to traditional development tools—hybrid business strat-
egies that incorporate consumer education; microloans, consumer
finance, or cross-subsidies among different income groups; franchise or
retail agent strategies that create jobs and raise incomes; partnerships
with the public sector or with nongovernmental organizations (NGOs).
Yet the solutions are ultimately market oriented and demand driven—
and many successful companies are adopting such strategies.
-
Perhaps most important, traditional approaches do not point toward
sustainable solutions—while a market-oriented approach recognizes
that only sustainable solutions can scale to meet the needs of 4 billion
people.
>ifnè^èk\i\jk#îfnè^jlZZ\jjè9FGdXib\kj
Business interest in BOP markets is rising. Multinational companies have
been pioneers, especially in food and consumer products. Large national
companies have proved to be among the most innovative in meeting the
needs of BOP consumers and producers, especially in such sectors as
housing, agriculture, consumer goods, and financial services. And small
start-ups and social entrepreneurs focusing on BOP markets are rapidly
growing in number. But perhaps the strongest and most dramatic BOP
success story is mobile telephony.
Between 2000 and 2005 the number of mobile subscribers in devel-
oping countries grew more than fivefold—to nearly 1.4 billion. Growth
was rapid in all regions, but fastest in sub-Saharan Africa—Nigeria’s sub-
scriber base grew from 370,000 to 16.8 million in just four years (World
3 F 3 1 C B 7 D 3 A C ; ; / @ G j B 6 3 < 3 F B " 0 7 : : 7 = <

Bank 2006b). Household surveys confirm substantial and growing mobile
phone use in the BOP population, which has clearly benefited from the
access mobile phones provide to jobs, to medical care, to market prices, to
family members working away from home and the remittances they can
send, and, increasingly, to financial services (Vodafone 2005).
A strong value proposition for low-income consumers has translated
into financial success for mobile companies. Celtel, an entrepreneurial
company operating in some of the poorest and least stable countries in
Africa, went from start-up to telecom giant in just seven years. Acquired
for US$3.4 billion in 2005, the company now has operations in 15 African
countries and licenses covering more than 30% of the continent.
Not all sectors have found their footing in BOP markets yet. Privatized
urban water systems, for example, have encountered financial and politi-
cal difficulties in developing countries, and the result has been neither
better service for low-income communities nor success for the compa-
nies. The energy sector has similarly had only limited success in providing
affordable off-grid electricity or clean cooking fuels to rural BOP com-
munities. But even these sectors have seen encouraging new ventures,
and further development of technology and business models may expand
BOP markets. .
Dfmè^kfnXi[Xdfi\_fjg`kXYc\\emìfed\ek]fiYljè\jj
The operating and regulatory environments in developing countries can
be challenging. Micro and small businesses especially face disadvantages.
If they are informal, they cannot get investment finance, participate in
value chains of larger companies, or sometimes even legally receive ser-
vices from utilities. Condemned to remain small, they cannot generate
wealth or many jobs. Nor do they contribute to the broader economy by
paying taxes.
Most face barriers to joining the formal economy in the form of anti-
quated regulations and prohibitive requirements—dozens of steps, delays
of many months, capital requirements beyond attainment for most of the
BOP. In El Salvador, for example, starting a legitimate business used to
take 115 days and many separate procedures—until recent reforms re-
duced the effort to 26 days and allowed registration with four separate
agencies in a single visit. But even for legitimate small businesses, invest-
ment capital is generally unavailable and supporting services scarce.
Fortunately, there is growing recognition of the importance of remov-
ing barriers to small and medium-size businesses and a growing toolbox
for moving firms into the formal economy and creating more efficient
markets. And as the World Bank and International Finance Corporation
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
(IFC) show, in their annual Doing Business reports, there is also mount-
ing evidence that the tools work. In El Salvador five times as many busi-
nesses register annually since its reforms. Many countries, including
China, have dropped minimum capital requirements. The pace of reform
is accelerating, with more than 40 countries making changes in the most
2
recent year surveyed.
Coupled with reform is growing attention to enterprise development
initiatives focusing on BOP markets and investment capital for small and
medium-size businesses. Several international and bilateral development
agencies are launching investment funds to support the growth of small
and medium-size enterprises across the developing world. These efforts,
and the growing private sector interest in investing in such enterprises
in developing countries, explicitly recognize that an expanded private
sector role and a bottom-up market approach are essential development
strategies.
/
N_Xk9FGdXib\kjcffbc`b\
Total household income of $5 trillion a year establishes the BOP as a
potentially important global market. Within that market are large varia-
tions across regions, countries, and sectors in size and other character-
istics.
Asia (including the Middle East) has by far the largest BOP market:
2.86 billion people with income of $3.47 trillion. This BOP market repre-
sents 83% of the region’s population and 42% of the purchasing power—a
significant share of Asia’s rapidly growing consumer market.
Eastern Europe’s $458 billion BOP market includes 254 million peo-
ple, 64% of the region’s population, with 36% of the income.
In Latin America the BOP market of $509 billion includes 360 million
people, representing 70% of the region’s population but only 28% of total
household income, a smaller share than in other developing regions.
Africa has a slightly smaller BOP market, at $429 billion. But the BOP
is by far the region’s dominant consumer market, with 71% of purchas-
ing power. It includes 486 million people—95% of the surveyed popula-
tion.
3 F 3 1 C B 7 D 3 A C ; ; / @ G j B 6 3 < 3 F B " 0 7 : : 7 = <

Sector markets for the 4 billion BOP consumers range widely in size.
Some are relatively small, such as water ($20 billion) and information
and communication technology, or ICT ($51 billion as measured, but
probably twice that now as a result of rapid growth). Some are medium
scale, such as health ($158 billion), transportation ($179 billion), housing
($332 billion), and energy ($433 billion). And some are truly large, such
3
as food ($2,895 billion).
Evidence of BOP penalties emerges in several sectors. Wealthier
mid-market households are seven times as likely as BOP households to
have access to piped water. Some 24% of BOP households lack access
to electricity, while only 1% of mid-market households do. Rural BOP
households have significantly lower ICT spending and are significantly
less likely to own a phone than rural mid-market households or even
urban BOP households—consistent with the broad lack of access to ICT
services in rural areas.
0
9FGYljè\jjjkiXk\^`\jk_Xknfib
Why are some enterprises succeeding in meeting BOP needs, and others
are not? Successful enterprises operating in these markets use four broad
strategies that appear to be critical:
• Focusing on the BOP with unique products, unique services, or
unique technologies that are appropriate to BOP needs and that
require completely reimagining the business, often through sig-
nificant investment of money and management talent. Examples
are found in such sectors as water (point-of-use systems), food
(healthier products), finance (microfinance and low-cost remit-
tance systems), housing, and energy.
• Localizing value creation through franchising, through agent
strategies that involve building local ecosystems of vendors or
suppliers, or by treating the community as the customer, all of
which usually involve substantial investment in capacity building
and training. Examples can be seen in health care (franchise and
agent-based direct marketing), ICT (local phone entrepreneurs
and resellers), food (agent-based distribution systems), water
(community-based treatment systems), and energy (mini-hydro-
power systems).
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
• Enabling access to goods or services—financially (through sin-

gle-use or other packaging strategies that lower purchase barri-
ers, prepaid or other innovative business models that achieve the
same result, or financing approaches) or physically (through novel
distribution strategies or deployment of low-cost technologies).
Examples occur in food, ICT, and consumer products (in packaging
goods and services in small unit sizes, or “sachets”) and in health
care (such as cross-subsidies and community-based health insur-
ance). And cutting across many sectors are financing strategies that
range from microloans to mortgages.
• Unconventional partnering with governments, NGOs, or groups
of multiple stakeholders to bring the necessary capabilities to the
table. Examples are found in energy, transportation, health care,
financial services, and food and consumer goods.
Enterprises may—and often do—use more than one of these strategies

serially or in combination.
('
3 F 3 1 C B 7 D 3 A C ; ; / @ G j B 6 3 < 3 F B " 0 7 : : 7 = <
<e[efk\j
1. In this report current U.S. dollars means 2005 dollars. Unless otherwise noted, however, market information is
given in 2005 international dollars (adjusted for purchasing power parity); for convenience, BOP and mid-market
income cutoffs are given in international dollars for 2002 (the base year to which household surveys used in the
analysis for the report have been normalized). U.S. dollars are generally denoted by US$, international dollars by $.
2. The tools are available in the World Bank and IFC’s annual Doing Business reports, along with country ratings of
progress on reform. For the most recent results, see World Bank and IFC (2006).
3. The analysis of market size starts with household expenditure data from 36 countries for which recorded
expenditures have been mapped into standard spending categories. (The underlying surveys may vary from
country to country and across time, however, so that information collected may not be directly comparable.) The
analysis estimates the size of sector markets in each region by extrapolating from these measured countries to a
broader set of surveyed countries for which BOP income data exist. This approach assumes that the ratio of sector
expenditure to total household expenditure will be similar in the two sets of countries within a region. It also
assumes that total household income equals total household expenditure. ((
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
()
:?8GK<IFE<
Fm\im`\n
Xe[DXib\k
@ekif[lZk`fe
In an informal suburb of Guadalajara, Mexico, a growing family is
struggling to expand their small house. Help arrives from a major
industrial company in the form of construction designs, credit,
and as-needed delivery of materials, enabling rapid completion
of the project at less overall cost.
In rural Madhya Pradesh, an Indian farmer gains access to soil
testing services, to market price trends that help him decide what
to grow and when to sell, and to higher prices for his crop than
he can obtain in the local auction market. The new system is an
innovation of a large grain-buying corporation, which also
benefits from cost saving and more direct market access.
A South African who lives in an impoverished, crime-ridden neighbor-
hood of Johannesburg has no bank account, cannot order items from a
7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

distant store, and is sometimes robbed of her pay packet. She finds that
a new financial service offered by a local start-up company allows her
mobile phone to become a solution—her pay is deposited directly to her
phone-based account, she can make purchases via an associated debit 9FGdXib\kÇ,ki`cc`fe
KFK8C9P@E:FD<J<>D<EK
card, and she carries no cash to steal.
In a small community outside Tianjin, China, a small merchant whose 9FG*'''
children have been repeatedly sickened by drinking water from a heav- 9FG),''
ily-polluted river is distraught. He finds help not from the overwhelmed 9FG)'''
municipal government but from a new, low-cost filtering system, devel- 9FG(,''
9FG('''
oped by an entrepreneurial company, which enables his family to treat
9FG,''
its water at the point of use.
Four billion people such as these form the base of the economic
pyramid (BOP)—those with incomes below $3,000 (in local purchasing
power). The BOP makes up 72% of the 5,575 million people recorded by
available national household surveys worldwide and an overwhelming
majority of the population in the developing countries of Africa, Asia,
Eastern Europe, and Latin America and the Caribbean—home to nearly
all the BOP. (*
=fliY`cc`feg\fgc\]fidk_\YXj\f]k_\\Zfefd`ZgpiXd`[9FG Ç
k_fj\n`k_èZfd\jY\cfn*#'''ècfZXcgliZ_Xjè^gfn\i %
K_\j_Xi\f]@:KèZi\Xj\j/$]fc[
]ifdk_\cfn\jkkfk_\_`^_\jk
9FGj\^d\ekj @:K This large segment of humanity faces significant unmet needs and
lives in relative poverty: in current U.S. dollars their incomes are less than
$3.35 a day in Brazil, $2.11 in China, $1.89 in Ghana, and $1.56 in India. Yet
D\o`ZfÇ together they have substantial purchasing power: the BOP constitutes a
j\Zkfij_Xi\jmXipn`k_èZfd\ $5 trillion global consumer market.
J?8I<F=J<:KFIJG<E;@E> The wealthier mid-market population segment, the 1.4 billion people
@E;<O<;KFK?<J?8I<F=K?<GFFI<JKJ<>D<EK
with per capita incomes between $3,000 and $20,000, represents a $12.5
+
trillion market globally. This market is largely urban, already relatively
well served, and extremely competitive.
*
BOP markets, in contrast, are often rural—especially in rapidly grow-
KiXejgfikXk`fe
) ing Asia—very poorly served, dominated by the informal economy, and
K_\j_Xi\f]]ff[[\Zcè\j as a result relatively inefficient and uncompetitive. The analysis reported
kfknf$k_ì[jk_\j_Xi\f]k_\gffi\jk
( here suggests significant opportunities for more inclusive market-based
?fljè^
=ff[ approaches that can better meet the needs of those in the BOP, increase
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
'%, their productivity and incomes, and empower their entry into the formal
9FG 9FG 9FG 9FG 9FG 9FG economy.
,'' (''' (,'' )''' ),'' *'''
The analysis draws on data from national household surveys in 110
countries and an additional standardized set of surveys from 36 countries.
Using these data—on incomes, expenditures, and access to services—it
characterizes BOP markets regionally and nationally, in urban and rural
areas, and by sector and income level. The results show striking patterns
in spending. Food dominates BOP household budgets. As incomes rise,
however, the share spent on food declines, while the share for housing
remains relatively constant—and the share for transportation and tele-
communications grows rapidly.
The composition of these BOP markets differs markedly across coun-
tries. Some, like Nigeria’s, are concentrated in the lowest income seg-
ments of the BOP; others, like those in Ukraine, are concentrated in the
upper income segments. Regional differences are also apparent. Rural
areas dominate most BOP markets in Africa and Asia; urban areas domi-
nate most in Eastern Europe and Latin America and the Caribbean.
(+
E`^\i`X
KFK8CJG<E;@E>9P@E:FD<J<>D<EK
9FG*'''
9FG),''
9FG)'''
9FG(,''
9FG('''
9FG,''
LbiXè\
KFK8CJG<E;@E>9P@E:FD<J<>D<EK
9FG*'''
9FG),''
N_XkËje\nèk_`jXeXcpj`j6 9FG)'''
The underlying proposition that business activities can help reduce pov- 9FG(,''
erty is not new. Many books and influential reports have outlined both 9FG('''
the need and the preconditions for a greater role for the private sector in 9FG,''
development (see, for example, Commission on the Private Sector and

Development 2004).
This report adds two important missing elements: a detailed if pre-
liminary economic portrait of the BOP—based on recorded incomes and
expenditures—and an overview of sector-specific business strategies
from successful enterprises operating in BOP markets. These data and
the record of experience back the calls for broader business engagement
with the BOP. Moreover, a guide to BOP markets is timely because signifi-
cant new investment—public and private—is being committed to serving
the BOP.
This work builds on concepts introduced by Hart and Prahalad (2002), 8j`X
Prahalad and Hammond (2002), Prahalad (2005), and Hart (2005) and
LI98E ILI8C
7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

explored by a growing number of authors (Banerjee and Duflo 2006; *) -/
Kahane and others 2005; Lodge and Wilson 2006; Wilson and Wilson
2006; Sullivan 2007). Based on their own definitions of the BOP, these
analysts have offered preliminary estimates of the BOP population vary-
ing from 4 billion to 5 billion. Providing an empirical foundation and a CXkè8d\i`ZX
consistent, worldwide set of baseline data is one motivation for the analy- .. )*
sis reported here. The analysis, with a focus on documenting BOP income
and expenditures, parallels similar efforts by Hernando De Soto to docu-
ment their assets (see box 1.1).
LI98E ILI8C
The development community has tended to focus on meeting the
needs of the poorest of the poor—the 1 billion people with incomes below KfkXc9FGjg\e[è^YpèZfd\
j\^d\ek#liYXeXe[iliXc
$1 a day (in local purchasing power). This analysis argues that a much
larger segment of the low-income population—the 4 billion people of
the BOP, all with incomes well below any Western poverty line—both
deserves our concern and is the appropriate focus of a market-oriented
approach.The starting point for the analysis is not just the BOP’s relative
poverty. Instead, it is the fact that BOP populations for the most part are
(,
9FO(%(1
?@;;<EGLI:?8J@E>GFN<I#;<8;:8G@K8C not integrated into the global market economy
and do not benefit from it. Those in the BOP also
K_\èZfd\Xe[jg\e[è^gXkk\iejf]k_\9FG#dX[\\ogc`Z`k
have significant unmet basic needs and often
èk_`ji\gfikËjXeXcpj`j#_Xm\]fikffcfe^Y\\e_`[[\e]ifd
pay higher prices than mid-market consum-
Yljè\jjYpcXZbf][XkXfek_\è]fidXc\ZfefdpXe[k_\g\i$
ers for the same service or commodity—a BOP
Z\gk`fef]k_\gliZ_Xjè^gfn\if]k_\gffiXjèj`ê`]`ZXek%
penalty. These characteristics profile a unique
8j?\ieXe[f;\Jfkf)''* _Xjgfèk\[flk#k_`jgliZ_Xjè^
market (see box 1.2).
gfn\iZflc[Y\jlYjkXek`XccpèZi\Xj\[`]k_\9FGZflc[c\m\i$
X^\k_\n\Xck_kiXgg\[èk_\Xjj\kjf]k_\è]fidXc\Zfefdp% A key issue in understanding BOP mar-
8i\Z\ekjkl[pj_fn\[#]fi\oXdgc\#k_Xkk_\È[\X[ZXg`kXcÉ kets is informality. The International Labour
i\gi\j\ek\[Ypè]fidXcgifg\ik`\jXe[Yljè\jj\jè()CXkè Organisation (ILO 2002) estimates that more
8d\i`ZXeZfleki`\j`jnfik_XjdlZ_XjLJ(%)ki`cc`fe@C; than 70% of the workforce in developing coun-
)''-2@;9)''- %LecfZbè^k_\j\Xjj\kj#Ypgifm`[è^cXe[ tries operates in the informal or underground
k`kc\jXe[cfn\iè^YXii`\ijkf]fidXci\^`jkiXk`fef]jdXccYlj`$ economy, suggesting that most BOP livelihoods
e\jj\j#Zflc[î\Xkcp\ogXe[9FGdXib\kj% come from self-employment or from work in
enterprises that are not legally organized busi-
nesses. This informal economy is a significant
fraction of the size of the formal economy.
According to a detailed study by economist Friedrich Schneider (2005),
the informal economy averages 30% of official GDP in Asia, 40% in
Eastern Europe, and 43% in both Africa and Latin America and the
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
Caribbean. Informality is a trap for the assets and the growth potential
of micro and small businesses and those who work in them.
Another important source of income for many BOP households is
remittances from family members working overseas, much of which
travels through informal channels. Recent work by the Inter-American
Development Bank and the World Bank has documented the growing im-
portance of remittances. In 2005 such transfers through official channels
amounted to US$232 billion, of which US$167 billion went to develop-
ing countries—though actual amounts, including remittances through
informal channels, may have been as much as 50% more (World Bank
2006a).3
These results together suggest that a significant part of BOP income
comes from activities and sources that are only indirectly reflected in na-
tional economic statistics. Household surveys, in contrast, usually seek to
capture all sources of income or total expenditures. Reporting of income
may not be precise, but in this report the income data are buttressed by
detailed, standardized expenditure data in a substantial subset of coun-
(- tries. Thus the BOP market analysis here, based on household surveys,
provides the most direct measure of total income and expenditures and
of the economic impact of informal employment and remittances.
Moreover, the surveys, despite some limitations for the purposes
here,4 provide direct information on the BOP as consumers that is not
available from other sources of economic data. This report uses those
data to dissect and characterize the economic behavior of the BOP in
some detail—providing, for the first time, a systematic empirical char-
acterization of BOP markets.
This work underlines the fact that the low income market includes far
more people than the very poor—and the entire market must be analyzed
and addressed for private sector strategies to be effective, even if there
are segments of that market for which market-based solutions are not
available or not sufficient.
Addressing the unmet needs of the BOP is essential to raising welfare,
productivity, and income—to enabling BOP households to find their own
route out of poverty. Engaging the BOP in the formal economy must be a
critical part of any wealth-generating and inclusive growth strategy. And
eliminating BOP penalties will increase effective income for the BOP.
Moreover, to the extent that unmet needs, informality traps, and BOP
penalties arise from inefficient or monopolistic markets or lack of atten-
7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

tion and investment, addressing these barriers may also create significant
market opportunities for businesses.
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nfib]fiZ\è[\m\cfgè^Zfleki`\jfg\iXk\jèk_\è]fidXcfile[\iîfle[
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fi]ifdnfibè\ek\igi`j\jk_XkXi\efkc\^Xccpfi^Xe`q\[Yljè\jj\j%
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8e\nnXpf]k_èbè^XYflkgfm\ikpi\[lZk`fe
The BOP market analysis in this report is intended to help businesses
and governments think more creatively about new products and services
that meet BOP needs and about opportunities for market-based solutions
to achieve them. For businesses, characterizing the market in empirical
terms is an important first step toward identifying business opportuni-
ties, considering business models, developing products, and expanding
investment in BOP markets. Put simply, while an analysis of the depth of
poverty does not generate private sector enthusiasm for investment, an
analysis of BOP market size and willingness to pay might—and is thus a
critical step toward market-based solutions.
For governments, such an analysis can help focus attention on reforms
needed in the operating and regulatory environment to allow a larger role
for the private sector.
The market-based approach to poverty reduction and empirical mar-
ket data described in this report are equally important for the develop-
ment community. They can help frame the debate on poverty reduction
more in terms of enabling opportunity and less in terms of aid. A success-
ful market-based approach would bring significant new private sector
resources into play, allowing development assistance to be more sharply
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
targeted to the segments and sectors for which no viable market solutions
can presently be found. Market-based approaches and smart develop-
ment policies are synergistic strategies.
There are distinct differences between a market-based approach to
poverty reduction and more traditional approaches, and it is useful to
clarify those differences. As suggested, traditional approaches often focus
on the very poor, proceeding from the assumption that they are unable to
help themselves and thus need charity or public assistance. In contrast, a
market-based approach starts from the recognition that being poor does
not eliminate commerce and market processes: virtually all poor house-
holds trade cash or labor to meet a significant part of their basic needs. A
K_\9FGdXib\kXeXcpj`jèk_`ji\gfik`jèk\e[\[kf_\cg
Yljè\jj\jXe[^fm\ied\ekjk_èbdfi\Zi\Xk`m\cpXYflk
)' e\ngif[lZkjXe[j\im`Z\jk_Xkd\\k9FGe\\[jXe[XYflk
fggfikle`k`\j]fidXib\k$YXj\[jfclk`fejkfXZ_`\m\k_\d%
market-based approach thus focuses on people as consumers and produc-
ers and on solutions that can make BOP markets more efficient, competi-
tive, and inclusive—so that the BOP can benefit from them.
Traditional approaches also tend to address unmet needs for health
care, clean water, or other basic necessities by setting targets for meet-
ing those needs through direct public investments, subsidies, or other
handouts. The goals may be worthy, but the results have not been strik-
ingly successful. A market-based approach recognizes that it is not just
the very poor who have unmet needs and asks about the willingness to
pay of different market segments. It looks for solutions in the form of new
products and new business models that can provide goods and services
at affordable prices.
Those solutions may involve market development efforts that
include elements similar to traditional development tools—hybrid busi-
ness strategies that incorporate consumer education or other forms of
capacity building; microloans, consumer finance, or cross-subsidies among
different income groups; franchise or retail agent strategies that create
jobs and raise incomes; and partnerships with the public sector or with
nongovernmental organizations (NGOs). Many successful companies
are adopting such innovative strategies, as this report illustrates, some-
7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

times even co-creating solutions with community groups and civil society
(Brugman and Prahalad 2007). But the solutions ultimately are market
oriented and demand driven.
Perhaps most important, traditional approaches do not point to-
ward sustainable solutions, while a market-oriented approach rec-
ognizes that only sustainable solutions can scale to meet the needs of
4 billion people.
>ifnè^gi`mXk\j\Zkfièk\i\jk
Already business interest in BOP markets is rising, both among large
national companies and multinational corporations and among small
entrepreneurial ventures and social entrepreneurs. One indicator is the
business presence at conferences devoted to the topic5 and the growing
journalistic coverage in business publications.6
A stronger indicator is the number of large companies conducting
pilots, launching new businesses, or extending product lines in existing
businesses that serve BOP markets. Of these, multinational consumer
product companies such as Unilever and Procter & Gamble have the most )(
extensive track record, with “sachet” marketing now widely known and
single-serving product sizes now dominant in many consumer markets.
Large national companies have proved to be among the most inno-
vative and adept in meeting needs of BOP consumers and producers.
Standouts include India’s ITC in agriculture and ICICI Bank in financial
services, Brazil’s Casas Bahia in consumer goods, and Mexico’s Cemex in
housing (Annamalai and Rao 2003). But perhaps the strongest and most
dramatic BOP success story—whether measured by market penetration,
by the documented benefits to low-income customers, or by the financial
success of the companies—comes from mobile telephony.
A decade ago phone service in most developing countries was poor,
and few BOP communities had access to phone service or could afford it
on the terms offered. The entry of mobile phone companies transformed
this picture. The number of mobile subscribers in developing countries
grew more than fivefold between 2000 and 2005 to reach nearly 1.4 bil-
lion. Growth was rapid in all regions, but fastest in Sub-Saharan Africa:
Nigeria’s subscriber base grew from 370,000 to 16.8 million in just four
years. Meanwhile, the Philippines’ grew sixfold to 40 million (World Bank
2006b). Wireless subscribers in China, India, and Brazil together now
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
outnumber those in either the United States or the European Union (ITU
2006).7
Comparison of these numbers with the size of BOP populations sug-
gests substantial and growing penetration of mobile phone use in the BOP,
confirmed by the household surveys analyzed in this report. Industry ana-
lysts expect more than 1 billion additional mobile subscribers worldwide
by 2010, with 80% of the growth in developing countries, almost entirely
in BOP markets (Wireless Intelligence 2005).
Low-income populations have clearly benefited from access to mobile
phones, which ease access to jobs, to medical care, to market prices, to
family members working away from home and the remittances they can
send, and, increasingly, to financial services (Vodafone 2005). All this de-
pends on the affordability of mobile services, and a critical factor in this
has been innovative business models such as prepaid voice and prepaid
text-messaging services, available in ever-smaller units. For example, the
Philippines’ Smart Communications has a growing, profitable business
with more than 20 million BOP customers, virtually all of whom use pre-
))
8[\ZX[\X^fg_fe\j\im`Z\èdfjk[\m\cfgè^Zfleki`\jnXj
gffi#Xe[]\n9FGZfddle`k`\j_X[XZZ\jjkfg_fe\j\im`Z\fi
Zflc[X]]fi[`kfek_\k\idjf]]\i\[%K_\\ekipf]dfY`c\g_fe\
ZfdgXe`\jkiXej]fid\[k_`jg`Zkli\%K_\eldY\if]dfY`c\jlY$
jZi`Y\ijè[\m\cfgè^Zfleki`\jî\ndfi\k_Xe]`m\]fc[Y\kn\\e
)'''Xe[)'',kfi\XZ_e\Xicp(%+Y`cc`fe%
paid text-messaging services bought in units as small as US$0.03 (Smith

2004b).
Another innovative business model—shared access, in which an entre-
preneur with a phone provides pay-per-use access to a community—has
extended the social and economic impact of mobile phones beyond the
subscriber base. In South Africa more than half the traffic on Vodacom’s
mobile network in 2004 came not from its 8 million subscribers but from
4,400 entrepreneur-owned phone shops where customers rent access to
phones by the minute. In Bangladesh, Grameen Telecom’s village phone
entrepreneurs now serve 80,000 rural villages, generating more than
US$100 in monthly revenue per phone by aggregating the demand of
(and providing service to) entire villages (Cohen 2001).
A strong value proposition for low-income consumers has translated
into financial success for mobile companies. In 2006 the Kenyan mo-
bile company Safaricom posted the biggest profit ever in East Africa—K
Sh 12.77 billion (US$174 million)—edging out East African Breweries as
the region’s biggest profit maker.8 Celtel, an entrepreneurial company
founded by a British entrepreneur of Sudanese descent and operating in
some of the poorest and least stable countries in Africa, went from start-
7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

up to telecom giant in just seven years. In 2005 the company was acquired
for US$3.4 billion. It now has operations in 15 African countries and holds
licenses covering more than 30% of the continent.9
Not all sectors have found their footing yet in BOP markets, however.
Privatized urban water systems, for example, have encountered financial
and political difficulties in developing countries, and the result has been
neither better service for low-income communities nor success for the
companies. The energy sector has similarly had only limited success in
providing affordable off-grid electricity or clean cooking fuels to rural
BOP communities.
Even in these sectors, however, there are encouraging entrepreneurial
ventures—providing affordable water filters or home treatment systems
so that households can purify water for themselves, offering low-cost
solar-powered LED (light-emitting diode) lighting systems that can pro-
vide a few hours of light in the evening, or introducing efficient, multi-fuel
cookstoves that can burn propane, plant oils, or gathered biomass fuels.
Further development of technology and business models may expand
BOP markets in these sectors. )*
Some observers have raised concerns about market-based approaches
to reducing poverty (box 1.3). On the ground, however, BOP-oriented
business activity is accelerating, in many cases generating evidence of
significant benefits for BOP households and communities.
K_\\eXYcè^\emìfed\ek]fiYljè\jj
The operating and regulatory environments in developing countries can
be challenging. Micro and small businesses especially face disadvantages.
If they are informal, they cannot get investment finance, participate in
value chains of larger companies, or sometimes even legally receive ser-
vices from utilities. Condemned to remain small, they cannot generate
wealth or large numbers of jobs. Nor do they contribute to the broader
economy by paying taxes.
Most face significant barriers to joining the formal economy in the
form of antiquated regulations and prohibitive requirements—dozens of
steps, delays of many months, capital requirements beyond attainment
for most of the BOP. In El Salvador, for example, it used to take 115 days
and many separate procedures to start a legitimate business—until recent
reforms reduced the effort to 26 days and allowed registration with four
separate agencies in a single visit (World Bank and IFC 2006). Even for
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
legitimate small businesses investment capital is generally unavailable

and supporting services scarce.
Fortunately, there is growing recognition of the importance of remov-
ing barriers to small and medium-size businesses and a growing toolbox
for moving firms into the formal economy and creating more efficient
markets. These tools, and country ratings of progress on reform, are
available in the World Bank and International Finance Corporation’s
(IFC) annual Doing Business report, along with growing evidence that
the tools work. In El Salvador five times as many businesses register an-
nually since its reforms. Many countries, including China, have dropped
minimum capital requirements. The pace of reform is accelerating, with
more than 40 countries making changes in the most recent year surveyed
(World Bank and IFC 2006). Accelerated formation of legitimate small
businesses creates benefits for individuals (owners, workers, customers),
the enterprises, and the larger economy.
Coupled with reform is growing attention to enterprise development
initiatives focused on BOP markets and investment capital for small and
)+ medium-size enterprises. The Inter-American Development Bank, as
9FO(%*1
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k_\ìXggifgi`Xk\e\jj#\jg\Z`XccpXdfe^jfd\XZX[\d`Zj#E>Fj#Xe[[\m\cfgd\ekgif$
]\jj`feXcj%Jfd\Xi^l\k_XkZXg`kXc`jdèk_\j\ZìZldjkXeZ\j`jleXZZ\gkXYc\fik_Xk
Ègif]`kè^]ifdk_\gffiÉ`jdfiXccpnife^%Fk_\ij#gfèkè^kf\oXdgc\jf]ZfigfiXk\
\ogcf`kXk`fef]cfn$èZfd\nfib\ijfi`cc$è]fid\[Zfejld\ij#Xi^l\k_Xkk_\gffiXi\
le`hl\cpmlce\iXYc\Xe[gfn\ic\jjXe[jfe\\[jX]\^lXi[j%Jk`ccfk_\ijj\\bkfgifk\Zk
k_\gffi]ifdÈYX[Égif[lZkjfik_\g\iZ\`m\[\oZ\jj\jf]XZfejld\ijfZ`\kp%
Jfd\f]k_\j\ZfeZ\iejXi\Xggifgi`Xk\%9lkfk_\ijdXpi\]c\Zkd`jle[\ijkXe[$
è^Çf]k_\9FGfif]dXib\kgifZ\jj\j%8jYfk_Zfejld\ijXe[gif[lZ\ij#cXi^\cpè
k_\è]fidXc\Zfefdp#k_fj\èk_\9FGXci\X[pjl]]\i]ifdè\]]`Z`\ekXe[leZfdg\k`$
k`m\dXib\kjj\\Yfo(%) %
E\n]fidXcYljè\jj\ekiXekjZXegfk\ek`Xccp`dgifm\Zfdg\k`k`fe#cfn\igi`Z\j#Xe[
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fileX]]fi[XYc\%Jfd\f]k_\j\j\im`Z\j#jlZ_XjdfY`c\k\c\g_fepfi]èXeZ`Xcj\im`Z\j#
ZXe[ì\Zkcp`dgifm\gif[lZk`m`kp#\Xieè^gfn\i#Xe[XZZ\jjkfafYj%Fk_\ij#jlZ_Xj
XZZ\jjkfYXj`Z_\Xck_ZXi\Xe[g_XidXZ\lk`ZXcjfikfd\Xej]fij\Zliè^Zc\XenXk\iÇ
f]k\eXmX`cXYc\kfk_\9FGfecp]ifdk_\gi`mXk\j\ZkfiÇkiXejcXk\[ì\Zkcpèkfî\Xk\i
n\c]Xi\%K_\gfk\ek`XcY\e\]`kjkf9FG_flj\_fc[jXe[kfk_\Zfleki`\jèn_`Z_k_\pc`m\
^fn\ccY\pfe[Zfejldgk`feXe[Xi\Xe\jj\ek`Xcjk\gkfnXi[èZclj`m\dXib\kj%
=fidXepèk_\9FG#afYjXi\k_\Zi`k`ZXcd`jjè^èî\[`\ek#Y\ZXlj\ZXj_èZfd\
`jèZi\Xjè^cp\jj\ek`Xc%N`k_]\n\oZ\gk`fej#afYZi\Xk`fei\hlì\jX[[`k`feXcYljè\jj
èm\jkd\ekXe[Yljè\jj]fidXk`fe%<ogXe[\[gi`mXk\j\Zkfi\e^X^\d\ekèk_\9FG#
\jg\Z`XccpYpjdXccXe[d\[`ld$j`q\\ek\igi`j\j#`jk_\fecpjljkXèXYc\jfliZ\f]cXi^\
eldY\ijf]afYj%
Dfi\fm\i#k_\i\`jefk\efl^_Z_Xi`kpfiX`[kfd\\kk_\e\\[jf]+Y`cc`feg\fgc\
feXefe^fè^YXj`j%N`k_flkjljkXèXYc\Çk_Xk`j#gif]`kXYc\ÇYljè\jj\jèmfcm\[#
\]]fikjkfX[[i\jjled\ke\\[jdljk]Xccj_fik%8e[gif]`kXY`c`kp`j\jj\ek`XckfXkkiXZk
X[[`k`feXcèm\jkd\ekXe[jZXc\jfclk`fejkfi\XZ_k_\]lcc\ok\ekf]k_\e\\[%<m\eè
7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

Xi\XjkiX[`k`feXccpj\im\[Yp^fm\ied\ek#jlZ_Xj_\Xck_ZXi\Xe[\[lZXk`fe#`k`jZc\Xi
k_XkèdXepZfleki`\jk_\glYc`Zj\ZkfiZXeefkd\\kXcck_\e\\[jèk_\e\Xik\idÇXe[
k_Xkgi`mXk\j\Zkfijfclk`fejXi\[\jìXYc\Xe[\jj\ek`Xc%
part of its Opportunity for the Majority program, is committing US$1 bil-
lion over five years to new investments to support private sector efforts
for the BOP, including small and medium-size enterprises. The Asian
Development Bank is launching several new investment funds for the
same purpose. The Japan Bank for International Cooperation aims to
increase its funds for African private sector development including small
and medium enterprises. IFC is expanding its technical assistance and
investment activities for small and medium-size enterprises.
These efforts, and the growing private sector interest in investing in
small and medium-size enterprises in developing countries, explicitly ),
recognize that an expanded private sector role and a bottom-up market
approach are essential development strategies.
:_XiXZk\i`qè^9FGdXib\kj
Total annual household income of $5 trillion a year establishes the BOP
as a potentially important global market. Within that market are signifi-
cant regional and national variations in size, population structure income
distribution, and other characteristics.
Market size
The BOP market in Asia (including the Middle East) is by far the larg-
est: 2.86 billion people in 19 countries, with an aggregate income of
$3.47 trillion (box 1.4). The BOP market in these countries represents
83% of the region’s population and 42% of its aggregate purchasing
power—a significant share of Asia’s rapidly growing consumer market
(figure 1.1). In rural areas the BOP is the majority of the market—rep-
resenting 76% of aggregate household income in rural China and effec-
tively 100% in rural India and rural Indonesia.
Eastern Europe’s $458 billion BOP market
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
includes 254 million people in 28 surveyed

countries, 64% of the region’s population,
9FO(%+1 with 36% of the region’s aggregate income. In
8CK<IE8K@M<D8IB<KD<KI@:J Russia, the region’s largest economy, the BOP
Lec\jjfk_\in`j\efk\[#k_\dXib\kj`q\jèk_`jXe[jlY$ market includes 86 million people and $164
j\hl\ekZ_Xgk\ijXi\[\efdèXk\[èèk\ieXk`feXc[fccXij#
billion in income.
n_`Z_i\]c\Zkk_\gliZ_Xjè^gfn\if]cfZXcZlii\eZ`\jXe[
In Latin America the BOP market of $509
k_ljXi\k_\Xggifgi`Xk\]iXd\f]i\]\i\eZ\]ficfZXcZfdgX$
billion includes 360 million people, 70% of the
e`\jXe[]fi9FGgif[lZ\ijXe[Zfejld\ij%9lk]fidlckèX$
population in the 21 countries surveyed. The
k`feXcZfdgXe`\jL%J%[fccXijgifm`[\Xdfi\lj\]lcd\ki`Z%
BOP market accounts for 28% of the region’s
9pk_`jd\ki`Zk_\^cfYXc9FGdXib\k`jLJ(%*ki`cc`fe#n_`c\
aggregate household income, a smaller share
k_\8j`Xe9FGdXib\k`jLJ.+)Y`cc`fe#k_\CXkè8d\i`ZXe
dXib\kLJ))0Y`cc`fe#k_\<Xjk\ie<lifg\XedXib\kLJ(*, than in other developing regions. In both
Y`cc`fe#Xe[k_\8]i`ZXedXib\kLJ()'Y`cc`fe%J\\Xgg\e[ò Brazil and Mexico the BOP constitutes 75% of
8]fi9FGdXib\kj`q\jèYfk_èk\ieXk`feXcXe[L%J%[fccXij the population, representing aggregate income
]fij\c\Zk\[Zfleki`\j% of $172 billion and $105 billion.
)-
In Africa the BOP market, $429 billion, is slightly smaller than that of
Eastern Europe or Latin America. But it is by far the region’s dominant
consumer market, with 71% of aggregate purchasing power. The African
BOP includes 486 million people in 22 surveyed countries—95% of the
population in those countries.10 South Africa has the region’s strongest
and most modern economy, yet 75% of the population remains in the D\o`Zf
G<I:<EKF=GFGLC8K@FE9P@E:FD<J<>D<EK
BOP. The South African BOP market has an aggregate income of $44 bil-
9FG*'''
lion. Other countries in the region offer even larger BOP market opportu-
9FG),''
nities, notably Ethiopia ($84 billion) and Nigeria ($74 billion).
9FG)'''
9FG(,''
Market composition 9FG('''
Population distribution across BOP income groups is far from homoge- 9FG,''
neous. In Nigeria, for example, most of the BOP is concentrated in the ' (' )'
lowest income segments. Mexico has a more even distribution of popu-
lation by income within the BOP. The contrast between rural and urban E`^\i`X
G<I:<EKF=GFGLC8K@FE9P@E:FD<J<>D<EK
China is particularly striking, showing that economic opportunities for
9FG*'''
BOP populations are significantly better in urban than in rural areas of
9FG),''
that country—a disparity that has implications both for business and for
9FG)'''
social stability.
9FG(,''
7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

