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Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business
Knowledge & lessons learned from marketing and selling to the so called Base of the Pyramid (BoP)
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Colombian President: “Every Latin American that gets out of poverty is one more consumer,”

Colombian President: “Every Latin American that gets out of poverty is one more consumer,” | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

By Laura Bonilla — COLOMBIAN president told Latin American businessmen the region’s nearly quarter billion poor could be their customers if they join with government to fight poverty. “Every Latin American that gets out of poverty is one more consumer,” Colombian President Juan Manuel Santos said at the Business Summit of the Americas in Cartagena.


“That’s why it’s so profitable and so important that macroeconomic methods are translated into social improvement,” he said. Hundreds of entrepreneurs and several Latin American presidents attended the business meeting.

 

“Fighting poverty is a profitable business for everyone,” Santos said. More than 40 million Latin Americans have escaped poverty in recent years, but in 2010, 31.4 per cent of the region’s population — 247 million people — still lived in poverty or extreme poverty, according to the Economic Commission for Latin America.
Santos also suggested that US and Canadian entrepreneurs should think of Latin America not “as a region full of problems, but as a region full of opportunities.”

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How GE Profits From "Reverse Innovation"

How GE Profits From "Reverse Innovation"

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Solutions to Safe, Pure Water for Drinking - AllAfrica.com

Solutions to Safe, Pure Water for Drinking - AllAfrica.com | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
Solutions to Safe, Pure Water for DrinkingAllAfrica.comAs a solution, a number of interventions have been to ensure water is safe for drinking for the population, according to Paul Kimera, the research officer with Appropriate Technology Center for...

Via Kiron Ravindran
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Forbes India Magazine - Poverty Line: Dialogue Of The Deaf

Forbes India Magazine - Poverty Line: Dialogue Of The Deaf | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
The furore over the apparent ‘reduction’ of the Poverty Line to Rs 29 is based on muddled assumptions.

 

Trouble started when the government policy think-tank, the Planning Commission, released the latest set of poverty estimates on March 19. It said India’s poverty estimates had “declined by 7.3 percentage points from 37.2 percent in 2004-05 to 29.8 percent in 2009-10.” Rural poverty had declined by 8 percentage points from 41.8 percent to 33.8 percent and urban poverty had declined by 4.8 percentage points from 25.7 percent to 20.9 percent. Beyond the percentages, for the first time, even the absolute number of poor in the country had fallen, it estimated.

Read more: http://forbesindia.com/article/real-issue/poverty-line-dialogue-of-the-deaf/32636/1#ixzz1rlZPnR6N

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IDEO.org's Mission to Tackle Global Social Challenges Through Design for All

One of the big differences in the human-centered design approach is that it is centered on the needs of communities, so it starts with developing a deep understanding.

 

Jocelyn Wyatt is the Executive Director and Co-Lead of IDEO.org, the nonprofit organization started by Palo Alto, CA-based design consultancy IDEO to address poverty-related challenges through design and to encourage the use of a "human-centered approach" to innovation in the social sector.

 

IDEO.org has worked with the Rockefeller Foundation, identifying potential funding strategies in support of youth employment initiatives around the world and Winrock International to help simplify and articulate a process for multiple-use water services in Nepal and Ethiopia. Recently they have worked with TED to design TEDx-In-A-Box for organizers of TEDx events who don't have access to technology to host events in diverse locations around the world.

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Time to look at crowdfunding to unlock the fortune at the BoP.

Time to look at crowdfunding to unlock the fortune at the BoP. | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

‘SACHET' APPROACH

Crowdfunding uses the same concept — of a micro-sized financial exposure — while multiplying the number of risk takers.

 

A ‘sachet' approach to finance, if you will. And we all know how successful the sachet concept has been in transforming the market for consumer product companies.

 

By taking relatively expensive consumer products and putting them into bite sized — and right priced — sachets, these products suddenly came within the reach of even the poorest consumer. This has caused volumes to shoot up and radically changed the perspective of consumer product marketers on rural markets. For them, the fortune at the bottom of the pyramid has already been unlocked.

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Our new products will be designed for global markets: Pawan Munjal, MD and CEO, Hero MotoCorp - The Economic Times

Our new products will be designed for global markets: Pawan Munjal, MD and CEO, Hero MotoCorp - The Economic Times | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
The Pawan Munjal-led Hero MotoCorp does not seem to be in a mood to leave any stone unturned to retain its 'numero uno' position in the two-wheeler industry.

 

We have a huge focus on the entry-level segment. If you look at the bottom of the pyramid, there is a large section, which does not use any two-wheeler today, and therefore, there is immense potential.

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Making Disclosure Work for Low-Income Financial Consumers

A micro-borrower in the Philippines struggles to figure out which one of several loans is the least expensive—one comes with a flat charge, another a weekly interest rate, and still another a monthly rate with an upfront deduction.

 

In Senegal, a recent survey of low-income consumers revealed that more than 99% of respondents were unaware of their right to standardized price information on the loan and deposit services they used. In Mexico, poorer consumers looking for a cheaper way to save, reported to CGAP losing 25%, 50%, or even their whole savings due to hidden fees on “low-balance” accounts they were not aware of until it was too late.

