This IDB initiative applies sustainable market-based strategies to bring the benefits of economic and social development to the majority of the population in Latin America and the Caribbean, reaching more than 360 million people—around 70 percent of the population—who live on less than US$300 per month.
This low-income sector has not benefited substantially from the region’s recent economic growth, and meeting its needs requires new investment approaches from both the public and private sectors to make a positive impact from which all will benefit.
The initiative promotes and finances emerging business models that engage private sector companies, local governments and communities in the development and delivery of quality products and services, the creation of employment, and the participation of low-income producers and consumers in the formal economy.
Partnering with the IDB
The Inter-American Development Bank, the largest regional multilateral development bank in the world, has placed a priority on financing both private sector projects and public-private partnerships that advance the goals of the Opportunities for the Majority Initiative. Among the instruments at the Bank’s disposal for its business partners are medium- to long-term loans, guarantees and technical assistance. Opportunities for the Majority projects can cover all sectors, and each project can be structured to meet its own unique needs.
In its five decades of activity the IDB has built a solid reputation as a reliable business partner with vast knowledge of Latin America and the Caribbean. It has historically been a bridge between the public and private sectors.
The IDB has offices in each of its 26 borrowing member countries that engage in a permanent dialogue with government authorities and the private sector. The IDB has built up strong ties with local organizations, communities, academic centers and other market participants that can be leveraged to create strategic alliances in projects for the benefit of the majority.
In supporting the Opportunities for the Majority Initiative, the IDB applies a long-term focus and a willingness to take calculated risks. These qualities, among others, make the IDB an invaluable partner for companies active in the region that are seeking to innovate and invest in this growing and underserved market.
Companies that engage with majority markets often have to rethink their business models, re-engineer products or services, and explore new distribution channels. There is no universal solution. Some business models have already been tested and offer good guidelines for future approaches to the economic inclusion of the underserved low-income majority.
The Opportunities for the Majority Initiative supports a variety of financially sustainable, scalable and innovative approaches that:
Promote higher quality and lower prices
Technology can be used to create a significant price breakthrough in order to supply low-income markets with high-quality, accessible products. New materials, new designs and alterations in the production process can all drive such a change.
Build local value chains
Using local ecosystems and localizing value creation through local microentrepreneurs is a winning strategy to build supply chains (vendors and suppliers), distribution and market channels. This benefits the company by enabling access, not only to a broader consumer and supplier base, but also to microentrepreneurs (e.g., microfranchisees) and customers.
Foster co-creation of opportunities for businesses and local entities
Private sector managers do not always understand the exact needs of low-income customers. Closer engagement with communities can promote the joint development of solutions to meet their demands. This approach can engage community associations, NGOs, local governments, social entrepreneurs and social agents in the creation of new opportunities.
Adapt products, services and distribution channels to increase access
Products and services can be adapted to the consumption patterns and financial constraints of the low-income market. For instance, smaller packaging, prepaid services and innovative credit models can increase the access of the majority to essential products and services.
Enhance product value
Including several services in one package is often a successful strategy to promote low-income communities’ access to essential services. The possibilities are very diverse: banking by cellular telephone, electricity bills that also allow access to credit, and free training and capacity building offered to manufacturers with the purchase of materials are only a few examples of solutions involving creative coupling.
Offer opportunities to repeat successful experiences
Replicating successful models is an essential part of building transformative projects: many projects can be started as pilots and then scaled up, replicated or both.
The Opportunities for the Majority initiative will concentrate its efforts on market-oriented solutions to enable low-income populations to escape from the cycle of informality, misinformation and uncompetitiveness that prevents those in the majority from realizing their productive potential and creating new wealth for themselves and for the economies in which they are included.