9FG('''
Spending patterns 9FG,''
Population structure by itself is not a reliable guide to market composi- ' (' )'
tion. Accordningly, this analysis also examines BOP spending patterns
by country, sector, and income level. This analysis is based on a World
:_èX
Bank initiative—the International Comparison Program—to standardize LI98E8E;ILI8C9FGGFGLC8K@FE
the expenditures reported by national household surveys into defined 9P@E:FD<J<>D<EK
categories. LI98E ILI8C
The standardized data allow detailed, sector-by-sector analysis
within countries, insight into how spending patterns by income level
differ among countries, and more meaningful aggregation of BOP con-
sumer markets to a regional scale, though the surveys themselves vary
across countries and over time.11 (See appendix B for a description of the
standardization methodology and country tables of standardized BOP
expenditure data by sector and income level.) Combining income and
expenditure data allows estimation of the size of regional sector markets
(box 1.5).
).
9FO(%,1
<JK@D8K@E>K?<J@Q<F=J<:KFID8IB<KJ
K_\j`q\f]\XZ_j\ZkfidXib\kèXi\^`fe`j\jk`dXk\[YpZfdYèè^jkXe[Xi[`q\[j\Zkfi\og\e[`kli\[XkX]ifd
k_\jlYj\kf]*-Zfleki`\j]fin_`Z_k_\j\[XkX\o`jkn`k_k_\èZfd\$YXj\[d\Xjli\f]k_\i\^`feXcdXib\k
j`q\]ifd(('Zfleki`\j %@e8]i`ZX#]fi\oXdgc\#
k_\9FG_\Xck_dXib\kd\Xjli\[XZifjjk_\() DXib\kj`q\#
Zfleki`\j]fin_`Z_jkXe[Xi[`q\[\og\e[`kli\[XkX d\Xjli\[ 8]i`ZX
Xi\XmX`cXYc\`jXYflk/Y`cc`fe#n_`Z_i\gi\j\ekj Xe[\jk`dXk\[ (/%'Y`cc`fe
9FGJG<E;@E>
XYflk+f]kfkXc9FGjg\e[è^èk_fj\Zfleki`\j% @EK?<?<8CK?J<:KFI
<okiXgfcXkè^k_Xk\og\e[`kli\gXkk\iekfXccjli$
8]i`ZX
m\p\[Zfleki`\jèk_\i\^`fec\X[jkfXe\jk`dXk\ /%(Y`cc`fe
f](/Y`cc`fe]fik_\kfkXc9FG_\Xck_dXib\kèk_\
i\^`fe%()
8j`d`cXigifZ\jj]fifk_\ii\^`fej^`m\j0,
Y`cc`fe]fi8j`XËji\^`feXc9FG_\Xck_dXib\k#)(
Y`cc`fe]fi<Xjk\ie<lifg\Ëj#Xe[)+Y`cc`fe]fi
CXkè8d\i`ZXËjÇ]fiXkfkXc9FG_\Xck_dXib\kf]
(,/Y`cc`fe%
D\Xjli\[ <jk`dXk\[
/.%.Y`cc`fe (,/%+Y`cc`fe
:_XiXZk\i`qè^9FGj\ZkfidXib\kj
The following chapters analyze BOP sector markets in detail, drawing
on the country data tables in appendix B. Highlights from those chap-
ters show how the data in this report can be used to characterize BOP
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
markets.
• How large is the market? Sector markets for the 4 billion BOP
consumers range widely in size. Some are relatively small, such as
water ($20 billion) and information and communication technol-
ogy, or ICT ($51 billion as measured, but probably twice that now
because of rapid growth). Some are medium scale, such as health
($158 billion), transportation ($179 billion), housing ($332 billion),
and energy ($433 billion). And some are truly large, such as food
($2,895 billion). BOP markets in Asia (including the Middle East)
are the largest, reflecting the sheer weight of the population in that
region. Many BOP sector markets in Africa, Eastern Europe, and
Latin America and the Caribbean are roughly comparable in size,
reflecting the smaller BOP populations but larger incomes in East-
ern Europe and Latin America.
• How is the market segmented? BOP markets can be usefully char-
acterized as bottom heavy, top heavy, or flat, depending on where
spending is concentrated among the six income segments distin-
)/ guished in the BOP. Bottom-heavy BOP markets predominate in
<jk`dXk\[9FGdXib\kYpj\Zkfi
,ki`cc`fe
@:K KI8EJGFIK8K@FE
?<8CK?
FK?P
=FF;
?FLJ@E>
Asia and Africa, and top-heavy markets in Eastern Europe and

Latin America. The ICT sector is an exception, with spending still
typically concentrated in the upper income segments of the BOP
in all regions.
@e[`X
7 9P@E:FD<J<>D<EK
hold spending is significantly higher in Latin America than in other
regions. For ICT, for example, average BOP household spending 9FG*'''
for the median country is $34 in Africa, $54 in Asia, $56 in East- 9FG),''
9FG)'''
ern Europe, and $107 in Latin America. Comparable numbers for
9FG(,''
health care are $154 in Africa, $131 in Asia, $152 in Eastern Europe,
9FG('''
and $325 in Latin America—and for transportation, $211 in Afri-
9FG,''
ca and Asia, $141 in Eastern Europe, and $521 in Latin America.
Spending is higher, but differences proportionately less, for food: D\o`Zf
$2,087 in Africa, $2,643 in Asia, $3,687 in Eastern Europe, $3,050 JG<E;@E>9P@E:FD<J<>D<EK
in Latin America. 9FG*'''

• Where is the market? Urban areas dominate the BOP markets for 9FG),''
water, ICT, and housing in all regions. BOP markets for transpor- 9FG)'''
tation and energy are also heavily urban except in most of Asia, 9FG(,''
where rural areas dominate. For food and health care, rural BOP 9FG('''
9FG,''
markets are larger in most countries of Africa and Asia, and urban
BOP markets larger in most countries of Eastern Europe and Latin
America. )0
Jflk_8]i`ZX
Gif]`c\f]kfkXc@:Kjg\e[è^
@:K?FLJ<?FC;JG<E;@E>9P@E:FD<J<>D<EK
9FG*''' )++
9FG),'' (/0
9FG)''' (+-
9FG(,'' ('+
9FG(''' +0
• What does the BOP buy? The survey data record interesting pat-
9FG,'' (,
terns in what BOP households buy. For health care, for example,
8m\iX^\
_flj\_fc[jg\e[è^ more than half of BOP spending goes to pharmaceuticals. For ICT,
fe@:K phone service dominates recorded expenditures. Many BOP house-
('0
holds don’t pay cash for water: in Africa surface water is the pri-
Iljj`X
mary source for 17% of BOP households, and unprotected wells the
primary source for relatively large shares in some countries in the
region. Access to electricity is virtually universal in Eastern Europe
and high among BOP households in Asia and Latin America, but
@:K?FLJ<?FC;JG<E;@E>9P@E:FD<J<>D<EK quite low in Africa. For all regions except Eastern Europe firewood
9FG*''' /) is the dominant cooking fuel among lower BOP income segments,
9FG),'' -- while propane or other modern fuels are dominant among higher
9FG)''' +. BOP income segments and in urban areas.
9FG(,'' *+ • Is there evidence of a BOP penalty? Data for several sectors suggest
9FG(''' ))
a penalty—higher costs or lower quality for services, or no access
9FG,'' ('
at all—for BOP households. Wealthier mid-market households are
8m\iX^\
_flj\_fc[jg\e[è^ seven times as likely as BOP households to have access to piped
fe@:K water. Some 24% of BOP households lack access to electricity,
,*
compared with only 1% of mid-market households. ICT spend-
ing and phone ownership are significantly lower among rural
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
BOP households than either rural mid-market or even urban BOP

households—consistent with the broad lack of access in rural areas
confirmed by coverage data from other sources.
E`^\i`X
LI98E ILI8C
9FGYljè\jjjkiXk\^`\j
+- ,+ The following chapters also give case studies of business enterprises that
are successfully serving BOP markets. Here, four broad strategies are dis-
tinguished that are used by enterprises operating in BOP markets and
that appear to be critical to their success:
9iXq`c • Focusing on the BOP with unique products, unique services, or
.. )* unique technologies that are appropriate to BOP needs and that
require reimagining the business, often through significant invest-
ment of money and management talent.
LI98E ILI8C • Localizing value creation through franchising, through agent strat-
egies that involve building local ecosystems of vendors or suppliers,
KfkXc9FG]ff[jg\e[è^
YpèZfd\j\^d\ek# or by treating the community as the customer, all of which usually
liYXeXe[iliXc involve substantial investment in capacity building and training.
*'
LiYXeXe[iliXcjg\e[è^Ç:Xd\iffe
8eelXcjg\e[è^g\i_flj\_fc[
@:K ,' ('' (,' )''
9FG*''' RURAL
9FG),''
9FG)''' URBAN
9FG(,''
9FG('''
9FG,''
?<8CK? )'' +'' -''
• Enabling access to goods or services—financially (through single- 9FG*''' RURAL URBAN

9FG),''
use or other packaging strategies that lower purchase barriers, pre-
9FG)'''
paid or other novel business models that achieve the same result,
9FG(,''
or financing approaches) or physically (through novel distribution
9FG('''
strategies or deployment of low-cost technologies). 9FG,''
• Unconventional partnering with governments, NGOs, or groups
of multiple stakeholders to bring the necessary capabilities to the KI8EJGFIK8K@FE *'' -'' 0'' ()''
table. 9FG*''' RURAL

9FG),''
9FG)''' URBAN
Enterprises may—and often do—use more than one of these
9FG(,''
strategies.
9FG('''
9FG,''
Focusing on the BOP
In the water sector, filters and other point-of-use treatment approaches
that enable BOP households to purify dirty water exemplify a strategy
of focusing on the BOP, responding to BOP circumstances with unique
products and technology. This strategy is also found in the food sector,
in the development of healthier products that address BOP needs; in the
housing sector, in the packaging of design, financing, and as-needed de-
livery of materials services; and in the energy sector, in the marketing of
7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

solar-powered LED lighting and high-tech home cookstoves. In financial
services, microfinance and low-cost remittance systems reflect a BOP
focus.
Localizing value creation

Franchising and direct marketing by agents of pharmaceuticals, health
services, and preventive health materials are gaining traction in the BOP
health sector, as are distribution systems (such as Shakti in India) in the
food and consumer goods sectors. These approaches create jobs and help
ensure local value creation as well as provide efficient, low-cost distribu-
tion. In the ICT sector mobile phone companies have built extensive eco-
systems of small shops, village phone entrepreneurs, and other vendors
to sell or deliver their services to BOP markets; in the Philippines even
McDonald’s franchises serve as points of delivery for remittances sent
by phone from overseas.
Community water treatment systems and mini-hydropower sys-
tems enable the community to be the provider as well as the customer.
*(
;XkX]fij\m\iXcj\Zkfijjl^^\jkXg\eXckpÇ_`^_\iZfjkjficfn\i
hlXc`kp]fij\im`Z\j#fiefXZZ\jjXkXccÇ]fi9FG_flj\_fc[j%
N\Xck_`\id`[$dXib\k_flj\_fc[jXi\j\m\ek`d\jXjc`b\cpXj
9FG_flj\_fc[jkf_Xm\XZZ\jjkfg`g\[nXk\i%
Extractive industries use a similar strategy when they source goods and
services locally.
Enabling access
Sachet marketing—packaging products in single-use or other small
units that make them more affordable to the BOP—is associated with
fast-moving consumer goods. But the strategy is also widely used in the
food sector and in ICT (pricing voice or text-messaging units at US$.50
or less and selling Internet access by the quarter hour). These packag-
ing strategies are critical to enabling access in BOP communities, where
cash is scarce.
Cross-subsidy strategies—where wealthier customers help subsidize
services for BOP clients—play a big part in enabling access in the health
sector. Financing strategies—microloans, consumer finance, or mortgage
financing for the BOP or even community-based health insurance—play
a similar part in a range of sectors, enabling access to housing, to health
care, to solar power systems, and to fertilizers or advanced seeds in ag-
ricultural supply chains for the food sector.
Franchising and other local value creation strategies also are often
critical to enabling access to services for the BOP, especially in rural
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
areas.
Unconventional partnering
Public-private partnerships are common in the energy and water sectors.
Less common but gaining momentum are partnerships between busi-
nesses and NGOs—to build distribution and service networks for cook-
stoves in the energy sector, to build and manage distribution networks
for food and consumer goods, to create and manage franchise networks
in health care. As banks move into providing financial services to the
BOP, some are partnering with microfinance entities and community
self-help groups. And partnerships between multiple stakeholders are
being used to transform urban transportation systems.
*)
<e[efk\j
1. In this report current U.S. dollars means 2005 dollars. Unless otherwise noted, however, market information is
given in 2005 international dollars adjusted for purchasing power parity; for convenience, BOP and mid-market
income cutoffs are given in international dollars for 2002 (the base year to which household surveys used in this
analysis have been normalized). See appendix A for the methodology.
2. The high-income population segment is approximately 0.3 billion worldwide. But neither its size nor its very
large aggregate income can be reliably measured by household surveys, because the sample of such households in
national surveys, especially in developing countries, is too small.
3. In 2004 recorded remittances were the second largest source of external financing in developing countries, after
foreign direct investment, and amounted to more than twice the size of official aid. Including unrecorded flows,
remittances are the largest source of external financing in many developing countries. (World Bank 2006a).
4. While household surveys are regarded by economists as a source of reliable economic data, here they are applied
as market research tools in ways for which they were not designed. As a result, some limitations apply: household
surveys rarely capture unit prices for commodities purchased, for example, and are not standardized across
countries or over time. For rapidly developing sectors, such as mobile communications, even relatively recent
surveys can markedly understate use rates and expenditure.
5. Conferences include “Eradicating Poverty through Profit” (World Resources Institute, San Francisco, December
12–14, 2004; http://www.nextbillion.net/sfconference); “Business Opportunity and Innovation at the Base of the
Pyramid” (World Resources Institute, Multilateral Investment Fund, and Ashoka, São Paulo, August 30, 2005);
“Business Opportunity and Innovation at the Base of the Pyramid” (World Resources Institute, Multilateral
Investment Fund, and Ashoka, Mexico City, September 1, 2005); and “Global Poverty: Business Solutions and
Approaches” (Harvard Business School, Cambridge, MA, December 1–3, 2005; http://www.nextbillion.net/
harvard05conference).
7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

6. World Resources Institute, “News: NextBillion.net,” http://www.nextbillion.net/newsroom (accessed January 12,
2007).
7. According to the International Telecommunication Union, there were 2,137 million mobile subscribers in 2005.
India, China, and Brazil together accounted for 555.6 million of those, the European Union for 470.6 million, and
the United States for 201.6 million.
8. East African, “Safaricom Makes $12.77 Million Profit, a Record for Region,” October 30, 2006, http://allafrica.
com/stories/200610301138.html.
9. Mo Ibrahim, presentation to World Bank, April, 2006.
10. Many African countries lack current household surveys. If the missing countries were included, the African BOP
population and market size might be as much as twice that of the “surveyed” BOP figures given here. In other
regions the missing countries would not affect reported totals significantly.
11. While the data are standardized, the household surveys are not and so do not capture the same information in
each country. Direct comparisons between countries should thus be avoided or used with great caution.
12. The estimation procedure is based on the following formula applied to BOP markets: measured sector
expenditure/total expenditure = estimated regional sector expenditure/total regional income, which is then
solved for estimated regional sector expenditure. This amounts to assuming that the average ratio of sector
expenditure to total expenditure as sampled in a measured group of countries is a good estimator for the same
ratio in another group of countries in the region for which income but not standardized expenditure data are
available. It also assumes that total household income equals total household expenditure, an equivalence already
assumed in the methodology for assembling the income survey data. **
:?8GK<IKNF
K_\
?\Xck_
DXib\k
Rural East Africa illustrates both the challenges BOP house-
holds face in obtaining health care and the potential health
market they represent. Access to public health care is often
very limited. Even finding medicines to buy—especially ones
that work—can be difficult. Spending on health care is low—
only $183 a year for a typical rural household in Uganda.
Of that, half is spent on medicine, often without a doctor’s prescrip-
tion; self-medication is common for BOP households.
Despite the huge need for more effective distribution of medicines and
other health-related consumer products—such as condoms, water filters,
and antimalaria bed nets—such spending levels might not seem to suggest
a promising market in which to launch a new franchise pharmacy busi-
ness. Yet CFWshops Kenya is doing just that. Its 64 locally owned fran-
chises charge prices averaging about US$0.50 a treatment for the more
than 150 pharmaceuticals they stock and last year served
more than 400,000 customers—and they are profitable. 9FGjg\e[è^fe_\Xck_
CFWshops Kenya and other ventures, both new and well (,/%+Y`cc`fe
established, are demonstrating innovative approaches to
the large and largely underserved BOP health market.
?fncXi^\`jk_\dXib\k6
The measured BOP health market in Africa (12 coun-
tries), Asia (9), Eastern Europe (5), and Latin America
and the Caribbean (9) is $87.7 billion. This represents
annual household health spending in the 35 countries
for which standardized data exist and covers 2.1 billion
of the world’s BOP population. The total BOP health
market in these four regions, including all surveyed 6 3 / :B 6 j B 6 3 < 3 F B " 0 7 : : 7 = <
countries, is estimated to be $158.4 billion, accounting for
the spending of 3.96 billion people (see box 1.5 in chapter
1 for the estimation method).1 Asia has by far the larg-
est measured regional BOP health market—$48.2 bil-
lion, reflecting a large BOP population (1.5 billion). The
total BOP health market in Asia (including the Middle
East) is estimated to be $95.5 billion, accounting for the Y`cc`fejGGG
spending of 2.9 billion people. Latin America follows, with 8]i`ZX (/%'
measured BOP health spending of $20.1 billion by 276 8j`X 0,%,
million people and an estimated total BOP health market <Xjk\ie<lifg\ )'%0
of $24 billion (360 million people). CXkè8d\i`ZX )+%'
Eastern Europe’s measured BOP health market is
<XZ_jhlXi\i\gi\j\ekj
$11.2 billion, covering the spending of 124 million people, Xggifo`dXk\cp,''d`cc`fe
and the estimated total BOP market is $20.9 billion *,
@e8j`Xk_\\oki\d\jXi\i\gi\j\ek\[YpGXb`jkXe#
9Xe^cX[\j_#Xe[KXa`b`jkXe#n_\i\k_\9FGZfejk`klk\j
dfi\k_Xe0/f]k_\_\Xck_dXib\k%
(254 million people). Africa’s measured BOP health market is $8.1 billion,
comprising the annual spending of 258 million people, and its estimated
total BOP market is $18.0 billion (486 million people).
The share of total household health spending that takes place in
the BOP—and thus the relative importance of the BOP market—var-
ies widely. In Asia the BOP dominates the market, with an 85% share.
In other regions its share is far smaller: 54% in Africa, 45% in Eastern
Europe, 38% in Latin America. In Eastern Europe and Latin America
DXcXn`
KFK8C?<8CK?JG<E;@E>9P@E:FD<J<>D<EK
mid-market and high-income groups tend to dominate health mar-
kets, even though large majorities of the population in both regions are
9FG*'''
in the BOP. But Africa shows the greatest disparity between the BOP
9FG),''
share of the total population (95%) and the BOP share of health spend-
9FG)'''
9FG(,'' ing (54%).
9FG(''' At the national level there is similarly wide disparity in the share
9FG,'' of health spending that occurs in the BOP. In Asia the extremes are
represented by Pakistan, Bangladesh, and Tajikistan, where the BOP
KXa`b`jkXe constitutes more than 98% of the health market, and Thailand (with a
KFK8C?<8CK?JG<E;@E>9P@E:FD<J<>D<EK
substantial mid-market population), where the BOP accounts for only
9FG*''' 44%. In Africa the extremes are Nigeria, where the BOP also accounts for
9FG),'' 98% of the health market, and South Africa (with a market dominated
9FG)'''
by the 25% of its population that is wealthier), where BOP spending is a
9FG(,''
modest 9% of the total.
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
9FG('''
In Eastern Europe the extreme is represented by Kazakhstan with
9FG,''
77% of total health spending in the BOP and Macedonia, FYR (38%).
Iljj`X In Latin America and the Caribbean the largest BOP shares of total
KFK8C?<8CK?JG<E;@E>9P@E:FD<J<>D<EK health spending are in Jamaica (90%) and Peru (77%), and the smallest
9FG*''' in Colombia (31%). Generally, the smaller the percentage of the popu-
9FG),'' lation in the BOP, the greater the likelihood that wealthier population
9FG)''' segments account for a disproportionate share of the health market.
9FG(,''
9FG(''' ?fn`jk_\dXib\kj\^d\ek\[6
9FG,''
Bottom-heavy BOP markets—where more than half of spending occurs
in the bottom three of the six BOP income segments—predominate in
Africa (9 of 12 countries) and Asia (8 of 9). Malawi and Tajikistan illus-
trate this pattern.In two of the larger countries, India and Indonesia,
while still bottom-heavy, spending is concentrated more toward the
middle of the BOP income spectrum, in BOP1000–2000. India, with
$35 billion in annual BOP health spending (85% of the national market),
shows what this spending pattern looks like (case study 2.1). Generally in
*- Africa and Asia the distribution of health spending across BOP income
:8J<JKL;P)%(@E;@81
8JL9JK8EK@8C?<8CK?D8IB<K@E
K?<D@;;C<F=K?<9FG
@e@e[`Xjg\e[è^fe_\Xck_Yp9FG_flj\_fc[j`jZfeZ\ekiXk\[è
k_\9FG('''#9FG(,''#Xe[9FG)'''îflgj%K_ljk_\@e[`Xe
9FG_\Xck_dXib\k#n_`c\Yfkkfd_\Xmp#`jefk[fdèXk\[Ypk_\
m\ipcfn\jkèZfd\j\^d\ek#XjDXcXn`Ëj`j#]fi\oXdgc\%K_\j\
k_i\\j\^d\ekjXZZflek]fi.-f]k_\9FG_\Xck_dXib\kè@e[`X%
K_\pXcjfXZZflek]fi-,f]k_\kfkXc_\Xck_dXib\kXe[./
f]Xcc_flj\_fc[j%@e[\\[#n`k_(,,d`cc`fe_flj\_fc[jXe[)-%-
Y`cc`feèkfkXcXeelXc_\Xck_jg\e[è^#k_`j`jXjlYjkXek`XcdXib\k%
8eelXcjg\e[è^fe_\Xck_g\i_flj\_fc[èk_\j\èZfd\j\^$
groups closely matches the distribution of the d\ekjXm\iX^\j(((#(/*#Xe[)-+%
Dfmè^lg$dXib\k[f\jefk[iXdXk`ZXccpZ_Xe^\_flj\_fc[_\Xck_
population across these groups.
jg\e[è^è@e[`X%8m\iX^\_\Xck_jg\e[è^g\i_flj\_fc[èk_\
In Eastern Europe and Latin America all
i\cXk`m\cpjdXccYlkdlZ_n\Xck_`\id`[$dXib\kgfglcXk`fej\^$
measured countries show a top-heavy BOP
d\ek*0( `jfecpXYflkkn`Z\k_Xkèk_\9FG(0) %
spending pattern, illustrated by Russia and
@e[`X
Peru. Another example is Mexico, with $4.1 bil- KFK8C?<8CK?JG<E;@E>9P@E:FD<J<>D<EK
lion in annual BOP health spending (38% of the
9FG*'''
national market; case study 2.2).
9FG),''
9FG)'''
N_Xk[f_flj\_fc[jjg\e[6 9FG(,''
The products and services that households are 9FG('''
willing to buy depend to some degree on in- 9FG,''
come. Average household spending at different
income levels is thus a useful guide to product
design. But spending, especially for health care,
also depends on access to services. If travel to a hospital or health clinic LbiXè\
costs more in cash or lost wages than the service itself, anecdotal evidence Gif]`c\f]kfkXc_\Xck_jg\e[è^
suggests, price-sensitive BOP households may defer treatment until a
condition is relatively serious.2 In any event, the available health dollars
might be larger if health care services were relatively available and travel
costs could be avoided. Current levels of household spending on health ?FLJ<?FC;JG<E;@E>9P@E:FD<J<>D<EK
9FG*''' (/)
should thus be regarded as establishing a lower bound for the willingness
9FG),'' (-(
to pay.
9FG)''' (*,
Average health spending by BOP households varies widely across
9FG(,'' ('+
countries. The difference depends in part on whether markets are top 9FG(''' .'
heavy or bottom heavy and may also reflect BOP access to public health 9FG,'' ,/ 6 3 / :B 6 j B 6 3 < 3 F B " 0 7 : : 7 = <
services. But the variation can also reflect differences in the questions 8m\iX^\
asked and the expenditures captured in national surveys. Both Indonesia _flj\_fc[jg\e[è^
fe_\Xck_
and Pakistan have bottom-heavy health markets, for example, but their (,)
reported BOP health spending per household averages are very different: Ji`CXebX
$78 and $197 (the extremes for measured countries in Asia). Gif]`c\f]kfkXc_\Xck_jg\e[è^
A more meaningful characterization may be the regional median
among average annual spending on health by BOP households. These
figures are as follows: for Africa, $154 (Nigeria) and $168 (Gabon); for
Asia, $131 (Sri Lanka); for Eastern Europe, $152 (Ukraine); and for Latin 9FG*''' )..
9FG),'' )+*
America, $325 (Peru). In most countries measured, household health
9FG)''' (/-
spending increases roughly in proportion to income through the BOP.
9FG(,'' (+*
In many countries, however, health spending increases disproportion-
9FG(''' ./
ately in the highest BOP income segments, BOP2500 and BOP3000—an 9FG,'' )0
indication of latent demand for health care in the BOP. For the countries 8m\iX^\ *.
_flj\_fc[jg\e[è^
fe_\Xck_
(*(
:8J<JKL;P)%)D<O@:F1
8KPG@:8CKFG$?<8MP9FG?<8CK?D8IB<K
@eD\o`Zf9FGjg\e[è^fe_\Xck_`jZfeZ\ekiXk\[èk_\kfg
k_i\\9FGèZfd\j\^d\ekjÇXkpg`ZXckfg$_\XmpdXib\kgXk$
k\ie%K_\j\k_i\\j\^d\ekjXZZflek]fi-(f]9FG_flj\$
_fc[j0%,d`cc`fe Xe[.,f]k_\9FG_\Xck_dXib\k*
Y`cc`feèXeelXcjg\e[è^ ÇYlkfecp)0f]k_\kfkXc_\Xck_
dXib\kèD\o`Zf%8eelXcjg\e[è^fe_\Xck_g\i_flj\_fc[
èk_\j\èZfd\j\^d\ekjXm\iX^\j)*,#*,0#Xe[*0+%
above, the ratio of average health spending per
Dfmè^lg$dXib\kdfi\k_Xe[flYc\jXm\iX^\g\i_flj\_fc[
household in BOP3000 to that in BOP500 is 8:1
jg\e[è^fe_\Xck_#]ifd)-'Xp\Xièk_\9FGkf-*,è
in Nigeria, 6:1 in Gabon, 9.5:1 in Sri Lanka, 3:1 in
k_\d`[$dXib\kj\^d\ek%KfkXcd`[$dXib\k_\Xck_jg\e[è^
`jXYflk-'cXi^\ik_XekfkXc9FGjg\e[è^% Ukraine, and 6:1 in Peru. Health care models that
can tap higher income segments to cross-subsi-
dize services to lower income segments—such as
D\o`Zf the Aravind Eye Care Hospitals in India—show
KFK8C?<8CK?JG<E;@E>9P@E:FD<J<>D<EK much promise as a way to extend even expensive
9FG*''' services such as surgery to the poorest parts of
9FG),'' the BOP (case study 2.3).
9FG)''' As incomes rise still higher, per household
9FG(,'' health spending continues to increase—but
9FG('''
only modestly compared with the increases in
9FG,''
income, except in Africa. The ratio of average
annual per household spending for health in the
mid-market segment to that in the BOP is 1.5:1
in Russia, 2:1 in Colombia, 2:1 in India, and 3:1 in
Thailand—but reaches 11:1 in Nigeria and 14:1 in South Africa.
G\il
J?8I<F=?FLJ<?FC;JG<E;@E>FE?<8CK?
N_\i\`jk_\dXib\k6
9FG*''' -%'
The relative sizes of urban and rural BOP health markets differ signifi-
9FG),'' ,%.
9FG)''' ,%, cantly across regions. In Asia the rural BOP health market is 2.4 times the
,%( size of the urban one, largely reflecting the distribution of the BOP popu-
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
9FG(,''
9FG(''' +%, lation. Pakistan’s BOP health market, for example, is 71% rural. Among
9FG,'' +%) measured Asian countries, only in Indonesia does BOP health spending
in urban areas exceed that in rural areas. In Africa urban and rural BOP
J`\iiXC\fe\ health markets are roughly comparable in size, even though rural areas
J?8I<F=?FLJ<?FC;JG<E;@E>FE?<8CK?
generally account for a larger share of the BOP population. In Nigeria,
9FG*''' ()%(
for example, rural areas account for 52% of the BOP health market but
9FG),'' /%(
have 22% more BOP households than urban areas. In Eastern Europe,
9FG)''' /%+
in contrast, the urban BOP health market is 61% larger than the rural
9FG(,'' .%)
9FG(''' -%/
market. Russia’s BOP health market is 61% urban. In Latin America the
9FG,'' -%+ difference is far greater: the urban BOP health market is 3.5 times the
size of the rural market. The urban share of the market is 85% in Brazil
and 73% in Colombia.
K_\]ìjki\jgfej\kf`cce\jjèdXep9FG_flj\_fc[j#
*/ \jg\Z`Xccpèk_\cfn\ièZfd\j\^d\ekjk_Xk[fdèXk\
Yfkkfd$_\XmpdXib\kj#k\e[jkfY\j\c]$d\[`ZXk`fe%
GXb`jkXe
*' .'
LI98E ILI8C
KfkXc9FG_\Xck_jg\e[è^
YpèZfd\j\^d\ek#
liYXeXe[iliXc
Iljj`X
Average health spending by BOP households is generally higher in

.. )*
urban than in rural areas—$451 a year in urban areas of Guatemala, for LI98E ILI8C
example, but $372 in rural areas.
The BOP share of the total urban health market is smaller in every re- 9iXq`c
gion than the BOP share of the rural market, because of the concentration // ()
of mid-market and high-income populations in urban areas.
N_Xk[f\jk_\9FGYlp6 LI98E ILI8C

The first response to illness in many BOP households, especially in the
lower income segments that dominate bottom-
heavy markets, tends to be self-medication. 3
Pharmacies or other sources of medicines are
:8J<JKL;P)%*
thus often the front line of health care, espe-
cially in rural areas where access to clinics and
JKI<8DC@E<?<8CK?:8I<1
9I@E>@E>8EÈ8JJ<D9CPC@E<É8GGIF8:?
hospitals may be limited. Supportive evidence KF:8K8I8:KJLI><IP
for this comes from the surveys reported in this
analysis: in nearly every measured country and ?\eip=fi[jkXe[Xi[`q\[Xe[jki\Xdcè\[XlkfdfY`c\gif[lZ$
in every BOP income segment pharmaceuticals k`fekfcfn\ik_\Zfjkf]_`jZXij\efl^_jfk_Xke\Xicp\m\ip$
account for more than half of all BOP health fe\Zflc[X]]fi[fe\%8iXmè[<p\:Xi\?fjg`kXcjè@e[`X_Xj
spending. As a result, the BOP often dominates [fe\k_\jXd\]fiZXkXiXZkjli^\ip%K_\8iXmè[jpjk\di\c`\j
national pharmaceutical markets, especially in feèk\ej`m\jg\Z`Xc`qXk`feè\m\ipgXikf]k_\nfib]cfnkf
Africa and Asia. ^\e\iXk\\]]`Z`\eZ`\j%8jli^\fe#]fi\oXdgc\#kpg`ZXccpg\i$
In Africa, except in Nigeria and South Africa, ]fidj(,'ZXkXiXZkjli^\i`\j\m\ipn\\b#jòk`d\jk_\eldY\i
BOP households spend between 51% (Uganda) ZfddfeXdfe^N\jk\iejg\Z`Xc`jkj%Kf]lik_\icfn\iZfjkj#
and 87% (Sierra Leone) of their health budget 8iXmè[_XjZi\Xk\[Xj`jk\ifi^Xe`qXk`fe#8lifcXY#kfdXel$
on pharmaceuticals. The percentage tends to be ]XZkli\èkiXfZlcXic\ej\jcfZXccpXkgi`Z\jfe\$]`]k`\k_f]L%J%
6 3 / :B 6 j B 6 3 < 3 F B " 0 7 : : 7 = <
highest in the lower income segments and to de- gi`Z\j#Xjn\ccXjk_\jlkli\jXe[[il^jlj\[èjli^\ip%
cline slightly as incomes rise. In Latin America, 8iXmè[jZi\\ejd`cc`fejf]g\fgc\\XZ_p\Xikf`[\ek`]p
except in Mexico, BOP households spend be- k_fj\n_fj\\p\j`^_k`jk_i\Xk\e\[YpZXkXiXZkjXe[g\i]fidj
tween 50% (Colombia) and 74% (Brazil) of their e\Xicp)''#'''jli^\i`\jXp\Xi%8e`dgfikXekgXikf]`kjYlj`$
e\jjdf[\c`jdlck`k`\i\[gi`Zè^fiZifjj$jlYj`[`qXk`fe1]\\j
health budget on pharmaceuticals, again with
]ifdgXpè^gXk`\ekjiXe^\]ifd,'kf**'g\ifg\iXk`fe#
higher percentages in lower income groups. The
èZcl[è^k_\_fjg`kXcjkXp#Ylk`kg\i]fidj-,f]`kjfg\iX$
pattern is also found in most countries of Eastern
k`fej]i\\f]Z_Xi^\Ç]fik_fj\#èZcl[è^gXk`\ekj]ifddfjk
Europe (69% in Russia) and in India (76%),
9FG_flj\_fc[j#n_fZXeËkX]]fi[kfgXp%
though not in some other countries of Asia.
K_ifl^_`kj]\\èZfd\#8iXmè[`jj\c]$jlggfikè^Xe[Xcjf
^\e\iXk\j\efl^_gif]`kkf]le[`kjîX[lXc\ogXej`fe%N`k_X
*'$p\Xii\Zfi[f]nfic[$ZcXjjZXi\#k_\8iXmè[df[\c[\d$
fejkiXk\jk_XkX]]fi[XYc\hlXc`kp_\Xck_ZXi\]fik_\9FG`j
gfjj`Yc\GiX_XcX[)'', %
*0
:8J<JKL;P)%+=I8E:?@J@E>1
89LJ@E<JJDF;<CK?8K;<C@M<IJ8==FI;89C<
?<8CK?:8I<N?<I<@KËJE<<;<;
@ei\Z\ekp\Xijk_\]iXeZ_`j\Yljè\jjdf[\c_Xjgifm\[kfY\XgXik`ZlcXicpjl`kXYc\
m\_`Zc\]fi[\c`m\iè^_\Xck_j\im`Z\jXe[gif[lZkjèYfk_liYXeXe[iliXccfn$èZfd\
Xi\Xj%8n\cc$[\j`ê\[]iXeZ_`j\jkilZkli\_XjYl`ck$èhlXc`kpZfekifc#YlcbYlpè^
gfn\i#gi`Z\jlYj`[`qXk`fe#Xe[\ogXej`feZXgXY`c`k`\jk_XkZXeXccfnXe\ek\igi`j\kf
]cfli`j_è[`]]`Zlck9FGdXib\kj%
Fe\\oXdgc\f]k_`jXggifXZ_`j:=Nj_fgjB\epX#n`k_-+]èXeZ`Xccpj\c]$jljkXè$
è^]iXeZ_`j\cfZXk`fejèliYXe#j\dìliXc#Xe[iliXcXi\Xj#j\imè^dfi\k_Xe+''#'''
gXk`\ekjXp\Xi%K_\]iXeZ_`j\jf]]\i(,'Æ),'^fm\ied\ek$Xggifm\[_\Xck_gif[lZkj
Xe[g_XidXZ\lk`ZXcj#gi`Z\[XkXYflkLJ'%,'g\iki\Xkd\ekÇX]]fi[XYc\]ficfn$è$
Zfd\B\epXej%<XZ_fe\`jcfZXk\[efdfi\k_XeXe_fliËjnXcb]ifd`kjèk\e[\[
Zljkfd\iYXj\%
=fikp$knfcfZXk`fejXi\fne\[YpZfddle`kp_\Xck_nfib\ij\Xieè^XeXm\iX^\
f]LJ-''Æ/''Xp\Xi#Xe[k_\fk_\i))Ypc`Z\ej\[elij\j\Xieè^XeXm\iX^\f]
LJ(#'''Æ(#+''%@eZfdgXi`jfe#k_\Xm\iX^\elij\ËjjXcXipèB\epX`jLJ.,+%:cè`Zj
fne\[Ypelij\jgifm`[\X[[`k`feXcjZi\\eè^j\im`Z\jXe[XYifX[\iiXe^\f]d\[`$
ZXk`fej#k_fl^_XcccfZXk`fejgifm`[\\jj\ek`Xcgi\m\ek`feXe[ki\Xkd\ekgif[lZkj]fi
dXcXi`X#[`Xii_\X#Xdf\Y`Xj`jjkfdXZ_nfidj Xjn\ccXjdfjhl`kfe\kjXe[nXk\i
ki\Xkd\ekgif[lZkj%
:=Nj_fgj_\X[hlXik\ij#k_\]iXeZ_`jfi#_fc[j\XZ_]iXeZ_`j\kfjki`ZkjkXe[Xi[j
f]gif[lZkhlXc`kpXe[gi`Zè^k_ifl^_leXeefleZ\[Xl[`kjXe[k_\k_i\Xkf]Zcfjli\%
=iXeZ_`j\fne\ijY\e\]`k]ifdY\è^gXikf]k_\:=Nj_fgjjpjk\d1k_\pY\XiXkiljk\[
YiXe[eXd\#j_Xi\dXib\kè^ZfjkjXe[Y\jkgiXZk`Z\j#Xe[ZXej\cc[il^jXkgi`Z\j
cfn\i\[k_ifl^_Zfcc\Zk`m\YXi^Xèè^Xe[YlcbYlpè^=\ik`^Xe[KqXiXj)'', %
8efk_\ijlZZ\jj]lc]iXeZ_`j\gifm`[è^_\Xck_gif[lZkjXe[j\im`Z\jkfk_\9FG`j
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
AXeXe`#Xefegif]`k@e[`Xefi^Xe`qXk`feljè^Xgi`mXk\j\Zkfidf[\c%AXeXe`Xggc`\jXdò
f]k\Z_e`hl\jÇjlYj`[`qè^jfd\gif[lZkj#^\e\iXkè^cXi^\ZXj\cfX[jkffYkXèmfcld\
[`jZflekj#c\m\iX^è^\o`jkè^jfZ`XcXe[Yljè\jje\knfibj#Xe[ljè^k\Z_efcf^pÇkf
èZi\Xj\k_\\]]`Z`\eZpf]`kjfg\iXk`fej%@kj]fZlj`jfej\ccè^cfn$ZfjkZfekiXZ\gk`m\j
k_ifl^_k_i\\Z_Xee\cjÇ*(#'''\o`jkèî\kX`cj_fgj#Xe\knfibf]+'#'''iliXc_\Xck_
gifm`[\ij#Xe[,)'Zcè`Zjn`k_i\j`[\ek[fZkfij%@e)'',AXeXe`jfc[,.%0d`cc`feZfe$
[fdjXe[0%0d`cc`feZpZc\jf]fiXcZfekiXZ\gk`m\j#gifk\Zkè^(%-d`cc`feZflgc\j]ifd
lenXek\[gi\êXeZ`\j%+
P\kXefk_\i`jD`=XidXZ`kXEXZ`feXc#XeXk`fen`[\D\o`ZXeg_XidXZpZ_Xèk_Xk
gifm`[\jcfn$Zfjk^\e\i`Zj#gli`]`\[nXk\iXe[gfn[\i\[d`cb#ZfejlckXk`fej#Xe[gi\$
fg\iXk`m\j\im`Z\jkfcfn$èZfd\g\fgc\%Kfjlggc\d\eki\m\el\#k_\è[\g\e[\ek
]iXeZ_`j\jXcjfgifm`[\jlZ_j\im`Z\jXjk\c\g_fe\Xe[@ek\ie\k%,
8cck_\j\]iXeZ_`jè^fg\iXk`fejZi\Xk\afYjXe[Zfddle`kp$YXj\[_\Xck_è]iXjkilZ$
kli\Xe[k_lj\o\dgc`]pXjkiXk\^pf]cfZXc`qè^mXcl\Zi\Xk`fe%
+'
K_\_\Xmp9FGjg\e[è^feg_XidXZ\lk`ZXcjgfèkj
kfk_\`dgfikXeZ\f][il^[`jki`Ylk`fejpjk\djÇXe[
f]hlXc`kpZfekifc#jèZ\]Xb\[il^jXi\XgifYc\dè
dXep[\m\cfgè^Zfleki`\j%
Data from measured countries illustrate the size of markets and

household spending for pharmaceuticals: G_XidXZ\lk`ZXcjj_Xi\
• In Africa the BOP market for pharmaceuticals is $3.9 billion—$1.3 f]9FG_\Xck_dXib\k
billion in Nigeria alone. Nigerian households in the lowest three ,-%.Y`cc`fe
BOP income groups, which account for 87% of the national health
market, spend an average of $47.99 a year on medicines. +. ,.
• In Asia the BOP market for pharmaceuticals is $30.8 billion—$26.6
billion in India alone. The 155 million Indian households in the
three income segments BOP1000–2000 spend an average of $134
a year on pharmaceuticals.
• In Eastern Europe the BOP market for pharmaceuticals is $9.2 bil-
lion—$8.0 billion of it in Russia. Russian BOP households spend
87.1% of their health budget on pharmaceuticals, $314 a year on
,0
average.
• In Latin America the BOP pharmaceutical market is $12.9 billion.
BOP households spend 64% of their health budget, or $201 a year,
on pharmaceuticals. ,.
The heavy BOP spending on pharmaceuticals points to the impor-

