Using the Base of the Pyramid Lens to Catalyze Interdependence-based Collaborations in Mobile Financial Services for Poor: Case of e-Masary in Egypt

M Mohamad

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review


Research Literature: The lasting misery faced by much of the world’s population, which can be the reason for and the consequence of poverty and disenfranchising remains one of humanity’s greatest challenges (Chambers, 1983; Margolis and Walsh, 2003; Hulme and Mosley, 1996). One result is increased interest by donors and enterprises in using market-based strategies to enfranchise the poor micro-entrepreneurs and link them to the financial system (Ivatury and Mas, 2008; Hulme and Arun, 2009; UNCTAD, 2011). Despite the growing trend toward these approaches, critiques are still rising and convincing (Copestake, 2007; Karnani, 2007; Morduch, 1999 & 2009; Walsh and Kress et al., 2005). The Donor-Led Value Chain Initiatives (DLVIs) and Enterprise-Led Value Chain Initiatives (ELVIs) operate relatively independently of one another, as the goals of generating profits and alleviating poverty are often seen as irreconcilable and sometimes conflicting (Yunus, 2010; London and Anupindi, 2011). Getting both approaches compatible may contribute to achieving sustainable development with wider outreach (London, 2011). A candidate business strategy, the “Base of the Pyramid” (BoP), offers insights into how this could occur (Prahalad, 2004; Prahalad and Hammond, 2002). In this article, we examine DLVIs and ELVIs and explore how the use of a BoP perspective based on collaborative interdependence can enhance the integration of these efforts. DLVIs are development programs specifically targeting poor microentrepreneurs. In these initiatives, the donor-funded Implementing Partner (IP) plays the role of network orchestrator. In executing this role, the IP remains outside the value chain and focuses on facilitating, as opposed to directly implementing, any changes. This facilitation may include improving demand for specific products/services as well as increasing the supply of higher performing smallholders. In ELVIs, the enterprise acts as the network orchestrator. These enterprises operate within the value chain and look for growth strategies and opportunities for competitive advantage (London and Anupindi, 2011). Investments are viewed through an economic lens of benefits and risks and require building business intimacy and transferable capabilities (Simanis and Hart, 2009). In this research we analyze both DLVIs and ELVIs uses the Participatory Value Chain model (PVC) (Kaplinsky and Morris, 2000) which conceptualizes enterprises as parts of chains of varying (but linked) production and exchange activities operating in different areas. The PVC explains how value is allocated at different levels of the chain and the varying interests and power relations which shape this allocation (Mayoux, 2003). In this way it enables a more complex exploration of alternative strategies for financing microentrepreneurs and provides “a sophisticated model of the positive and negative impacts, whether direct, indirect or unintended, of different interventions” (Mayoux, L., 2003: 1). The majority of development initiatives including the DLVIs and ELVIs pass through design, implementation, and sustainability stages: (a) During the design stage, the initiative is prototyped, and initial goals and performance metrics are developed. It also shows how feasible the implementation will be; (b) If the initiative proceeds, the implementation stage involves launching the proposed business model. (c) In the sustainability stage, the initiative assesses the opportunity to sustain and scale the activities implemented.By the end of 2011, the rate of donor-led financial institutions reached to 73% around the world (MicroRate, 2011). These institutions are mostly founded by mega donors such as the United States Agency for International Development, the United Kingdom’s Department for International Development, Swiss Aid organization, The World Bank, International Finance Corp and a variety of other development agencies and foundations (Bauchet, 2011). Such donors struggled to develop their existing value chains for integrating microentrepreneurs into the domestic and international financial markets, as well as providing a wide range of financial services for them (Helms, 2006; Mas, 2011).Enterprise-led Financial Service Providers (FSPs) in Africa, Asia, and elsewhere, seeking innovative sources of finance via new value chains, are also exploring non-traditional opportunities to include the unbanked poor in these value chains (Karlan and Zinman, 2010; Mas, 2011). With little prior knowledge and experience in this market environment, these EVCIs face challenges in identifying opportunities and developing scalable business models that generate competitive advantage (Valadez and Buskirk, 2011).Advancing the BoP strategy created a crossroad for business strategy and poverty alleviation (Prahalad and Hammond, 2002; Simanis & Hart 2009). The BoP represents four billion people live with less than $3,000 per capita purchasing power and primarily run their microenterprises in the informal economy (Hammond, 2007). The BoP literature provides a convincing argument for business-minded leaders for viewing the poor as an untapped market of consumers, producers, and entrepreneurs (Akula, 2008). It also, offers insight into the mindsets, capabilities, and partnerships that enterprises need to develop viable business models (Seelos & Mair, 2007). More recently, a second generation of BoP strategies has emerged. Rather than an emphasis on “finding a fortune at the BoP,” this work suggests that BoP initiative benefits from “creating a fortune with the BoP” (Arora and Romijn, 2009 & 2011; London & Hart, 2011). A fortune-creating approach involves identifying and enhancing what is “right” in BoP markets, co-creating and piloting business models in deep dialogue with the poor, and establishing competitive advantage based on the capability to become socially embedded in the local context and to assess and enhance mutual value creation (London, 2009). Collaborative interdependence, a partnering strategy premised on “how we can help each other,” provides the foundation for establishing and maintaining the necessary relationships (Margolis & Walsh, 2003; Simanis & Hart, 2009). The BoP literature on partnering, however, has primarily focused on strategies for interdependence collaboration between the poor community (the grassroots), donors, private enterprise and other non-traditional partners such as the Non-Governmental Organizations (NGOs) and state organizations.What insights, then, does the BoP perspective offer for enhancing the integration of donor and enterprise investments? To address this research question, the present article focuses first on comparing DLIs and ELIs and then examines the opportunity to use the BoP perspective to better integrate these efforts. We see this effort as an important step toward addressing the broader question of “how to make market-based approaches work better for the poor”. Research Methods: We developed this article based on an extensive review of the literature combined with an analysis of our fieldwork in the case of e-MASARY for mobile money and microfinance services in Egypt. The most appropriate method seemed to be the case study, since the objective was to highlight the process of value creation through interdependence collaboration among stakeholders (Yin 1994). As the literatures on both “BoP” and “mobile financial services for the poor” were emerging, a qualitative approach provided the best methodological fit.Combining semi-structured interviews, focus groups, archival studies and field visits, we then developed ethnographic account of the research inquiries. A convenient sample of participants has been selected from different stakeholder organizations (MASARY, Mobile telecoms, NGO-MFIs and client microentrepreneurs) and from different levels in the value chain. This sample helped provide a detailed account of the social interaction among stakeholders along different stages of the value creation process.The data analysis was an iterative exploratory, back and forth process between the literature and the field process. Coding have been conducted using NVivo and narrowed down to the following themes (catalyze investment, performance metrics and incentives, business intimacy and innovation, skills transfer, competitive advantage, governance). Then a separate code has been developed in context-related data to show how other codes can be prioritized in relation to the Egyptian market as well as the mobile telecommunication industry. Findings & Contribution: The key inquiry of our research is not whether the market-based approaches work or not, but rather how to integrate them to get a sustainable impact. Both the donors and enterprises have adopted the value chain approach to finance the poor microentrepreneurs. However, each has its advantages and disadvantages as they go along the stages of design, implementation, and sustainability. Using the BoP perspective, we argue that the Interdependence-Based Collaboration (IBC) mixes up the relatively high start up capabilities of DLVCIs with the relatively wider impact of ELVCIs. It also requires that the partners develop a balanced scorecard1 to collect relevant and up-to-date information about economic returns, social benefits and local impact. In addition, partners have to balance between the balanced scorecard and staff incentives to sustain their engagement with the poor microentrepreneurs.We also found that BoP initiatives need to be more flexible in fulfilling long term financial commitments and building innovation value chain. For financial commitments during the introduction stage, donors may rely on building business intimacy with a larger set of enterprises and focus on sharing knowledge and resources. Then in later stages (long run) they may select a smaller number of partners who have access to more resources and willingness to provide greater financial support, extended interactions, and detailed technical assistance. Innovating business model needs trial and error, particularly in the design and implementation stages and also needs that long term financial and technical support to reduce the risk. We found that engaging the poor microentrepreneurs in the design and implementation stages reduces error and improve the sustainability. At the endline of this paper we think that the concept of IBC provides a new lens for the BoP approach and present it at a new version of “stakeholder Capitalism” (Freeman and Liedtka, 1997) that raised the quest for socially interact among multiple stakeholders to co-create better value rather than being self-interested and maximize their own benefit.
Original languageEnglish
Title of host publicationhost publication
Place of PublicationBoston, USA
PublisherAcademy Of Management
Publication statusPublished - 10 Aug 2012
EventAcademy of Management Meeting - OCIS Stream
Duration: 1 Jan 1824 → …


ConferenceAcademy of Management Meeting
CityOCIS Stream
Period1/01/24 → …


  • Base of the Pyramid, Value Chain, Mobile Financial Services, Egypt


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