Good News from the Base of the Pyramid

In a compelling TED Talk from 2022, Adetayo Bamiduro of Metro Africa Xpress (MAX) tells the story of Baba Gbenro, a smallholder farmer in southwestern Nigeria who was able to sign up to MAX’s platform and who became one of their motorcycle drivers, increasing his net income from $3 to $6 per day. To many Western readers, accustomed to high incomes and the lifestyles that accompany them, this might not seem like much – but for Baba it was a 100% increase in income and a chance to provide an education for his son.

As Adetayo explains in the talk, Nigeria is growing fast. By 2050, Lagos will be one of the largest cities of the world with a population bigger than 32 million people, and Nigeria itself will have a bigger population than the United States. But set against this, transportation infrastructure is making it increasingly hard to get around. Informal motorcycle taxi drivers meet a valuable need but because they are effectively excluded from the mainstream economy, they are vulnerable to exploitation and are unable to access clean, modern, efficient, and reliable vehicles.

MAX meets the needs of these motorcycle taxi drivers by providing them with access to electric motorcycles, along with programmes for maintenance, battery swaps, insurance, and emergency assistance. This places technology and financial products in the hands of customers like Baba for whom credit and banking services would previously have been considered unthinkable. To date, fifteen thousand customers have been helped into a better way of working by MAX.

This is an excellent “good news” story, and it reminded me of Mambu, a company I wrote about in my first book.

In the paper that coined the phrase “base of the pyramid” (BoP), C.K Prahalad and Stuart Hart (2002) identified the 50% of the world’s population who live off an income of less than US$1500 per year as “the biggest potential market opportunity in the history of commerce” and suggest that “those in the private sector who commit their companies to a more inclusive capitalism have the opportunity to prosper and share their prosperity”. And as described by Jane Cooper (2014), Mambu saw an opportunity at the BoP to provide banking services not just to individuals without access to banking, but also to “the approximately 250 million micro, small and medium-sized enterprises (MSMEs) in the world that have little access to credit”.

Building a bank to serve these customers became possible because of reduction in the cost of banking technology, with a highly cost-effective cloud-based core banking platform. According to David Hamilton, president of Mambu at the time, “we are not just moving core banking software to the cloud… …we see the cloud as a metaphor for designing the whole business, the pricing, the operating model and culture”. This is not dissimilar to the disruptive innovation approach of coming up with a lower specification and providing just what the market needs (and no more) and being able to outmanoeuvre competitors in terms of price. And it turns out that it is very possible to take a successful business model from the BoP. According to their website, Mambu is now a global operation providing cloud-based banking services with a customer list including established names including ABN AMRO and Santander. It has successfully grown from the BoP to more established first-world markets, while doing good for microfinance institutions and their many customers in emerging markets and without losing connection with its roots.

Working at the BoP can provide the ability to do good for previously nonconsuming markets and gain clear ESG credentials at the same time as driving innovation that can then reflect back into more mainstream markets. Indeed, a 2014 study of BoP marketing strategies by Marielle Payaud concluded that “a genuine BoP marketing strategy is a novel approach, which is not necessarily integrated into the DNA of [multi-national companies] and of business leaders in general. It implies a new mind-set that may be profitable to the company through direct operations in the BoP markets and through the ability to learn from these unique markets”. In other words, it’s a great opportunity for differentiation, and by extension for success!

While MAX is currently focused on doing good in Nigeria, how is its business model scalable to developed markets, and what sorts of value could it create there? Could it be a prototype for financing vehicles, for packaging financial products in a more affordable way? Could the company pioneer battery swaps as a partial solution to the unavailability of infrastructure for EVs?