G_XidXZ\lk`ZXcdXib\k
tance of drug distribution systems—and of quality control, since fake Y`cc`fejGGG
drugs are a problem in many developing countries, especially in Africa. 8]i`ZX *%0
Franchise business models can add efficiency and quality control while 8j`X *'%/
enhancing drug distribution (case study 2.4). <Xjk\ie<lifg\ 0%)
CXkè8d\i`ZX ()%0 6 3 / :B 6 j B 6 3 < 3 F B " 0 7 : : 7 = <
Xggifo`dXk\cp),'d`cc`fe
<e[efk\j
1. Reported household expenditures in a given country should be regarded as a minimum
estimate of actual expenditures, because surveys may not have collected information on all
types of health-related spending.
2. Participant comments at a BOP Circle meeting hosted by the World Resources Institute,
Mexico City, October 19, 2006.
3. Interview with April Harding and Alex Preker, World Bank, Health Nutrition and Population.
Washington, DC, May 2006 .
4. Janani, “Welcome to Janani: Overview,” http://www.janani.org/overview.htm (accessed
January 31, 2007).
5. Mi Farmacita, “Beneficios,” http://www.tiendavirtual.ws/mifarmacita/contenido.
cfm?cont=BENEFICIOS (accessed January 31, 2007). Case study 2.4 +(
:?8GK<IK?I<<
K_\
@e]fidXk`feXe[
:fddle`ZXk`fej
DXib\k
A small coffee grower in Costa Rica keeps in touch with interna-
tional market prices, and ultimately arranges sale and pick-up of
his crop, via his mobile phone. A family in the Philippines, depen-
dent on money from a member working as a nurse in the United
States, can pick it up at a local McDonald’s, transferred quickly and
inexpensively by a mobile phone remittance system. It may seem
obvious, but those in the BOP cannot join the global economy, and
benefit from it, until they are connected to it.
The household survey data reported here show significant demand for
such connections and a willingness to pay—because the value proposition,
7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

for someone without connectivity, is compelling. A recent study among
low-income families in Tanzania showed that access to livelihoods was a
primary reason for owning a mobile phone (Vodafone 2005).
Not surprisingly, mobile phone companies in emerging markets are
growing rapidly, adding hundreds of millions of customers a year (World
Bank 2006b). With more than 1.5 billion mobile phone customers in de-
veloping regions—the size of the mid-market and high-in-
come population segments—most new customers in these
9FGjg\e[è^fe@:K
regions now come from the BOP. ,(%+Y`cc`fe
Advanced services are starting to appear. Wizzit, a
start-up in South Africa, and Globe Telecom and Smart
Communications in the Philippines together are provid-
ing banking services over mobile phones to more than
a million previously unbanked customers in those two
countries alone (Ivatury and Pickens 2006).
A broader range of businesses is developing to provide
services to the BOP. Some 1.6 million small sari-sari shops
in the Philippines help customers with electronic uploads
of voice or text-messaging units for their mobile phones,
generating almost $1 billion in revenue. At the other end
of the size spectrum, both Microsoft and Intel now have
emerging-market divisions focused on developing new
products for the BOP. Y`cc`fejGGG
8]i`ZX +%+
8j`X )/%*
<Xjk\ie<lifg\ ,%* +*
CXkè8d\i`ZX (*%+
Xggifo`dXk\cp)''d`cc`fe
:8J<JKL;P*%(:<CK<C1
=IFDJK8IK$LGKFK<C<:FD>@8EK
:fdYèè^X]fZljfele[\ij\im\[dXib\kjè8]i`ZXn`k_X
Zfdd`kd\ekkfZc\Xe#kiXejgXi\ekYljè\jjgiXZk`Z\j#:\ck\c
_XjY\Zfd\Xc\X[\ièk_\_`^_cpZfdg\k`k`m\8]i`ZXek\c\$
ZfddXib\k%K_\ZfdgXepnXj]fle[\[è(00/YpX9i`k`j_
\eki\gi\e\lif]Jl[Xe\j\[\jZ\ek#;i%Df@YiX_`d%CXk\ik_Xk
p\Xi:\ck\ccXleZ_\[j\im`Z\èQXdY`X#J`\iiXC\fe\#Xe[k_\
I\glYc`Zf]:fe^f%K_\ZfdgXepîX[lXccpX[[\[('dfi\
Zfleki`\jkf`kjgfik]fc`fÇDXcXn`#>XYfe#k_\;\dfZiXk`Z ?fncXi^\`jk_\dXib\k6
I\glYc`Z f] :fe^f# :_X[# 9libèX =Xjf# E`^\i# L^Xe[X#
The measured BOP market for ICT—informa-
KXeqXe`X#Jl[Xe#Xe[B\epX%
tion and communication technologies and the
:\ck\cfg\iXk\jèjfd\f]k_\dfjk[`]]`ZlckjfZ`fgfc`k`$
services they provide—is $30.5 billion for Africa
ZXc\emìfed\ekjèk_\nfic[ÇXd`[Z`m`cnXiXe[gfc`k`ZXc
(11 countries), Asia (9), Eastern Europe (6), and
lei\jkÇp\kk_\ZfdgXep`jZfdd`kk\[kfZc\Xe#Zfiilgk`fe$
Latin America and the Caribbean (9). This rep-
]i\\Yljè\jj%=fle[\i@YiX_`d_XjY\\eflkjgfb\eè_`j
resents annual household ICT spending in the
gifd`j\k_Xk:\ck\cn`ccgXpÈefkXjè^c\[fccXiÉèYi`Y\j%
Fm\iZfdè^X[m\ij\Yljè\jjXe[gfc`k`ZXc\emìfed\ekj# 35 low- and middle-income countries for which
:\ck\chl`Zbcp\ogXe[\[`kjZljkfd\iYXj\kf-d`cc`fek_Xebj standardized data exist, covering 2.1 billion of
kf`kj]fZljfek_\e\\[jf]cfn$èZfd\Zfejld\ij%:\ck\cËj the world’s BOP population.
f]]\iè^jXi\gi\gX`[Xe[jfc[èjdXccèZi\d\ekj%JlYj`[`Xi`\j The total BOP household ICT market in
èKXeqXe`XXe[QXdY`Xf]]\idfY`c\YXebè^j\im`Z\jfm\ik_\ these four regions, including 3.96 billion peo-
e\knfib%Jfd\0/f]k_\]ìdËjjkX]]Xi\8]i`ZXe#dXepf] ple in all surveyed countries, is estimated to be
k_\d_fc[è^ZfdgXepjkfZb% $51.4 billion (see box 1.5 in chapter 1 for the es-
DXepf]k_fj\jkfZb_fc[è^\dgcfp\\jZXj_\[èn_\e timation method).1 But the ICT sector has been
:\ck\cnXjXZhlì\[YpBlnX`k$YXj\[DK:èd`[$)'',]fi growing explosively in developing regions in
LJ*%+Y`cc`fe%:\ck\c#efnXn_fccpfne\[jlYj`[`Xipf]DK:# the interval since countries were surveyed, with
j\im\j(,Zfleki`\jè8]i`ZXXe[_fc[jc`Z\ej\jZfm\iè^dfi\ Internet services and especially mobile phone
k_Xe*'f]k_\Zfekè\ekÇk_\cXi^\jk]ffkgièkf]XepZfd$ companies adding customers at rates that may
gXepè8]i`ZX%@ealjkj\m\ep\Xij:\ck\cn\ek]ifdjkXik$lg well have doubled BOP sector spending since
kfk\c\Zfd^`XekÇXe[[`[jfYpglijlè^X9FG$]fZlj\[# that time.2 Moreover, rapid market growth is
\k_`ZXccp[i`m\eYljè\jjjkiXk\^pèjfd\f]k_\nfic[Ëjdfjk expected to continue for some time: in both
e\^c\Zk\[\Zfefd`\j%, Africa and India less than 15% of the popula-
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
9fk_è`kjlj\f]gi\gX`[j\im`Z\jf]]\i\[èjdXccle`kjXe[ tion have mobile phones.3

è`kjn`ccèê\jjkf[fYljè\jjèZ_Xcc\e^è^\emìfed\ekj# Asia has the largest measured regional BOP
:\ck\c\o\dgc`]`\jXjkiXk\^pf]\eXYcè^XZZ\jj% market for ICT, $14.3 billion, reflecting the
region’s significant BOP population of 1.49 bil-
lion. Its estimated total BOP market for ICT
(including the Middle East) is $28.3 billion, including the spending of
2.9 billion people. Not far behind is Latin America’s measured BOP mar-
ket, $11.2 billion, accounting for the ICT spending of 276 million people.
The region’s estimated total BOP market is $13.4 billion (360 million
people).
In Eastern Europe the measured BOP market for ICT is $3.0 bil-
lion (148 million people); the estimated total market is $5.3 billion (254
8j`X_Xjk_\cXi^\jkd\Xjli\[i\^`feXc9FGdXib\k]fi@:K#
(+%*Y`cc`fe#i\]c\Zkè^k_\i\^`feËjj`ê`]`ZXek9FG
++ gfglcXk`fef](%+0Y`cc`fe%
GXb`jkXe
KFK8C@:KJG<E;@E>9P@E:FD<J<>D<EK
9FG*'''
9FG),''
9FG)'''
9FG(,''
9FG('''
9FG,''
L^Xe[X
KFK8C@:KJG<E;@E>9P@E:FD<J<>D<EK
million people). In Africa the measured BOP market is $2.0 billion (258
million people), and the estimated total BOP market $4.4 billion (486 mil- 9FG*'''
lion people). Though smallest, the African ICT market is the most rapidly 9FG),''
growing one—and it has already generated very profitable companies and 9FG)'''
9FG(,''
significant wealth (case study 3.1).
9FG('''
The BOP share of the total household ICT market in measured coun-
9FG,''
tries varies across regions. In Asia the BOP share is about half of the total
market, 51%; in other regions it is smaller though still substantial: 36% in 9\cXilj
Eastern Europe, 28% in Africa, 26% in Latin America. Africa shows the KFK8C@:KJG<E;@E>9P@E:FD<J<>D<EK
greatest disparity between the BOP share of the population (95%) and 9FG*'''
the BOP share of ICT spending (28%). 9FG),''
At the national level there are wide disparities in the BOP share of ICT 9FG)'''
spending. These disparities stem in part from regulatory differences af- 9FG(,''
fecting the pace at which mobile phone networks expand (case study 3.2). 9FG('''
9FG,''
They also reflect national differences in urban-rural demographics, since
7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

mobile networks start in urban areas and only
then spread to rural areas.
In Asia the extremes are represented by
Pakistan and Bangladesh, where the BOP ac-
counts for more than 89% of the ICT market, :8J<JKL;P*%)I<>LC8KFIPI<=FID1
and Thailand, where the BOP population, FG<ED8IB<KJ8I<9@>><ID8IB<KJ
though substantial, accounts for only 29% of
the market. In Africa the extremes are Nigeria 8b\p[i`m\if]k_\iXg`[îfnk_f]@:Kj\im`Z\jèdXep[\m\c$
(98%) and Burundi (12%). In Eastern Europe fgè^Zfleki`\j_XjY\\ek_\fg\eè^f]dXib\kjkfZfdg\k`$
the extremes are represented by Belarus and k`fe%9lkfecpXYflk_Xc]f]cfn$Xe[d`[[c\$èZfd\Zfleki`\j
Kazakhstan (74%) and FYR Macedonia (21%). _Xm\le[\ikXb\ejlZ_i\]fidj#Xe[k_\[`]]\i\eZ\`jXggXi\ek1
In Latin America and the Caribbean, only in k_\;\dfZiXk`ZI\glYc`Zf]:fe^f#n`k_jòZfdg\kè^dfY`c\
Jamaica does the BOP account for more than g_fe\ZfdgXe`\j#_Xj(*k`d\jXjdXepdfY`c\Zljkfd\ijg\i
(#'''g\fgc\Xj[f\j<k_`fg`X#n`k_j`d`cXièZfd\g\iZXg`kX
half of total ICT household spending (71%); the
YlkfecpXjè^c\dfY`c\ZfdgXepNfic[9Xeb)''-Y %N_\i\
other extreme is Colombia, where the BOP ac-
YXii`\ijkfZfdg\k`k`fejk`cc\o`jk#gi`Z\j]fi@:Kj\im`Z\jXi\
counts for only 12% of ICT spending.
_`^_\iÇkn`Z\Xj_`^_feXm\iX^\ÇXe[dXib\kg\e\kiXk`fe
`jjcfn\i%
?fn`jk_\dXib\kj\^d\ek\[6
N_`c\k_\i\]fidgifZ\jj`jn\ccX[mXeZ\[]fidfY`c\k\$
In Asia and Africa most BOP markets for ICT
c\g_fep#YXii`\ijXi\jk`cck_\ilc\]fie\n\iXe[gfk\ek`Xccp
are either top heavy, like those in Sri Lanka dlZ_c\jj\og\ej`m\@:Kj\im`Z\j%@edXepZfleki`\jMf`Z\$
and Uganda, or centered on the middle of the fm\i$@ek\ie\kk\c\g_fepi\dXèj`cc\^Xc%I\cXk`m\cp]\nZfle$
income spectrum (in the BOP1500, BOP2000, ki`\j_Xm\Xjj`ê\[]i\hl\eZ`\j]fie\n\i#]ò\[nì\c\jj
and BOP2500 segments), like those in Pakistan j\im`Z\j#[\jg`k\k_\ìgfk\ek`Xckf\ogXe[dXib\kjXe[dXb\
or Côte d’Ivoire. Indonesia, with $2.1 billion in @:Kj\im`Z\jX]]fi[XYc\Xe[XZZ\jj`Yc\kfXcXi^\ij_Xi\f]k_\
annual BOP spending for ICT, offers another 9FG#\jg\Z`XccpèiliXcXi\Xj%8e[fecpX]\nZfleki`\j_Xm\
example of a market centered on the middle Zffi[èXk\[YXebè^Xe[k\c\Zfdi\^lcXk`fejkfgXm\k_\nXp +,
]fidfY`c\g_fe\YXebè^#n_`Z_Zflc[Yiè^X]]fi[XYc\]èXe$
Z`Xcj\im`Z\jkf_le[i\[jf]d`cc`fejf]g\fgc\n_fXi\efn
leYXeb\[%8ji\]fidjX[mXeZ\#jfn`ccdXib\kjXe[gi`mXk\
j\Zkfièm\jkd\ek%
:XdYf[`X
?FLJ<?FC;JG<E;@E>9P@E:FD<J<>D<EK
9FG*''' )(+
9FG),'' (*+
9FG)''' 0)
9FG(,'' ,,
9FG(''' ).
(case study 3.3). There are as yet few bottom-heavy BOP markets, reflect-
9FG,'' (+
ing the still modest penetration of ICT services into BOP populations
8m\iX^\
_flj\_fc[jg\e[è^ and into rural areas.
fe@:K
,+ Eastern Europe and Latin America also have top-heavy BOP markets,
exemplified by Belarus and Peru. Moreover, the wealthier mid-market
BXqXb_jkXe segment accounts for most of the total ICT market in half the measured
countries of Eastern Europe and all those of Latin America. In contrast,
the BOP dominates Asian and African markets; in only five countries—
Thailand, South Africa, Rwanda, Malawi, and Burundi—does spending
?FLJ<?FC;JG<E;@E>9P@E:FD<J<>D<EK by the mid-market segment exceed that by the BOP.
9FG*''' (++
9FG),'' ()+ N_Xk[f_flj\_fc[jjg\e[6
9FG)''' Business models play a big part in ICT spending. Prepaid mobile tele-
(''
9FG(,'' -'
phony in small units and Internet access by the quarter hour in cyberca-
9FG(''' *)
fes, for example, have helped to create affordability. That may account for
9FG,'' (*
the remarkable levels of ICT spending by BOP households documented
8m\iX^\ in the surveys. Except in the very lowest BOP income segment, average
_flj\_fc[jg\e[è^
fe@:K ICT spending per household generally exceeds spending on water—and
/.
in the upper BOP income segments sometimes exceeds spending on
health. Continuing rapid growth in the ICT
sector in developing countries suggests ample
untapped demand.4 Recorded levels of house-
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
:8J<JKL;P*%*@E;FE<J@81 hold ICT spending should thus be regarded as

8E@:KD8IB<K:<EK<I<;FE establishing a lower bound for the willingness
K?<D@;;C<F=K?<9FG to pay.
Access to services also plays a big part in
@e@e[fe\j`X@:Kjg\e[è^Yp9FG_flj\_fc[j`jZfeZ\ekiXk\[ household spending, especially in the ICT sec-
èk_\9FG(,''#9FG)'''#Xe[9FG),''èZfd\j\^d\ekj% tor—where most rural communities are still
K_\j\k_i\\j\^d\ekjXZZflek]fi,0f]k_\kfkXc@:KdXi$ underserved—as do demographic factors. As a
b\kXe[)/f]Xcc_flj\_fc[jè@e[fe\j`X2n`k_(,d`cc`fe result, average ICT spending per BOP house-
_flj\_fc[jXe[(%-Y`cc`feèXeelXc@:Kjg\e[è^#k_`j`jX hold varies widely across countries, but can
jlYjkXek`XcdXib\k%8eelXc@:Kjg\e[è^g\i_flj\_fc[è also be similar despite quite different market
k_\j\èZfd\j\^d\ekjXm\iX^\j,'#(-(#Xe[**-% characteristics. For example, Côte d’Ivoire and
Dfmè^lg$dXib\k[iXdXk`ZXccpèZi\Xj\j@:Kjg\e[è^ Sierra Leone report similar spending by BOP
g\i_flj\_fc[ÇYlkk_\fm\iXccdXib\kjk`cc`j[\Z`[\[cpZfe$
households—averaging $57.60 and $46.40 a
Z\ekiXk\[èk_\d`[[c\9FGj\^d\ekj%8m\iX^\XeelXc@:K
year—yet Côte d’Ivoire’s BOP market is decid-
jg\e[è^g\i_flj\_fc[
@:Kjg\e[è^èk_\9FG edly bottom heavy while Sierra Leone’s is more
èk_\i\cXk`m\cpjdXcc
Gif]`c\f] 8eelXcjg\e[è^ top heavy, trending toward the top two income
Ylk dlZ_ n\Xck_`\i kfkXc@:Kjg\e[è^ g\i_flj\_fc[
segments (BOP2500 and BOP3000). Reported
d`[$dXib\kgfglcXk`fe
+- j\^d\ek (#)*/ `j (-(
**- spending can also reflect differences in the
,'
XYflk\`^_kk`d\jk_Xk
èk_\9FG(+0 %
:8J<JKL;P*%+JD8IKK<C<:FDJ1
K8@CFI@E>J<IM@:<J#
KI8EJ=FID@E>D8IB<KJ

Dfjkf]k_\@:Kjg\e[èî\Zfi[\[Yp_flj\_fc[jlim\pj
`j]fig_fe\j\im`Z\%8efk_\ijg\e[è^ZXk\^fip#^\e\iXccp
jdXcc\i#`j]fi@:K\hl`gd\ekk\c\m`j`fej\kj#dlj`ZgcXp\ij#
Zfdglk\ij#g_fe\j#ZXd\iXj %8jk`ccjdXcc\ife\`j]fii\gXì
f]jlZ_\hl`gd\ek%Fk_\iè]fidXk`fej_fnjk_Xkdfjk9FG
lj\ijXZZ\jjk_\@ek\ie\k]ifdZpY\iZX]\jfifk_\ij_Xi\[$
XZZ\jjgfèkj#efk]ifd_fd\2k_\jXd\`jkil\]fiXcXi^\
j_Xi\f]k_fj\ljè^g_fe\j\im`Z\%
questions asked and expenditures captured in
K_\j\jlim\pZXk\^fi`\j]X`ckf[faljk`Z\kfk_\i`Z_$
national surveys.
e\jjf]k_\@:Kj\im`Z\jXe[Yljè\jjjkiXk\^`\jgifg\c$
A more meaningful characterization may be
cè^9FGdXib\kj%@ek_\G_`c`ggè\j#]fi\oXdgc\#JdXik
the median of annual BOP per household spend-
:fddle`ZXk`fej_XjkiXej]fid\[k_\Z\ccg_fe\dXib\kYp
ing on health for each region. These figures are
Xccfnè^\c\Zkife`ZjXc\jf]Xìk`d\k_ifl^_j_fikd\jjX^\
as follows: for Africa, $33.89 (Cameroon); for
j\im`Z\JDJ Xe[Ypi\[lZè^k_\le`kj`q\f]jlZ_jXc\jkf
Asia, $53.62 (Cambodia); for Eastern Europe, Xjc`kkc\XjLJ'%'*%K_`jèefmXk`fe_XjXccfn\[XZZ\jjkf
$55.83 (Belarus) and $87.00 (Kazakhstan); and Zfddle`ZXk`fej\im`Z\j]fid`cc`fejf]cfn$èZfd\=`c`gèfj2
for Latin America, $107.40 (Peru). India has the 0/f]JdXikËjjlYjZi`Y\ijXi\cfn$èZfd\#gi\gX`[Zljkfd$
largest measured BOP market for ICT in Asia, \ij%@kjJDJ$YXj\[kiXejXZk`fejpjk\dXccfnjZljkfd\ijkf
with $7.8 billion in aggregate household spend- kiXej]\igi\gX`[le`kjkffe\Xefk_\i#gifm`[è^Xe\c\Zkife`Z
ing (53% of the national ICT market); average ÈZlii\eZpÉk_Xk]XZ`c`kXk\jjdXcckiXejXZk`fej%8e[`kXccfnj
ICT spending per BOP household is $42 a year. jdXccd\iZ_Xekjkfi\j\ccdèlk\j#n`k_XZfdd`jj`fefe
(No expenditure data are available for China.) \m\ipjXc\ÇZi\Xkè^XYljè\jjfggfikle`kp]fi/''#'''
7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

In other regions the BOP market leaders are d`Zif\eki\gi\e\lij%
Brazil ($5.5 billion, 27% of the total market), JdXikXcjfjkXik\[k_\nfic[Ëj]ìjki\d`kkXeZ\jpjk\dYp
Russia ($1.4 billion, 35% of the total market), k\okd\jjX^\%<ogXki`Xk\=`c`gèfjZXe^`m\ZXj_gXpd\ekj
and South Africa ($745 million, 14% of the total kfèk\ieXk`feXcX^\ekj#n_fk_\ekiXej]\ik_\ZXj_kfk_\
market). Annual BOP per household spending [\j`êXk\[i\Z`g`\ekjYXZbèk_\G_`c`ggè\j%K_\i\Z`g`$
averages $173 in Brazil, $53 in Russia, and $109 \ekj#Xc\ik\[YpXeJDJd\jjX^\fek_\ìg_fe\#ZXe`d$
in South Africa. d\[`Xk\cpn`k_[iXnk_\ZXj_]ifdk_\cfZXcDZ;feXc[Ëj
In most countries measured, ICT spending YiXeZ_%Dfi\fm\i#k_\j\im`Z\`jZ_\Xg\ik_Xek_\è]fidXc#
per household increases roughly in proportion le[\iîfle[e\knfibf]k\elj\[kfkiXejgfikZXj_kfk_\
to income through the BOP, especially above G_`c`ggè\j]ifdXYifX[Jd`k_)''+Y %
the lowest income segment. In many countries, JdXik:fddle`ZXk`fej\o\dgc`]`\jknf9FGYljè\jj
jkiXk\^`\j1]fZljè^fek_\9FGk_ifl^_`kjèefmXk`fef]e\n
however, ICT spending increases dispropor-
j\im`Z\jXe[cfZXc`qè^mXcl\Zi\Xk`fek_ifl^_`kj\ok\ej`m\
tionately in the highest BOP income segments
e\knfibf]X^\ekj%
(BOP2500 and BOP3000), indicating latent
demand for ICT services in the BOP. Among
the median countries by region discussed above, the ratio of average
household ICT spending in the BOP3000 income segment to that in the
BOP1000 segment is 27:1 in Cameroon, 8:1 in Cambodia, 4:1 in Belarus 9libèX=Xjf
J?8I<F=?FLJ<?FC;JG<E;@E>FE@:K
and Kazakhstan, and 32:1 in Peru.
As incomes rise still higher, per household ICT spending increases 9FG*''' ,%'
as well, but to an extent that varies by country—only modestly in Latin 9FG),'' *%.
American and Eastern European countries on average, more so in most 9FG)''' )%,
9FG(,'' (%)
African and Asian countries. A useful measure is the ratio of average an-
9FG(''' '%+
nual ICT spending by mid-market households to that by BOP households.
9FG,'' '%(
In the above countries, mid-market households outspend BOP house-
holds by about 12:1 in Cameroon and 12:1 in Cambodia; 2:1 in Belarus and +.
9iXq`c
KfkXc9FG@:Kjg\e[è^
0.
YpèZfd\j\^d\ek#
liYXeXe[iliXc
Kazakhstan; and 8:1 in Peru. These ratios are considerably higher than
those in other infrastructure sectors, such as energy and water, again sug-
LI98E ILI8C gesting quite a bit of latent demand for ICT services (case study 3.4).
@e[`X
,( +0
N_\i\`jk_\dXib\k6
In the still largely urban-centered ICT sector, there are vast differ-
ences in size between urban and rural markets, including their BOP
segments. In all measured countries except Cambodia and Sri Lanka,
LI98E ILI8C
urban areas dominate the overall ICT market. Urban areas also domi-
nate the BOP market in all Eastern European and Latin American
countries, in all African countries except Uganda, and in four of nine
Asian countries, including India, Indonesia, and Pakistan.
9fc`m`X In Brazil, for example, the BOP market for ICT is 97% urban, and aver-
G<I:<EKF=?FLJ<?FC;JN@K?8K<C<G?FE< age annual spending by urban BOP households ($203) is seven times that
-' by rural BOP households. In Russia the urban share of the BOP market
is 71%, and the ratio of urban to rural household ICT spending is 2:1. In
+' LI98E
Asia, India’s BOP market for ICT is 51% urban, with urban BOP house-
holds outspending rural ones 3:1; Pakistan and Indonesia have even larger
)'
ILI8C urban shares of the BOP market, 69% and 93%. In Africa, South Africa’s
BOP market is 68% urban, with urban households spending twice as
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
'
9FG 9FG 9FG 9FG 9FG 9FG much on average as rural households; Nigeria has a 77% urban share.
,'' (''' (,'' )''' ),'' *''' Despite generally lower levels of ICT spending in rural areas, the sheer
GXb`jkXe size of the rural population in some countries means a significant rural
G<I:<EKF=?FLJ<?FC;JN@K?8K<C<G?FE< market. Thailand’s rural BOP market for ICT, for example, is $1.5 billion,
('' with household spending averaging $160 a year. India’s is $3.8 billion.
/' Mexico’s is $767 million, with average annual per household spending
LI98E
-' of $154.
ILI8C
+'
)' @jk_\i\\m`[\eZ\f]X9FGg\eXckp6
' Rural ICT market shares may have increased somewhat in recent years,
9FG 9FG 9FG 9FG 9FG 9FG as mobile networks have expanded out of urban centers. But the overall
,'' (''' (,'' )''' ),'' *'''
urban-rural pattern in BOP spending is consistent with widespread lack
of access to ICT services in rural areas. The differences cannot be entirely
due to higher urban incomes. In Bolivia, for example, urban BOP house-
holds spend 365% more on ICT than their rural counterparts, yet have
only 94% more income (based on measured total expenditure).
+/
:c\Xicp#cXZbf]XZZ\jjkf@:Kj\im`Z\jèiliXcXi\XjZXeY\Xj`ê`]`ZXek9FG
g\eXckp#fe\k_Xkb\\gjiliXc_flj\_fc[j[`jZfee\Zk\[]ifddXib\kjXe[YifX[\i
è]fidXk`fejfliZ\jXe[k_lji\è]fiZ\jiliXc`jfcXk`feXe[gfm\ikp%
Data on phone ownership support lack of

access as a primary cause of the disparity: in
Bolivia only 2% of rural BOP households report
owning a fixed or cellular phone, compared
with 13% of their wealthier mid-market rural :8J<JKL;P*%,:FDDLE@KPG?FE<J1
neighbors and 25% of urban BOP households. <EKI<GI<E<LIJGIFM@;<J?8I<;8::<JJ
This pattern is widespread. In Russia 27% of
rural BOP households own a phone, compared Mf[XZfd:fddle`kpJ\im`Z\j#XgifîXdf]Jflk_8]i`ZXËj
with 48% of mid-market rural households and cXi^\jkZ\cclcXig_fe\ZfdgXep#j_fnj_fnYljè\jjXe[^fm$
53% of urban BOP households. In Pakistan 6% \ied\ekZXenfibkf^\k_\ikfXZ_`\m\jfZ`XcXe[\Zfefd`Z
of BOP households in rural areas own a phone, ^fXcj%;\m\cfg\[YpMf[XZfdkfd\\kX(00+^fm\ied\ek
compared with 26% of those in urban areas. dXe[Xk\kfgifm`[\j\im`Z\jè9FGZfddle`k`\j#k_`jèef$
mXk`m\gifîXdi\c`\jfeg_fe\j_fgjfne\[Xe[fg\iXk\[
7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

Clearly, lack of access to ICT services in
rural areas can be a significant BOP penalty, Yp\eki\gi\e\lij%K_\gifîXd_XjYfk_gifm`[\[X]]fi[XYc\
one that keeps rural households disconnected Zfddle`ZXk`fej\im`Z\jkfd`cc`fejf]Jflk_8]i`ZXejXe[
from markets and broader information sources \dgfn\i\[k_fljXe[jf]gi\m`fljcp[`jX[mXekX^\[\eki\$
gi\e\lij%
and thus reinforces rural isolation and poverty.
8kXZfjkf]XYflkI)-#'''LJ*#+,' #gifjg\Zk`m\
The penalty would be more severe without the
fne\ijZXejkXikX:fddle`kpJ\im`Z\j]iXeZ_`j\kffg\i$
widespread—though far from universal—public
Xk\Z\cclcXicè\j]ifdèj`[\XZfem\ik\[j_`ggè^ZfekXè\i%
or shared-access ICT services.
K_\g_fe\j_fgjXi\è[\g\e[\ekYljè\jj\j#Ylkk_\pf]]\i
jkXe[Xi[gif[lZkjXe[j\im`Z\j%8kXep:fddle`kpJ\im`Z\j
?fnj_Xi\[XZZ\jj_\cgji\[lZ\ g_fe\j_fgèk_\Zflekip#Zljkfd\ijZXedXb\Xg_fe\ZXcc
k_\9FGg\eXckp ]fiXj\kiXk\f]I/,LJ'%(( Xdèlk\#c\jjk_XeXk_ì[f]
While few rural BOP households in Bolivia own k_\Zfdd\iZ`XciXk\]figi\gX`[Z\cclcXiZXccj%
a phone, survey data show that such house- @eX^ff[cfZXk`feXg_fe\j_fgn`k_]`m\cè\jkpg`ZXccp
holds nevertheless spend an average of $35 a _Xe[c\jdfi\k_Xe(''_flijf]ZXccè^Xdfek_g\icè\#^\e$
year on ICT, more than $27 of it for “telephone \iXkè^kfkXcdfek_cpi\m\el\jf]I).#'''LJ*#,,' 2f]
and telefax services.” Simply put, these rural k_`j#I0#'''LJ(#(0' ^f\jkfk_\\eki\gi\e\li%K_\g_fe\
households cannot afford to purchase a phone, j_fgjkXb\X[mXekX^\f]Mf[XZfdËj\ok\ej`m\Z\cclcXie\k$
but they will gladly pay to use one—whether a nfib#n_`Z_gifm`[\jZfm\iX^\kf0*f]Jflk_8]i`ZXËj++
public pay phone, a neighbor’s cell phone, or a d`cc`feZ`k`q\ej%Kf[Xpk_\j_fgjj\im`Z\dfi\k_Xe)*#'''
shared-use phone owned by an entrepreneur. Z\cclcXicè\jXkdfi\k_Xe+#+''cfZXk`fejk_ifl^_flkJflk_
Paraguay provides an even starker example. 8]i`ZXI\ZbXe[Nff[)''* %
A survey there shows that among rural BOP K_\Zfddle`kpg_fe\j_fgj_Xm\jlZZ\\[\[Yp_Xie\jj$
households only 0.25% report owning a phone. è^cfZXc\eki\gi\e\lij#\o\dgc`]pè^XjkiXk\^pf]cfZXc`qè^
Yet the same survey reports that annual per mXcl\Zi\Xk`fe%
household ICT spending in this group averages
+0
:8J<JKL;P*%-@EM<JK@E>@EK?<9FG1
9LJ@E<JJJKI8K<>@<J=FI
K?<E<OK9@CC@FE
I\gfikj]ifdX)''-^cfYXcZfe]\i\eZ\f]k_\@ek\ieXk`feXc
K\c\Zfddle`ZXk`feLe`fejl^^\jkk_Xkk\c\ZfdXe[è]fi$
dXk`fek\Z_efcf^p\o\Zlk`m\jXi\efn]fZljè^fek_\9FG
gfglcXk`feè\d\i^è^dXib\kjXjk_\jfliZ\f]k_\ìe\ok
Y`cc`feZljkfd\ij%K_\pXi\ljè^XiXe^\f]jkiXk\^`\jkfkXi$ $128 a year, with $117 of it going to telephone
^\kk_\9FG% services.
HlXcZfdd#]fi\oXdgc\#`j_\cgè^gXike\ijè@e[`X This pattern—in which very few rural house-
cXleZ_dfY`c\g_fe\j#YXj\[fek_\ZfdgXepËjk\Z_efcf^p# holds own a phone yet most spend significant
k_XkZfjkc\jjk_XeLJ*'%N_`c\k_\g_fe\jdXpefk\Xie
amounts on phone service—also holds in other
dlZ_dfe\p]fiHlXcZfdd#k_\pi\gi\j\ekXeèm\jkd\ek
countries. In Uganda measured annual spending
èk_\]lkli\#XZZfi[è^kfGXlcAXZfYj#k_\ZfdgXepËjZ_`\]
for phone service averages $29 across all rural
\o\Zlk`m\f]]`Z\i%ÈN\[feËkk_èbn\Ëi\^fè^kfdXb\Xcfkf]
BOP households, yet just 0.10% report owning a
dfe\pfek_\]ìjkg_fe\k_Xkjfd\Yf[pYlpj#É_\jXpj%È9lk
phone. In Pakistan, where just 6% of rural BOP
\m\eklXccpRk_XkZljkfd\iTn`ccYlpdfi\Xe[dfi\%É
households own a phone, annual spending on
Dfi\fm\i#AXZfYjXi^l\j#Xcfkf]èefmXk`feZfd\j]ifd
]fZljè^fe[\m\cfgè^è\og\ej`m\gif[lZkj]fi\d\i^è^ phone services by rural BOP households aver-
dXib\kj%È@klj\[kfY\k_Xkpflnflc[èm\jkèk_\_`^_$\e[ ages $24. Mexico’s ownership rate is higher than
j\im`Z\jXe[k_\pnflc[ki`Zbc\[fne#É_\jXpj%ÈEfnn\è$ those in African and Asian countries, at 17%, but
m\jk\hlXccpèk_\cfn\e[Xe[_`^_\e[Xe[k_è^jki`Zbc\kf so is its average annual spending on phone ser-
k_\d`[[c\%É- vices by rural BOP households, at $137.
DfkfifcXkffY\c`\m\jk_Xk]fZljè^fe\d\i^è^dXib\kj In some countries public pay phones provide
i\jlckjèèefmXk`fe%K_\ZfdgXepj\ccjXLJ*'_Xe[j\k shared access; in others, such as India and South
[\j`ê\[è@e[`Xn`k_iliXclj\ijèdè[%K_\g_fe\ZXe^`m\ Africa, entrepreneur-run phone shops provide
èjkilZk`fejkfXlj\iYpXl[`fiXk_\ik_Xeèk\ok]fidÇè the access (case study 3.5). Cybercafes and ki-
ZXj\k_\lj\i`jefkc`k\iXk\%@kXcjf_XjXi\]c\Zk`m\[`jgcXp osks similarly provide shared access to comput-
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
k_Xkg\fgc\ZXe\Xj`cpj\\n_\eflk[ffijXe[XYXkk\ipn`k_ ers and the Internet.

