IXL Social Enterprise Case Studies Water March 2011 | Page 8

Getting Safe Water and Sanitation to the Bottom of the Pyramid through Bold and Game-Changing Innovations
areas. In contrast, traditional grant costs have
remained stagnant at USD40/person. Therein
lies the beauty of WaterCredit—it relies less
on charity dollars and instead spurs sustainable
growth in commercial capital (freeing up
traditional grant charity for those who really need
it and cannot afford a loan). In fact, three dollars
of commercial and social capital is attracted for
each philanthropic dollar used by WaterCredit.
And as each borrowed dollar is repaid, it can be
re-lent again and again.

But, WaterCredit is not enough—there
has to be a better way
WaterCredit is only part of the solution that needs
to rapidly bring safe water and sanitation to 100
million or more people within five years. Faced
with the challenge of finding other complementary
business models that he could borrow and
adapt, Gary was having a familiar feeling—like
how he felt back in 2003 before pioneering
WaterCredit. Once again he was searching
for a game-changing solution that would be a
breakthrough in accelerating Water.org’s reach.
And once again, the feeling pushed him to look
outside of the watsan space. As WaterCredit was
a revolutionary idea located at the intersection of
two industries (microfinance and watsan), Gary’s
hunch was that the next breakthrough was an
untapped business opportunity sitting at another
industry “intersection” point. And so he is now in
the midst of investigating what other industries
are doing to penetrate the Bottom of the
Pyramid (BOP).
A revolution is spreading across other industries
as they develop innovative ways to penetrate
the BOP. In the telecom industry, for example,
mobile phones are reaching hundreds of millions
of the world’s poorest people who would have
never been considered “customers” in the past.
New business models for serving the BOP
spring to life each day as cell phones are used in
creative, never-before imagined ways: as mobile
banks and information communication systems.51
Through the development of new business
models, many other industries such as education,
healthcare, insurance, and financial services are
reaching the BOP. In fact, people who are actually
living in the BOP are building businesses that
generate profits by serving the BOP itself. Many
future solutions aimed at reaching the “last mile”
will occur at the intersections of these models
and others. A review of learnings from other
industries may help generate insights to solving
the challenge of getting safe water and sanitation
to people.

Learnings from other industries
BOP is profitable
Driven by high profit margins on low unit sales,
mobile phone companies are penetrating deeper
and deeper into the BOP.52 More people in the
world have access to cell phones than to toilets.
By the end of August 2010, people in India had
more than 670 million connections, growing at a
rate of about 20 million new users per month.53
Companies like Reliance in India, Wizzit in South
Africa, and Safari.com in Kenya are finding ways
to profit from the BOP.54
Women from local community “self-help groups”
are serving as Unilever’s sales force in India,
educating other women about the importance of
cleanliness and selling Unilever’s personal care
products directly to them. Its Indian subsidiary,
Hindustan Lever Limited (HLL), developed
profitable products at prices affordable to the
poor (such as small plastic sachets of shampoo
rather than more expensive bottles).55
Social relations can be used to collateralize
loans for the poor
The BOP is proving wrong the long-held
conventional belief that it is too risky to lend to
the poor. On the contrary, the poor are willing
and able to repay their loans (there are about
300 million individuals with USD12 billion of
pent-up demand for watsan loans between now
and 2015). The numbers speak for themselves at
Grameen Bank with its microfinance loans and at
Water.org with its WaterCredit program: 97 to 98
percent repayment rates. Moreover, the BOP is
demonstrating that other means of collateral can
be used beyond economic assets. In small group
loans with family and friends, reputation becomes
a powerful form of “social collateral” (people
risk losing the trust and respect of those closest
to them if they fail to pay). The power of peer
pressure helps to ensure reliable repayment.56
Units of services / products are able to be divided
beyond what was thought conventional
In the developing world, a single cell phone or
household water tap can go a long way towards
providing benefits to small groups of people
rather than just one person. While the idea of
sharing a phone with others would likely seem
nonsensical in the U.S., such arrangements are
proving ingenious at the BOP. In fact, entire
communities can benefit from a single mobile
phone. The Grameen Foundation has been acting
on such an opportunity through its “Village
Phone” initiative, which has already created
25,000 micro-franchises in Asia and Africa
(Village Phone Operators charge people a fee to )