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New Partnership to Develop Business Models for Providing Basic Services to the BoP in Latin America

IDB’s MIF, OMJ to provide grants and technical assistance for businesses seeking to provide health care, education, energy and water for poor and low-income communities

The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group, in partnership with the IDB’s Opportunities for the Majority (OMJ), have established a $3.4 million regional program to support the development of new business models for the provision of basic services, such as health care, education, energy and water, to poor populations in Latin America and the Caribbean, also known as the base of the pyramid (BoP).

The new “Program to Accelerate Businesses Providing Basic Services to Poor and Low-income Populations” will supply grants and technical assistance of up to $250,000 to private sector companies to support them in the design and pilot testing of new business models and distribution channels for the low-income marketplace, thereby accelerating their market readiness and preparing them to become eligible for loans to scale up their business models.

“This new program contributes to narrow the financing and knowledge gap in the development of business models targeted to meet the needs of the base of the pyramid in Latin America,” said MIF project team leader David Bloomgarden. “It levels the playing field for companies to overcome hurdles in the provision of basic services to the poor and to make their models attractive to impact investors.”

The MIF will provide grant money to fund pilot business models, while OMJ will provide business modeling expertise on reaching larger numbers of customers at the base of the socioeconomic pyramid.Models that are tested and have the potential for scaling up may qualify for credit from OMJ or from other impact and commercial investors. The program will also disseminate lessons learned, evaluate each model to see how effective the grant dollars are in taking a company from a pre-commercial to an investment ready stage, and assess or identify distribution and funding partners.

“Companies of all sizes are increasingly interested in engaging with base of the pyramid markets, not only to have a social impact, but more importantly, to strengthen their competitiveness by connecting with new consumers, potential employees, and supply chains,” according to OMJ principal investment officer Elizabeth Boggs Davidsen.

“With this new program, we are combining the resources and expertise of both MIF and IDB to develop innovative market-based solutions to improve the quality of life of low income populations while supporting sustainable business models.”

In the next 12 months, the MIF will support the launching of up to eight new business models in Latin America and the Caribbean; at least five of which should become investment ready for OMJ or commercial credit. The MIF and OMJ estimate that through the projects it funds, at least 8,000 poor and low-income households in the region will have new or improved access to health, education, energy, water and sanitation services within five years.