XjkXe[Ypk`d\f]knfn\\bj>JD8jjfZ`Xk`fe)'', %
JlZ_ ZfdgXe`\j Xj @ek\c# DfkfifcX# Xe[ JXdjle^ E\nk\Z_efcf^p#e\ndXib\kgfk\ek`Xc
<c\Zkife`ZjdXb\XZXj\]fie\n]ò\[nì\c\jjk\Z_efcf^`\j# Will phones become the Internet platform for
N`DXoXe[N`=`#kfZfee\Zkk_\e\okY`cc`felj\ij#Xi^lè^ BOP households and rural communities? Several
k_Xknì\c\jj`j]XiZ_\Xg\ik_XeZfgg\i#\jg\Z`Xccp^`m\e factors suggest that they will, including the busi-
k_\ile$lgèZfgg\igi`Z\jèi\Z\ekp\Xij%@ek\c_XjY\\e ness strategies adopted by some major mobile
jlggfikè^ki`XcjèJflk_\Xjk8j`X%JXdjle^`jgifm`[è^ phone manufacturers and information technol-
\hl`gd\ek]fiki`XcjèCXkè8d\i`ZXXe[gcXejkfdXib\k ogy companies (case study 3.6).
k_\\hl`gd\ekèJflk_\Xjk8j`XXe[8]i`ZX%
Mobile phones already have an enormous
K_\j\\oXdgc\j\o\dgc`]pXjkiXk\^pf]]fZljè^fek_\
lead over computers in developing countries.
9FG%
Moreover, phones are relatively easy to master,
generally require no sophisticated technical sup-
port, and, as voice-based devices, pose no literacy
barrier. Phones are less expensive than computers—basic GSM models
designed for developing countries are approaching US$30—and service is
often offered through prepaid business models that are more affordable
,' for BOP consumers.
K_\ZfdYèXk`fef]gfn\i]lcg_fe\j#è\og\ej`m\e\knfibj#
Xe[mf`Z\$XZZ\jj`Yc\Xggc`ZXk`fejdXpfg\elgk_\@ek\ie\kkf
cXi^\eldY\ijf]e\nlj\ij%
Increasingly, mobile phones also offer Internet services such as

e-mail and Web browsing and are becoming a platform for banking and
other financial services. Driven by intense competition, mobile phone
manufacturers are rapidly adding new capabilities—digital photography,
voice recognition, and biometric identification, to name a few. As a result,
industry observers forecast, within five years the typical mobile phone
will have the processing power of today’s desktop computers.
Equally important is the potential for low-cost fixed wireless
networks in rural areas, bringing Internet access—and Voice-over-Internet
telephony—to phones and other devices in areas too sparsely popu-
lated to support conventional cellular networks. Adding a WiFi chip to
a mobile phone to allow access to such rural networks will cost only a
7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

few dollars.
The combination of powerful phones, inexpensive networks, and
voice-accessible Internet applications—for obtaining market prices,
health information, or government services—may open up the Internet
to large numbers of new users. In any event, it is clear that ongoing inno-
vation in technology will help increase the potential of rural—and largely
BOP—ICT markets.
<e[efk\j
1. Reported household expenditures in a given country should be regarded as a minimum estimate of actual
expenditures, because surveys may not have collected information on all types of ICT-related spending.
2. For a comprehensive overview, see the World Bank’s Information and Communications for Development 2006:
Global Trends and Policies (2006b). To illustrate the rapid growth in the sector, the report cites the increase in
mobile phone subscribers in Nigeria from 370,000 to 16.8 million between 2001 and 2005, and the sixfold growth
in the Philippines to 40 million subscribers between 2000 and 2005. Access to phones tripled in Sub-Saharan
Africa and East Asia between 2000 and 2004, nearly doubled in South Asia, and doubled in Latin America and
Central Asia. The numbers of Internet users grew even faster, though from a much smaller base.
3. Economist, “Out of Africa,” December 9, 2006, 67–68.
4. In late 2005, for example, India was reported to be adding more than 6 million new mobile subscribers a month
(Katie Allen, “Motorola’s Gloomy Outlook Casts Shadow on Mobile Phone Market,” Guardian Unlimited, January
6, 2006, http://business.guardian.co.uk/story/0,,1983795,00.html accessed January 18, 2006 ).
5. Michela Wrong, “Mo Ibrahim: Revolutionising Communications in Africa. His Tool? The Mobile Phone,” New
Statesman, October 17, 2006, http://www.newstatesman.com/200510170021; Mo Ibrahim, presentation to World
Bank, April, 2006.
6. Bruce Einhorn, “Telecoms Hungry for Next Billion Callers,” BusinessWeek, December 7, 2006, http://www.
businessweek.com/globalbiz/content/dec2006/gb20061207_197764.htm. ,(
:?8GK<I=FLI
K_\
NXk\i
DXib\k
More than a billion people lack access to clean drinking water.
Many more must struggle to meet their daily needs for water—or
to pay the high costs for this essential commodity. The reasons for
these challenges? Urban water networks are aging. Rapid urban-
ization is increasing demand faster than networks can expand.
Many people live in water-stressed regions and water sources are
being polluted by industrialization, agricultural runoff, and lack
of sanitation services.
People obtain water in many ways. Some collect it at no “cost” (apart
from the considerable cost of their labor) from streams or other surface
sources or from wells or community standpipes. Others must pay for it.
Payments to large urban water systems dominate recorded household
spending on water. But households also purchase water from vendors
and small-scale community water systems and pay for point-of-use ser-
vices such as water purification.
The private sector is often the provider of last resort.
Small-scale water vendors are often the only option in 9FGjg\e[è^fenXk\i
peri-urban communities. Improved point-of-use systems )'%(Y`cc`fe
being devised and marketed by the private sector also
show promise for giving BOP households better options
for water supply, especially in rural areas. New models of
community engagement and public-private partnership
are emerging.
E/B 3 @ j B 6 3 < 3 F B " 0 7 : : 7 = <
The measured BOP water market in Africa (11 countries),
Asia (7), Eastern Europe (5), and Latin America and the
Caribbean (7) is $11.3 billion. This represents the annual
household water spending of 2.0 billion people in 30 low-
and middle-income countries. The total BOP water mar- Y`cc`fejGGG
ket in these four regions, including all surveyed countries, 8]i`ZX ,%.
is estimated to be $20 billion, accounting for the spending 8j`X -%+
of 3.96 billion people (see box 1.5 in chapter 1 for the es- <Xjk\ie<lifg\ *%)
timation method). CXkè8d\i`ZX +%/
Latin America has the largest measured BOP water
market, at $3.8 billion for 262.5 million people. The re- Xggifo`dXk\cp(''d`cc`fe
gion’s total BOP water market is estimated to be $4.8 bil-
lion, accounting for the spending of 360 million people. In ,*
9FGnXk\idXib\kjk\e[kfY\gi\[fdèXk\cpliYXe#\m\e
n_\i\dfjk9FG_flj\_fc[jXi\iliXc%>ifnk__XjY\\e
gXik`ZlcXicpiXg`[èg\i`$liYXeXi\Xj#n_`Z_f]k\ec`\Y\pfe[
dle`Z`gXcjlggcpe\knfibj%
Asia the measured BOP water market is $3.2 billion (1.4 billion people),
while the estimated total BOP water market in the region (including the
Middle East) is $6.4 billion (2.9 billion people). In Africa the measured
market is $2.5 billion (252.4 million people), and the estimated total mar-
ket $5.7 billion (486 million people). Eastern Europe’s measured market
is $1.7 billion (138.9 million people), and its estimated total market $3.2
billion (254 million people).
E`^\i`X
KFK8CN8K<IJG<E;@E>9P@E:FD<J<>D<EK The BOP share of total spending in measured markets ranges widely.
Asia has the largest BOP share, at 68%. In Latin America and Eastern
9FG*'''
Europe the BOP share is 45%. In Africa the BOP share is 60% .
9FG),''
9FG)'''
The regional averages mask large differences within regions. In
9FG(,'' Eastern Europe the BOP market share ranges from a low of 24% in FYR
9FG(''' Macedonia to a high of 98% in Uzbekistan. Africa shows a similar spread:
9FG,'' in Rwanda the BOP accounts for a mere 14% of household spending on
water, while in Nigeria the BOP is effectively the entire market, account-
GXb`jkXe ing for more than 99%. In Latin America, among countries with larger
KFK8CN8K<IJG<E;@E>9P@E:FD<J<>D<EK
populations, only Peru has a BOP market share of well over half, at 71%.
9FG*''' In Asia only Thailand and Nepal have BOP market shares hovering
9FG),''
around 50%; other countries have much larger BOP market shares.
9FG)'''
By many measures (not just size), the BOP water market is
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
9FG(,''
“depressed” compared with other BOP markets. BOP households gen-
9FG('''
9FG,''
erally represent a smaller share of the national water market than of
other markets, including energy and transportation. Moreover, while
the BOP accounts for 71% of the population in Latin America, it accounts
for only 45% of recorded water spending—and a similar pattern holds in
other regions.
Bottom-heavy BOP water markets—in which more than 50% of recorded
spending occurs in the bottom three BOP income segments—are ap-
parent in 10 of the 30 measured countries. Eight are in Asia and Africa
(Indonesia, Pakistan, Tajikistan, Burkina Faso, Côte d’Ivoire, Malawi,
Nigeria, and Uganda). In these countries where the bottom three BOP in-
come segments dominate the BOP market, they often also dominate the
national market—representing more of the market than both the upper
BOP income segments and the mid-market segment combined.
Some cases are even more extreme, with more than 50% of all re-
,+ corded national water spending occurring in the lowest two BOP income
:8J<JKL;P+%(FLKJ@;<K?<E<KNFIB1
N@CC@E>E<JJKFG8P=FI:C<8EN8K<I
NXk\i?\Xck_@ek\ieXk`feXc#Xgi`mXk\ZfdgXepfg\iXkè^è
@e[`Xn`k_Yfk_glYc`ZXe[gi`mXk\]le[è^#_Xj[\m\cfg\[
XiXe^\f]gif[lZkjljè^XelckiXm`fc\kLM nXk\i[`jè$
]\Zk`fejpjk\dÇ]ifd_flj\_fc[le`kjkfjZXcXYc\Zfddl$
e`kpnXk\ijpjk\djXe[]iXeZ_`j\[nXk\ijkfi\j%8g`cfkè
9fddèXdgX[l#èk_\@e[`XejkXk\f]8e[_iXGiX[\j_#Zfe$
]ìd\[k_Xkcfn$èZfd\Zfddle`k`\jXi\n`ccè^kfgXpÇYfk_
]fiki\Xk\[nXk\iXe[]fi_fd\[\c`m\ip%@e[\\[#/'f]
_flj\_fc[jj`ê\[lgÇèXm`ccX^\n_\i\Y\]fi\effe\_X[
groups. Burkina Faso, Côte d’Ivoire, Nigeria, and gX`[Xk_è^]finXk\i%
Uganda all exhibit this pattern. In Nigeria the 22.3 <cj\n_\i\è8e[_iXGiX[\j_#?\i`kX^\C`m\c`_ff[J\im`Z\j
million households in the BOP500 and BOP1000 gXike\ijn`k_k_\?p[\iXYX[D\kifgfc`kXeNXk\iJlggcpXe[
segments account for 75% of the national water mar- J\n\iX^\9fXi[kfYiè^j\im`Z\jkfg\i`$liYXeXi\Xjf]k_\
ket—$444.6 million in annual spending. Z`kp%K_\ZfdgXepËjèm\jkd\ekj#n_`Z_èZcl[\[nXk\ikXebj
Among Asian countries, a similar concentration Xe[nfibè^ZXg`kXckfgifm`[\]fiYlcbgXpd\ekj]finXk\i
occurs in Pakistan, where the BOP500 and BOP1000 jlggc`\j#_Xm\\eXYc\[gi`mXk\cp$fne\[nXk\ikilZbjjlY$Zfe$
groups account for 54% of the national water mar- kiXZk\[Ypk_\^fm\ied\ekkfgifm`[\Zc\XenXk\iXkiXk\j
ket, and in Tajikistan, where they account for 57%. n\ccY\cfnk_fj\Z_Xi^\[YpXck\ieXk`m\jlggc`\ijÇk_fl^_
In Indonesia, with the third largest measured jk`cc_`^_\efl^_kfZfm\iZfjkj%K_\ZfdgXepXcjf\e^X^\j
water market in Asia, the lowest three BOP income cfZXcZfddle`kpfi^Xe`qXk`fejkf\[lZXk\g\fgc\XYflkk_\
groups dominate the market, accounting for 52% of mXcl\f]`dgifm\[nXk\i[\c`m\ip%
total spending—$421.1 million across 125.6 million NXk\i?\Xck_#k_ifl^_`kjèefmXk`m\\]]fikj#`ccljkiXk\jX
households. jkiXk\^pf]]fZljè^fek_\9FG%?\i`kX^\C`m\c`_ff[J\im`Z\j#
Top-heavy BOP water markets, in which the top èj\\è^k_\Zfddle`kpXjk_\Zljkfd\i#`j\dgcfpè^X
three BOP income segments account for more spend- jkiXk\^pf]cfZXc`qè^mXcl\Zi\Xk`fe%9fk_j_fnk_Xkgi`mXk\
ing than the bottom three, predominate in Eastern ZfdgXe`\jZXe`dgc\d\ek9FGYljè\jjjkiXk\^`\j\m\en_\e
Europe and Latin America—occurring in 10 of the glYc`Z\ek`k`\jXi\Xcjfèmfcm\[%
12 measured countries in these regions. These top-
heavy BOP markets often coincide with a national
market dominated by the mid-market segment. Paraguay represents an
extreme case. In that country the mid-market segment represents 78% of G\il
recorded national water spending—but only 36% of the national popula- KFK8CN8K<IJG<E;@E>9P@E:FD<J<>D<EK
tion. In contrast, the bottom three BOP groups represent only 3% of the 9FG*''' E/B 3 @ j B 6 3 < 3 F B " 0 7 : : 7 = <
national water market—but 36% of the population. 9FG),''
Where top-heavy BOP water markets occur in Asia and Africa, they 9FG)'''
rarely coincide with mid-market dominance. Bangladesh has a top-heavy 9FG(,''
BOP water market, for example, yet the mid-market segment accounts 9FG('''
for only 15% of national spending. 9FG,''
BXqXb_jkXe
N_\i\`jk_\dXib\k6 KFK8CN8K<IJG<E;@E>9P@E:FD<J<>D<EK
BOP water markets tend to be predominantly urban, even where most
9FG*'''
BOP households are rural. Among measured markets the only excep-
9FG),''
tions to this pattern are Thailand, Uganda, and Uzbekistan. Growth
9FG)'''
in BOP water markets has been particularly rapid in peri-urban areas, 9FG(,''
which often lie beyond municipal supply networks. Here, non-net- 9FG('''
worked but relatively large water purification initiatives show promise 9FG,''
(case study 4.1). ,,
LiYXe9FG_flj\_fc[jjg\e[j`ê`]`ZXekcpdfi\
fenXk\ik_Xe[filiXc9FG_flj\_fc[j%
In Africa the most heavily urban BOP water markets are in Djibouti,
Jflk_8]i`ZX Gabon, Rwanda, and Sierra Leone, where urban spending accounts for
KfkXc9FGnXk\ijg\e[è^
/- (+
YpèZfd\j\^d\ek# more than 90% of the total. In Gabon the urban BOP market is 32 times
liYXeXe[iliXc
the size of the rural one. At the other end of the spectrum is Uganda,
whose rural market is 6 times the size of its urban market.
LI98E ILI8C Urban spending also drives BOP water markets in Asia. In Pakistan,
for example, urban areas account for 84% of the BOP water market, but
@e[`X
only 29% of BOP households. Eastern Europe and Latin America, where
-0 *(
BOP households also are mostly urban, show similar or even stronger
urban dominance. In Ukraine 87% of BOP water spending is urban; in
Colombia, 93%.
LI98E ILI8C
Urban BOP households also spend significantly more on water than
do rural BOP households. In Malawi total BOP spending is twice as much
DXcXn`
-, *,
in urban as in rural areas, but spending on water 16 times as much. Nepal
shows a similar pattern: the urban-rural ratio for total household spend-
ing is about 2:1, while that for water spending is 22:1. Similar but much
less extreme differences show up in most countries of Eastern Europe
LI98E ILI8C
and Latin America.
N_Xk[f\jk_\9FGYlp6
BOP households still meet much of their need for water by gathering
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
it from “free” sources—surface water and wells. Some of these sources

are safe and protected; others are subject to serious contamination and
consequently pose health hazards. The variety of contaminants—waste,
heavy metals, chemical and biological agents—requires a range of solu-
tions (case study 4.2).
BOP households in Africa are the most likely to rely on surface water.
In the measured African countries 17% of BOP households report surface
water as their primary source (compared with only 1% in the mid-mar-
ket segment). Use of surface water is consistently highest in the BOP500
group and declines as incomes rise. In Burkina Faso, for example, 81%
of households in the BOP500 segment use surface water, compared with
69% in BOP1000 and 55% in BOP1500. In Sierra Leone the rates are 47%,
38%, and 27%. In Cameroon, 49%, 40%, and 20%.
In Latin America a smaller share of BOP households rely on surface
water as a primary source. Moreover, reliance on surface water drops
more quickly as incomes rise. In Peru, for example, 45% of households
in the BOP500 segment rely on surface water, but only 32% in BOP1000
,- and 15% in BOP1500.
:8J<JKL;P+%):C<8I@E>LGK?<N8K<I1
E<NK<:?EFCF>@<JJ<IM@E>8K$I@JBGFGLC8K@FEJ
8iXe^\f]\ek\igi`j\jXi\[\m\cfgè^k\Z_efcf^`\jÇYXj\[fe[\jXcèXk`fe#[`jè]\Zk`fe#Xe[]`ck\iè^d\k_$
f[jÇkfgifm`[\X]]fi[XYc\gfèk$f]$lj\ki\Xkd\ekjpjk\dj]fik_\mXi`\kpf]ZfekXdèXekj]XZ\[Yp9FG_flj\$
_fc[jXe[Zfddle`k`\j%
;\jXcèXk`fe1G\i_Xgjk_\j`dgc\jkd\k_f[f][\jXcèXk`fe`j\mXgfiXk`fef]YiXZb`j_fijXckpnXk\iXe[
i\ZXgkli\f]k_\jXck$]i\\nXk\ik_ifl^_Zfe[\ejXk`fe%K_\NXk\iZfe\[f\j\oXZkcpk_Xk%D\Xjliè^-'Æ/'
Z\ek`d\k\ijè[`Xd\k\iXk`kjYXj\#k_\Zfe\ZXep`\c[dfi\k_XeXc`k\if]nXk\iX[Xple[\ik_\Xm\iX^\jfcXi
ìiX[`Xk`feè:XjXYcXeZX%DX[\]ifdXLM$i\j`jkXekgfcpZXiYfeXk\gcXjk`Z#k_\NXk\iZfe\`jefekfo`ZXe[i\Zp$
ZcXYc\Xe[_XjXc`]\\og\ZkXeZpf]]`m\kfj\m\ep\Xij%8e\ngif[lZk#`k`j\og\Zk\[kfj\cc]fiXifle[LJ),%
;`jè]\Zk`fe1@eDX[X^XjZXiXjljkXèXYc\cfZXc\ek\igi`j\#JliË<XljX]\nXk\i #`jgif[lZè^X[`clk\Yc\XZ_
jf[`ld_pgfZ_cfi`k\ nXk\i$jXe`k`qè^jfclk`fe]fik_\dXjjdXib\k%K_ifl^_XjfZ`XcdXib\kè^jpjk\dXe[
Xe\knfibf]dfi\k_Xe('#'''Zfddle`kp$YXj\[i\kX`c\ij#JliË<Xl_Xjg\ijlX[\[_le[i\[jf]k_fljXe[jf]
Zfejld\ijkfgliZ_Xj\k_\jfclk`feÇj\ccè^dfi\k_Xe,''#'''Yfkkc\jè)''+Xcfe\%K_\Zfjkkfki\Xk\efl^_
[ièbè^nXk\i]fiX]Xd`cp]fiX[Xp#Xifle[)'c`k\ij#`jc\jjk_XeXg\eep%I\Z\ekcpJliË<XlY\^Xef]]\iè^X
dfi\ZfeZ\ekiXk\[jfclk`feèXjdXcc\i#c`^_k\iYfkkc\#\Xj`\ikfkiXejgfikkfi\dfk\cfZXk`fejGJ@)''- %
K_\Zfejld\igif[lZkj^`XekGifZk\i>XdYc\G> #nfibè^èZfccXYfiXk`fen`k_k_\L%J%:\ek\ij]fi
;`j\Xj\:fekifcXe[Gi\m\ek`fe#_XjXcjfgif[lZ\[X[`clk\Yc\XZ_gif[lZk#dXib\k\[le[\ik_\eXd\GlI%G>
`jnfibè^kfdXb\k_\gif[lZk]lccpZfdd\iZ`Xccpm`XYc\#Ylk`k`jXci\X[pY\è^jfc[è9Xe^cX[\j_#9fkjnXeX#
:_X[#?X`k`#@iXe#DXcXn`#Xe[fk_\i[\m\cfgè^Zfleki`\j%K_\n_`k\gfn[\iZfd\jèXjdXccgXZb\k#jfc[]fi
XYflkLJ'%('#k_Xkgli`]`\jXYflk)%,^Xccfejf]nXk\i%8]k\ik_\kjleXd`èJflk_\Xjk8j`Xè;\Z\dY\i)''+#
GlInXjlj\[k_ifl^_flkk_\i\^`fekfki\Xkk_\ZfekXdèXk\[nXk\ik_Xkk_\[`jXjk\ic\]kè`kjnXb\%
=`ck\iè^1=`ck\iè^[\m`Z\j_Xm\Y\\e[\m\cfg\[]fiXiXe^\f]nXk\iZfekXdèXekj%Fe\[\m`Z\#[\j`ê\[kf
i`[nXk\if]YXZk\i`X#nXj[\m\cfg\[è(0/(è>lXk\dXcXXe[_XjY\\egifdfk\[Xe[lj\[XZifjjk_\[\m\cfg$
è^8efk_\i[\m`Z\kXi^\kjXij\e`ZZfekXdèXk`fe#n`[\jgi\X[èdlZ_f]9Xe^cX[\j_Çn_\i\\Xicp[\m\cfg$
d\ekè`k`Xk`m\jc\[kfk_\[i`ccè^f]_le[i\[jf]k_fljXe[jf]Yfi\n\ccj#dXepkXggèêXkliXccpXij\e`Z$cXZ\[
îfle[nXk\iÇXe[ègXikjf]@e[`XXe[E\gXc%Nfibè^n`k_X9Xe^cX[\j_`Z_\d`jk#@ek\ieXk`feXc;\m\cfgd\ek
<ek\igi`j\j_Xj[\m\cfg\[k_\J_XgcX8ij\e`Z=`ck\i#YXj\[feX]\iifljjlc]Xk\jfclk`feYfe[\[kfZilj_\[Yi`Zb%
@eZfigfiXk\[èkfXm\jj\c#k_\]`ck\iZXegifm`[\),Æ*)c`k\ijf]Xij\e`Z$]i\\nXk\iX[Xp%8jpjk\dj\ccj]fiLJ.#
n`k_i\gcXZ\d\ek]`ck\ijZfjkè^c\jjk_XeLJ()Xp\Xi%
P\kXefk_\ijfclk`feX[[i\jj\j\oZ\jj`m\]clfi`[\#XcjfXgifYc\dèjfd\gXikjf]Jflk_8j`X%Dpkip#X]`ck\i
k\Z_efcf^p[\m\cfg\[Xk@@K$BXegli#è@e[`X#`jY\è^jfc[k_ifl^_XcfZXc[`jki`Ylk`fee\knfibkXi^\kè^XdXib\k
f]e\Xicp.'d`cc`fe@e[`Xejn_fXi\Xki`jb%K_\Yljè\jjjkiXk\^pZXccj]fij\ccè^XhlXik\id`cc`fe]`ck\ile`kjè
k_i\\p\XijD\\_XeXe[QX`[dXe)'', %
KnfY`^ZfdgXe`\jXi\dXib\kè^Zfdg\kè^]`ck\ik\Z_efcf^`\jè@e[`X%?è[ljkXeC\m\iC`d`k\[?CC #X
[`m`j`fef]Zfejld\igif[lZkj^`XekLe`c\m\i#gif[lZ\jGli\`k#n_`Z_[\c`m\ijjòc`k\ijf]gli`]`\[nXk\i]fiX
ilg\\%<li\bX=fiY\j_Xjk_\8ZhlX^Xi[cè\f]gif[lZkj#i\gi\j\ekè^XcXi^\j_Xi\f]k_\_`^_$\e[nXk\i]`ck\i
dXib\k%9fk_?CCXe[<li\bX=fiY\jXi\dfmè^jk\X[`cp[fne$dXib\kkfZfdg\k\]fik_\cXi^\9FGj\^d\ek#
E/B 3 @ j B 6 3 < 3 F B " 0 7 : : 7 = <
\e^X^è^cXi^\[ì\ZkjXc\je\knfibj%9lkgi`Z\Xe[Zfejld\i\[lZXk`fei\dXèj`ê`]`ZXekYXii`\ij%
L%J%_`^_$k\Z_dXel]XZkli\iBO@e[ljki`\j`j[\m\cfgè^XZXiYfeeXef]`Y\i]`ck\i#k_\BONfic[=`ck\i#èX
îXm`kp$]cfn_fd\jpjk\d#X`d\[XkYiè^è^k_\dfjkX[mXeZ\[k\Z_efcf^pn`k_èi\XZ_f]k_\9FGdXib\k%
K_\BOjpjk\dZXe[\c`m\inXk\i]i\\f][ìk#Z_\d`ZXcgfcclkXekj#Xe[YXZk\i`XcXe[mìXcZfekXdèXk`feXk
LJ'%''/X^Xccfe#fiLJ'%'*X[Xp]fiX]Xd`cp%K_\ZfdgXep`jXcjf[\m\cfgè^XjZXc\[$lgm`ccX^\jpjk\d
k_XkZXe[\c`m\i)#'''^XccfejX[Xp#i\[lZè^k_\ZfjkkfLJ'%''(X^Xccfe#n`k_Xeè`k`XcZXg`kXcZfjkf]Xifle[
LJ(,'%
8kk_\fk_\i\e[f]k_\jg\Zkild`jXg\ijfeXc]`ck\i[\m`Z\#k_\C`]\JkiXn#ZfdYèè^k_i\\k\Z_efcf^`\j1X
_Xcf^\e$YXj\[i\jèk_Xkb`ccjYXZk\i`XfeZfekXZk#k\ok`c\gi\]`ck\ijkfi\dfm\gXik`Zc\jXjjdXccXj(,d`Zifej #
Xe[XZk`m\ZXiYfekfi\dfm\gXiXj`k\j%<XZ_[\m`Z\ZXegli`]p.''c`k\ijf]nXk\iÇXk)c`k\ijX[Xp#\efl^_]fi
Xp\Xi%K_\[\m`Z\[f\jefki\dfm\Xij\e`Zfi\oZ\jj]clfi`[\#Xe[ZfejkXeklj\n`k_jXcè\nXk\ii\[lZ\j`kj
\]]\Zk`m\c`]\YpXYflk_Xc]%Efkp\kXjljkXèXYc\Yljè\jj\e[\Xmfi#C`]\JkiXn`jgifdfk\[gi`dXi`cpk_ifl^_
Z_Xi`kXYc\Z_Xee\cj%
8cck_\j\è`k`Xk`m\j#X`d\[Xk[\j`êè^jfclk`fej]fik_\le`hl\e\\[jf]k_\9FG#\o\dgc`]pXjkiXk\^pf]
]fZljè^fek_\9FG% ,.
N_`c\9FG_flj\_fc[jXi\dfi\c`b\cpkflj\jli]XZ\nXk\iXe[
c\jjc`b\cpkf_Xm\XZZ\jjkfg`g\[nXk\i#Xk_ì[Xck\ieXk`m\#
\jg\Z`Xccpèg\i`$liYXeXi\Xj#`jkfYlp]ifddfY`c\nXk\im\e[fij%
:Xd\iffe
G<I:<EKF=?FLJ<?FC;J9PN8K<IJFLI:< Use of unprotected wells by BOP households, where present in Asia,
('' Eastern Europe, and Latin America, also drops off quickly as incomes rise
/' through the lower BOP income segments. Paraguay is the lone exception,
-' >IFLE;N8K<I
with use of unprotected wells remaining consistently high across all BOP
G@G<;
+'
income groups.
In Africa use of unprotected wells similarly remains high across BOP
)'
income groups in Malawi, Rwanda, Sierra Leone, and Uganda. In Malawi
'
9FG 9FG 9FG 9FG 9FG 9FG 26% of BOP households—and in Rwanda, 45%—report relying on unpro-
,'' (''' (,'' )''' ),'' *''' tected wells as their primary water source.
G\il
G<I:<EKF=?FLJ<?FC;J9PN8K<IJFLI:< @jk_\i\\m`[\eZ\f]X9FGg\eXckp6
('' There is a widely held view that the BOP suffers a significant penalty in
/' G@G<; access to safe drinking water—and household survey data confirm this
-' view. Consider access to the most reliable and affordable source, piped
+' water in the home. In 9 of the 29 countries for which sufficient data exist
)'
for a comparison, the ratio of mid-market households to BOP households
>IFLE;N8K<I
with access to piped water is 6:1 or higher. Data on access to public stand-
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
'
9FG 9FG 9FG 9FG 9FG 9FG pipes show a similar pattern—significantly lower access in the BOP than
,'' (''' (,'' )''' ),'' *''' in the mid market.
While BOP households are more likely to use surface water and less
likely to have access to piped water, a third alternative, especially in peri-
urban areas, is to buy from mobile water vendors. But this option typically
involves a significant price penalty. One study showed that in eight major
cities water vendors charge prices 8–16 times those charged by public
utilities (UNDP 2006). Another study, covering 47 countries, found that
mobile distributors such as tanker trucks charge unit prices up 10 times
the price of piped water (Kariuki and Schwartz 2005).
Where BOP communities lack access to municipal water supply net-
works, point-of-use water purification and small-scale community-based
water purification and waste treatment can be useful solutions. The com-
munity-based approach underlies an innovative program in Orangi, an
informal settlement area in Karachi that is home to 1.2 million people.
Community-managed services—latrines, neighborhood collector sew-
ers—link to a municipal system of trunk sewers and treatment plants.
,/ Local residents provide labor and financing, and external sources provide
:8J<JKL;P+%*K?<GFN<IF=G8IKE<IJ?@G1
GL9C@:$GI@M8K<@E@K@8K@M<JKF@DGIFM<J<IM@:<

Knf\oXdgc\jÇfe\èmfcmè^XZffg\iXk`m\è9fc`m`X#k_\fk_\iXcfZXc^fm\ied\ekè?fe[liXjÇj_fn
k_XkèefmXk`m\XggifXZ_\jZXedXb\gifî\jj%
:fjdfc#XZffg\iXk`m\gifm`[è^nXk\iXe[j\n\iX^\j\im`Z\kf0'#'''Zljkfd\ijèDfek\if#X
kfneèk_\9fc`m`Xekifg`ZXccfncXe[j#]XZ\[j\i`flj[`jZfek\ekè)'''%D\dY\ijn\i\]\[lgn`k_
YX[j\im`Z\#XiY`kiXipilc\j#XZcfj\[$[ffidXeX^\d\ek#Xe[j\i`flj]èXeZ`Xc[`jXiiXp%E\ncpèjkXcc\[
dXeX^\d\eki\efleZ\[k_\fc[Zlckli\#gifd`jè^]lcckiXejgXi\eZpXe[k_ifnè^fg\eXcci\Zfi[jkf
jZilkèpYpd\dY\ij%
Kfj\Zli\cfXejkf]èXeZ\i\gXìXe[\ogXej`fef]k_\nXk\iXe[j\n\ie\knfib#k_\Zffg\iXk`m\
Xî\\[kfj\\be\ni\m\el\j]ifdd\dY\ij%9ifX[ZfejlckXk`fen`k_k_\Zfddle`kpc\[kfXZfeZclj`fe
k_XkZljkfd\ijnXek\[Zfddle`kp_\Xck_èjliXeZ\Xjn\ccXjY\kk\inXk\ijlggcpXe[jXe`kXk`fe%8LJ)
dfek_cpjliZ_Xi^\Ç\efidfljèXi\^`fen_\i\k_\Xm\iX^\dfek_cpnX^\`jfecpLJ.'ÇnXj`dgfj\[#
n`k_Zfddle`kpXggifmXc%8]k\i\XZ_]Xd`cp_X[Zfeki`Ylk\[LJ(,'kfk_\nXk\iXe[j\n\i]le[#k_\
jliZ_Xi^\nflc[[ifgkfLJ'%,'Xdfek_#\efl^_kfZfekèl\k_\_\Xck_èjliXeZ\gifîXd%K_\:fjdfc
\og\i`\eZ\`j\m`[\eZ\f]k_\mXcl\f]\e^X^è^k_\Zfddle`kpèk_\jfclk`fe:fejkXeZ\)'', %
@eGl\ikf:fikj#?fe[liXj#k_\_lii`ZXe\f](00*[\jkifp\[dlZ_f]k_\Xci\X[pZildYcè^Xe[]X`c\[
è]iXjkilZkli\%K_\cfZXc^fm\ied\ek#_\X[\[Ypk_\e$dXpfiDXicfeCXiX#ZfeZcl[\[k_Xk]lccZfjki\Zfm$
\ipnflc[Y\\jj\ek`Xc]fi\]]\Zk`m\j\im`Z\gifm`j`fe%CXiX\dYXib\[feXe\ok\ej`m\glYc`Z\[lZXk`fe
ZXdgX`êÇXe[XcfYYpè^\]]fikkf^XècfZXcZfekifcf]nXk\iXe[jXe`kXk`fe%8_fkcp$Zfek\jk\[\c\Zk`fe
ZXdgX`êklie\[fek_\hl\jk`fef]Y\kk\inXk\iXe[j\n\iX^\j\im`Z\#n`k__`^_\igi`Z\jXe[Zfdgi\$
_\ej`m\d\k\iè^f]Xcc_fd\j#Yljè\jj\j#Xe[glYc`Zèjk`klk`fejXjZ\ekiXc`jjl\j%
@kkffbj\m\iXcp\Xij#YlkCXiXni\jk\[Zfekifcf]k_\nXk\iXe[j\n\iXlk_fi`kp]ifdk_\eXk`feXc
^fm\ied\ek%8e\n#è[\g\e[\ekglYc`Z$gi`mXk\ZfdgXepnXj\jkXYc`j_\[#Yl`ckfek_\]fle[Xk`fejf]
k_\gi\m`fljcpglYc`ZX^\eZp#n`k_k_\cfZXc^fm\ied\ekZfekifccè^k_\le[\icpè^Xjj\kjXe[Xgi`mXk\
ZfekiXZkfidXeX^è^fg\iXk`fejle[\iXZfekiXZkj\kkè^g\i]fidXeZ\^fXcj%K_\ZfdgXep#èjlcXk\[
]ifdgfc`k`ZXcèk\i]\i\eZ\#j\kiXk\jjl]]`Z`\ekkf]le[gifg\iZfejkilZk`feXe[dXèk\eXeZ\f]k_\nXk\i
Xe[j\n\ijpjk\d%
DXicfeCXiX_Xjdfm\[fekfXeXk`feXcgfjk#Xe[k_\Z`kp_Xjj\\eYXZbjc`[è^feiXk\jXe[\ogXej`fe
f]j\im`Z\j%9lkk_\gXk_kfjlZZ\jjÇ[\gfc`k`Z`qXk`fe#Z`k`q\eZfejlckXk`fe#Xe[fg\iXk`feXcè[\g\e[\eZ\Ç
_XjY\\edX[\Zc\Xi:fejkXeZ\Xe[:fikj)''+2JXkk\ik_nX`k\#DZ>iXeX_Xe#Xe[D`kcè)'', %
K_\j\\oXdgc\jj_fnk_Xkk_\9FGYljè\jjjkiXk\^`\jf]leZfem\ek`feXcgXike\iè^Xe[cfZXc`qè^ E/B 3 @ j B 6 3 < 3 F B " 0 7 : : 7 = <
mXcl\Zi\Xk`feXi\XmX`cXYc\kfk_\glYc`ZXjn\ccXjk_\gi`mXk\j\Zkfi%
technical assistance and materials. Against all expectations and under ex-
tremely difficult conditions, the Orangi project has managed to combine
cost recovery with high quality.
Similar community-based efforts are gaining traction in Bolivia. The
government is finding that engaging communities early and consis-
tently—including by educating people about fees and involving them in
construction and continuing oversight—bears fruit throughout the life
of a project (case study 4.3). ,0
:?8GK<I=@M<
K_\
KiXejgfikXk`fe
DXib\k
For many in the BOP lack of transportation—or the high cost
of what is available—is a constant obstacle to looking for work,
getting goods to or from markets, or obtaining health care. All
too often public transit systems in developing countries are
run-down or nonexistent, and the costs of owning a private
vehicle prohibitive.That leaves few options: walking, bicycling,
animal-drawn carts, minibuses or other informal services.
Under these circumstances people cannot easily fulfill their economic
potential. And sometimes, especially in rural areas, they put off seeking
medical care or sending children to school because of the high cost or 9FGjg\e[è^fekiXejgfikXk`fe
(.0%*Y`cc`fe
long hours in getting to the hospital or the school. In urban areas gridlock
and pollution levy an additional toll. Deliberate transportation planning
that involves multiple stakeholders is one promising route toward creat-
B @ / < A > = @ B/B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

ing better urban transportation options (case study 5.1).
Distribution and delivery systems for merchandise operate under
different constraints than public transportation systems, yet these too
contribute to the economic barriers facing the BOP. The focus here is on
personal transportation spending. But more efficient distribution chan-
nels for services, products, and information—from health care to con-
sumer products to better agricultural techniques and equipment—would
also help empower rural communities and reduce the need for people to
Y`cc`fejGGG
8]i`ZX )+%,
8j`X 0/%*
<Xjk\ie<lifg\ ('%.
CXkè8d\i`ZX +,%0
<XZ_jhlXi\i\gi\j\ekj -(
Xggifo`dXk\cp,''d`cc`fe
:8J<JKL;P,%(8CC89F8I;1
KI8EJ@KGC8EE@E>N@K?
DLCK@GC<JK8B<?FC;<IJ
LiYXed`îXk`feZfekèl\jkf\ogXe[Z`kpgfglcXk`fejè
dXep[\m\cfgè^Zfleki`\j1èk_\d\Xjli\[Zfleki`\jZfm$
\i\[èk_`ji\gfikXifle[+'f]k_\gfglcXk`feXi\liYXe$
`k\j%D\Xen_`c\#jlZ_kiXejgfikXk`fe`jjl\jXjî`[cfZbXe[
gfcclk`feXi\^\e\iXkè^Y`^^\iXe[Y`^^\iZfjkjÇ]l\cZfjkj#
cXYfi_flijcfjkèkiX]]`Z#_\Xck_ZXi\Zfjkj[l\kfi\jgìXkfip
`cce\jj\j%9\ZXlj\liYXekiXejgfikXk`fejpjk\djèmfcm\jf
dXepXZkfijÇ]ifdgfc`k`Z`Xejkfgi`mXk\fne\ij#gXjj\e^\ij#
Xe[Z`m`cXe[d\Z_Xe`ZXc\e^è\\ijÇZi\Xkè^fe\k_Xk`jX]$
travel to obtain such essentials. Indeed, trans-
]fi[XYc\Xe[\emìfed\ekXccpjljkXèXYc\i\hlì\jèmfcmè^
portation impacts every sector covered in this
dlck`gc\jkXb\_fc[\ij%
report.
;fè^jfZXep`\c[Y`^Y\e\]`kj%:fej`[\ik_\D\o`Zf:`kp
9ljIXg`[KiXej`kjpjk\d#\jkXYc`j_\[YpXglYc`Z$gi`mXk\
gXike\ij_`gY\kn\\ek_\Z`kp^fm\ied\ek#gi`mXk\Yljfne\ij#
The measured BOP market for transporta-
Xe[k_\<D98IHgifîXdf]k_\Nfic[I\jfliZ\j@ejk`klk\%
@e)''-#X]k\iXp\Xièfg\iXk`fe#k_\kiXej`kjpjk\dZXii`\[ tion for Africa (12 countries), Asia (9), Eastern
dfi\k_Xe(''d`cc`fegXjj\e^\ij#_X[i\[lZ\[Zfddlk\ Europe (6), and Latin America and the
k`d\jXcfe^`kjiflk\YpXYflk,'#Xe[gi\m\ek\[Xifle[ Caribbean (9) is $105 billion. This represents
*-#'''kfejf]ZXiYfe[`fo`[\\d`jj`fejèkfD\o`Zf:`kpËj the annual household transportation spending
Xì%I`[\jZfjkXifle[LJ'%*'\XZ_=cfi\j$8i`Xj)''- % of 2.2 billion people in the 36 low- and middle-
8efk_\igifa\Zk#èk_\G_`c`ggè\Z`kpf]M`^Xe#Clqfe#`j income countries for which standardized data
i\kif]`kkè^dfkfiY`b\jÇk_\dfjkZfddfekiXejgfikXk`fe exist. The total BOP transportation market in
m\_`Zc\è8j`XÇn`k_c\jjgfcclkè^Xe[dfi\\]]`Z`\ek]l\c these four regions, comprising 3.9 billion peo-
èa\Zk`fejpjk\dj%K_\gifa\Zk#n_`Z_gcXejkfi\kif]`kk_fl$ ple, is estimated to be $179 billion (see box 1.5 in
jXe[jÇgfk\ek`Xccpj\m\iXck\ejf]k_fljXe[jÇf]dfkfi$ki`$ chapter 1 for the estimation method).
ZpZc\kXo`j#`jY\è^le[\ikXb\eYpk_\efegif]`kfi^Xe`qXk`fe The largest measured regional BOP trans-
<emìf]`k#nfibè^n`k_Z`kpf]]`Z`Xcj#dfkfiY`b\fne\ij#cfZXc portation market is the $49.6 billion Asian
d\Z_Xe`Zj#Xe[dXel]XZkli\ij%:`kpf]]`Z`Xcj_Xm\Zfdd`kk\[ market (1.5 billion people), followed by those
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
kfgXjjè^c\^`jcXk`fek_Xkn`cci\hlì\ki`ZpZc\[i`m\ijkfi\$ in Latin America ($38.4 billion and 276 mil-

gcXZ\fii\kif]`kk_\ìm\_`Zc\j%<emìf]`k`jkiXèè^cfZXcdXel$ lion people), Africa ($11.0 billion and 253 mil-
]XZkli\ijXe[d\Z_Xe`Zjèk_\gif[lZk`feXe[èjkXccXk`fef] lion people), and Eastern Europe ($6.0 billion
`kj]l\cèa\Zk`fejpjk\dj#Yl`c[è^ZXgXZ`kp]fiXkiXejgfikX$ and 148 million people). Total BOP house-
k`feè[ljkipYXj\[fe\emìfed\ekXccp]i`\e[cpk\Z_efcf^p% hold transportation spending is estimated to
9fk_f]k_\j\\oXdgc\j`ccljkiXk\k_\mXcl\f]k_\jkiXk\^p be $98.3 billion in Asia, $45.9 billion in Latin
f]leZfem\ek`feXcgXike\iè^%
America, $24.5 billion in Africa, and $10.7 bil-
lion in Eastern Europe.
Spending by the BOP accountsfor 63% of the
total Asian transportation market, 41% of the
Eastern European market, 39% of the African market, and 28% of the
Latin American market.
In national transportation markets the BOP consistently accounts for
a large share of the total in Asia. BOP spending represents more than 60%
of the total market in every measured Asian country but Cambodia (42%)
-)
K_\9FGj_Xi\f]kiXejgfikXk`fejg\e[è^`jZfej`jk\ekcp_`^_è8]i`ZX%@k
\oZ\\[j,'èXccYlkk_i\\d\Xjli\[Zfleki`\j%Jflk_8]i`ZX#n_\i\k_\
9FGdXib\kj_Xi\`jaljk(+#`jk_\dfjkgifdè\ek\oZ\gk`fe%
and Thailand (30%). In Bangladesh, Indonesia,

Pakistan, and Tajikistan the BOP share is more
than 90%. :8J<JKL;P,%)9I8Q@C1
The BOP share of transportation spending 89@>D8IB<K8KK?<KFGF=K?<9FG
is also consistently high in Africa. It exceeds
50% in all but three measured countries. South 9iXq`cËj9FGkiXejgfikXk`fedXib\kf](0%,Y`cc`fe`jk_\cXi^$
Africa, where the BOP market share is just 14%, \jkXdfe^k_\eè\d\Xjli\[Zfleki`\jèCXkè8d\i`ZX%
is the most prominent exception. BOP mar- K_fl^_k_`jjg\e[è^`jdfi\k_Xe,'f]k_\kfkXcd\X$
ket shares are largest in Côte d’Ivoire (74%), jli\[9FGkiXejgfikXk`fedXib\kèk_\i\^`fe#`k`jfecp)/
f]9iXq`cËjkfkXckiXejgfikXk`fedXib\kf].(Y`cc`fe%K_`jbè[
Djibouti (94%), and Nigeria (98%).
f]dXib\k[`jki`Ylk`fe`jZfddfeèCXkè8d\i`ZX#n_\i\k_\
In Eastern Europe the BOP share of the mar-
d`[$dXib\kXe[_`^_$èZfd\gfglcXk`fej\^d\ekjXZZflek
ket ranges from 23% in FYR Macedonia to 77%
]fik_\dXafi`kpf]kiXejgfikXk`fe\og\e[`kli\j\m\ek_fl^_
in Kazakhstan. In Russia the BOP transporta-
k_\gfglcXk`fe`jZfeZ\ekiXk\[èk_\9FG%@e9iXq`ck_\9FG
tion market, Eastern Europe’s largest, accounts
XZZflekj]fi.(f]k_\kfkXcgfglcXk`fe%
for 43% of the total.
9iXq`cËj9FGgfglcXk`fe`kj\c]`jYfkkfd_\Xmp#n`k_.(è
Spending by mid-market and high-income k_\Yfkkfdk_i\\9FGèZfd\j\^d\ekj%P\kk_\9FGkiXej$
B @ / < A > = @ B/B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

segments dominates the transportation mar- gfikXk`fejg\e[è^`jZfeZ\ekiXk\[èk_\kfgk_i\\9FGè$
ket in most countries of Latin America and Zfd\j\^d\ekj%K_\j\k_i\\Zfejk`klk\X(*%-Y`cc`fedXib\k#
the Caribbean. The BOP share of the national dfi\k_Xe.'f]k_\9FGdXib\kXe[(0f]k_\eXk`feXc
market is less than 35% in every country but dXib\k%K_XkdXib\kXcfe\`jcXi^\ik_Xe\m\ipfk_\id\X$
Jamaica (81%) and Peru (51%). The smallest jli\[eXk`feXc9FGkiXejgfikXk`fedXib\k\oZ\gk@e[`XËj%
BOP shares are in Colombia (17%) and Paraguay K_\(*%/d`cc`fe_flj\_fc[jè9iXq`cËjkfgk_i\\9FGè$
(19%). Zfd\j\^d\ekjjg\e[XeXm\iX^\f]0/*Xp\XifekiXej$
gfikXk`fe#()f]k_\ì_flj\_fc[Yl[^\k%LiYXe_flj\_fc[j
?fn`jk_\dXib\kj\^d\ek\[6 XZZflek]fi/,f]k_\kiXejgfikXk`fejg\e[è^Ypk_\j\
In most of the measured African and Asian j\^d\ekj%
countries BOP transportation markets are bot-
GfglcXk`fe Jg\e[è^
tom heavy. BOP transportation spending is con-
centrated in the BOP1000 and BOP1500 groups,
as exemplified by Bangladesh and Burkina Faso.
Important exceptions to this pattern include
South Africa and Thailand, where BOP trans- GfglcXk`feÇn\`^_k\[ Jg\e[è^Ç
kfnXi[k_\Yfkkfd ZfeZ\ekiXk\[Xkk_\kfg
portation spending is significantly top heavy,
-*
9Xe^cX[\j_
KFK8CKI8EJGFIK8K@FEJG<E;@E>9P@E:FD<J<>D<EK
9FG*'''
9FG),''
9FG)'''
9FG(,''
9FG('''
9FG,''
and India, where it is marginally top heavy. BOP transportation spending
9libèX=Xjf in Eastern Europe and Latin America is distinctly top heavy and concen-
KFK8CKI8EJGFIK8K@FEJG<E;@E>9P@E:FD<J<>D<EK trated in the BOP2500 and BOP3000 groups. This top-heavy pattern is
9FG*''' exemplified by Brazil, which has one of the largest BOP transportation
9FG),'' markets (case study 5.2).
9FG)'''
9FG(,'' N_Xk[f_flj\_fc[jjg\e[6
9FG(''' Average annual transportation spending per BOP household varies widely
9FG,''
within and between regions. In Africa and Asia, however, the median for
K_X`cXe[ this figure among measured countries is remarkably close: in Africa, $211
KFK8CKI8EJGFIK8K@FEJG<E;@E>9P@E:FD<J<>D<EK (Burkina Faso) and $275 (Uganda); and in Asia, $211 (Tajikistan). In con-
9FG*''' trast, the recorded average spending in Africa ranges from $25 a year in
9FG),'' Burundi to $157 in Nigeria, $333 in South Africa, and $517 in Gabon. In
9FG)''' Asia the range is from $101 a year in Nepal to $136 in India and $601 in
9FG(,'' Thailand. Differences in the survey questions asked and data captured
9FG(''' may account for some of the variation.
9FG,'' The median among measured countries in Eastern Europe is $141 a
year (Ukraine), and in Latin America, $521 a year (Paraguay). Average
transportation spending per BOP household in Eastern Europe is gener-
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
ally less than in Africa and Asia, probably reflecting that region’s heavily
urban character and its well-developed public transit systems. Russia
also reflects the Eastern European median, recording an average of $141
in transportation spending per BOP household.
N`k_èk_\9FG#kiXejgfikXk`fejg\e[è^èZi\Xj\jjk\\gcpÇ
Xe[f]k\e[`jgifgfik`feXk\cpÇXjèZfd\i`j\j%
-+
L^Xe[X
Gif]`c\f]kfkXckiXejgfikXk`fejg\e[è^
9FG*''' 0+0
9FG),'' -/(
9FG)''' -+(
9FG(,'' *,*
9FG(''' (.*
9FG,'' ,+
8m\iX^\
In contrast, in Latin America BOP transportation spending is dis- _flj\_fc[jg\e[è^
fekiXejgfikXk`fe
tinctly higher than in Africa and Asia: in every measured country but ).,
Peru BOP households spend more than $270 a year on average for trans-
GXiX^lXp
portation. The range extends from $181 a year in Peru to $331 in Jamaica,
$613 in Brazil, and $809 in Mexico. Gif]`c\f]kfkXckiXejgfikXk`fejg\e[è^
Within the BOP, transportation spending increases steeply—and
often disproportionately—as income rises. While the income ratio
between the BOP3000 and BOP500 groups is 6:1, the transportation ?FLJ<?FC;JG<E;@E>9P@E:FD<J<>D<EK
spending ratio is at least 10:1 in 29 of the 36 measured countries. The 9FG*''' (#',(
ratio varies across the largest BOP markets by region: in Nigeria it is 9FG),'' -*0
32:1; in India, 17:1; in Brazil, 13:1; and in Russia, 5:1. The pattern suggests 9FG)''' .-'
substantial latent demand for transportation within the BOP. Clearly, 9FG(,'' *)*
those in the BOP view spending for transportation—buying that first 9FG(''' (0'
9FG,'' .(
motorbike—much as they do spending for ICT: a priority for increas-
8m\iX^\
ing their productivity and their economic options. Data from Nigeria _flj\_fc[jg\e[è^
give additional insight into the spending of different market segments fekiXejgfikXk`fe
,)(
(case study 5.3).
Transportation spending in the mid-market segment is higher than in
B @ / < A > = @ B/B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

the BOP but not dramatically so. Ratios of average mid-market to aver-
age BOP per household spending for some major countries range from
less than 2:1 in Russia and 3:1 in Mexico to 5:1 in India, 8:1 in Pakistan and
South Africa, and 12:1 in Nigeria. Transportation, as a share of total per @e[`X
household spending, varies widely between BOP income segments, and J?8I<F=?FLJ<?FC;JG<E;@E>#KI8EJGFIK8K@FE
between countries, as shown by the examples of India and Brazil. 9FG*''' +

9FG),'' *
N_\i\`jk_\dXib\k6 9FG)''' )
National transportation markets are predominantly urban in every re- 9FG(,'' )
gion but Asia. In Africa more than 50% of all transportation spending 9FG(''' (
9FG,'' (
is urban in every country but Uganda and Burkina Faso; in eight coun-
9iXq`c
J?8I<F=?FLJ<?FC;JG<E;@E>#KI8EJGFIK8K@FE
9FG*''' (*
9FG),'' ()
9FG)''' ()
9FG(,'' ('
9FG(''' /
9FG,'' , -,
:8J<JKL;P,%*E@><I@81
K?<9@>><JK9FGKI8EJGFIK8K@FED8IB<K
@E8=I@:8
E`^\i`X_Xjk_\cXi^\jk9FGj_Xi\èk_\kfkXckiXejgfikXk`fedXib\k#Xk0/#Xe[k_\
cXi^\jk9FGkiXejgfikXk`fedXib\kè8]i`ZX#Xk+%)Y`cc`fe%@e[\\[#`kj9FGkiXejgfi$
kXk`fedXib\k`je\Xicpkn`Z\XjcXi^\XjJflk_8]i`ZXËj#k_\e\okcXi^\jki\Zfi[\[fe\
èk_\i\^`fe%
E`^\i`XËj9FGkiXejgfikXk`fedXib\kZ\ek\ijfek_\jg\e[è^f]k_\9FG('''Xe[
9FG(,''èZfd\j\^d\ekj%Kf^\k_\i#k_\j\j\^d\ekjXZZflek]fi*0f]E`^\i`XËj
gfglcXk`feYlk-)f]`kj9FGjg\e[è^#Xe[-(f]`kjkfkXcjg\e[è^#fekiXejgfi$
kXk`fe%@eZfekiXjk#k_\cfn\jk9FGèZfd\j\^d\ek#9FG,''#_Xj,0f]E`^\i`XËj
gfglcXk`fep\kXZZflekj]fifecp(.f]k_\eXk`feXckiXejgfikXk`fedXib\k#jg\e[è^
fecp,,g\i_flj\_fc[Xp\XifeXm\iX^\%
@eE`^\i`X#XjèdfjkZfleki`\j#_flj\_fc[jg\e[è^fekiXejgfikXk`fei`j\jj`^$
e`]`ZXekcpn`k_èZfd\%Jg\e[èî\XZ_\j-/)èk_\9FG),''j\^d\ekXe[aldgj
dXib\[cpkf(.+-èk_\9FG*'''j\^d\ek%K_`jdXpi\]c\ZkgliZ_Xj\Xe[fg\iXk$
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
è^Zfjkjf]X]ìjkdfkfiY`b\fifk_\im\_`Zc\%@eXep\m\ek#k_\gXkk\ief]èZi\Xj\[
jg\e[è^c`b\cpi\]c\Zkjg\ek$lg[\dXe[]fikiXejgfikXk`feXe[k_\`dgfikXeZ\f]
Y\kk\ijfclk`fej%
KFK8CKI8EJGFIK8K@FEJG<E;@E>9P@E:FD<J<>D<EK
KfkXc G\i_flj\_fc[
jg\e[è^ jg\e[è^
(#.+-
-/)
-*)
**/
(-/
,,
8m\iX^\_flj\_fc[jg\e[è^
fekiXejgfikXk`fe(,.
--
:?8GK<IJ@O

K_\
?fljè^
DXib\k
Housing is one of the larger BOP markets—larger than trans-
portation, smaller than energy. The market encompasses major
spending items—rent, mortgage payments (or imputed rents),
and repairs and other services. But the BOP housing market is
perhaps uniquely handicapped by informality. Both lack of legal
title to housing in squatter settlements—Hernando De Soto’s
“dead capital”—and lack of access to mortgage financing for the
BOP limit its potential size.
Despite these barriers, both private sector approaches and policy
reforms—sometimes catalyzed by NGOs—are showing how to tap this
market in ways that provide significant benefits for BOP households. In
Asia especially, where mortgage markets are undeveloped
and land prices high relative to income, the market poten-
9FGjg\e[è^fe_fljè^
tial—and the need—is huge (Bestani and Klein 2006). **(%/Y`cc`fe
The measured BOP market for housing in Africa (12 coun-
tries), Asia (9), Eastern Europe (6), and Latin America
and the Caribbean (9) is $187.5 billion. This represents
recorded annual household spending on housing in the 36
low- and middle-income countries for which standardized
data exist, covering 2.1 billion of the world’s BOP popula-
6 = C A 7 < 5 j B 6 3 < 3 F B " 0 7 : : 7 = <

tion. The total BOP housing market in these four regions,
including 3.96 billion people in all surveyed countries, is
estimated to be $331.8 billion (see box 1.5 in chapter 1 for
the estimation method). Because imputed rent is a major
part of household spending on housing and cannot be
determined precisely, these numbers should be regarded
as setting a lower bound for such spending.
Asia has the largest measured regional BOP market for
housing, $86.6 billion, reflecting a significant BOP popula-
Y`cc`fejGGG
8]i`ZX +)%0
8j`X (.(%+
<Xjk\ie<lifg\ -'%/
CXkè8d\i`ZX ,-%.
<XZ_jhlXi\i\gi\j\ekj -0
Xggifo`dXk\cp(Y`cc`fe
tion of 1.49 billion. The total BOP housing market in Asia (including the
Middle East) is estimated to be $171.4 billion, representing the spending
of 2.9 billion people. Latin America has the next largest measured mar-
ket, $47.4 billion (276 million people), and an estimated total market of
$56.7 billion (360 million people).
InXe[X In Eastern Europe the measured BOP housing market is $34.2 billion
KFK8C?FLJ@E>JG<E;@E>9P@E:FD<J<>D<EK
(148 million people), and the estimated total market $60.8 billion (254
9FG*''' million people). In Africa the measured BOP market is $19.3 billion (258
9FG),'' million people), and the estimated total BOP market is $42.9 billion (486
9FG)''' million people).
9FG(,''
The average BOP share of measured national housing markets varies
9FG('''
across regions. In Asia and Africa that share is 63%. In other regions it
9FG,''
is much smaller: 39% in Latin America, 35% in Eastern Europe. Latin
K_X`cXe[ America has the greatest disparity between the BOP share of the popula-
KFK8C?FLJ@E>JG<E;@E>9P@E:FD<J<>D<EK tion (71%) and the average BOP share of housing spending (39%).
9FG*''' The BOP share of housing spending also varies across countries.
9FG),'' These differences in part reflect the prevalence of a landed middle class
9FG)''' in some developing countries, such as South Africa and throughout Latin
9FG(,'' America. Between mid-market landowners and disenfranchised BOP
9FG(''' communities, the BOP share of a country’s housing market is on average
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
9FG,'' half that of its weight in population. Nonetheless, in countries such as

Pakistan and Sierra Leone, the BOP accounts for more than 95% of the
measured housing market.
In Asia one extreme is represented by Sri Lanka, Pakistan, and
Bangladesh, where the BOP accounts for more than 90% of the spend-
ing on housing—the other by Thailand and India, where despite the
substantial BOP population, the recorded BOP share is only 47% and
48%, respectively. In Africa the extremes are Nigeria (99% BOP) and
South Africa (31%). In Eastern Europe the extremes are represented by
Uzbekistan (92%) and FYR Macedonia (13%).
Many African BOP markets for housing are relatively bottom heavy,
with spending concentrated in the bottom three of the six BOP income
segments. The remainder are flat, with spending distributed relatively
evenly across all BOP income segments. In Asia too, most BOP housing
markets are either bottom heavy or flat.
.'
9FGjg\e[è^fe_fljèî\]c\ZkjZfej`jk\ekcpjkife^
[\dXe[1g\fgc\Xi\n`ccè^kfjg\e[X]XìcpZfej`jk\ekj_Xi\
f]k_\ìèZfd\fek_\ì_fd\%
In Eastern Europe, in contrast, almost all countries have a top-heavy LbiXè\

KFK8C?FLJ@E>JG<E;@E>9P@E:FD<J<>D<EK
BOP market, with the top three segments accounting for more than half
of BOP housing spending. The lone exception is Uzbekistan, where the 9FG*'''
bottom three BOP income segments account for 77% of spending. In 9FG),''
Latin America spending tends to flatten out at the BOP1500 segment. 9FG)'''
9FG(,''
In Brazil, for example, the top four segments each account for 19–23% of
9FG('''
BOP housing spending.
9FG,''
In Latin America and the Caribbean some large national housing mar-
kets are dominated by the wealthier mid-market segment; in Colombia 9iXq`c
the BOP accounts for only 27% of the total. In Peru, however, the BOP KFK8C?FLJ@E>JG<E;@E>9P@E:FD<J<>D<EK
segment accounts for nearly three-quarters of the total market (73%). 9FG*'''
Jamaica represents the extreme, with 88% of the national housing market 9FG),''
in the BOP. 9FG)'''
In contrast, the BOP dominates Asian markets, with only Thailand and 9FG(,''
India having slightly more than half of total housing spending in the mid 9FG('''
market. Africa too is predominantly a BOP market: in only one country, 9FG,''
South Africa, does spending in the mid-market segment exceed that in
6 = C A 7 < 5 j B 6 3 < 3 F B " 0 7 : : 7 = <

the BOP.
N_Xk[f_flj\_fc[jjg\e[6
BOP spending on housing reflects consistently strong demand: people are
willing to spend a fairly constant share of their income on their home.
India has the largest measured BOP housing market in Asia, $62.1
billion; BOP spending accounts for 48% of the national housing market 9libèX=Xjf
J?8I<F=?FLJ<?FC;JG<E;@E>FE?FLJ@E>
and averages $164 per household a year. In other regions the BOP market
leaders are Mexico ($45.6 billion, 44% of the total market), with average 9FG*''' 0
9FG),'' 0
annual spending of $1,280 per BOP household; Russia ($94.7 billion, 34%
9FG)''' 0
of the total market), with average spending of $1,268; and South Africa
9FG(,'' 0
($14.4 billion, 31% of the total market), with average spending of $652.
9FG(''' 0
These expenditures by BOP households may not be large. But in
9FG,'' ('
Mexico they are large enough to fuel two significant and growing corpo-
rate efforts to tap BOP housing markets (case study 6.1).
.(
@e[`X
Gif]`c\f]kfkXc_fljè^jg\e[è^
9FG*''' .+/
9FG),'' +0-
9FG)''' )-(
9FG(,'' 0'
9FG(''' )*
9FG,'' /
8m\iX^\
_flj\_fc[jg\e[è^
fe_fljè^ N_\i\`jk_\dXib\k6
(-+
In 24 of the 36 measured countries, BOP housing markets are predomi-
D\o`Zf nately urban. However, it is often difficult for national surveys to ac-
Gif]`c\f]kfkXc_fljè^jg\e[è^ curately measure housing expenditure in poor rural areas—often rents
must be imputed.
In Asian and African countries, housing markets are often predomi-
nantly rural. The Ugandan BOP housing market, for example, is 71%
?FLJ<?FC;JG<E;@E>9P@E:FD<J<>D<EK rural. Most Asian BOP housing markets also are predominantly rural.
9FG*''' (#.,* In Sri Lanka, for example, 77% of the BOP housing market is rural. Rural
9FG),'' (#,.'
housing markets can be substantial—$9 billion in Thailand, for example.
9FG)''' (#)0/
An exception to the pattern of rural dominance is Pakistan, where urban
9FG(,'' (#',-
squatter settlements account for much of the imputed BOP rent and the
9FG(''' .0'
9FG,'' ,-)
BOP housing market is only 36% rural.
8m\iX^\ In Eastern Europe, where countries were so heavily urbanized under
_flj\_fc[jg\e[è^ Soviet rule, much of the housing is in cities. In Russia just 19% of the BOP
fe_fljè^
(#)/' market is rural. Only two countries have BOP markets in which at least a
quarter of the spending takes place in rural areas—FYR Macedonia (31%)
and Belarus (25%).
In many Latin American countries reported spending on housing also
occurs mostly in urban areas. In Colombia, for example, urban spend-
ing is 92% of the total for BOP housing. In Guatemala, however, the BOP
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
L^Xe[X
KfkXc9FG_fljè^jg\e[è^ housing market is 52% rural and 48% urban.
LI98E ILI8C YpèZfd\j\^d\ek#
liYXeXe[iliXc Large urban BOP communities represent huge untapped market op-
)0 .(
portunities. Mexico’s urban BOP housing market is nearly $16 billion an-
nually (see case study 6.1). Brazil and Colombia each report urban BOP
housing spending of more than $8 billion a year.
Iljj`X
/( (0
LI98E ILI8C
@e[`X_Xjk_\cXi^\jkd\Xjli\[9FG_fljè^dXib\kè8j`X#
-)%(Y`cc`fe29FGjg\e[è^XZZflekj]fi+/f]k_\eXk`feXc
.) _fljè^dXib\kXe[Xm\iX^\j(-+g\i_flj\_fc[Xp\Xi%
:8J<JKL;P-%(D<O@:F1
?FLJ@E>@EEFM8K@FEJ8KNFIB
KnfZfdg\kè^ZfigfiXk\gifîXdjj\im\k_\9FG_fljè^
dXib\kèD\o`Zf1GXki`dfe`f?fpXe[D`:XjX%<XZ_`jk_\
è`k`Xk`m\f]XdXafiZ\d\ekdXel]XZkli\ièk_\Zflekip%
:\d\o#k_\k_ì[cXi^\jkZ\d\ekdXel]XZkli\ièk_\
@jk_\i\\m`[\eZ\f]X9FGg\eXckp6 nfic[#[\Z`[\[`ke\\[\[kfdfm\]ifdj\ccè^dXk\i`Xcjkf
Household surveys seek to capture all sources j\ccè^jfclk`fej%N`k_cfn]ò\[gi`Z\j#dXk\i`XcjfeZi\[`k#
of income, but they do not measure the “dead gi\Zfjk\[_fljè^[\j`êj#Xe[\m\ejlg\im`j\[ZfejkilZ$
capital” trapped in the informal economy. For k`fej\im`Z\j]fiD\o`ZXejnfibè^XYifX[#`kjGXki`dfe`f
many BOP households, their dwelling and the ?fpgifîXd#cXleZ_\[è(00/#dXb\j_fljè^X]]fi[XYc\
]figffig\fgc\èD\o`Zf%
land it sits on is their primary capital. When
K_\gifîXdgifm`[\jZfejlckXk`fejn`k_XiZ_`k\Zkjkf_\cg
they lack formal title to that asset, or when they
nflc[$Y\_fd\fne\ij[\j`êk_\ìgifa\Zk#jZ_\[lc\j[\c`m$
must contend with ineffective land markets or
\i`\jf]dXk\i`Xcjfm\in_Xk`jkpg`ZXccpX.'$n\\bYl`c[è^
barriers to transferring title, housing becomes
g\i`f[#Xe[b\\gjgi`Z\jjkXYc\k_ifl^_k_Xkg\i`f[%K_\Zfjk
dead capital. Under these circumstances BOP
`jXYflkLJ(+Xn\\bfm\ik_\Yl`c[è^g\i`f[%GXik`Z`gXekj
households face a significant BOP penalty—one
èk_\gifîXdÈ]fle[k_\pn\i\Yl`c[è^_fd\j]Xjk\i#Xe[
that artificially curbs their potential purchasing ^\e\iXccpZ_\Xg\i#k_Xek_\pZflc[fek_\ìfneÉJXe[fmXc
power and often their access to services. )'', %
The problem extends to the multitude of 9pcXk\)''-#XZZfi[è^kf:\d\o#k_\GXki`dfe`f?fp
enterprises in the informal economy. These gifîXd_X[j\im\[(,'#'''Zc`\ekjè+,Z`k`\jk_ifl^_flk
businesses, operating outside the formal legal D\o`Zf%Efnk_\ZfdgXep`j\ogXe[è^k_\jkiXk\^pkffk_\i
system, cannot easily leverage their assets into Zfleki`\j%
working capital. The dead capital trapped in =XZè^jkife^Zfdg\k`k`fe]ifd:\d\oèk_\YX^^\[Z\$
houses and businesses together is enormous: d\ekdXib\k#?fcZ`d8gXjZf_Xj]fZlj\[feèefmXk`feè
a recent study showed that informal proper- [`jki`Ylk`fe%9pj\kkè^lg`kjfneD`:XjX[`jki`Ylk`feZ\e$
ties and businesses in just 12 Latin American k\ij#`kZXeYpgXjjknfkfk_i\\[`jki`YlkfijXe[k_ljb\\g
countries are worth as much as US$1.2 trillion gi`Z\jdfi\X]]fi[XYc\%JèZ\(00-k_\ZfdgXep_Xj\jkXY$
(ILD 2006; IDB 2006). Worldwide, the figure c`j_\[dfi\k_Xe()'jkXe[Xi[D`:XjXcfZXk`fej#n_\i\i\$
j\cc\ij_Xm\X]lcciXe^\f]Yl`c[è^dXk\i`XcjXe[gif[lZkj
6 = C A 7 < 5 j B 6 3 < 3 F B " 0 7 : : 7 = <
is estimated to be at least US$9.3 trillion, and is
probably much larger (De Soto 2004). XmX`cXYc\cfZXccpXki\XjfeXYc\gi`Z\j%
Informal home ownership also poses a bar- 8gXiXcc\cjZ_\d\_XjkiXè\[dfi\k_Xe('#'''g\fgc\
rier to service delivery. Many governments èk_\jb`ccje\\[\[kfYl`c[k_\ìfne_fd\j%K_\D`:XjX
require proof of title before a household can gifa\Zki\Zfê`q\jk_Xkk_\i\Xce\\[f]k_\dXib\k`jefk
receive social benefits. And municipalities Z\d\ekYlkk_\befnc\[^\kfYl`c[XjX]\Xe[Zfd]fik$
often are unwilling to connect undocumented XYc\_fd\ÇXcfe^n`k_k_\[\c`m\ipf]X]]fi[XYc\dXk\i`Xcj
N9:J;)''+ %
homes to water, sewer, and electricity networks,
9fk_f]k_\j\\oXdgc\j`ccljkiXk\XjkiXk\^pf]]fZljè^
since they have no legal recourse to collect un-
fek_\9FG%
.*
:8J<JKL;P-%)<EK@KC<;1 paid fees from a home that—in the eyes of the
JFCLK@FEJ=FIJ<:LI<?FLJ@E> government—does not exist.
Economist Hernando De Soto (2003) has
?\ieXe[f;\JfkfËj@ejk`klk\]fiC`Y\ikpXe[;\dfZiXZp_Xj suggested that one way out of this informal-
[\j`ê\[cXe[i\]fidgifîXdjè<^pgk#<cJXcmX[fi#?X`k`# ity trap is to make extralegal ownership more
KXeqXe`X#Xe[#dfjkefkXYcp#G\il%K_\G\ilm`XegifîXd# formal—for example, by offering home owners
n_`Z_iXe]ifd(0/)k_ifl^_(00-#i\jlck\[è(%)d`cc`fe official title to their home. A different strategy,
]Xd`c`\jXe[e\Xicp+''#'''è]fidXcYljè\jj\ji\Z\`mè^ in Pakistan, has focused on providing low-
k`kc\kfk_\ì_fd\fiYljè\jj%@e[\g\e[\ek\mXclXk`fejj_fn cost mortgages that enable low-income fami-
k_Xkk_\i\]fidgifîXd^\e\iXk\[LJ('Y`cc`feèe\kY\e$ lies to buy new homes with secure titles (case
\]`kj]fi_fd\fne\ij%K_\mXcl\f]e\ncp]fidXc`q\[i\Xc study 6.2).
\jkXk\èZi\Xj\[YpLJ)%)Y`cc`fe#]fi\oXdgc\#Xe[k_Xkf]
Xci\X[p]fidXc`q\[i\Xc\jkXk\YpLJ*%)Y`cc`fe%K_\gifîXd
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XYc\iXk\j#^`mè^k_\]fid\ijhlXkk\ijj\Zli\k\eli\%@kf]]\ij
k_\e\n_fd\fne\ijXcfn$Zfjkdfik^X^\#n`k_)'XYflk
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.+
@e]fidXc_fd\fne\ij_`ggfj\jXYXii`\ikfj\im`Z\[\c`m\ip%DXep
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le[fZld\ek\[_fd\jkfnXk\i#j\n\i#Xe[\c\Zki`Z`kpe\knfibj#
jèZ\k_\p_Xm\efc\^Xci\Zflij\kfZfcc\ZklegX`[]\\j]ifdX
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<e[efk\j
expenditures, because surveys may not have collected information on all types of housing-related spending.
Moreover, many surveys do not account for the expenditure value of an owner-occupied dwelling; these surveys
are standardized using a rent imputation to estimate the amount of money owners would spend if they were
renting the house they own.
2. Many surveys in Latin American countries suffer from measurement and imputation problems in rural areas,
which may lead to underrecording of the rural housing market.
3. Institute for Liberty and Democracy, “Mapping Dead Capital..” Inter-American Development Bank, http://www.
iadb.org/bop/mapping_capital.cfm (accessed January 12, 2007).
4. Cemex, “Construye tu futuro hoy,” http://www.cemexmexico.com/se/se_ph_pf.html (accessed March 1, 2007),
and “Patrimonio Hoy Developing and Launching a Market Transforming Innovation to Low-Income, Developing
World Markets,” http://www.vision.com/clients/client_stories/cemex_pat.html (accessed March 1, 2007).
5. Institute for Liberty and Democracy, “Documented Impact of ILD’s Reforms,” http://www.ild.org.pe/eng/facts.
htm and http://www.ild.org.pe/pdf/annex/Annex_01.pdf (accessed January 30, 2007). .,
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
.-

:?8GK<IJ<M<E
K_\
DXib\k
<e\i^p
Lack of clean, affordable energy is part of the poverty trap. Pollution
from indoor use of harmful fuels for cooking and lighting leads to sig-
nificant health problems. Gathering biomass fuels takes time that
could be better spent—in school or at work. And the higher cost of
inefficient energy-using devices and the lack of access to modern
energy sources such as electricity become part of the BOP penalty—the
added cost of being poor.
Together, private sector solutions and public institutional reforms are
working to close the energy gap. Innovative approaches and new business
investments are bringing energy services to BOP markets. While earlier
efforts to extend grids beyond major urban centers often
met with difficulties and even failure, rural electrification 9FGjg\e[è^fe\e\i^p
initiatives in Latin America suggest that creative solutions +**%+Y`cc`fe
can be found. Where publicly regulated grids cannot reach,
off-grid solutions are becoming more widespread—using
hydropower, solar photovoltaics, and hybrid solutions.
New technologies, such as light-emitting diodes (LEDs),
and modern improvements of old ones, such as biomass-
burning cookstoves, are increasingly available at afford-
able prices to both urban and remote rural populations.
3 < 3 @ 5 G j B 6 3 < 3 F B " 0 7 : : 7 = <
The measured BOP household market for energy is $228
billion, representing the annual spending of 2.1 billion
people in 34 countries. The total BOP household energy
market in Africa, Asia, Eastern Europe, and Latin America
and the Caribbean is estimated to be $433 billion, repre-
senting the spending of 3.96 billion people (see box 1.5 in
chapter 1 for the estimation method).
Asia has the largest BOP energy market, with measured
annual spending of $177 billion by 1.5 billion people. The
estimated total BOP energy market in the region (includ-
ing the Middle East) is $351 billion (2.9 billion people).
Y`cc`fejGGG
Latin America’s measured BOP energy market is $25 bil-
8]i`ZX )-%- ..
8j`X *,'%0
<Xjk\ie<lifg\ ),%+
CXkè8d\i`ZX *'%,
Xggifo`dXk\cp(9`cc`fe
9FG_flj\_fc[j[\mfk\XeXm\iX^\f].f]k_\ì
\og\e[`kli\jkf\e\i^p%@edfjkd\Xjli\[Zfleki`\j#k_\
j_Xi\f]_flj\_fc[jg\e[è^[\mfk\[kf\e\i^p[f\jefk
Z_Xe^\j`ê`]`ZXekcpXjèZfd\ji`j\%
lion (269.5 million people), and its estimated total market $31 billion
:k\[Ë@mfì\ (360 million people). While Africa has the smallest measured BOP en-
KFK8C<EPJG<E;@E>9P@E:FD<J<>D<EK ergy market, at $12 billion (253.3 million people), its estimated total BOP
9FG*''' energy market is $27 billion (486 million people). Eastern Europe, with
9FG),'' a Soviet-era legacy of cheap and reasonably universal electricity, shows
9FG)''' BOP energy spending of $14 billion (138.9 million people) and an esti-
9FG(,'' mated total BOP market of $25 billion (254 million people).
9FG(''' In Africa, Eastern Europe, and Latin America energy ranks third in
9FG,''
BOP household expenditures, trailing food and housing. In Asia energy
@e[fe\j`X ranks second, surpassing housing, because of the high levels of energy
KFK8C<EPJG<E;@E>9P@E:FD<J<>D<EK spending reported in India.
9FG*''' In national energy markets the BOP represents a significant share
9FG),'' in virtually all 34 countries for which standardized survey data exist.
9FG)''' It accounts for more than 90% of recorded spending in such populous
9FG(,'' countries as Indonesia, Nigeria, and Pakistan—and more than 50% in
9FG(''' Brazil, India, Sri Lanka, Uganda, Peru, and Bolivia (case studies 7.1 and
9FG,'' 7.2). The BOP share falls short of 50% in only 7 of the 34 countries: FYR
Macedonia (20%), Paraguay (30%), Colombia (35%), South Africa (41%),
LbiXè\
KFK8C<EPJG<E;@E>9P@E:FD<J<>D<EK Russia (44%), Ukraine (47%), and Mexico (48%).
The smallest BOP market shares by region are recorded in South
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
9FG*'''
Africa, Thailand, FYR Macedonia, and Paraguay. The largest are in
9FG),''
9FG)'''
Nigeria, Tajikistan and Pakistan (a virtual tie in Asia), Uzbekistan, and
9FG(,'' Jamaica.
9FG('''
9FG,'' ?fn`jk_\dXib\kj\^d\ek\[6
Developing-country energy markets are predominantly in the BOP.
:fcfdY`X Moreover, nearly a quarter of all recorded energy spending occurs in
KFK8C<EPJG<E;@E>9P@E:FD<J<>D<EK
the bottom two BOP income segments—BOP500 and BOP1000, where
9FG*''' per capita income is $1.50 and $3 a day.
9FG),''
Market concentration in these two income groups is most pronounced
9FG)'''
in Asia and Africa, where bottom-heavy BOP markets predominate. In
9FG(,''
Indonesia, for example, where the BOP accounts for 95% of national en-
9FG('''
9FG,''
ergy spending, 50% of the spending occurs in the BOP500 and BOP1000
segments. In Burundi, where the BOP carries similar weight, at 89% of
the national energy market, the BOP500 and BOP1000 segments ac-
count for 62% of this market.
./
@e[`X
J?8I<F=?FLJ<?FC;JG<E;@E>FE<EP
9FG*''' ('%/
9FG),'' ((%(
9FG)''' ((%,
9FG(,'' ((%/
9FG(''' ()%,
9FG,'' (+%)
K_X`cXe[
J?8I<F=?FLJ<?FC;JG<E;@E>FE<EP
9FG*''' +%'
South Africa has a different market segmentation than other measured
9FG),'' +%)
countries in Africa. While the BOP makes up 74% of the population, it ac-
9FG)''' +%*
counts for only 41% of total energy spending. Distribution of the BOP en-
9FG(,'' +%,
ergy market across income groups is more balanced, split evenly between +%,
9FG('''
the lower three BOP income segments and the upper three. The more 9FG,'' *%0
dominant mid-market population segment outspends the BOP popula-
tion by 32%.
Top-heavy BOP energy markets and larger mid-market spending are
found in much of Eastern Europe and Latin America. In Ukraine the top
three BOP income groups account for 90% of BOP spending, while the
mid-market segment, 40% of the national population, slightly outweighs Iljj`X
the BOP market. In Colombia the top three BOP income groups represent Gif]`c\f]kfkXc\e\i^pjg\e[è^
73% of the BOP energy market, while the mid-market segment, 42% of
the national population, accounts for an energy market nearly twice the
size of the BOP market.
9FG*''' *+'
N_Xk[f_flj\_fc[jjg\e[6
9FG),'' )..
Across measured countries BOP households devote an average of 9% of
9FG)''' )*-
their expenditures to energy. Asia shows the largest share, at 10%, with 9FG(,'' )')
all other regions clustering around the average. In most measured coun- 9FG(''' (-)
tries, the share of household spending devoted to energy does not change 9FG,'' ()(
significantly as incomes rise. 8m\iX^\
Households in the BOP500 income group spend an average of $148 a _flj\_fc[jg\e[è^
3 < 3 @ 5 G j B 6 3 < 3 F B " 0 7 : : 7 = <

fe\e\i^p
year on energy, equivalent to around $0.40 a day. In the BOP1000 group ),)
the average rises to $264 a year ($0.72 a day), and in the BOP1500 seg- D\o`Zf
ment to $379 a year ($1 a day). Gif]`c\f]kfkXc\e\i^pjg\e[è^
These amounts may be small, but the large populations in the bottom
three income segments create big markets. In the 34 countries for which
standardized data on energy spending are available, energy expenditures
total $9.5 billion a year in the BOP500 segment, $60.5 billion in BOP1000, 9FG*''' ,.(
and $64.0 billion in BOP1500. 9FG),'' ,(,
Differences in access to electricity between rural and urban areas cre- 9FG)''' +/-
ate different patterns of energy spending. In Brazil, for example, the 6.5 9FG(,'' +(,
million rural BOP households spend $661.3 million a year on energy, or 9FG(''' )-0
$102 per household—while the 25.3 million urban BOP households spend 9FG,'' (('
$10.1 billion, or $397 per household. On average, an urban BOP household 8m\iX^\
_flj\_fc[jg\e[è^
in Brazil spends 289% more on energy than its rural counterpart. fe\e\i^p
++0 .0
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k_\9FG(,'']fi(-%9libèX=Xjf`jk_\fecpfk_\id\Xjli\[ZflekipèXepi\^`fe
n`k_dfi\k_XeXk_ì[f]`kjeXk`feXc\e\i^pdXib\kèk_\9FG,''j\^d\ek%
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*.iliXc% IliXc9FG,''_flj\_fc[ji\gfikXm\iX^\\e\i^pjg\e[è^f](*'Xp\Xi#
_Xc]k_Xkf]k_\ìliYXeZflek\igXikj#Xk)-.%9lkiliXc9FG,''_flj\_fc[jflkeldY\i
liYXefe\je\Xicpknfkffe\#\hlXc`qè^k_\dXib\kj`q\j%
Fecp *, f] 9FG,'' _flj\$
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E`^\i`X
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9FG*'''
j\Zfe[_`^_\jkiXk\èk_`jèZfd\ 9FG),''
îflg Xdfe^ jlim\p\[ 8]i`ZXe 9FG)''' 9FG(,''
Zfleki`\j%K_\j_Xi\f]_flj\_fc[j 9FG('''
9FG,'' 8m\iX^\
n`k_XZZ\jjkf\c\Zki`Z`kpZc`dYjkf LI98E ILI8C (0)
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
,.è9FG('''#.+è9FG(,''# -* *-
Xe[/)è9FG)'''%JkXib[`]]\i$
\eZ\jj_fnlgY\kn\\eiliXcXe[liYXeXi\Xj1fecp(+f]iliXc9FG,''_flj\_fc[j
i\gfik_Xmè^XZZ\jjkf\c\Zki`Z`kp#ZfdgXi\[n`k_.)f]liYXefe\j%
=fiiliXc9FG,''_flj\_fc[jn`k_flk\c\Zki`Z`kp#b\ifj\e\`jk_\[fdèXek]l\c
jfliZ\]fic`^_kè^1.0i\gfik`kXjk_\ìgi`dXipjfliZ\#ZfdgXi\[n`k_fecp),f]
liYXe9FG,''_flj\_fc[j%=fiZffbè^#]ì\nff[`jk_\gi`dXip]l\cjfliZ\]fiYfk_
liYXeXe[iliXc9FG,''_flj\_fc[j#i\gfik\[Yp/'feXm\iX^\%8dfe^9FG)'''
_flj\_fc[j]ì\nff[lj\]Xccjkf*(#i\gcXZ\[Ypb\if$
8ZZ\jjkf\c\Zki`Z`kp j\e\]fi,0f]_flj\_fc[j%
(''
LiYXe
IliXc
'
9FG 9FG 9FG
,'' J\^d\ek *'''
/'
GXkk\iejf]]l\clj\mXipXZifjjèZfd\îflgjXjn\cc
XjY\kn\\eiliXcXe[liYXeXi\Xj%@e8]i`ZX#8j`X#Xe[
CXkè8d\i`ZX]ì\nff[`jk_\dXè]l\cjfliZ\lj\[
]fiZffbè^èk_\cfn\i9FGèZfd\îflgj%
Patterns of fuel use vary across income groups as well as between K_X`cXe[
G<I:<EKF=?FLJ<?FC;J9PGI@D8IP:FFB@E>=L<C
rural and urban areas. In Africa, Asia, and Latin America firewood is the
(''
main fuel source used for cooking in the lower BOP income groups. In
/'
Thailand firewood is reported as the primary source by 79% of house- GIFG8E<
-'
holds in BOP500, 45% in BOP1000, and 27% in BOP1500.
Far more rural than urban BOP households—in all income seg- +'
ments—use firewood as their primary fuel source for cooking. In Gabon )' =@I<NFF;
48% of urban households in BOP500 report firewood as their primary '

9FG 9FG 9FG 9FG 9FG 9FG
fuel source, while 86% of their rural counterparts do. Across all BOP in- ,'' (''' (,'' )''' ),'' *'''
come segments, however, only 20% of urban households use primarily
firewood, compared with 76% of rural households—a share nearly four >XYfe
G<I:<EKF=?FLJ<?FC;JLJ@E>=@I<NFF;
times as large. 8JK?<GI@D8IP:FFB@E>=L<C
In higher income segments propane or liquefied petroleum gas (LPG) (''
becomes the most common substitute for firewood. In Bolivia this is the /' ILI8C
primary fuel source for 87% of households in BOP2500, 87% in BOP3000, -'
and 93% in the mid-market segment (compared with 13% in BOP500). +'
LI98E
Use in Nepal is reported by 60%, 75%, and 94% in the same groups (<1% )'
in BOP500). In African countries fuel sources used in the mid-market '
segment are more varied, with the most prevalent being propane or LPG 9FG 9FG 9FG 9FG 9FG 9FG
,'' (''' (,'' )''' ),'' *'''
in Cameroon, Côte d’Ivoire, Malawi, and Rwanda; kerosene in Burundi,
Djibouti, and Nigeria; and electricity in Malawi and Uganda. DXcXn`
For lighting, kerosene is the predominant fuel source in lower BOP G<I:<EKF=?FLJ<?FC;J9PGI@D8IPC@>?K@E>
income groups in Africa and Asia. In Malawi 89% of households in the (''
3 < 3 @ 5 G j B 6 3 < 3 F B " 0 7 : : 7 = <

BOP500 segment report it as their primary lighting fuel, compared with /' B<IFJ<E<
only 7% in the mid-market segment. In Bhutan the share for BOP500 -'
households is 64%, while there is no recorded use in the mid-market seg- +'
ment. )' <C<:KI@:@KP
Electricity replaces kerosene in the mid-market segment, where it is '
predominant across regions. In Burkina Faso electricity is the primary 9FG 9FG 9FG 9FG 9FG 9FG
,'' (''' (,'' )''' ),'' *'''
/(
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fe\e\i^pÇe\Xicp+,f]XcceXk`feXcg\i_flj\_fc[\e\i^pjg\e[è^%P\kè\XZ_f]
k_\j\k_i\\9FGèZfd\j\^d\ekj
_flj\_fc[\e\i^pjg\e[è^Xm\i$ @e[`X
9FGkfkXc G\i_flj\_fc[
X^\jc\jjk_Xe)X[Xp% \e\i^pdXib\k jg\e[è^fe\e\i^p
B\ifj\e\`jk_\dfjkZfddfe 9FG*'''
c`^_kè^]l\c]fik_\cfn\jkknf 9FG),''9FG)'''
9FGèZfd\îflgjÇi\gfik\[ 9FG(,'' 9FG('''
Xjk_\gi`dXipjfliZ\Yp-,f] 9FG,'' 8m\iX^\
LI98E ILI8C ..,
9FG,'' _flj\_fc[j Xe[ ,' ). -*
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
f]9FG('''fe\j%B\ifj\e\lj\
iXk\j]Xccf]][iXdXk`ZXccpè_`^_\i
èZfd\j\^d\ekj#[ifggè^kf.è9FG),''Xe[9FG*'''Xe[fecp(èk_\d`[
dXib\k%<c\Zki`Z`kpY\Zfd\jk_\dXèc`^_kè^jfliZ\è9FG),''Xe[_`^_\ièZfd\
c\m\cj%
=ì\nff[`jk_\gi`dXip]l\cjfliZ\]fiZffbè^èk_\cfn\i9FGèZfd\îflgj
è@e[`X#i\gfik\[Yp.,f]jlim\p\[_flj\_fc[jè9FG,''#./è9FG('''#
Xe[-'è9FG(,''%Lj\]Xccjkffecp)*f]_flj\_fc[jè9FG),''Xe[(,
è9FG*'''%GifgXe\fiCG>Y\Zfd\jk_\dXè]l\c
Gi`dXipc`^_kè^ jfliZ\]fiZffbè^è_`^_\ièZfd\îflgj#i\gfik\[
(''
Yp-,f]_flj\_fc[jè9FG),''#.0è9FG*'''#
<c\Zki`Z`kp
Xe[/.èk_\d`[dXib\k%
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'
9FG 9FG 9FG
,'' J\^d\ek *'''
/)
8]i`ZXj9FG\e\i^pdXib\kjdXèkXèXifl^_cp\m\ejgc`k :XdYf[`X
(/ /)
Y\kn\\eliYXeXe[iliXcXi\Xj%8j`XjdXib\kj#èZfekiXjk# LI98E ILI8C
Xi\[\Z`[\[cpjb\n\[kfnXi[iliXcXi\Xj%
DXcXn`
+, ,,
LI98E ILI8C
lighting source for 8% of households in the BOP; in the mid-market seg- KfkXc9FG\e\i^pjg\e[è^
YpèZfd\j\^d\ek#
ment this share rises to 78%. liYXeXe[iliXc
N_\i\`jk_\dXib\k6
Measured BOP spending on energy splits ap-
proximately 40% urban, 60% rural. But rural :8J<JKL;P.%*GFN<I@E>LG1
BOP households spend on average 44% less ?8IE<JJ@E>JL9J@;@<J=FI
on energy than do urban BOP households. The
ILI8C<C<:KI@=@:8K@FE@E:?@C<
larger populations in rural areas balance out the
@ek_\d`[$(00'j:_`c\#Xe\Xicpi\]fid\ièk_\\c\Zki`Z`kpj\Z$
markets—and represent significant market op-
kfi#j\kflkkfXZ_`\m\iliXc\c\Zki`]`ZXk`fek_ifl^_XgifîXd
portunities for energy to power lighting, cook-
èmfcmè^k_\gi`mXk\j\Zkfi%K_\^fXc1gifm`[\\c\Zki`Z`kpkf
ing, and productive enterprises (case studies
,'f]k_\iliXcgfglcXk`feÇfe\d`cc`feg\fgc\%K_\gif$
7.3–7.6).
îXdf]]\i\[Xfe\$k`d\[ì\ZkjlYj`[pkfgi`mXk\\c\Zki`Z`kp
Africa’s BOP energy markets, at 55% urban, [`jki`Ylk`feZfdgXe`\jkfZfm\igXikf]k_\ZXg`kXcèm\jkd\ek2
maintain a roughly even split between urban fg\iXkè^Zfjkjnflc[_Xm\kfY\Zfm\i\[k_ifl^_kXi`]]j%=fli
and rural areas. Yet rural BOP households gièZ`gc\j^l`[\[k_\gifîXd1[\Z\ekiXc`q\[[\Z`j`fedXbè^#
spend only a third as much on energy as their afèk]èXeZè^#Zfdg\k`k`fe#Xe[Xggifgi`Xk\k\Z_efcf^`\j%
urban counterparts on average, the largest such K_\gifîXd_XjY\\eXjlZZ\jjèj\m\iXcnXpj%@k\o$
discrepancy among regions. In Malawi, for ex- Z\\[\[`kjkXi^\k#i\XZ_è^.,f]k_\lej\im\[gfglcX$
ample, while the BOP energy market is 55% k`feYp(000%Gifa\Zkjn\i\]èXeZ`XccpjljkXèXYc\\efl^_
rural, rural BOP households spend only 15% as kfXccfnk_\^fm\ied\ekkfi\[lZ\`kjèm\jkd\ekjkXb\#Xj
much on energy as their urban counterparts. gcXee\[%I\^`feXc^fm\ied\ekjg\i]fid\[n\cc#Xj[`[Zfd$
Asia’s BOP energy markets, in contrast, are dle`kpîflgjXe[k_\gi`mXk\\e\i^pZfdgXe`\j%N_`c\dfjk
decidedly skewed toward rural areas (Indonesia gfn\i_XjZfd\k_ifl^_î`[\ok\ej`fe#`jfcXk\[Xi\Xj_Xm\ 3 < 3 @ 5 G j B 6 3 < 3 F B " 0 7 : : 7 = <
is the lone exception). In Cambodia the BOP en- \og\i`d\ek\[jlZZ\jj]lccpn`k_nè[#Y`fdXjj#_p[ifgfn\i#
ergy market is 82% rural. Xe[g_fkfmfckX`Zjpjk\dj%=èXccp#n_`c\k_\Xm\iX^\jkXk\
Eastern Europe’s BOP energy markets are jlYj`[pg\i[n\ccè^èZi\Xj\[Yp,']ifd(00,kf(000
predominantly urban. This region, where ac- ]ifd(#'/'kf(#,(' #k_\Zfjkkf^fm\ied\ek_XjY\\eXZ$
cess to electricity is nearly universal, has the Z\gkXYc\Ç\jg\Z`Xccpèc`^_kf]k_\jfZ`Xc^fXcXZ_`\m\[ÇXe[
smallest gap between rural and urban energy n`k_è\og\Zk\[Yl[^\kXipc`d`kj%
spending. In Ukraine, where the BOP energy <XicpXe[ZfekèlXcZfejlckXk`fe_\cg\[\ejli\jXk`j]XZk`fe
market is 67% urban, urban BOP households Xe[jlggfikXdfe^Zljkfd\ij%8e[iliXcZfddle`k`\j_Xm\
gifm\[kfY\^ff[Zljkfd\ij1Y`ccgXpd\ekiXk\jXi\_`^_#Xe[
spend only 17% more on energy than their rural
\c\Zki`Z`kplj\`jjk\X[`cpi`jè^Xj\Zfefd`ZXZk`m`kpîfnj
counterparts.
AX[i\j`Z)''' %
Latin America’s BOP energy markets also tilt
K_`jZXj\j_fnjk_\mXcl\f]k_\jkiXk\^pf]leZfem\e$
decidedly toward uban areas (with Guatemala
k`feXcgXike\iè^%
/*
:8J<JKL;P.%+K?@EBE>JD8CCKF
JFCM<9@>1
?8IE<JJ@E>JL9J@;@<J=FI
ILI8C<C<:KI@=@:8K@FE@E:?@C<
K_ifl^_k\Z_efcf^`ZXcèefmXk`fe#dXepcXi^\ZfdgXe`\jXi\
nfibè^kfjfcm\Y`^gifYc\djn`k_jdXcc[\m`Z\j%K_\\e\i^p
^`XekJ_\ccX`djkfZi\Xk\jljkXèXYc\dXib\kjpjk\djkfj\cc
)'d`cc`feX]]fi[XYc\jkfm\jè@e[`XYp)'('%8e[n`k_k_\
jlggfikf]`kjgi`mXk\j\ZkfiÆ]fZlj\[J_\cc=fle[Xk`fe#knf
@e[`XeE>Fj#k_\8ggifgi`Xk\IliXcK\Z_efcf^p@ejk`klk\Xe[ the lone exception). In Mexico urban areas ac-
;\m\cfgd\ek8ck\ieXk`m\j#Xi\[\m\cfgè^Xe[dXib\kè^cfn$ count for 76% of BOP spending on energy, with
gfcclkè^Y`fdXjj]l\cjXe[Zffbè^[\m`Z\j% urban BOP households spending roughly 50%
8efk_\if`c^`Xek#9G#`jifccè^flkXjkfm\k_XkZXelj\ more on energy than their rural counterparts.
\`k_\iY`fdXjjfic`hl\]`\[eXkliXc^Xj%N`k_E>FgXike\ij#
9G`jXcjf[\m\cfgè^èefmXk`m\[`jki`Ylk`fedf[\cj#d`Zif$ @jk_\i\\m`[\eZ\f]X9FGg\eXckp6
]èXeZè^]fik_\jkfm\j#Xe[jdXcc$jZXc\\eki\gi\e\lij_`g% Income is clearly related to access to energy and
;lkZ_dlckèXk`feXcG_`c`gj_Xj[\m\cfg\[Xe\]]`Z`\eknff[$ to the type of energy source used for different
Ylieè^jkfm\k_XkZlkj\d`jj`fejf]gfcclkXekjYp0'fm\i purposes. The BOP consistently has less access
kiX[`k`feXcnff[]ì\jG_`c`gjI\j\XiZ_)''- %>\idXe to electricity than the mid-market segment. And
è[ljki`Xcc\X[\ij9fjZ_Xe[J`\d\ej_Xm\k\Xd\[lgkf access increases as BOP incomes rise, a consis-
[\m\cfgGifkfj#XgcXekf`cjkfm\#efnfek_\dXib\kèk_\ tent pattern across countries and regions.
G_`c`ggè\j% Rural areas show a larger and more persis-
8cck_\j\\]]fikjdXiip_`^_$k\Z_XZX[\d`Zi\j\XiZ_Xe[ tent BOP penalty in access to electricity across
Z`m`cjfZ`\kp\e^X^\d\ekn`k_XdXib\k$[i`m\eYljè\jj income groups: in any income group access is
df[\c%K_\p`ccljkiXk\XjkiXk\^pf]]fZljè^fek_\9FG#Zfd$ invariably lower in rural than in urban areas. In
Yè\[èjfd\ZXj\jn`k_leZfem\ek`feXcgXike\iè^% Bangladesh 37% of urban households in BOP500
have access, compared with only 4% of their rural
counterparts. Among households in all BOP in-
come segments in Bangladesh, the share is 81%
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
Iljj`X in urban areas, 20% in rural.

KfkXc9FG\e\i^pjg\e[è^ Overall, 36% of BOP households lack access to electricity—while
YpèZfd\j\^d\ek# only 6% of mid-market households lack access. Reported access rates
liYXeXe[iliXc
are 51% in the BOP500 income segment, 63% in BOP1000, and 74% in
-- *+
LI98E ILI8C BOP1500.
But these averages conceal marked differences across regions. In
9fc`m`X Eastern Europe access to electricity is virtually universal. FYR Macedonia,
/, (, Russia, and Ukraine all show 99% access in the BOP and at least 95% in
BOP500. Latin America and Asia show access rates similar to one an-
other across the lowest BOP income segments, albeit lower than Eastern
LI98E ILI8C
Fm\iXcc#*-f]9FG_flj\_fc[jcXZbXZZ\jjkf\c\Zki`Z`kpÇ
n_`c\fecp-f]d`[$dXib\k_flj\_fc[jcXZbXZZ\jj%
/+ I\gfik\[XZZ\jjiXk\jXi\,(èk_\9FG,''èZfd\
j\^d\ek#-*è9FG('''#Xe[.+è9FG(,''%
9Xe^cX[\j_
G<I:<EKF=?FLJ<?FC;JN@K?8::<JJKF<C<:KI@:@KP
(''
/' LI98E
-'
+' ILI8C
)'
'
,'' (''' (,'' )''' ),'' *'''
9iXq`c
G<I:<EKF=?FLJ<?FC;JN@K?8::<JJKF<C<:KI@:@KP
(''
LI98E
/'
Europe and with higher variance across measured countries. High access -' ILI8C
rates occur in Brazil, where coverage in BOP500 is 85%, and in Indonesia, +'
with 82% in the same segment. )'
Africa, in contrast, has severely depressed rates of access to electric-
'
ity. Gabon has the largest share of BOP500 households reporting access, 9FG 9FG 9FG 9FG 9FG 9FG
at 54%. But only 16% of all BOP households in Sierra Leone have access ,'' (''' (,'' )''' ),'' *'''
to electricity, and less than 10% in Burkina Faso, Malawi, Rwanda, and L^Xe[X
Uganda. The situation is most extreme in Africa’s rural areas: the share G<I:<EKF=?FLJ<?FC;JN@K?8::<JJKF<C<:KI@:@KP
of BOP households with access to electricity in rural areas is only a fifth (''
that in urban areas. /' LI98E
Bringing electricity to low-income communities involves inherent dif- -'

ficulties. But new solutions are emerging for at least some of the problems +'
related to the BOP penalty (case study 7.3). )' ILI8C
'
,'' (''' (,'' )''' ),'' *'''
:8J<JKL;P.%,?<I<:FD<JK?<JLE1
JFC8I9<:FD@E>DFI<<==@:@<EK#
DFI<8==FI;89C<
JfcXig_fkfmfckX`Zjpjk\djXi\dXbè^_\X[nXp]fi^\e\iXc_flj\_fc[lj\èf]]$î`[j`klXk`fej%DXib\k$YXj\[
\ek\igi`j\jXi\i\gcXZè^\Xic`\i^fm\ied\ek$ilegifîXdj%JfcXigXe\cjXi\Y\Zfdè^èZi\Xjè^cp\]]`Z`\ek# 3 < 3 @ 5 G j B 6 3 < 3 F B " 0 7 : : 7 = <
n`k_k_\Zfjkg\ib`cfnXkk$_flif]\c\Zki`Z`kpgif[lZ\[Zfekèlè^kf[\Zcè\%8e[ÈZc\Xek\Z_Éjfclk`fejXi\
]è[è^]Xmfièk_\ZXg`kXcdXib\kj#jf\ek\igi`j\]le[è^`jdfi\i\X[`cpXmX`cXYc\%
K_\JfcXi<c\Zki`ZC`^_k:fdgXepJ\cZf #XjdXccZfdgXepè@e[`X#Xe[k_\JfcXi<c\Zki`ZC`^_k=le[J<C= #
XeE>F#Yfk_gifm`[\_flj\_fc[$j`q\g_fkfmfckX`Zjpjk\djXkXeX]]fi[XYc\Zfjk#n`k_]èXeZè^fgk`fej#èX
eldY\if]Zfleki`\j%8n\cc$]le[\[e\nZfdgXep#FiY<e\i^p#jkX]]\[YpjfcXigfn\im\k\iXej#`jYl`c[è^
Yfk_Zfdd\iZ`XcXe[i\j`[\ek`Xcle`kj]fik_\@e[`XedXib\k%<":f#Xg`fe\\iè^\e\i^p]le[#`jefnaljkfe\
f]dXepZXg`kXc]le[jèm\jkè^YifX[cpèjfcXig_fkfmfckX`Z#^\fk_\idXc#nè[#Y`fdXjj^\e\iXkfij#Xe[jdXcc
_p[ifgfn\ijpjk\dj%
@e9iXq`c#@;<88Jf]]\ijX]lcc$j\im`Z\jfcXig_fkfmfckX`Zjpjk\dn`k_flki\hlìè^Zljkfd\igliZ_Xj\ÇXYlj`$
e\jjdf[\cefklec`b\î`[lk`c`k`\j%K_`jgif]`kXYc\jfZ`Xc\ek\igi`j\_Xji\[lZ\[k_\eldY\if]iliXc9iXq`c`Xej
n`k_flk\c\Zki`Z`kp]ifd-'d`cc`feèk_\d`[$(00'jkf]\n\ik_Xe()d`cc`fekf[Xp%
8cck_\j\ZXj\j#Z\ek\iè^feZfek\ok$jg\Z`]`ZèefmXk`fe#`ccljkiXk\XjkiXk\^pf]]fZljè^fek_\9FG%
/,
:8J<JKL;P.%-GFIK89C<GFN<I1
C@>?KPFL:8E:8IIP8E;N<8I
?`^_$Yi`^_ke\jj#jfc`[$jkXk\c`^_kè^gif[lZ\jX[`^`kXcc`^_k
f]/'cld\ejg\inXkk#\efl^_kfi\X[#nfib#fikiXm\cYp%
B\ee\[pM`fc`Z_8iZ_`k\Zkli\_Xj\dY\[[\[_`^_$Yi`^_k$
e\jjc`^_k$\d`kkè^[`f[\jC<;j è]c\o`Yc\g_fkfmfckX`ZjfcXi
gXe\cj%K_\i\jlck`jXc`^_k$gif[lZè^k\ok`c\k_Xk`jc`^_k$
n\`^_k#]lccpgfikXYc\#Xe[f]]k_\î`[%
8dfe^ k_\ [\m`Z\j è gif[lZk`fe `j k_\ ÈGfikXYc\
Nfibj_fg#ÉX]fc[XYc\k\ok`c\nfibjgXZ\n\`^_è^(+fleZ\j
Xe[gifm`[è^)%,_flijf]c`^_kXk(-'cld\ej%I\Z_Xi^è^
kXb\j]fli_flij#k_ifl^_Xj_flc[\ijXj_n`k_g_fkfZ\ccjfiX
ZXefgpk_XkXcjfj_X[\jk_\lj\i%=fie`^_kk`d\lj\k_\[\m`Z\
ZXeY\Zfe]`^li\[kfgifm`[\XdY`\ekfikXjbc`^_kè^fikfc`^_k
k_\nXp]fikiXm\c%
K_\C`^_kLgk_\Nfic[=fle[Xk`fe#ègXike\ij_`gn`k_
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]fiiliXclj\iXe^è^]ifdX]cXj_c`^_k$j`q\[\m`Z\kfXefe$fi
f]]$î`[[\m`Z\]fiXdY`\ekfikXjbc`^_kè^%;\m`Z\jZXeY\
gfn\i\[èj\m\iXcnXpjÇjfcXi#_p[if#nè[#fi_ldXe\]]fik%
Fe\[\m`Z\jlZZ\jj]lcèE\gXc`jk_\g\[Xc^\e\iXkfiÇjX]\#
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
il^^\[#\Zfefd`ZXc#XYc\kfZ_Xi^\dlck`gc\YXkk\i`\jj`dlc$
kXe\fljcp#Xe[\XjpkfdXèkXè#i\gXì#Xe[kiXejgfik#\m\e
fm\i[`]]`Zlckk\iiXè%
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`kjjpjk\dj]fiè[`m`[lXcj#_flj\_fc[j#Xe[m`ccX^\èjk`klk`fej
jlZ_XjjZ_ffcjXe[Zcè`Zj%@kjjpjk\dj_Xm\Y\\eèjkXcc\[
èdfi\k_Xe(+#'''_fd\j#Y\e\]`kè^dfi\k_Xe(''#'''
g\fgc\#Xe[gcXej]ficXi^\$jZXc\ifccflkXi\le[\inXp%
K_fl^_Xefegif]`k#k_\]fle[Xk`feglkj\ek\igi`j\[\m\c$
fgd\ekXkk_\Zfi\f]`kjd`jj`fe%K_ifl^_ÈjfZ`Xcgi`Zè^É
XiiXe^\d\ekjn`k_Zfdgfe\ekjlggc`\ij#`k_\cgje\nYlj`$
e\jj\j^\k\jkXYc`j_\[ècfZXcdXib\kjXe[gifm`[\jd\ekfi$
è^Xe[kiXèè^kfjlggfikk_\ìjljkXèXYc\[\m\cfgd\ek%
9fk_ k_\j\ ZXj\j `ccljkiXk\ X jkiXk\^p f]]fZljè^ fe
k_\9FG%
/-
@e8]i`ZX#iliXc9FG_flj\_fc[jjg\e[fecpXk_ì[XjdlZ_fe
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<e[efk\j
3 < 3 @ 5 G j B 6 3 < 3 F B " 0 7 : : 7 = <
expenditures, because surveys may not have collected information on all types of energy-related spending.
2. For more on these entities, see http://www.shellfoundation.org, http://www.arti-india.org, and http://www.devalt.
org.
3. BSH (Bosch und Siemens Hausgeräte GmbH), “BSH Presents Ecological Plant Oil Stove for Developing
Countries,” http://www.plantoilcooker.org (accessed January 13, 2007).
4. Selco, “What We Provide,” http://www.selco-india.com/what-we-provide.html; Solar Electric Light Fund, “Solar
Technology,” http://www.self.org/shs_tech.asp (accessed January 13, 2007).
5. E+Co, “E+Co Enterprises,” http://www.eandco.net/enterprise_home.php (accessed January 13, 2007).
6. IDEAAS (Instituto para o Desenvolvimento de Energias Alternativas e da Auto Sustentabilidade), “Projects,”
http://www.ideaas.org.br/id_proj_luz_agora_eng.htm (accessed January 13, 2007).
7. Portable Light Project, “Portable Light,” http://www.tcaup.umich.edu/portablelight/portable.swf (accessed
January 13, 2007).
8. Economist, “Lighting Up the World,” September 21, 2006, http://www.economist.com/science/tq/displayStory.
cfm?story_id=7904248.
/.
:?8GK<I<@>?K
K_\
=ff[
DXib\k
Putting enough food on the table is a constant struggle for many
BOP households. Purchasing food takes more than half of BOP
household budgets in many countries, especially in Africa and
Asia. In Nigeria, food accounts for 52% of BOP household spend-
ing—in rural Pakistan, 55%. As incomes rise, the share of house-
hold spending on food declines. Food nevertheless represents
the largest share of BOP household spending and the largest BOP
market.
Improving distribution to expand access to food and providing better
food products, including more nutritional ones, are clearly significant
business opportunities—as well as investments that could benefit the
BOP. Opportunities also exist in agriculture, an essential part of the food
value chain and a major source of employment and income for the BOP.
?fncXi^\`jk_\dXib\k6 9FGjg\e[è^fe]ff[
The measured BOP food market in Africa (12 )#/0+Y`cc`fe
countries), Asia (9), Eastern Europe (6), and Latin
American and the Caribbean (9) is $1.53 trillion.
This represents annual household spending on
food by 2.16 billion people in the 36 low- and
middle-income countries for which standard-
ized data are available. The total BOP household
food market in these four regions, including all
surveyed countries, is estimated to be $2.89 tril- 4 = = 2 j B 6 3 < 3 F B " 0 7 : : 7 = <
lion, accounting for the spending of 3.96 billion
people (see box 1.5 in chapter 1 for the estimation
method).1
Asia has the largest measured regional BOP
food market, $1.1 trillion, reflecting a large BOP
population (1.49 billion). The total BOP food
market in Asia (including the Middle East) is es-
Y`cc`fejGGG
8]i`ZX )(,
8j`X )#)*- /0
<Xjk\ie<lifg\ )++
CXkè8d\i`ZX (00
Xggifo`dXk\cp,Y`cc`fe
@e(.Zfleki`\jè8]i`ZXXe[8j`X#k_\Yfkkfdk_i\\9FG
èZfd\j\^d\ekjXZZflek]fidfi\k_Xe,'f]d\Xjli\[
eXk`feXc]ff[jg\e[è^%
E`^\i`X timated to be $2.24 trillion, accounting for the spending of 2.9 billion
KFK8C=FF;JG<E;@E>9P@E:FD<J<>D<EK people. Latin America follows, with a measured BOP food market of $167
9FG*'''
billion (275.8 million people) and an estimated total BOP food market of
9FG),'' $199.4 billion (360 million people). Eastern Europe has recorded BOP
9FG)''' food spending of $137 billion (147.8 million people) and estimated total
9FG(,'' BOP spending of $244.0 billion (254 million people). Africa’s measured
9FG(''' BOP food market is $97.0 billion (253.3 million people), and its estimated
9FG,'' total market $215.1 billion (486 million people).
Asia also has the largest BOP share of the measured food market, at
@e[fe\j`X
KFK8C=FF;JG<E;@E>9P@E:FD<J<>D<EK
89%. Africa follows with 80%. Latin America has a markedly smaller BOP
share, at 51%—as does Eastern Europe, at 50%.
9FG*'''
In national food markets the BOP share is consistently high across
9FG),''
measured countries in Asia. Bangladesh, Indonesia, Pakistan, and
9FG)'''
9FG(,''
Tajikistan all have BOP shares exceeding 95%. Thailand, with 67%, is
9FG(''' the only country with a BOP share less than 80%. In Africa the extremes
9FG,'' at the high end are Nigeria (99%), Sierra Leone (97%), and Burkina Faso
(96%)—and at the low end, South Africa (46%). In Eastern Europe,
:fcfdY`X Uzbekistan (99%) marks the high extreme—and Russia (41%), FYR
KFK8C=FF;JG<E;@E>9P@E:FD<J<>D<EK
Macedonia (42%), and Ukraine (44%) the low. In Latin America the ex-
9FG*''' tremes are Peru (78%) and Colombia (33%).
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
9FG),''
9FG)'''
9FG(,''
Bottom-heavy BOP food markets—in which the bottom three BOP in-
9FG('''
come segments outspend the top three—occur in 24 of the 30 countries
9FG,''
measured in Africa, Asia, and Latin America. These countries with bot-
=PIDXZ\[fe`X tom-heavy BOP markets often also have a national market dominated
KFK8C=FF;JG<E;@E>9P@E:FD<J<>D<EK by the BOP.
9FG*''' Indeed, in 17 of the 18 countries in Africa and Asia with bottom-heavy
9FG),'' BOP food markets, the bottom three BOP income segments account for
9FG)''' more than 50% of measured national food spending. The bottom two
9FG(,'' BOP groups alone account for more than 50% of national food spend-
9FG(''' ing in 8 of these countries in Africa (Burkina Faso, Burundi, Cameroon,
9FG,''
Côte d’Ivoire, Malawi, Nigeria, Rwanda, and Sierra Leone) and 5 in Asia
(Bangladesh, Indonesia, Nepal, Pakistan, and Tajikistan). Only one coun-
try in Eastern Europe (Uzbekistan) shows this concentration, and none
in Latin America.
0'
Jflk_8]i`ZX
Gif]`c\f]kfkXc]ff[jg\e[è^
9FG*''' *#*(,
9FG),'' *#'0(
9FG)''' )#0'0
9FG(,'' )#-/+
9FG(''' )#)))
9FG,'' (#+)-
In Latin America five of the nine measured BOP food markets are bot-
8m\iX^\
tom heavy, and in each case the BOP accounts for more than 50% of mea- _flj\_fc[jg\e[è^
sured national food spending. In four countries (Guatemala, Honduras, fe]ff[
)#,+/
Jamaica, and Peru) three middle BOP income segments (BOP1000–2000) LqY\b`jkXe
account for more than 50% of national food spending. Gif]`c\f]kfkXc]ff[jg\e[è^
Top-heavy BOP food markets—in which the top three BOP income
segments outspend the bottom three—occur in four of the measured
countries in Latin America (Brazil, Colombia, Mexico, and Paraguay) and
five of the six measured in Eastern Europe (Belarus, Kazakhstan, FYR ?FLJ<?FC;JG<E;@E>9P@E:FD<J<>D<EK
9FG*''' ,#(+(
Macedonia, Russia, and Ukraine). In six of the countries with top-heavy
9FG),'' +#-,/
BOP markets, the mid-market segment dominates the national market,
9FG)''' +#,/+
accounting for more than 50% of total spending on food.
9FG(,'' +#,+,
9FG(''' *#0.)
N_Xk[f_flj\_fc[jjg\e[6 9FG,'' )#-/*
Average annual food spending per household in the BOP varies across 8m\iX^\
measured countries. The median value among these averages by region _flj\_fc[jg\e[è^
fe]ff[
may be the most useful indicator: in Africa, $2,087 (Cameroon) and *#.++
$2,548 (South Africa); in Asia, $2,643 (Pakistan); in Eastern Europe,
$3,687 (Kazakhstan) and $3,744 (Uzbekistan); and in Latin America,
$3,050 (Peru).
Household spending on food increases less rapidly than income. Or put :Xd\iffe
another way, the share of the household budget devoted to food declines J?8I<F=?FLJ<?FC;JG<E;@E>FE=FF;
as household income rises. This can be seen by comparing measured an- 9FG*''' ).%0
nual food spending by BOP3000 and BOP500 households in the coun- 9FG),'' )/%. 4 = = 2 j B 6 3 < 3 F B " 0 7 : : 7 = <
tries above. While BOP3000 households have 6 times as much income 9FG)''' *+%/
on average, they outspend BOP500 households in the food market by a 9FG(,'' +'%.
ratio of only 2:1 in Cameroon, 2.3:1 in South Africa and Pakistan, 2.4:1 in 9FG(''' +/%/
Kazakhstan, 1.9:1 in Uzbekistan, and 3:1 in Peru. 9FG,'' ,)%0
This pattern probably reflects the simple fact that even in the low-
G\il
est segments of the BOP, households must spend a minimum amount to J?8I<F=?FLJ<?FC;JG<E;@E>FE=FF;
ensure survival. Business strategies that can deliver more value for these
9FG*''' *0%-
minimum food expenditures accordingly can create significant market
9FG),'' +*%(
value—for BOP consumers and for the company (case study 8.1). +-%0
9FG)'''
9FG(,'' ,)%-
9FG(''' ,0%*
9FG,'' ,/%0
0(
:8J<JKL;P/%(?<8CK?@<I=FF;1
D8B@E>DFI<F=C<JJ=FI9FGD8IB<KJ
DXbè^ Èdfi\ f] c\jjÉ `j Zi`k`ZXc kf _\Xck_ è k_\ 9FG%
I\Zfê`qè^k_`j#gi`mXk\\ek\igi`j\jXi\nfibè^kf]è[nXpjkf
_\cgd\\kk_\elki`k`feXce\\[jf]cfn$èZfd\gfglcXk`fej%
Fe\\]]fik_Xj]fZlj\[feèjl]]`Z`\ek[`\kXip`f[è\#Xc\X[$
è^ZXlj\f]d\ekXci\kXi[Xk`feè@e[`X%Dfi\k_Xe.'d`cc`fe
g\fgc\è@e[`X#Xe[)''d`cc`fe^cfYXccp#jl]]\i]ifd`f[è\
[\]`Z`\eZp[`jfi[\i%@ek_\[\m\cfg\[nfic[dfjkjXck`j]fik`]`\[
n`k_`f[è\Xe[\m\ipfe\ZXeX]]fi[`k%9lkè@e[`Xfecp)'
`j`f[`q\[#Xe[k_`jjXck`jgi`Z\[_`^_\ik_Xeefe`f[`q\[jXck#
glkkè^`kflkf]i\XZ_]fidXepèk_\9FG%Dfi\fm\i#Zc`dXk\
Zfe[`k`fej#jkfiX^\giXZk`Z\j#Xe[kiX[`k`feXcZffbè^d\k_f[j
è@e[`Xk\e[kf\c`dèXk\k_\`f[è\]ifdk_\jXck%
?è[ljkXeC\m\iC`d`k\[?CC #Xe@e[`Xe[`m`j`fef]Zfe$
jld\i^`XekLe`c\m\i#kXZbc\[k_`jgifYc\d%Glkkè^df[\ie
jZ`\eZ\Xe[k\Z_efcf^pkfnfib#`k[\m\cfg\[Xd\k_f[]figif$
[lZè^`f[`q\[jXckk_Xknflc[i\dXèjkXYc\le[\iXepZfe[`$
k`fejè@e[`XÇp\kjk`ccY\X]]fi[XYc\kfk_\9FGIXa\e[iXXe[
N_\i\`jk_\dXib\k6
J_X_)'', %@kje\n8eeXglieXYiXe[jXck`jgif]`kXYc\ÇXe[
The distribution of BOP food spending between
k_\jlZZ\jjè@e[`X_Xjc\[kfè`k`Xk`m\jèfk_\iLe`c\m\i
urban and rural areas closely tracks the distri-
dXib\kj%8dfe^k_\j\Xi\:k\[Ë@mfì\#>_XeX#B\epX#Xe[
bution of the BOP population. In Africa, where
E`^\i`X#n_\i\k_\gif[lZk_XjY\\eX[Xgk\[kfèZfigfiXk\
) measured BOP spending on food is $97.0 bil-
fk_\i\jj\ek`Xcelki`\ekj%
K_\9Xe^cX[\j_d`Zif]èXeZ\èjk`klk`fe>iXd\\e9XebXe[ lion, the BOP food market is predominantly
k_\=i\eZ_dlckèXk`feXc>iflg\;Xefe\_Xm\gXike\i\[#èX rural in 9 of 12 countries (Djibouti, Gabon, and
,'1,'afèkm\ekli\#kfgif[lZ\cfn$Zfjk#_`^_$elki`\ekpf^lik South Africa are the urban-tilting exceptions).
gif[lZkjkXi^\k\[kfk_\9FGZfejld\idXib\k%N_XkdXb\j Across these 12 countries the rural market is 1.6
k_\df[\cèk\i\jkè^`jk_Xk`kXcjf]fZlj\jfe9FGgif[lZ\ij times as large as the urban one. Significant mal-
Xe[[`jki`Ylkfij%>iXd\\e;Xefe\=ff[jn`ccjfliZ\k_\d`cb nutrition in the region underscores the need to
]ifd_le[i\[jf]d`Zif]Xid\ij#n_fkpg`ZXccpfnefe\fiknf improve farmers’ productivity and strengthen
ZfnjgliZ_Xj\[n`k_Xd`ZifcfXe%8e[`kn`ccj\cck_\pf^lik food supply chains (case study 8.2).
k_ifl^_Xe\knfibf]jkXe[jXe[]ff[b`fjbjfg\iXk\[Ypd`$ Asia has similarly rural-skewed BOP food
Zif\eki\gi\e\lij%<XZ_j\imè^f]pf^likZfekXèjk_i\\k`d\j spending. At $811 billion, the region’s mea-
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
XjdXepelki`\ekjXjk_\Zfdg\k`k`fe#Zfjkjc\jjk_XeLJ'%'.# sured rural BOP food market is 2.5 times the

Xe[Zfd\jèX(''g\iZ\ekY`f[\îX[\XYc\Zlg% size of the urban market; only Indonesia has
Jk`ccXefk_\iè`k`Xk`m\_Xj[\m\cfg\[XZ_\XgjfliZ\f] an urban market larger than the rural one. The
gifk\è%K_\`[\X^fk`kj^\e\j`jn_\e?\Zkfi>feqXc\j#k_\ dominance of rural markets stems from the
]fle[\if]:lX[i`kfj#XjlZZ\jj]lcd`cb#Z_\\j\#Xe[pf^lik dominance of the rural BOP population: in Asia
ZfdgXepèD\o`Zf#\jkXYc`j_\[X]ff[YXebèk_XkZflekip% rural BOP households outnumber urban ones
@ec\jjk_Xeknfp\Xij#Yp_Xie\jjè^\]]`Z`\ekcf^`jk`Zjn`k_ by a ratio of almost 3:1. The large size of rural
ZfigfiXk\[feXk`fej#k_\]ff[YXebî\nkf]\\[(''#''' food markets underscores the importance of
g\fgc\X[Xp%8j>feqXc\jjXnk_Xkk_fljXe[jf]kfejf]]ff[ distribution strategies that can efficiently reach
n\i\[`jZXi[\[[X`cp#j`dgcpY\ZXlj\k_\p_X[efkjfc[Ypk_\ì
rural BOP households—like those being devel-
ÈY\jklj\[YpÉ[Xk\#_\[\m\cfg\[Xk\Z_efcf^pkfi\gifZ\jj
oped in India by Hindustan Lever Limited. For
k_\gifk\è]ifdd`cb#pf^lik#Xe[m\^\kXYc\j%Klie\[èkfX
this company, rural BOP markets have also
gfn[\i#k_\i\gifZ\jj\[gifk\èZXeY\X[[\[kfXmXi`\kpf]
become a source of bottom-up learning (case
]ff[jkl]]j#jlZ_Xj[XìpXe[jfpd`cbjXe[Zffb`\jXe[fk_\i
study 8.3).
YXb\[^ff[jE\nM\ekli\j)''- %Elki`\eki\ZpZcè^dXpY\
In Eastern Europe and Latin America BOP
k_\)(jk$Z\eklipm\ij`fef]k_\glcgXe[Xcldèldi\ZpZcè^f]
k_\cXk\)'k_Z\eklipÇgif]`kXYc\Xe[Y\e\]`Z`Xc% food markets are predominantly urban in 11 of
9fk_f]k_\j\\ek\igi`j\j#èèefmXkè^kfX[[i\jjk_\ 15 countries. In Latin America the measured
0) le`hl\Zfe[`k`fejf]k_\dXib\kjk_\p\eZflek\i\[#`ccljkiXk\ urban BOP food market is $106 billion, 2.4
XjkiXk\^pf]]fZljè^fek_\9FG%
@e[`X
)- .+
LI98E ILI8C
D\o`Zf
.) )/
LI98E ILI8C
KfkXc9FG]ff[jg\e[è^
YpèZfd\j\^d\ek#
liYXeXe[iliXc
times the size of the rural market. Only three :8J<JKL;P/%)

countries in the region—Guatemala, Jamaica, GLDG@E>LGGIF;L:K@M@KP1
and Paraguay—record a rural-tilted BOP food E<NN8K<IGLDGJ=FI9FG=8ID<IJ
market.
Despite the mostly larger rural food mar- 9FG]Xid\ijZXegcXpXe`dgfikXekgXikècfZXcfi\m\eèk\i$
kets, on average urban BOP households spend eXk`feXc]ff[mXcl\Z_Xèj#Xe[èefmXk`fejk_Xk`dgifm\k_\ì
gif[lZk`m`kpXcjfèZi\Xj\k_\ìèZfd\j%N`k_k_`jèdè[#
more on food than rural ones in 30 of the 36
k_\E>F@ek\ieXk`feXc;\m\cfgd\ek<ek\igi`j\j_Xj[\m\c$
measured countries (the exceptions are Brazil,
fg\[X]Xd`cpf]jk\g$XZk`fe]ffkgldgj]fiXî`ZlckliXclj\#
Jamaica, Kazakhstan, Tajikistan, Ukraine, and
Xccf]n_`Z_ZXeY\cfZXccpdXel]XZkli\[]ifdcfZXccpXmX`cXYc\
Uzbekistan). The difference is smaller in total
d\kXcXe[nff[dXk\i`Xcj%*JèZ\k_\j\YXj`Zgldgjn\i\
household spending. In Côte d’Ivoire, Nigeria,
èkif[lZ\[è(0/,#dfi\k_Xe)d`cc`fe_Xm\Y\\eèjkXcc\[
Pakistan, and Thailand, for example, the dif-
nfic[n`[\%;`]]\i\ek[\j`êjXccfnk_\lj\f][`]]\i\eknXk\i
ference between urban and rural areas in BOP jfliZ\jÇ]ifdi`m\ijXe[fk_\ijli]XZ\nXk\ikfYfi\_fc\j
household spending on food is less than 10%, Xe[fk_\iîfle[nXk\ijfliZ\j%
while the difference in spending in all markets 8efk_\iE>F#B`ZbJkXik#_Xj]fZlj\[fe[\m\cfgè^Xg$
is at least 33%. gifgi`Xk\k\Z_efcf^`\j]fi8]i`ZXe\eki\gi\e\lijk_XkZXe
Y\]lccpdXib\k[i`m\e#Zi\Xkè^\ek\igi`j\jXk\m\ipc\m\cf]
N_Xk[f\jk_\9FGYlp6 k_\mXcl\Z_Xè]ifddXel]XZkli\kf[`jki`Ylk`fe#i\kX`cè^#
In the developing world, particularly for the Xe[\e[lj\Yp]Xid\ij%+B`ZbJkXikËjÈDfe\pDXb\iÉcè\f]
BOP, food is more a local than a global business. gldgjÇiXe^è^]ifdj`dgc\ki\X[c\kfdfi\Zfdgc\ojlZ$
Favored foodstuffs reflect the local climate, ge- k`fe$gi\jjli\gldgjÇXi\èn`[\lj\#dfjkcpè<Xjk8]i`ZX 4 = = 2 j B 6 3 < 3 F B " 0 7 : : 7 = <
ography, and traditions. So it is not surprising Af_e;\\i\)'', %,
to find in household survey data—as for Brazil— K_\j\\ek\igi`j\j#gif[lZè^d\Xeè^]lcèefmXk`fejè
that BOP spending patterns on food do not dif- i\jgfej\kf9FGe\\[j#\o\dgc`]pXjkiXk\^pf]]fZljè^fe
fer appreciably from those of the mid-market k_\9FG%
segment, either in the types of foods purchased
K_\cXi^\j`q\f]iliXc]ff[dXib\kjle[\ijZfi\jk_\
`dgfikXeZ\f][`jki`Ylk`fejkiXk\^`\jk_XkZXe\]]`Z`\ekcp
i\XZ_iliXc9FG_flj\_fc[j 0*
=FF;:8J<JKL;P/%*I<8:?@E>K?<9FG
@EEFM8K@FEJ@E;@JKI@9LK@FE
Jfd\f]k_\9FGg\eXckpZXeY\XjZi`Y\[kfk_\[`]]`Zlck`\j
Xe[X[[\[Zfjkf][`jki`Ylk`feècfn$èZfd\Zfddle`k`\j#
n_\k_\iliYXee\`^_Yfi_ff[jfiiliXcm`ccX^\j%DXepZfdgX$
e`\jXi\]è[è^èefmXk`m\e\nnXpjkfi\XZ_9FGZljkfd$
\ij#Xj\oXdgc\jèk_\_\Xck_Xe[]èXeZ`Xcj\im`Z\jdXib\kj
j_fn%N_Xk`jkil\èk_\j\dXib\kj`jXcjfkil\èk_fj\]fi or in the allocation of spending among these
]Xjk$dfmè^Zfejld\i^ff[j#Zfejld\i[liXYc\j#Xe[]ff[1 types.
]lkli\îfnk_n`ccZfd\cXi^\cp]ifdk_\9FG% Still, survey data for Brazil do reveal differ-
:femèZ\[f]k_`j#?è[ljkXeC\m\iC`d`k\[ki`\j\m\ip ences. Two categories of food purchases that
Xe^c\kfi\XZ_k_\9FG%-@ki\hlì\je\ndXeX^\ijkfjg\e[
appear in the top 10 for the BOP do not show
jòkf\`^_kn\\bjèXiliXcm`ccX^\#c\Xieè^]ifd9FGZlj$
up in the top 10 for the mid-market segment:
kfd\ij#XjgXikf]k_\ìkiXèè^%KfdXb\gif[lZkjXZZ\j$
“other cereals, flours” and “sugar.” Similarly,
j`Yc\Çb\pèi\XZ_è^k_\9FGdXib\kÇ?CClj\jÈjXZ_\kÉ
two categories in the top 10 for the mid-market
gXZbX^è^%Cfn$gi`Z\[#jè^c\$j\imè^jXZ_\kjXZZflek]fi
segment—“mineral waters and soft drinks” and
,,f]`kjj_XdgffjXc\j9Xcl)''( %?CCXcjflj\jleZfe$
“fresh or chilled fruits”—rank only 14 and 15 for
m\ek`feXcdXib\kè^kfi\XZ_k_\9FG%=Xìj#]\jk`mXcj#Xe[
kiXm\cè^Zè\dXmXej_Xm\XccY\Zfd\`dgfikXekgXikjf]`kj the BOP. It can be surmised that the calorie-rich
Zfejld\iflki\XZ_#ZfdYèè^\ek\ikXèd\ekn`k__\Xck_Xe[ carbohydrates of cereals and sugars are simply
_p^`\e\\[lZXk`fe% more important in the basic diets of people with
K_ifl^_èefmXk`fejè[`jki`Ylk`fe#?CC_Xji\XZ_\[ lower incomes—and that fresh fruit and bottled
[\\g\iXe[[\\g\ièkfiliXcdXib\kj%@k_Xjj\klg[`jki`$ beverages are more affordable alternatives for
Ylk`fee\knfibjk_XkZXiip`kjgif[lZkjkfk_\dfjki\dfk\ those with higher incomes.
m`ccX^\jYpn_Xk\m\id\Xeji\hlì\[ÇdfkfiY`b\#Y`ZpZc\# Spending per household differs significantly,
foZXikÇXe[_XjXcjf\dgcfp\[[ì\ZkjXc\jX^\ekj% of course. Brazilian households in the bottom
K_\XggifXZ_Yl`c[jYiXe[cfpXckpXkk_\jXd\k`d\k_Xk`k three BOP segments (BOP500–1500) spend
Zi\Xk\j\dgcfpd\ekÇXe[\o\dgc`]`\jk_\Yljè\jjjkiXk\^p an average of $1,332 a year on food, while those
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
f]\eXYcè^XZZ\jj% in the mid-market segment spend an average

of $3,487. Even so, the difference is smaller
than might be expected. The income ratio be-
tween mid-market households (median income
$12,000) and BOP1000 households is 12:1, yet
the ratio of average household food spending for
9iXq`c these two groups is only 3:1. This is consistent
J?8I<F=?FLJ<?FC;JG<E;@E>FE=FF; with the finding from household survey data
9FG*''' ), that the share of food in household spending
9FG),'' )/ steadily declines as incomes rise—and does so
9FG)''' )0 in all income groups.
9FG(,'' **
9FG(''' *.
9FG,'' *.
0+
K_\iXk`ff]_flj\_fc[]ff[jg\e[è^Y\kn\\ek_\d`[$dXib\kj\^$
d\ekXe[k_\9FG('''j\^d\ek`jZfej`jk\ekn`k_k_\]è[è^k_Xk
k_\j_Xi\f]]ff[è_flj\_fc[jg\e[è^jk\X[`cp[\Zcè\jXjèZfd\j
i`j\ÇXe[[f\jjfèXccèZfd\j\^d\ekj%
4 = = 2 j B 6 3 < 3 F B " 0 7 : : 7 = <
<e[efk\j
expenditures, because surveys may not have collected information on all types of food-related spending.
2. Janet Roberts, “Project Shakti: Growing the Market While Changing Lives,” Case Weatherhead School of
Management, http://worldbenefit.cwru.edu/inquiry/featureShakti.cfm (accessed January 9, 2007).
3. International Development Enterprises, “Homepage,” http://www.ideorg.org/ (accessed January 9, 2007).
4. KickStart, “KickStart: The Tools to End Poverty,” http://www.kickstart.org/ (accessed January 9, 2007).
5. KickStart, “25 Entrepreneurs Who Are Changing the World: KickStart,” FastCompany.com, http://www.
fastcompany.com/social/2006/statements/kickstart.html (accessed January 9, 2007).
6. Hindustan Lever Limited, “Creating Markets: Delighting Customers Everywhere,” http://www.hll.com/brands/
creating_markets.asp (accessed January 9, 2007).
0,
:?8GK<IE@E<
K_\
=èXeZ`Xc
J\im`Z\j
DXib\k
Microcredit pioneer Muhammad Yunus received the Nobel
Peace Prize in 2006, a milestone in public attention to the
financial needs of the BOP. Until recently the main focus has
been microcredit, historically the domain of nonprofits. Now
the focus is changing—as new players and new products enter
the market and new technologies transform services. A dynam-
ic financial services sector is emerging—moving toward finan-
cial access for all.
Many microfinance institutions now offer savings as well as micro-
credit. Commercial banks are becoming active in the BOP market and
bringing a still broader range of services, including insurance. Mobile
phone banking, still at an early stage, promises to dramatically broaden
access and lower transaction costs. Remittances to BOP households from
4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

family members overseas have emerged as a significant cross-border fi-
nancial flow, bringing new attention and new ways to promote economic
growth.
As these changes expand access to financial services for the BOP, the
effects can be measured in many ways, not just in the volume or dollar
value of transactions:
• New jobs and income. New types of financial services, provided

through mobile phone systems, are generating new jobs and
income for millions of small entrepreneurs who sell over-the-air
credit.
• Formal identity. Establishing a banking relationship gives people
a formal identity they often lacked before, contributing to the pro-
cess of political and social inclusion critical to development.
• Greater personal safety. Cash is a burden for the poor, making
them vulnerable to crime. By doing away with the need to carry a
lot of cash, such services as debit cards and mobile phone–based
access to cash and bill-paying facilities enhance personal safety
and the quality of life.
0.
@e@e[fe\j`Xnfd\en_fXi\Zc`\ekjf]9XebIXbpXk@e[fe\j`X
Xi\dfi\c`b\cpk_Xefk_\infd\ekfgXik`Z`gXk\è]Xd`cp
]èXeZ`Xc[\Z`j`fej%
• More education for children. In Bangladeshi families that are cli-

ents of Grameen Bank, nearly all girls are in school, compared with
only 60% in nonclient families.
• More timely health care. In Uganda the Foundation for Credit and
Community Assistance (FOCCAS) links its microloans to partici-
pation in child health education programs and has doubled the
share of its clients using practices to prevent the transmission of
HIV. In Bolivia microcredit clients of Crédito con Educación Rural
(Crecer) had higher rates of child immunization in their families
than did nonclients.
• Economic empowerment of women. In Indonesia women who
are clients of Bank Rakyat Indonesia (BRI) are more likely than
other women to participate in family financial decisions. In India
borrowers from SEWA Bank have organized unions to lobby for
higher wages and more rights as members of the associated Self-
Employed Women’s Association (Littlefield, Morduch, and Hash-
emi 2003).
Through these effects and many more, financial services play a critical
part in reducing poverty and improving the access of the BOP to goods
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
and services.
National household surveys capture extensive data on financial matters,
but little on actual spending for financial services. Moreover, the costs
of these services are often not fully transparent to BOP customers, who
may not know or understand the actual costs of transferring remittances
from sender to recipient, for example, or the true interest rate paid to an
informal village lender. As a result, robust data on spending for financial
services are not available in sufficient detail for meaningful analysis.
What is known, however, clearly indicates that the financial services
sector is changing—and doing so in ways that are moving it toward broad
access for the BOP. Three factors are powering this transformation:
• The microfinance sector is growing up, attracting new participants
and creating new services.
• Rapid changes in technology are reducing the transaction costs in
financial services, expanding markets, and interesting large finan-
0/ cial institutions in markets previously ignored.
:8J<JKL;P0%(9FKKFDLG98EB@E>1
;<<G<E@E>=@E8E:@8CJ<IM@:<J
FE<JD8CCCF8E8K8K@D<
@e(00/#n`k_LJ,)#'''èÈ]Xd`cpXe[]i`\e[jÉ]le[è^#
M`biXd8blcX(+jkXik\[JBJD`Zif]èXeZ\#Xd`ZifZi\[`kè$
jk`klk`feè@e[`X%8blcX_X[Xm\ipjg\Z`]`Z^fXcèdè[1lj\
df[\ie#\]]`Z`\ekYXZb$f]]`Z\jpjk\djkfcfn\ikiXejXZk`fe
• Remittances are approaching an estimat- ZfjkjjfiX[`ZXccpk_Xkd`ZifcfXejZflc[Y\_Xe[c\[gif]`k$
ed US$350 billion a year, and recipients, XYcpXe[XkjZXc\%(,>fè^n\ccY\pfe[k_\>iXd\\eÈc\e[è^
businesses, and national governments ZìZc\ÉXggifXZ_#JBJkXi^\k\[XdXjj`m\dXib\kÇk_\/''
are learning how to leverage these “BOP d`cc`feg\fgc\f]k_\9FGè@e[`X%
to BOP” financial flows. JBJZi\Xk\[j`dgc\cfXedXeX^\d\ekjf]knXi\n`k__\cg
]ifd]i`\e[jXkZfejlckè^]ìdj%8e[`k[\m\cfg\[j`dgc\ilc\j
The following analysis briefly explores the ]fiYfiifn\ijk_XkZlkkiXejXZk`fek`d\Xe[Zfdgc\o`kpÇ]fi
financial services sector through these three \oXdgc\#i\hlìè^jkXe[Xi[i\^lcXii\gXpd\ekjèdlck`gc\j
lenses. 1 f]]`m\ilg\\jk_\jdXcc\jkgXg\iY`ccè@e[`X#nfik_Xifle[
LJ'%(( %
K_\Z_Xe^è^YXebè^cXe[jZXg\ JBJ_XjZXi\]lccpkiXZb\[`kji`jbgif]`c\#YXcXeZè^`kjcfXe
Several strategies are at work to bring finan- gfik]fc`fn_\eè[Xe^\if]Y\Zfdè^fm\i\ogfj\[èfe\
j\ZkfifiXefk_\i%N_\ecfXej]fiYl]]Xcf\jifj\iXg`[cp#]fi
cial services further into the BOP. One is
\oXdgc\#`khl`Zbcpi\jgfe[\[Yp]è[è^Yfiifn\ijèjlZ_
to expand the microfinance institutions. A
Xi\XjXji\kX`c#ZfejkilZk`fe#Xe[XlkfXe[kilZbi\gXì%
growing number of traditional microcredit
9`^YXebjXi\efncèè^lgkfc\e[JBJ]le[jkfi\c\e[
banks—such as the Cooperative Bank of Kenya,
kf`kjfneZc`\ekj%(-@:@:@9Xeb#@e[`XËjcXi^\jkgi`mXk\j\Z$
Financiera Compartamos in Mexico, and BRI
kfiYXeb#_Xj^`m\eJBJXefg\ecè\f]Zi\[`k%@:@:@Xjj\jj\j
in Indonesia—have become profitable on a fully
k_\i`jbkfY\cfnÇJBJ_XjX0/fe$k`d\i\gXpd\ekiXk\%
4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

commercial basis, with sustainable microlend- Dfi\fm\i#JBJ\XiejX_`^_\ii\kliefeZXg`kXck_Xe@:@:@Ëj
ing now just a part of their core business. And cXi^\ZfigfiXk\Yfiifn\ij%
one relative newcomer, SKS Microfinance in JBJ_XjcfXe\[dfi\k_XeLJ,.d`cc`fekfdfi\k_Xe
India, has relied on operational efficiency to )''#'''nfd\e%9\j`[\j`kjèZfd\$^\e\iXkè^cfXej#JBJ
power rapid growth in lending (case study 9.1). f]]\ijèk\i\jk$]i\\cfXej]fi\d\i^\eZ`\jXe[c`]\èjliXeZ\
By the industry’s own estimate, however, ]fi`kjZc`\ekj%8eJBJX]]`c`Xk\#JBJ<[lZXk`fe#gifm`[\j\[lZX$
microcredit had reached only 82 million house- k`fej\im`Z\jkfgffiZ_`c[i\e%
holds by the end of 2006. Even the industry’s JBJefn_Xj/,d`Zif]èXeZ\YiXeZ_\jè]`m\@e[`Xe
new target for 2015, 175 million households, jkXk\jXe[gcXejkffg\eè]`m\dfi\Xj`kglijl\j`kj^fXcf]
would represent only 31.5% of today’s 556 mil- j\imè^.''#'''Zc`\ekjYp\Xicp)''.%9p`kjfneXZZflek`k
lion BOP households.2 `jXci\X[pXdfe^k_\nfic[Ëj]Xjk\jk$îfnè^d`Zif]èXeZ\
Clearly, other strategies are needed to reach fi^Xe`qXk`fej%(.
scale. Some are already in play. Major finan- 8cck_\j\\]]fikjX[[lgkfXj`ê`]`ZXek[\\g\eè^f]k_\
cial institutions are discovering that they can ]èXeZ`Xcj\im`Z\jj\Zkfi]fik_\9FGÇXe[`ccljkiXk\XjkiXk\^p
go “down-market” profitably, leveraging their f]\eXYcè^XZZ\jj%
capital, their expertise, and their back-office
systems. In one of many examples, Citi in late
2006 announced plans to expand into low-in-
come neighborhoods of India with automated teller machines (ATMs)
using thumbprints to identify customers.3 Banks also are beginning to 00
EfekiX[`k`feXcgcXp\ijXi\\ek\iè^k_\9FGdXib\k%I\kX`c^`Xek
NXc$DXik_Xji\Z\`m\[i\^lcXkfipXggifmXcèD\o`ZfkfZi\Xk\`kjfne
YXebZfccfZXk\[n`k_`kjjkfi\j%>iXd\\e=fle[Xk`feLJ8Xe[@e[`Xj
cXi^\jkgi`mXk\YXeb#@:@:@9Xeb#_Xm\]fid\[>iXd\\e:Xg`kXc@e[`Xkf
Xjj`jkd`Zif]èXeZ\èjk`klk`fejèiX`jè^]le[j%
view those receiving remittances as potential customers for a range of

financial services.
Nontraditional players are entering the BOP market. Retail giant Wal-
Mart has received regulatory approval in Mexico to create its own bank,
Banco Wal-Mart, colocated with its stores.4 If the venture is successful,
other Wal-Mart banks will follow elsewhere.
Some microfinance institutions and big commercial banks are meet-
ing in the middle. Grameen Foundation USA and India’s largest private
sector bank, ICICI Bank, have formed Grameen Capital India to assist
microfinance institutions in raising funds. The joint venture will help mi-
crofinance institutions access primary and secondary debt markets and
sell portfolios of microloans to other banks—and will also supply guaran-
tees and credit enhancements for these portfolios where appropriate.5
ICICI has many similar ventures in the pipeline aimed at reaching the
BOP. One is a partnership with microfinance institutions and technology
provider n-Logue to harness thousands of entrepreneur-run Internet ki-
osks as the first touch point for savings accounts, mutual fund purchases,
insurance, and even equity loans—and to provide branches, franchise
operators, and ATMs throughout rural India.6 Partnerships like these
are spreading across the financial sector as a way to broaden access to
services for the BOP.7
Steady growth of savings accounts in the BOP provides compelling
evidence of its appetite for more than microcredit. Savings accounts for
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
low-income customers in developing and transition economies are esti-

mated to number more than a billion (Peachey and Roe 2006).8 Indeed,
for BRI and Financiera Compartamos, savings accounts represent a
much larger part of their BOP portfolio than do microloans. Savings ve-
hicles are often hampered by outdated laws and regulations. But where
permitted, they can play a powerful new role in deepening the financial
sector for the BOP.
Finance for small and medium-size enterprises is growing. While
this development does not bring financial services to the BOP, it does
expand opportunity by creating jobs and services. The financing comes
in the form of loans and equity investment beyond the limits of microfi-
nance but too small for the traditional lending windows of large banks.
The Asian Development Bank is developing a series of investment funds
for small and medium-size enterprises in Asia, and the Japan Bank for
International Cooperation has increased by several million dollars its
pledge for private sector investment in Africa, including money for small
and medium enterprises. Shell Foundation has helped launch several
(''
investment funds in Africa that focus on small enterprises, bringing in
local financial institutions as coinvestors.9 The most effective new mod-
els combine the provision of capital with mentoring, business education,
and skills training.
Commercial banks are seeking new ways to participate in small and
medium-size enterprise finance, driven by such structural factors as low
rates of return on government debt in much of the developed world and
stiff competition among banks at the high end of the market. The global
banks usually partner with local banks, able to provide the risk assess-
ment and community relationships critical to success. Meanwhile, the
availability of capital and the support of big money-center banks are driv-
ing local banks to better serve local small and medium-size enterprises,
a market many have long ignored.
K\Z_efcf^pXjX[i`m\i
Technology does two key things that help drive the development of fi-
nancial services: it cuts costs, and it bridges physical distance. For BOP
customers, technology in financial services can address four important
concerns: convenience, accessibility, safety, and transferability (Wright
and others n.d.). A mobile phone–based transaction system offers far
more convenience and accessibility than a traditional financial institu-
4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

tion, whose use may require that clients find a bank branch or attend
a weekly microfinance group meeting. Electronic forms of money, less
prone to theft, are safer than cash. They also are more easily transferred,
especially overseas.
Technology is bringing nontraditional players into the financial ser-
vices market. Most notably, mobile phone operators are introducing new
products and services over their networks that look and feel like tradi-
tional financial services (case study 9.2). Start-ups are finding ways to
combine mobile networks and traditional banks (case study 9.3).
The resulting hybrids—banks partnered with mobile phone operators,
or companies that market both financial and mobile phone services—
pose issues for banking and telecommunications regulators. But the ben-
efits seem so great as to demand solutions, and Pakistan, for example, has
instructed the two sets of regulators to work out effective solutions.10
The emerging technology-driven financial services include bank-cen-
tric models, electronic currency, and mobile commerce systems. The ser-
vices are being provided through a range of technologies: ATMs, mobile
phones, handheld computers, and credit, debit, and smart cards.
('(
:8J<JKL;P0%)98EB@E>FEG?FE<J1
DF9@C<FG<I8KFIJ8J98EB@E>G@FE<<IJ
@EK?<G?@C@GG@E<J
=`c`gèfjXi\Xm`[lj\ijf]k\ok$d\jjX^è^j\im`Z\j%9pi\Zf^$
e`qè^Xe[Yl`c[è^fek_`jXgg\k`k\#JdXik:fddle`ZXk`fej
Xe[>cfY\K\c\Zfd_Xm\Y\Zfd\g`fe\\ijèdfY`c\]èXeZ`Xc
gcXk]fidj%
In Kenya, Vodafone is partnering with local
JkXikè^n`k_k_\j`dgc\efk`fef]i\]`ccè^gi\gX`[Xìk`d\
mobile operator Safaricom and local microfi-
[\Y`kZXi[j\c\Zkife`ZXccp#JdXik_XjZi\Xk\[Xjl`k\f]j\i$
nance institutions to roll out a financial transac-
m`Z\jk_Xkfg\iXk\j\Xdc\jjcpn`k_fk_\iZfdgXepjpjk\dj%
tion system called M-Pesa. The system is based
K_\ZfdgXepËjÈJdXikDfe\pÉXccfnjXjlYjZi`Y\ikfkiXej$
on a new mobile phone card, developed for the
]\iZXj_]ifdXYXebXZZflekkfXZ\ccg_fe\2kfgXp]fi^ff[j
purpose, that enables microfinance clients to
Xe[j\im`Z\jèk_fljXe[jf]j_fgjXe[i\jkXliXekj2kffi[\i
Xe[#ljè^jpjk\dZi\[`kj#gXp]fi^ff[jXe[j\im`Z\jfm\i make deposits, check balances, and fully manage
k_\g_fe\2kfcfX[Xìk`d\fekfXepJdXikjpjk\dg_fe\2kf their accounts. Neighborhood banking agents
kiXej]\idfe\p]ifdfe\JdXikDfe\pZXi[kfXefk_\i2kf can turn electronic transactions into cash and
gXplk`c`kpY`ccj2Xe[\m\ekfj\e[i\d`kkXeZ\j]ifdXYifX[ take deposits and payments on behalf of clients,
Jd`k_)''+X % earning commissions along the way. Vodafone
>cfY\K\c\Zfdgifm`[\jj`d`cXij\im`Z\j%@e)''+`k has plans to rapidly add more countries.11
cXleZ_\[k_\È>$:Xj_ÉgifîXd#n_`Z_Xccfnjlj\ijkfj\e[ Prodem FFP in Bolivia is a sector-leading
Xe[i\Z\`m\ZXj_Xe[kfdXb\gXpd\ekjkfXmXi`\kpf]j\i$ example in the advanced use of ATMs to pro-
m`Z\jXe[Yljè\jj\jk_ifl^_k\ok$d\jjX^è^%K_\jpjk\d vide savings accounts to low-income, illiterate
XcjfXccfnj[fd\jk`ZXe[èk\ieXk`feXcdfe\pkiXej]\ij% customers in rural areas. Technology, it under-
Lec`b\n`k_JdXikËjjpjk\d#k_\lj\i[f\jefke\\[kf_Xm\ stood, would be the key to providing affordable
Xj\gXiXk\YXebXZZflek1>cfY\Ëjjpjk\dlj\jYXebjYlkXcjf service. Unable to find the low-cost, high-quality
i\c`\jfeXe\knfibf]i\kX`ccfZXk`fej]filj\ijkfÈZXj_èÉ technology it sought, Prodem partnered with a
fiÈZXj_flkÉM\^X % local firm to create it. The result: an ATM that
>cfY\Xe[JdXikXi\jlZZ\\[è^èk_\dXib\kgcXZ\ uses visual and audio prompts in four languages,
Y\ZXlj\k_\pd\\ki\Xce\\[jf]Zljkfd\ij%K_\pgifm`[\ including three indigenous ones, and a smart
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
jX]\kp1k_\\c\Zkife`ZZlii\eZpi\c`\m\jZljkfd\ijf]k_\ card that captures and stores account informa-

Yli[\eXe[[Xe^\if]ZXiipè^ZXj_%K_\p\e_XeZ\j\Zli`kp1 tion and biometric identification. ATMs aimed
mXcl\jXi\jkfi\[Z\ekiXccp#gifk\Zkè^Zljkfd\ijX^Xèjkcfjj at the BOP are now being taken up by big banks,
`]XZXi[fig_fe\`jcfjkfijkfc\e%K_\pgifm`[\XZZ\jj`Y`c$
such as Citi in its ATM venture in India.
`kp1k_ifl^_k_\i\dfk\YXebè^Xggc`ZXk`fej#k_\pYiè^k_\
Visa International has partnered with FINCA
YXebkfk_\Zljkfd\iiXk_\ik_Xei\hlìè^k_\Zljkfd\ikf
International, a microfinance institution in
^fkfXg_pj`ZXccfZXk`fe%8e[k_\pXccfnkiXej]\iXY`c`kp1k_\ì
Latin America, in a retail banking program for
jpjk\dj\eXYc\Zljkfd\ijkfkiXej]\idfe\pkfXefk_\iZlj$
FINCA’s BOP microfinance clients. The pro-
kfd\iÇXj\im`Z\f]k\elj\[n`k_è]Xd`c`\jXe[]fiYljè\jj
gram automatically deposits loans into a savings
kiXejXZk`fej%
9\pfe[Xcck_`j#k_\knfZfdgXe`\j_Xm\Zi\Xk\[dfi\ account opened by the client at a retail bank and
k_Xe(%,d`cc`fee\n\eki\gi\e\lij#\e^X^\[èi\j\ccè^Xì$ issues the client a Visa debit card and a personal
k`d\Xe[]XZ`c`kXkè^dfY`c\]èXeZ`Xcj\im`Z\j%K_\ìXggifXZ_ identification number (PIN) to access the funds.
\o\dgc`]`\jknfjkiXk\^`\j1cfZXc`qè^mXcl\Zi\Xk`feXe[ Visa and FINCA have found that the program
]fZljè^fek_\9FG% makes clients more inclined to save now that
their money is in a secure place. The program
(')
8kk_\jXd\k`d\k_XkYXebjXi\[`jZfm\iè^k_Xkk_\9FGnXekXe[e\\[]lcc
XZZ\jjkf]èXeZ`Xcj\im`Z\j#]èXeZ`Xcj\ZkfiXeXcpjkjXi\[`jZfm\iè^k_Xkk_\
]le[j]cfnè^èXe[flkf]k_\9FGXi\dlZ_î\Xk\ik_Xegi\m`fljcpk_fl^_k%
also increases security by eliminating the need for a loan check, which
could be lost or stolen. And it gives clients a feeling of prestige associated
with carrying a Visa card.
I\d`kkXeZ\jXjXe\nkffc]figifdfkè^îfnk_
At the same time that banks are discovering that the BOP want and need
full access to financial services, financial sector analysts are discovering
that the funds flowing in and out of the BOP are much greater than previ-
ously thought. The Multilateral Investment Fund of the Inter-American
Development Bank took the lead in tracking remittances to Latin America
and the Caribbean, and now others are adding to the data.
The new understanding of the size of remittances brought policy and
commercial attention. Reforms were launched to bring more of the flows
into official channels, and new competition emerged among transfer
services (Orozco 2006). With competition have come better service and I\d`kkXeZ\]cfnj#L%J%kfCXkè8d\i`ZX
lower cost. The results have been especially noticeable in Latin America, @E;<O#)''(4(''
(.,
where the reported flows from the United States have risen every year,
(,' KFK8C
reaching US$53.6 billion in 2005.12 Worldwide the total is now thought I<D@KK8E:<J
to approach US$350 billion, with significant flows to every developing (),
region. Indeed, reported remittances doubled between 1999 and 2004 (''
(World Bank 2005). /' KI8EJ8:K@FE:FJK
4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

This stable flow of funds provides a large share of income for many in f]kiXejXZk`fe
--
the BOP as well as a direct “BOP to BOP” financing mechanism that helps )''( )'') )''* )''+ )'',
pay for new houses, new businesses, and children’s educations. But gov-
ernments and development agencies are only beginning to understand the Source: Inter-American Development Bank,
national and local effects of remittance flows—and to find ways to increase “Remittances to Select LAC Countries in
the benefits from them. 2005 (US$ Millions),” http://www.iadb.
One benefit: at the national level remittances significantly improve org/mif/remittances/index.cfm (accessed
country risk ratings, as recent research by World Bank economist Dilip February 1, 2007).
Ratha (2005) shows. Higher ratings encourage more private sector invest-
ment, which can help create jobs and fuel growth. Another benefit: several
banks in developing countries have been able to “securitize” remittance
flows—that is, use these dependable flows to back a financial instrument
sold in international capital markets—and thereby lower their cost of bor-
rowing. Both these benefits mean greater national financial capacity for
domestic investment, increasing the growth effect of remittances beyond
their impact at the household level.
Recognizing the potential in transferring remittances, businesses are
launching new services. At the 3GSM World Congress in Barcelona in
('*
:8J<JKL;P0%*M@IKL8C98EB@E>1
898EB=FIK?<9FG@EJFLK?8=I@:8
N`qq`kfg\iXk\jXmìklXcYXebè^j\im`Z\èJflk_8]i`ZXÇ
i\cpè^fedfY`c\g_fe\j#efkg_pj`ZXcYiXeZ_\j%@kjX`d
`jkfgifm`[\XZZ\jjkf]èXeZ`Xcj\im`Z\jkf(+d`cc`fele$
YXeb\[Z`k`q\ej%BiXd\iXe[GXlc)''- N`qq`kfg\iXk\jXj
X[`m`j`fef]k_\Jflk_8]i`ZXe9Xebf]8k_\ej%@k`jXcjfXe
XZZi\[`k\[`jjl\if]X[\Y`kZXi[Xe[f]]\ijXj\Zli\dfY`c\
gXpd\ekjZ_Xee\c]fidfY`c\g_fe\gXpd\ekj%K_\N`qq`k
February 2007, a consortium of 19 mobile op-
jpjk\d\eXYc\jZljkfd\ijkf1
erators, serving more than 600 million custom-
KiXej]\idfe\p]ifdXN`qq`kXZZflekkfXepfk_\i
ers in 100 countries, announced a system that
YXebXZZflek_fc[\i%
will transfer remittances entirely through their
GliZ_Xj\Z\ccg_fe\Xìk`d\%
GXpY`ccjn`k_lk`c`k`\jXe[fk_\iYljè\jj\j% mobile phone systems, radically reducing cost.
>\kZXj_Xk8KDjnfic[n`[\% The consortium predicts global remittances of
more than $1 trillion a year by 2012.13
:fejZ`fljf]k_\YXii`\ijk_Xk_Xm\è_`Y`k\[k_\9FG]ifd These developments notwithstanding, there
gXik`Z`gXkè^èk_\]fidXc]èXeZ`Xcj\Zkfi#N`qq`k_XjX[$ is still a serious shortage of infrastructure on the
fgk\[gfc`Z`\jkf\eZfliX^\e\nZljkfd\ij1 ground to provide financial services to the BOP.
Dlck`cè^lXcZljkfd\ij\im`Z\Z\ek\ij% Carefully mapping where remittances are sent
8Y`c`kpkffg\eXZZflekjXkXepk`d\#Xep[Xpf]k_\ in Mexico and where formal banking institu-
n\\bÇèaljkknfdèlk\j% tions exist, the Inter-American Development
=lccZfdgc`XeZ\n`k_k_\ZflekipËjÈbefnpfli Bank has identified many locations with sub-
Zljkfd\iÉi\hlì\d\ekj]fiYXebjÇn`k_flkljè^k_`j stantial remittances but no banking services.
XjXe\oZlj\efkkffg\eXZZflekj% This lack of presence represents a lost oppor-
:fddle`kp$YXj\[ÈN@QQb`[Éi\gi\j\ekXk`m\jn_fn`cc tunity for traditional financial institutions and a
Zfd\kfk_\Zc`\ekkffg\eXeXZZflek#iXk_\ik_Xe barrier to full financial citizenship for the BOP.
i\hlìè^k_\Zc`\ekkfkiXm\c% It also creates a significant opening to this un-
8ZZflekj]fidèfijXjn\ccXjX[lckj% served market for non-traditional players and
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
branchless banking enterprises.

N`qq`kXcjfXggc`\j`kjjfZ`XccpZfejZ`fljXkk`kl[\kf`kj
_ìè^gfc`Zp%@kX`djkf_ì\fecple\dgcfp\[g\fgc\Xe[jf
]Xi_Xjgifm`[\[afYj]fidfi\k_XeXk_fljXe[%K_\N`qq`k
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1. There are, of course, many other important aspects of financial services for the BOP not addressed here, such as
supply chain finance, the deepening of credit service analysis, and the provision of all types of insurance, from
crop insurance to flood, health, and business liability policies.
2. Associated Press, “Microcredit Campaign Launches New Goal of Reaching 175 Million of World’s Poorest by
2015,” International Herald Tribune, November 1, 2006,
3. http://www.iht.com/articles/ap/2006/11/01/america/NA_GEN_Canada_Microcredit_Summit.php (accessed
November 1, 2006).
4. Joe Leahy, “Citi Plans Thumbprint ATMs for India’s Poor,” Financial Times, December 1, 2006, http://www.
ft.com/.
5. BusinessWeek, “In Mexico, Banco Wal-Mart,” November 20, 2006, http://www.businessweek.com/magazine/
content/06_47/b4010076.htm?chan=search.
6. Jyoti Sunita, “ICICI Bank, Grameen of USA Set Up JV for Micro-Finance,” Financial Express, November 16, 2005,
http://www.financialexpress.com/fe_full_story.php?content_id=108757 (accessed January 17, 2007).
7. Anand Giridharadas, “In India, Thinking Big by Thinking Small,” International Herald Tribune, September
30, 2005, http://www.iht.com/articles/2005/09/30/business/wbbank.php (accessed January 17, 2007); Sumit
Sharma and Cherian Thomas, “ICICI Seeks 25 Million Rural Clients to Lift Growth (update 1),” Bloomberg,
November 1, 2006, http://www.bloomberg.com/apps/news?pid=20601091&sid=aHZH6TpOSmJM.
8. AME Info, “Visa Encourages Banks to Partner with Microfinance Institutions,” November 7, 2006, http://www.
ameinfo.com/101075.html.
9. In fact, Peachey and Roe (2006) come up with an eye-popping estimate of 1.4 billion. Christen, Rosenberg, and
4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

Jayadeva (2004, 1) are more cautious, but their estimate too is large: “over 750 million [savings and loan] accounts
in various classes of financial institutions that are generally aimed at markets below the level of commercial
banks.”
10. John Oyuke, “Sh900 Million Fund Targets Small Traders,” The Standard (Nairobi), May 17, 2006; Shell
Foundation, “ASPIRE Kenya Launches,” http://www.shellfoundation.org/index.php?newsID=337 (accessed
January 17, 2007).
11. DAWN: The Internet Edition, “Efforts Geared up to Introduce Mobile Banking,” October 20, 2006, http://www.
dawn.com/2006/10/20/ebr8.htm.
12. Based on private conversations with Vodafone managers in November 2006; and MicroSave (2006).
13. Inter-American Development Bank, “Remittances to Select LAC Countries in 2005 (US$ Millions),” http://www.
iadb.org/mif/remittances/index.cfm (accessed February 1, 2007).
14. Reuters, “Mobile Carriers Facilitate Cash Transfers,” CNET News.com, February 11, 2007,
15. http://news.com.com/Mobile+carriers+facilitate+cash+transfers/2100-1039_3-6158314.html?tag=nefd.top
(accessed February 13, 2007).
16. Time Magazine, “The Lives and Ideas of the World’s Most Influential People,” special issue, May 8, 2006.
17. SKS Microfinance, “SKS,” http://www.sksindia.com/ (accessed January 22, 2007).
18. Eric B. Shivnoor, “Entrepreneur Gets Big Banks to Back Very Small Loans,” Wall Street Journal, May 15, 2006,
http://www.wsj.com/.
19. MIX Market, “Profile of SKS,” http://www.mixmarket.org/en/demand/demand.show.profile.asp?ett=25
(accessed January 10, 2007).
(',
I\]\i\eZ\j
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The analysis of the size of the BOP is based on data derived from The income cutoffs are given in 2002 international dollars for con-
national income and consumption surveys conducted by national venience and ease of reference. Unless otherwise indicated, how-
statistics offices in 110 countries (see table A.1a). The analysis ever, actual income or expenditure figures in this report are given
of the total income of the BOP is based on an income inequality in 2005 international dollars, inflated from the 2002 figures using
methodology developed by Branko Milanovic, lead economist with the U.S. consumer price index. (Where such data are also reported
the World Bank’s Research Department, and described in Worlds in U.S. dollars, they are given in 2005 U.S. dollars.) In 2005 inter-
Apart: Measuring International and Global Inequality (Milanovic national dollars the income cutoff for the BOP is $3,260, and that
2005). Dr. Milanovic “lines up” all the world’s people, assigning for the mid-market segment $21,731.
each an annual income based on the relevant national household
survey, to measure global inequality among individuals. Jlim\pj
A selected list of surveys included in the income analysis is shown
The analysis undertaken for this report uses the same methodol- in table A.1b. For a complete list of surveys used please contact Dr.
ogy in determining relative income levels. People with incomes Milanovic.
of $3,000 and below (in 2002 international dollars, adjusted for
purchasing power parity, or PPP) are defined as the BOP. Those J`q\f]dXib\k
with incomes up to $20,000 but more than $3,000 are defined as Data on the size of the BOP population and on the total income of
the mid-market segment. And those with incomes greater than the BOP—assumed in this report to be equivalent to expenditure
$20,000 are defined as the high-income segment. Purchasing and thus used to define market size—are shown by selected regions
power parity conversions are made using data from the World and for selected countries within these regions in table A.2. The re-
Bank’s World Development Indicators database. gional totals comprise selected countries listed in table A.1a. These
data are provided by Dr. Milanovic and have not been previously
published.
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China Burkina Faso Armenia Argentina (urban) Austria
East Timor Cameroon Azerbaijan Bolivia Belgium
India Cape Verde Belarus Brazil Canada
Indonesia Comoros Bosnia Chile Finland
Iran Egypt Bulgaria Colombia France
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Jordan Ethiopia Croatia Costa Rica Germany
Laos Guinea Czech Republic Dominican Republic Greece
Malaysia Ivory Coast Estonia Ecuador Ireland
Nepal Madagascar Georgia El Salvador Israel
Pakistan Malawi Hungary Guatemala Italy
Philippines Mali Kazakhstan Haiti Japan
Sri Lanka Mauritania Kyrgyz Rep Honduras Korea, South
Syria Mozambique Latvia Jamaica Luxembourg
Thailand Nigeria Lithuania Mexico Netherlands
Vietnam Sao Tomé and Principe FYR Macedonia Nicaragua Norway
Senegal Moldova Panama Singapore
Sierra Leone Montenegro Paraguay Spain
South Africa Poland Peru Sweden
Tanzania Romania Suriname Switzerland
Uganda Russia Uruguay (urban) Taiwan
Zambia Serbia Venezuela United Kingdom
Slovakia USA
Slovenia ('0
Tajikistan
Turkey
Ukraine
Uzbekistan
KXYc\8%(Y
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2002 Albania Living Standards Measurement Study Survey
2004 Armenia Armenian Household Survey (Integrated Living Conditions Survey)
2002/3 Australia Survey of Income and Housing
2000 Austria European Community Household Panel (LIS Database)
2000 Belgium Panel Study of Belgian Households (LIS Database)
2001 Bosnia and Herzegovina Living Standards Measurement Study Survey
2003 Bulgaria Household Income Survey
2000 Canada Survey of Labour and Income Dynamics (LIS Database)
2001/2 Cape Verde Inquerito as Despensas e Receitas Familiars
2004 Croatia Household Budget Survey
2002 Czech Republic Mikrocensus
2003 Ecuador Encuesta de Condiciones de Vida
2004 Egypt Income and Expenditure Survey
2000 Estonia Household Income and Expenditure Survey (LIS Database)
2000 Finland Income Distribution Survey (LIS Database)
2002 France Revenus Fiscaux des Ménages
2000 Germany German Social Economic Panel Study (LIS Database)
2000 Greece Household Income and Living Conditions Survey (LIS Database)
2001 Haiti Encuesta sur les Conditions de Vie en Haiti
2002 Hong Kong, China General Household Survey
1999/2000 India (rural) National Sample Survey
1999/2000 India (urban) National Sample Survey
2002 Indonesia (rural) National Socioeconomic Survey (SUSENAS)
2002 Indonesia (urban) National Socioeconomic Survey (SUSENAS)
2000 Ireland European Community Household Panel (LIS Database)
2001 Israel Family Expenditure Survey (LIS Database)
2000 Italy Bank of Italy Survey (LIS Database)
2003 Jamaica Jamaica Survey of Living Conditions
2002 Japan Family Income and Expenditure Survey
2003 Jordan Household Expenditure Survey
2003 Korea Household Income and Expenditure Survey
2002 Lao PDR Lao Expenditure and Consumption Survey III
2002 Latvia Household Survey
2004 Malawi Second Integrated Household Survey
2000 Malaysia Malaysian Household Income Survey
2002 Moldova Household Budget Survey
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
2000 Montenegro Household Income and Expenditure Survey (LSMS data)

2003/4 Nepal Nepal Income and Expenditure Survey
2000 Norway Income and Property Distribution Survey (LIS Database)
2000 Philippines Family Income and Expenditure Survey
2002 Poland Household Budget Survey
2002 Russia Household Budget Survey
2000 São Tomé and Principe Inquérito Condições de Vida das Familias
2003 Serbia Living Standards Measurement Study Survey
2003 Sierra Leone Sierra Leone Living Standards Survey
2003 Singapore Household Expenditure Survey
2003 Slovakia Mikrocensus
1999 Slovenia Household Budget Survey (LIS Database)
2000 South Africa Income and Expenditure Survey
2000 Spain European Community Household Panel (LIS Database)
2002 Sri Lanka Household Income and Expenditure Survey
2000 Sweden Income Distribution Survey (LIS Database)
2002 Switzerland Income and Expenditure Survey (LIS Database)
2003/4 Syria Family Income and Expenditure Survey
2003 Tajikistan Living Standards Measurement Study Survey
2003 Turkey Household Budget Survey
((' 1999 United Kingdom Family Resources Survey (LIS Database)
2000 United States March Current Population Survey (LIS Database)
2002/3 Uzbekistan Uzbekistan Household Survey
2002/3 Zambia Zambia Living Conditions Monitoring Survey
Note: LIS is Luxembourg Income Study. LSMS is Living Standards Measurement Study. For complete survey list see Branko Milanovic.
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8gg\e[ò9 data sets by mining existing survey data—drawing on the most re-
cent available nationally representative household budget survey
JkXe[Xi[`qXk`fed\k_f[fcf^p (or on another survey with a detailed questionnaire on household
Expenditure data are derived from household consumption sur- expenditure).
veys conducted by national statistics offices. All surveys have Because the source data sets are not standard (different ques-
been standardized as part of the 2003–06 round of the Interna- tionnaires and methods are used in different countries), the stan-
tional Comparison Program. Standardization of the surveys used dardization process has some limits. The formatting of the result-
in this report was overseen by Olivier Dupriez, senior statistician ing subsets is standardized, but total comparability of the data
and economist with the World Bank’s Development Data Group. cannot be achieved. To the extent possible, uniform methods are
The International Comparison Program is a global statisti- used to process the data, particularly for aggregating household
cal initiative established to produce internationally comparable expenditure. But significant differences in the design of question-
price levels, expenditure values, and purchasing power par- naires make it impossible to fully harmonize the aggregation pro-
ity (PPP) estimates. Purchasing power parities are a form of ex- cedures (for example, some questionnaires do not collect enough
change rate that takes into account the cost and affordability of information for estimating the annual consumption value for
common items in different countries. durables).
The project has classified products and services consumed by
households into 110 groups called “basic headings.” The objective Jlim\pj
of the project is to derive, for as many participating countries as Table B.1 shows the 36 surveys that have been standardized in the
possible, the share of each basic heading in total household con- way described and that serve as the basis for the sector analyses in
sumption for different population categories (sorted by level of this report and for the country data tables that follow.
wealth, between urban and rural areas, or using other criteria).
The aim is to generate poverty-specific purchasing power parities :flekip[XkXkXYc\j
that take into account the spending patterns of the poor. The country data tables show standardized expenditure data for
To obtain the share of each basic heading, the project pro- each of 36 countries—the measured BOP expenditure data for the
duces a standardized data set for each country. It generates these analysis presented in this report.
KXYc\9%(
Jlim\pjlj\[XjjfliZ\jf]\og\e[`kli\[XkX
P\Xi :flekip Jlim\p
2000 Bangladesh Household Budget Survey
2002 Belarus Income and Expenditure Survey
2002 Bolivia Encuesta de Hogares (MECOVI Program)a
2002 Brazil Pesquisa de Orçamentos Familiares
2003 Burkina Faso Enquête Burkinabé sur les Conditions de Vie des Ménages
1998 Burundi Enquête Prioritaire
2003/4 Cambodia Socioeconomic Survey
2001 Cameroon Enquête Camerounaise auprès des Ménages II
1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

2003 Colombia Encuesta de Calidad de Vida
2002 Côte d’Ivoire Enquête Niveau de Vie des Ménages
2004 Djibouti Enquête Djiboutienne auprès des Ménages Indicateurs sociaux
2005 Gabon Enquête Gabonaise pour l’Evaluation et le Suivi de la Pauvreté
2000 Guatemala Encuesta Nacional sobre Condiciones de Vida
2004 Honduras Encuesta Nacional de Condiciones de Vida
2004 India National Sample Survey 60th Round
2002 Indonesia National Socioeconomic Survey (SUSENAS)
2002 Jamaica Jamaica Survey of Living Conditions
2003 Kazakhstan Household Budget Survey
2003 FYR Macedonia Household Budget Survey
2004 Malawi Second Integrated Household Survey
2004 Mexico Encuesta Nacional de Ingresos y Gastos de los Hogares
2003 Nepal Nepal Living Standards Survey II
2003 Nigeria QUIBB+
2001 Pakistan Pakistan Integrated Survey
2000/1 Paraguay Encuesta Integrada de Hogares
2003 Peru Encuesta Nacional de Hogares—Condiciones de Vida y Pobreza
2003 Russia NOBUS
2000 Rwanda Enquête Intégrale sur les Conditions de Vie
2003 Sierra Leone Sierra Leone Integrated Household Survey
2000 South Africa Income and Expenditure Survey
2002 Sri Lanka Sri Lanka Integrated Survey
((*
2003 Tajikistan Living Standards Measurement Study Survey a. MECOVI (the Spanish acronym for Mejoramiento de
las Encuestas de Hogares y la Medición de Condiciones de
2002 Thailand Socioeconomic Survey
Vida) is the Program for the Improvement of Surveys and
2002/3 Uganda National Household Survey
the Measurement of Living Conditions in Latin America
2003 Ukraine Household Budget Survey and the Caribbean.
2003 Uzbekistan Living Standards Measurement Study Survey
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<e\i^p ()#-/*%' (#)++%+ ,#+).%' *#'(,%+ (#,/-%. /.)%' ,*.%, ,.&+* Fk_\i *'#0,.%+ 0,%+
G\iZXg`kX -( )0 ,' /, ()+ (.* ),( KfkXc )(+#0()%( 0,%)
G\i_flj\_fc[ )+* (*- (00 *'. +). ,0' /,(
?flj\_fc[^ff[j (,#.))%' (#+.'%' -#.*,%* *#.-/%' )#'*'%/ (#'.,%0 -+)%' ,,&+,
1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX .- *+ -) ('- (,0 )(+ )00
G\i_flj\_fc[ *') (-( )+. */+ ,+. .)/ ('(-
?\Xck_ +#'.+%/ )0+%+ (#-()%+ (#'++%, ,./%. *-+%, (/'%) -)&*/
G\iZXg`kX )' . (, )0 +, .) /+ J\Zkfij_Xi\jf]
./ *) ,0 ('- (,- )+. )/,
KiXejgfikXk`fe /#*0,%. ),)%/ )#-/,%/ )#,..%/ (#,-*%/ /**%( +/)%* -.&**
G\iZXg`kX +( - ), .) ()) (-- )), EXk`feXc 9FG
G\i_flj\_fc[ (-( )/ 0/ )-* +)( ,-* .-* =ff[ ,(%, ,)%,
@:K )#(*0%) +%, (.*%. +0(%) ,0/%/ +0.%+ *.*%- 0*&. ?fljè^ ('%+ 0%/
G\iZXg`kX (' ' ) (+ +. 00 (.+ NXk\i '%+ '%+
G\i_flj\_fc[ +( ' - ,' (-( **- ,0( <e\i^p -%) -%)
<[lZXk`fe *#.+'%* )'.%- (#(/+%( (#'(+%+ -./%0 +'-%, )+/%/ .0&)( ?flj\_fc[^ff[j .%/ .%.
G\iZXg`kX (/ , (( )/ ,* /( ((- ?\Xck_ )%' )%'
G\i_flj\_fc[ .) )* +* ('* (/* )., *0+ KiXejgfikXk`fe +%) +%(
Fk_\i )0#,+.%) )#+++%/ ()#0+0%( .#++-%- *#.,*%. (#0(0%+ (#'**%, ,,&+, @:K (%* (%'
G\iZXg`kX (+* ,. ()' )'0 )0* */) +/) <[lZXk`fe (%0 (%/
G\i_flj\_fc[ ,-. )-/ +.+ .,/ ('(' ()0/ (-*- Fk_\i (+%+ (+%+
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()0
A8D8@:8
KfkXceXk`feXc_flj\_fc[dXib\k+#0*'%0d`cc`fe
GfglcXk`fe)%-d`cc`fe
?flj\_fc[j'%-d`cc`fe
9FG*''' '%( *%- ,/%, *',%, -%) ,/%.
9FG),'' '%( ,%- +/%* *0)%* /%' +/%+
9FG)''' '%* ('%/ +.%/ ,/*%' ((%/ +/%(
9FG(,'' '%, (/%+ ++%) .('%, (+%+ ++%,
9FG(''' '%/ )0%, +*%' -/'%' (*%/ +)%(
9FG,'' '%- )*%/ +-%' )'+%- +%( +*%0
9FGkfkXc )%+ 0(%. +,%, GfglcXk`fe <og\e[`kli\ )#/.,%/ ,/%* +-%.
9FG\og\e[`kli\
=ff[ 0*+%( )/%' )('%+ ),*%) )'+%* (+,%( 0*%( *(&-0 =ff[ (#(*-%. /)%)
G\iZXg`kX *0( +, ).+ ,). .)+ 0/0 (''' ?fljè^ (',%' //%(
G\i_flj\_fc[ (+,( (0( ((,( (0'( )),. )-)+ )-*0 NXk\i /)%( /(%0
?fljè^ 0)%, )%) )'%' )'%, ),%* (*%* ((%( /(&(0 <e\i^p )+,%. 0(%*
G\iZXg`kX *0 * )- +* 0' 0( ()' ?flj\_fc[^ff[j ))/%- /0%-
G\i_flj\_fc[ (++ (, ((' (,+ )/' )+( *(, ?\Xck_ -*%* /0%0
NXk\i -.%* ,%' (.%) (-%( (*%+ 0%. ,%0 --&*+ KiXejgfikXk`fe )-+%. /'%-
G\iZXg`kX )/ / )) *+ +. -- -+ @:K +,%. .'%0
G\i_flj\_fc[ (', *+ 0+ ()( (+/ (., (-/ <[lZXk`fe e%X% e%X%
<e\i^p ))+%, ),%) --%) ,/%' */%+ )*%) (*%+ ,)&+/ Fk_\i )#.,0%( */%(
G\iZXg`kX 0+ +( /- ()( (*- (,/ (++ KfkXc +#0*'%0 ,/%*
G\i_flj\_fc[ *+0 (.) *-) +*- +), +)' */'
?flj\_fc[^ff[j )'+%/ (0%0 ,.%/ +0%/ +'%- )(%- (,%( +0&,(
G\iZXg`kX /- *) ., ('+ (++ (+. (-)
G\i_flj\_fc[ *(/ (*- *(- *.+ ++/ *0( +).
?\Xck_ ,-%0 ,%* (.%, (*%* ((%( -%' *%. +*&,.
J\Zkfij_Xi\jf]
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
G\iZXg`kX )+ 0 )* )/ *0 +( +'
G\i_flj\_fc[ // *- 0- ('' ()) ('0 ('- _flj\_fc[\og\e[`kli\

KiXejgfikXk`fe )(*%+ (+%- ,(%- ,-%' +(%* )/%/ )(%( ,,&+,
G\iZXg`kX /0 )+ -. ((. (+- (0- )). EXk`feXc 9FG
G\i_flj\_fc[ **( 00 )/) +)' +,- ,)( ,0/ =ff[ )*%( *)%,
@:K *)%+ '%/ /%' .%- .%+ +%0 *%. -.&** ?fljè^ )%( *%)
G\iZXg`kX (+ ( (' (- )- ** +' NXk\i (%. )%*
G\i_flj\_fc[ ,' - ++ ,. /( // ('- <e\i^p ,%' .%/
<[lZXk`fe e%X% e%X% e%X% e%X% e%X% e%X% e%X% e%X% ?flj\_fc[^ff[j +%- .%(
G\iZXg`kX ?\Xck_ (%* )%'
G\i_flj\_fc[ KiXejgfikXk`fe ,%+ .%+
Fk_\i (#'+0%0 ('*%- )*(%* )*,%0 )'(%) (*0%. (*/%) ,*&+. @:K '%0 (%(
G\iZXg`kX +*0 (-. *'( +0( .(+ 0,* (+/+ <[lZXk`fe e%X% e%X%
G\i_flj\_fc[ (-*( .'. ()-, (..( )))* ),). *0(, Fk_\i ,-%' *-%,
KfkXc )#/.,%/ )'+%- -/'%' .('%, ,/*%' *0)%* *',%, +.&,* KfkXc (''%' (''%'
(*'
B8Q8B?JK8E
KfkXceXk`feXc_flj\_fc[dXib\k)/#++.%/d`cc`fe
GfglcXk`fe(,%+d`cc`fe
?flj\_fc[j*%.d`cc`fe
9FG*''' (%) .%, /'%* *#+.*%+ ()%) /'%+
9FG),'' )%( (*%* .*%. ,#'+/%- (.%. .*%0
9FG)''' *%( )'%' -)%* ,#0)(%, )'%/ -)%-
9FG(,'' +%* ).%/ +.%' ,#/-.%- )'%- +.%.
9FG(''' *%+ )(%. **%' )#0*0%0 ('%* **%(
9FG,'' '%) (%, *,%- (',%) '%+ *+%0
9FGkfkXc (+%) 0(%/ ,*%+ GfglcXk`fe <og\e[`kli\ )*#*,-%) /)%( -'%(
9FG\og\e[`kli\
=ff[ (*#-+(%) .(%/ (#/0.%' *#,.'%) *#*0(%* )#.00%) (#0((%/ ,-&++ =ff[ (-#*)+%, /*%-
G\iZXg`kX 0,0 *'- ,-+ /)0 ('0) (*,/ (-+0 ?fljè^ ((/%/ /'%)
G\i_flj\_fc[ *-/. (.*. *(+. *,0' *.+- +')- +(,+ NXk\i )(,%+ /)%/
?fljè^ 0,%* '%) ,%/ (0%, ).%0 ),%' (.%' 0/&) <e\i^p )#-(-%+ /)%)
G\iZXg`kX . ( ) , 0 () (, ?flj\_fc[^ff[j *#*'+%* /(%.
G\i_flj\_fc[ )- , (' )' *( *- *. ?\Xck_ -))%' ..%*
NXk\i (./%+ (%) )(%- +.%' +-%, */%* )*%/ .0&)( KiXejgfikXk`fe (#'.-%, ..%+
G\iZXg`kX (* , - (( (, (0 )( @:K +*-%0 .*%.
G\i_flj\_fc[ +/ )/ *- +. ,( ,, ,) <[lZXk`fe +-0%0 /+%-
<e\i^p )#(+0%. 0%+ )-'%. ,)(%+ ,+/%* +.0%+ **'%- -*&*. Fk_\i *#)-*%) ./%+
G\iZXg`kX (,( +' ./ ()( (.- )** )/, KfkXc )/#++.%/ /)%(
G\i_flj\_fc[ ,/( )). +** ,)+ -'- -/0 .(/
?flj\_fc[^ff[j )#-00%* 0%* *)+%* -/*%' -0(%/ ,0+%+ *0-%, -)&*/
1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX (0' +' 0- (,0 ))* )// *+)
G\i_flj\_fc[ .*' ))- ,*/ -/. .-+ /,, /-)
?\Xck_ +/'%, (%+ +-%. (')%- ()/%( (()%0 //%. -0&*(
G\iZXg`kX *+ - (+ )+ +( ,, .. J\Zkfij_Xi\jf]
(*' ** ./ ('* (+) (-) (0*
KiXejgfikXk`fe /**%. )%0 /)%- (0'%( )(,%0 )''%( (+)%( .)&)/
G\iZXg`kX ,0 () ), ++ .' 0. ()* EXk`feXc 9FG
G\i_flj\_fc[ )), .' (*. (0( )*0 )// *'0 =ff[ ,.%+ ,/%+
@:K *)(%/ '%, (0%, ,0%* 0'%+ /-%' --%( ./&)) ?fljè^ '%+ '%+
G\iZXg`kX )* ) - (+ )0 +) ,. NXk\i '%/ '%/
G\i_flj\_fc[ /. (* *) -' ('' ()+ (++ <e\i^p 0%) 0%)
<[lZXk`fe *0.%* '%/ *'%. 0-%( ((,%) 0+%0 ,0%, .,&), ?flj\_fc[^ff[j ((%- ((%-
G\iZXg`kX )/ + 0 )) *. +- ,( ?\Xck_ )%) )%(
G\i_flj\_fc[ ('. )' ,( 0. (). (*. ()0 KiXejgfikXk`fe *%/ *%-
Fk_\i )#,,/%0 .%. ),(%' ,./%, ---%' -(/%, +*.%) -+&*- @:K (%, (%+
G\iZXg`kX (/' ** ., (*+ )(+ *'' *.. <[lZXk`fe (%. (%.
G\i_flj\_fc[ -0) (/- +(- ,/) .*- /0' 0,' Fk_\i ((%, ((%'
KfkXc )*#*,-%) (',%) )#0*0%0 ,#/-.%- ,#0)(%, ,#'+/%- *#+.*%+ -'&+' KfkXc (''%' (''%'
(*(
=PID8:<;FE@8
KfkXceXk`feXc_flj\_fc[dXib\k-#0'*%.d`cc`fe
GfglcXk`fe)%'d`cc`fe
?flj\_fc[j'%*d`cc`fe
9FG*''' '%) ('%. ,(%- -*-%+ 0%) ,(%0
9FG),'' '%* (*%- ,/%/ --*%* 0%- ,/%0
9FG)''' '%* (*%- ,)%. ,(/%0 .%, ,)%.
9FG(,'' '%* ()%. ,+%) *+-%* ,%' ,*%0
9FG(''' '%( -%/ ,(%) ((/%- (%. ,(%(
9FG,'' '%' '%/ ,,%) .%' '%( ,+%)
9FGkfkXc (%) ,/%) ,+%( GfglcXk`fe <og\e[`kli\ )#)0'%+ **%) ,+%+
9FG\og\e[`kli\
=ff[ (#**)%' ,%, /.%( )*-%, *'/%) *-(%. ***%( ,-&++ =ff[ *#)'(%+ +(%-
G\iZXg`kX ((*) *+0 -** 0)) (()( (*(- (,*- ?fljè^ )+%+ (*%(
G\i_flj\_fc[ ,(+, )'), *+/. ++,* ,(.) ,,(0 -)/- NXk\i *%0 )+%+
?fljè^ *%) '%' '%' '%( '%0 (%' (%) -0&*( <e\i^p .((%( (0%.
G\iZXg`kX * ( ' ' * + - ?flj\_fc[^ff[j /,/%* ),%/
G\i_flj\_fc[ () 0 ( ( (, (- )* ?\Xck_ (.(%) *.%0
NXk\i '%0 '%' '%' '%( '%) '%* '%* /)&(/ KiXejgfikXk`fe +0+%. ))%,
G\iZXg`kX ( ' ' ' ( ( ( @:K +'-%( )(%*
G\i_flj\_fc[ + ' ( ) + + - <[lZXk`fe (,%( ('%*
<e\i^p (+'%' '%' (%) ()%. )-%- +.%. ,(%/ ,+&+- Fk_\i (#'(.%, *)%*
G\iZXg`kX ((0 ) / ,' 0. (.+ )*0 KfkXc -#0'*%. **%)
G\i_flj\_fc[ ,+( (( +- )*0 ++- .)/ 0./
?flj\_fc[^ff[j ))(%+ '%* /%) ),%0 +0%. -.%( .'%) +0&,(
G\iZXg`kX (// (/ -' ('( (/( )++ *)+
G\i_flj\_fc[ /,, ('- *)0 +// /*, (')+ (*)+
?\Xck_ -+%0 '%( *%* /%- (-%- (.%/ (/%, ,.&+*
J\Zkfij_Xi\jf]
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
G\iZXg`kX ,, / )+ ** -' -, /,
),( ++ (** (-( )./ ).) *+0
KiXejgfikXk`fe (((%+ '%( (%0 /%( )+%) */%( *0%' +-&,+
G\iZXg`kX 0, . (* *) // (*0 (/' EXk`feXc 9FG
G\i_flj\_fc[ +*' +' .+ (,* +'- ,/( .*. =ff[ +-%+ ,/%)
@:K /-%. '%' '%. .%( (.%' *'%* *(%, ,*&+. ?fljè^ '%+ '%(
G\iZXg`kX .+ ' , )/ -) ((' (+, NXk\i '%( '%'
G\i_flj\_fc[ **, ' ). (** )/- +-* ,0, <e\i^p ('%* -%(
<[lZXk`fe (%- '%' '%' '%( '%+ '%, '%- /+&(- ?flj\_fc[^ff[j ()%+ 0%.
G\iZXg`kX ( ' ' ' ( ) * ?\Xck_ )%, )%/
G\i_flj\_fc[ - ' ) ) - . () KiXejgfikXk`fe .%) +%0
Fk_\i *)/%) '%0 (-%( +.%) .,%) 0/%. 0'%) ,*&+. @:K ,%0 *%/
G\iZXg`kX ).0 ,/ ((. (/+ ).+ *,0 +(- <[lZXk`fe '%) '%(
G\i_flj\_fc[ ()-/ **/ -+, //0 ()-) (,'- (.'( Fk_\i (+%. (+%*
KfkXc )#)0'%+ .%' ((/%- *+-%* ,(/%0 --*%* -*-%+ ,+&+- KfkXc (''%' (''%'
(*)
D8C8N@
KfkXceXk`feXc_flj\_fc[dXib\k.#,-'%'d`cc`fe
GfglcXk`fe()%)d`cc`fe
?flj\_fc[j)%.d`cc`fe
9FG*''' '%( '%- -/%, (0(%, )%, -/%+
9FG),'' '%( '%/ -(%( )(0%0 )%0 -(%)
9FG)''' '%* )%( ,+%' ++,%( ,%0 ,+%(
9FG(,'' '%/ -%- *'%, (#'',%) (*%* *(%'
9FG(''' *%. *'%' (*%/ )#-''%. *+%+ (+%0
9FG,'' .%( ,/%- *%, )#*(,%( *'%- +%(
9FGkfkXc ()%' 0/%- ('%* GfglcXk`fe <og\e[`kli\ -#...%+ /0%- (0%)
9FG\og\e[`kli\
=ff[ +#,).%( (#-/(%* (#...%- -(0%' )+*%- ((0%+ /-%* (-&/+ =ff[ +#.0,%( 0+%+
G\iZXg`kX *.- )*, +/- .-, 0-/ ()*0 ().) ?fljè^ ,/'%) 0+%)
G\i_flj\_fc[ (.'- ())' (0,' )-', *(-+ *0,0 +).* NXk\i *.%- .0%,
?fljè^ ,+-%, )'+%+ (0.%( .,%) */%/ (-%) (+%/ ),&., <e\i^p )-+%, /-%,
G\iZXg`kX +, )0 ,+ 0* (,+ (-0 )(0 ?flj\_fc[^ff[j /0'%' /,%.
G\i_flj\_fc[ )'- (+/ )(- *(- ,'+ ,*0 .*, ?\Xck_ ,+%' 0-%,
NXk\i )0%0 *%, 0%+ -%. ,%( )%, )%. /-&(+ KiXejgfikXk`fe ,-/%, ,/%-
G\iZXg`kX ) ' * / )' )- +' @:K (.%- ).%'
G\i_flj\_fc[ (( * (' )/ -- /* (*, <[lZXk`fe ,/%' /+%(
<e\i^p ))/%/ +0%- /'%- +-%0 )-%0 (*%( ((%/ +,&,, Fk_\i )0+%, /)%.
G\iZXg`kX (0 . )) ,/ ('. (*- (.* KfkXc .#,-'%' /0%-
G\i_flj\_fc[ /- *- // (0. *+0 +*+ ,/)
?flj\_fc[^ff[j .-)%- )(.%- )0'%( ()0%+ --%/ )0%, )0%' )(&.0
1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX -* *' .0 (-' )-, *'- +)/
G\i_flj\_fc[ )/. (,/ *(/ ,+, /-/ 0.0 (+*/
?\Xck_ ,)%( )+%, (/%0 ,%0 (%- '%/ '%, (+&/-
G\iZXg`kX + * , . - / . J\Zkfij_Xi\jf]
)' (/ )( ), )( ), )+
KiXejgfikXk`fe ***%+ +.%* ((+%/ .*%) *.%, )-%. *+%' )+&.-
G\iZXg`kX )/ . *( 0' (+0 ).. ,'( EXk`feXc 9FG
G\i_flj\_fc[ ()- *+ ()- *'/ +/. //, (-/) =ff[ -*%+ --%/
@:K +%/ '%' '%+ (%+ '%. (%( (%( ,,&+, ?fljè^ .%. /%(
G\iZXg`kX ' ' ' ) * () (- NXk\i '%, '%+
G\i_flj\_fc[ ) ' ' - 0 */ ,+ <e\i^p *%, *%+
<[lZXk`fe +/%/ (+%, (*%, .%( .%- *%( *%' ,,&+, ?flj\_fc[^ff[j ((%/ ((%*
G\iZXg`kX + ) + 0 *' *) ++ ?\Xck_ '%. '%/
G\i_flj\_fc[ (/ (( (, *' 00 (') (+0 KiXejgfikXk`fe .%, +%0
Fk_\i )+*%, .)%+ 0/%+ +'%, (-%+ .%, /%* (,&/, @:K '%) '%(
G\iZXg`kX )' (' ). ,' -, .. ()* <[lZXk`fe '%/ '%.
G\i_flj\_fc[ 0) ,* ('/ (.( )(* )+. +() Fk_\i *%0 *%-
KfkXc -#...%+ )#*(,%( )#-''%. (#'',%) ++,%( )(0%0 (0(%, (0&/( KfkXc (''%' (''%'
(**
D<O@:F
KfkXceXk`feXc_flj\_fc[dXib\k*(/#-'*%/d`cc`fe
GfglcXk`fe('+%'d`cc`fe
?flj\_fc[j(,%-d`cc`fe
9FG*''' 0%. 0%* /,%( )/#/0-%( 0%( /,%'
9FG),'' (*%) ()%. /*%* *)#)'+%) ('%( /*%+
9FG)''' (.%* (-%- .,%( *)#./,%* ('%* .,%)
9FG(,'' (-%0 (-%* -,%. )*#'++%- .%) --%'
9FG(''' ()%+ ((%0 +.%0 ('#*/.%/ *%* +0%(
9FG,'' )%/ )%. (+%' (#(0)%* '%+ (+%/
9FGkfkXc .)%+ -0%- -/%. GfglcXk`fe <og\e[`kli\ ()/#,('%+ +'%* .,%(
9FG\og\e[`kli\
=ff[ +(#0()%/ ,,0%. +#)(,%0 /#)00%0 ('#.,(%+ 0#/--%) /#)(0%- .)&)/ =ff[ .+#/+)%. ,-%'
G\iZXg`kX ,.0 (0/ *+' +0( -)( .+. /+, ?fljè^ +,#-'*%/ +*%/
G\i_flj\_fc[ )-/+ (*0. (/.( )+*, ).,- *(*. *)/( NXk\i )#(,-%/ +/%*
?fljè^ (0#00,%. )),%* (#./'%/ *#-''%' ,#'-*%+ +#0*-%' +#*0'%* .0&)( <e\i^p (+#,((%* +/%*
G\iZXg`kX ).- /' (++ )(* )0* *.+ +,) ?flj\_fc[^ff[j *)#/.)%0 *.%/
G\i_flj\_fc[ ()/( ,-) .0' (',- ()0/ (,.' (.,* ?\Xck_ ('#,/)%' */%+
NXk\i (#'+)%' +%* 0)%, (/0%- ),*%* ).-%, )),%/ /-&(+ KiXejgfikXk`fe *0#0-'%- *(%-
G\iZXg`kX (+ ) . (( (, )( )* @:K ()#/-(%( )0%,
G\i_flj\_fc[ -. (( +( ,- -, // 0' <[lZXk`fe (.#*.'%( **%/
<e\i^p .#'((%, ++%) -',%/ (#+(-%' (#/0+%0 (#-(0%' (#+*(%- .-&)+ Fk_\i -.#/+)%+ )0%(
G\iZXg`kX 0. (- +0 /+ ((' ()* (+. KfkXc *(/#-'*%/ +'%*
G\i_flj\_fc[ ++0 ((' )-0 +(, +/- ,(, ,.(
?flj\_fc[^ff[j ()#+)-%' (*0%/ (#(',%0 )#)(-%- *#(.)%- )#0//%( )#/'*%( .)&)/
G\iZXg`kX (.) +0 /0 (*( (/* ))- )//
G\i_flj\_fc[ .0- *+0 +0( -,' /(* 0,' (((0
?\Xck_ +#'-+%) **%+ )./%/ .)'%, 0(-%/ (#().%. 0/.%( -0&*(
J\Zkfij_Xi\jf]
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
G\iZXg`kX ,- () )) +* ,* /, (')
)-' /* ()+ )(( )*, *,0 *0+
KiXejgfikXk`fe ()#-*/%) +)%- --'%( (#0.*%) *#)+(%. *#,(,%' *#)',%. ..&)*
G\iZXg`kX (., (, ,* ((. (/. )-- **' EXk`feXc 9FG
G\i_flj\_fc[ /'0 ('- )0* ,.0 /*( (((/ ()/' =ff[ )*%, *)%-
@:K *#.0/%0 ,%+ (++%. ,),%- 0('%) (#'0*%. (#((0%+ /'&)' ?fljè^ (+%* (,%-
G\iZXg`kX ,* ) () *( ,* /* ((, NXk\i '%. '%/
G\i_flj\_fc[ )+* (* -+ (,+ )** *+/ ++. <e\i^p +%- ,%,
<[lZXk`fe ,#/-0%/ *-%* +*(%+ (#(''%( (#+()%/ (#,..%/ (#*((%+ /'&)' ?flj\_fc[^ff[j ('%* 0%.
G\iZXg`kX /( (* *, -, /) ()' (*, ?\Xck_ *%* *%)
G\i_flj\_fc[ *.- 0( (0( *)* *-) ,') ,)+ KiXejgfikXk`fe ()%, 0%/
Fk_\i (0#.,(%) ('(%+ (#'.)%( *#''*%) ,#(-/%) ,#)'+%) ,#)')%) .,&), @:K +%' *%'
G\iZXg`kX ).* *- /- (./ )00 *0+ ,*, <[lZXk`fe ,%, +%-
G\i_flj\_fc[ ()-, ),* +.- //( (*), (-,, )'.. Fk_\i )(%* (,%+
KfkXc ()/#,('%+ (#(0)%* ('#*/.%/ )*#'++%- *)#./,%* *)#)'+%) )/#/0-%( .,&), KfkXc (''%' (''%'
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K?<@EK<IE8K@FE8C=@E8E:<:FIGFI8K@FE, the private sector arm of the World Bank
Group, promotes open and competitive markets in developing countries. IFC supports sus-
tainable private sector companies and other partners in generating productive jobs and de-
livering basic services, so that people have opportunities to escape poverty and improve their
lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding
for private sector investments and mobilized an additional $25 billion in syndications for 3,531
companies in 140 developing countries. IFC Advisory Services and donor partners have pro-
vided more than $1 billion in program support to build small enterprises, to accelerate private
participation in infrastructure, to improve the business enabling environment, to increase access
to finance, and to strengthen environmental and social sustainability. For more information,
please visit www.ifc.org.
% j E = @ : 2 @ 3 A = C @ 1 3 A 7 < A B 7 B C B 3
K?<NFIC;I<JFLI:<J@EJK@KLK< is an environmental and international development think

tank that goes beyond research to create practical ways to protect the Earth and improve people’s
lives.
WRI is the first environmental organization to engage the business sector in a new way of
thinking about poverty alleviation. Our work is influencing the way business leaders think about
markets, profit, poverty and the environment.
Development Through Enterprise (DTE) is a project within WRI’s broader Enterprise and
Innovation objective. Other projects within this objective include New Ventures (www.new-
ventures.org), which supports sustainable enterprises by accelerating the transfer of capital to
outstanding companies that deliver social and environmental benefits.
The Next 4 Billion, a part of the Tomorrow’s Markets series, is a publication authored by the
DTE team at WRI. DTE catalyzes sustainable economic growth by identifying market opportuni-
ties and business models that meet the needs of underserved communities in emerging econo-
mies. Through direct engagements with corporations, aid agencies, business schools, and other
partners, DTE transforms its intellectual capital into on-the-ground initiatives.
Find more information and opportunities to engage in discussion about DTE’s subject exper-
(,' tise at http://www.NextBillion.net.
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(,)
Like consumers everywhere, the poor are constantly looking for products and services that
improve their quality of life at an affordable price. The poor are also vital producers and
distributors of an immense range of goods. Companies that are smart enough to tailor their
offerings to the needs of low-income consumers and entrepreneurs will thrive in the 21st century.
As illustrated in this important volume, The Next 4 Billion, companies that provide affordable
solutions in areas such as housing, sanitation, public transport, and connectivity will also
make a vital contribution to human development.
Cl`j8cY\ikfDfi\ef
President,
Inter-American Development Bank
C.K. Prahalad and Stuart Hart’s ground-breaking work alerted private sector businesses
to the importance of the market at the base of the pyramid. Now, for the first time, we
can express that importance in hard numbers—a 5 trillion dollar, 4 billion person market.
That represents a massive opportunity for private sector firms to engage in ways
that improve poor peoples’ lives.
D`Z_X\cBc\è
Vice President, Financial and Private Sector Development,
International Finance Corporation and World Bank, and
Chief Economist, International Finance Corporation
Global productivity, education, and the sciences have advanced at an increasingly

fast pace due to information technology and access to the Internet. Yet, most of the
world’s population who inhabit the middle and bottom of the “economic pyramid” is
being underserved in realizing the transforming benefits of IT. The IT industry can
narrow this gap by helping local communities evaluate and pursue inventive approaches
to realizing the benefits of technology, and through co-creation of new business
endeavors with NGO and public sectors that focus specifically on the needs of
middle- and bottom-of-pyramid customers.
N`ccGffc\
Senior Vice President
Microsoft Corporation
It is very clear that the private sector has an important and constructive role to play in
addressing the needs of the poor and disenfranchised. The Next 4 Billion lays the
foundation for the empirical, market-based approach necessary for private enterprises
to bring scale and sustainable solutions to heretofore intractable problems.
Af_e<cbèj
Executive Vice President
Global Brand and Marketing
Visa International
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@ek\ieXk`feXc=`eXeZ\:figfiXk`fe

A co-publication of World Resources Institute and International Finance Corporation

World Resources Institute International Finance Corporation

This report is published by World Resources Institute and International Finance

Rights and Permissions

ISBN 1-56973-625-1 (soft cover)

U.K, Europe, Middle East, Africa, Asia

Visit Eurospan's online bookstore: www.eurospangroup.com/bookstore

Current US dollars means 2005 dollars.

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Addressing the unmet needs of the BOP is essential to raising welfare,

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Traditional approaches tend to address unmet needs for health care,

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3 F 3 1 C B 7 D 3  A C ; ; / @ G  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

• Enabling access to goods or services—ﬁnancially (through sin-

Enterprises may—and often do—use more than one of these strategies

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development (see, for example, Commission on the Private Sector and

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7 < B @ = 2 C 1 B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

paid text-messaging services bought in units as small as US$0.03 (Smith

7 < B @ = 2 C 1 B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

legitimate small businesses investment capital is generally unavailable

7 < B @ = 2 C 1 B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

includes 254 million people in 28 surveyed

7 < B @ = 2 C 1 B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

Asia and Africa, and top-heavy markets in Eastern Europe and

7 < B @ = 2 C 1 B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

in Latin America. 9FG*'''

BOP households than either rural mid-market or even urban BOP

?<8CK? )'' +'' -''

• Enabling access to goods or services—ﬁnancially (through single- 9FG*''' RURAL URBAN

table. 9FG*''' RURAL

7 < B @ = 2 C 1 B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

Localizing value creation

7 < B @ = 2 C 1 B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

Average health spending by BOP households is generally higher in

of mid-market and high-income populations in urban areas.

N_Xk[f\jk_\9FGYlp6 LI98E ILI8C

Data from measured countries illustrate the size of markets and

The heavy BOP spending on pharmaceuticals points to the impor-

7 < 4 = @ ; /B 7 = <  / < 2  1 = ; ; C < 7 1 /B 7 = < A  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

9fk_`e`kjlj\f]gi\gX`[j\im`Z\jf]]\i\[`ejdXccle`kjXe[ tion have mobile phones.3

7 < 4 = @ ; /B 7 = <  / < 2  1 = ; ; C < 7 1 /B 7 = < A  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

:8J<JKL;P*%*@E;FE<J@81 hold ICT spending should thus be regarded as

7 < 4 = @ ; /B 7 = <  / < 2  1 = ; ; C < 7 1 /B 7 = < A  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

Data on phone ownership support lack of

7 < 4 = @ ; /B 7 = <  / < 2  1 = ; ; C < 7 1 /B 7 = < A  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

k_Xkg\fgc\ZXe\Xj`cpj\\n_\eflk[ffijXe[XYXkk\ipn`k_ ers and the Internet.

Increasingly, mobile phones also offer Internet services such as

7 < 4 = @ ; /B 7 = <  / < 2  1 = ; ; C < 7 1 /B 7 = < A  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

it from “free” sources—surface water and wells. Some of these sources

B @ / < A > = @ B/B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

kfgXjj`e^c\^`jcXk`fek_Xkn`cci\hl`i\ki`ZpZc\[i`m\ijkfi\$ in Latin America ($38.4 billion and 276 mil-

and Thailand (30%). In Bangladesh, Indonesia,

B @ / < A > = @ B/B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

B @ / < A > = @ B/B 7 = <  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

between countries, as shown by the examples of India and Brazil. 9FG*''' +

6 = C A 7 < 5  j  B 6 3  < 3 F B  "  0 7 : : 7 = <

9FG,'' half that of its weight in population. Nonetheless, in countries such as

@ek\ieXk`feXc=`eXeZ\:figfiXk`fe

3 F 3 1 C B 7 D 3 A C ; ; / @ G j B 6 3 < 3 F B " 0 7 : : 7 = <

3 F 3 1 C B 7 D 3 A C ; ; / @ G j B 6 3 < 3 F B " 0 7 : : 7 = <

3 F 3 1 C B 7 D 3 A C ; ; / @ G j B 6 3 < 3 F B " 0 7 : : 7 = <

3 F 3 1 C B 7 D 3 A C ; ; / @ G j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < B @ = 2 C 1 B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

N_Xk[f\jk_\9FGYlp6 LI98E ILI8C

7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

9fk_`e`kjlj\f]gi\gX`[j\im`Z\jf]]\i\[`ejdXccle`kjXe[ tion have mobile phones.3

7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

:8J<JKL;P%@E;FE<J@81 hold ICT spending should thus be regarded as

7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

k_Xkg\fgc\ZXe\Xj`cpj\\n_\eflk[ffijXe[XYXkk\ipn`k_ ers and the Internet.

7 < 4 = @ ; /B 7 = < / < 2 1 = ; ; C < 7 1 /B 7 = < A j B 6 3 < 3 F B " 0 7 : : 7 = <

B @ / < A > = @ B/B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

kfgXjj`e^c\^`jcXk`fek_Xkn`cci\hl`i\ki`ZpZc\[i`m\ijkfi\$ in Latin America ($38.4 billion and 276 mil-

B @ / < A > = @ B/B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

B @ / < A > = @ B/B 7 = < j B 6 3 < 3 F B " 0 7 : : 7 = <

6 = C A 7 < 5 j B 6 3 < 3 F B " 0 7 : : 7 = <

6 = C A 7 < 5 j B 6 3 < 3 F B " 0 7 : : 7 = <

6 = C A 7 < 5 j B 6 3 < 3 F B " 0 7 : : 7 = <

3 < 3 @ 5 G j B 6 3 < 3 F B " 0 7 : : 7 = <

,.`e9FG('''#.+`e9FG(,''# - -

3 < 3 @ 5 G j B 6 3 < 3 F B " 0 7 : : 7 = <

XjdXepelki`\ekjXjk_\Zfdg\k`k`fe#Zfjkjc\jjk_XeLJ'%'.# sured rural BOP food market is 2.5 times the

times the size of the rural market. Only three :8J<JKL;P/%)

f]\eXYc`e^XZZ\jj% in the mid-market segment spend an average

4 = = 2 j B 6 3 < 3 F B " 0 7 : : 7 = <

4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

jX]\kp1k_\\c\Zkife`ZZlii\eZpi\c`\m\jZljkfd\ijf]k_\ card that captures and stores account informa-

4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

4 7 < / < 1 7 / : A 3 @ D 7 1 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

@ 3 4 3 @ 3 < 1 3 j B 6 3 < 3 F B " 0 7 : : 7 = <

8j`X 8]i`ZX <Xjk\ie<lifg\ CXk`e8d\i`ZXXe[ 8[[`k`feXc:fleki`\j

/ > > 3 < 2 7 F / j B 6 3 < 3 F B " 0 7 : : 7 = <

8j`X )/,/ /%+ #+.'#''' .+)#''' +(%.

<Xjk\ie<lifg\ ),+ -%/ +,/#''' (,#''' *-%'

CXk`e8d\i`ZX:Xi`YY\Xe *-' -0%0 ,'0#''' ))0#''' )/%)

/ > > 3 < 2 7 F / j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX )* / *( -. /+ (+) )',

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX )- . (, )) ' ( +'

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX )0 - / )' *( ,/ /'

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX .) (* *( -. ((/ (+- (/)

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX ** (- +* /( ()- )(- )))

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX -+ (+ *, +, /' ((( ()+

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX (). )/ ,. 0* (*, (,. (.+

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

G\iZXg`kX .' ), ,) 0* (,+ (0) *-' J\Zkfij_Xi\jf]

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

1 = C < B @ G 2/B/ B/ 0 : 3 A j B 6 3 < 3 F B " 0 7 : : 7 = <

K?<NFIC;I<JFLI:<J@EJK@KLK< is an environmental and international development think