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Harvard Business Review article: Is the Bottom of the Pyramid Really for You?

Harvard Business Review article: Is the Bottom of the Pyramid Really for You? | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

n an article written for the March 2011 edition of the Harvard Business Review, Ashish Karamchandani, Mike Kubzansky, and Nishant Lalwani, who lead Monitor Inclusive Markets, an initiative within the Monitor Group that focuses on catalyzing market-based solutions for social change, argue that it’s far more difficult than many global corporations realized to get prices low enough to attract consumers and to manage distributed low-income producers.

 

The market for products and services aimed at the “bottom of the pyramid” (BOP), i.e., the 4 billion people living in poverty in developing economies, is vast, representing $5 trillion in purchasing power – but so are the obstacles for reaching them. Despite the immensity of the markets and the volume of the hype, few multinational firms have built sizable businesses serving consumers or producers who survive on just a few dollars a day.

 

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Mobile money takes East Africa by storm Emerging Markets Report

Mobile money takes East Africa by storm Emerging Markets Report | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
M-Pesa, a simple, easy to use way to move money and pay for goods with a cellphone, is transforming the economy in East Africa.

 

Agnes Ngooro, a small trader in the bustling central market of Mombasa, spends her days sitting behind a wooden table selling trousers for a few dollars a piece, and while it may not look like it at first glance, she is an international businesswoman.

 

The clothes displayed on her table are manufactured in China and Thailand, and they arrive in East Africa in the region’s major cities including Nairobi, Kenya and Kampala, Uganda. “If I want to buy something from Nairobi, I send money to the wholesaler. When he receives it he sends me the goods,” Ngooro said on a recent day while tending her goods.

This ma

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WBCSD: Inclusive business: moving beyond philanthropy

WBCSD: Inclusive business: moving beyond philanthropy | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

A wealth of opportunities for business to not only grow and prosper, but also develop philanthropic ways of operating and make a profit is opening up with the massive economic and demographic shifts taking place over the coming decades. The World Business Council for Sustainable Development (WBCSD) believes that tomorrow's leading companies will anticipate these trends and align profitable business ventures with the needs of society.

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Inclusive Business Checklist: Reaching the Rural Consumer - The Practitioner Hub

Inclusive Business Checklist: Reaching the Rural Consumer - The Practitioner Hub | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
Inclusive businesses wanting to market to low-income, rural consumers are increasingly using a village entrepreneur model for the ‘last mile’ of their distribution channel. However, although this model is growing in popularity, its use does not always guarantee success.

 

“Reaching the Rural Consumer” is a two-page Checklist which offers a series of factors for consideration, from the perspective of all stakeholders to help determine whether or not the village entrepreneur (VE) model is an appropriate solution to the challenge of reaching rural consumers.

 

The companion publication, “The ‘last mile’ challenge: the limitations of the village entrepreneur model” looks in more detail at circumstances where the ‘village entrepreneur’ model does and doesn’t work and why it may not be a universal solution to the ‘last mile’ challenge.

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The BoP Approach: Sinner or Savior? - Business Fights Poverty

The BoP Approach: Sinner or Savior? - Business Fights Poverty | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
Today several of the world’s largest corporations – including Hewlett Packard, SK Johnson and Unilever – are engaging with the so-called ‘bottom of the pyramid’, becoming key players in global development by selling products to improve health, nutrition and overall well-being in the rural markets of developing countries.

 

Meanwhile development donors like DfID champion large scale social entrepreneurship as a mechanism for delivering social development outcomes, from gender empowerment, to disease eradication and access to energy.

 

However, the BoP model is not without its critics.

Opponents have pointed to the paradox of promoting development by increasing mass consumption, highlighting the effects of selling single serve plastic sachets of soap and shampoo in a context of global climate change.

 

Others claim that such initiatives are nothing more than a cynical marketing ploy on behalf of multinational corporations to ‘have their cake and eat it’ by selling products that arguably poor communities do not need but in a model that suggests a genuine concern for wellbeing and economic empowerment.

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Five Phases Toward ‘Reverse Innovation’

Five Phases Toward ‘Reverse Innovation’ | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
A "reverse innovation" is any innovation likely to be adopted first in the developing world and then distributed globally. Vijay Govindarajan says this offers growth opportunities for American and European multinationals.

 

1. Globalization

Multinationals built unprecedented economies of scale by selling products and services to markets all around the world. Innovation happened at home, and then the new offerings were distributed everywhere.

2. Glocalization

In this phase, multinationals recognized that while Phase 1 had minimized costs, they weren’t as competitive in local markets as they needed to be. Therefore, they focused on winning market share by adapting global offerings to meet local needs. Innovation still originated with home-country needs, but products and services were later modified to win in each market. To meet the budgets of customers in poor countries, they sometimes de-featured existing products.

3. Local Innovation

In this phase, the first half of the reverse innovation process, multinationals are focusing on developing products “in-country, for country.” They are taking a “market-back” perspective. That is, they are starting with a zero-based assessment of customer’s needs, rather than assuming that they will only make alterations to the products they already have. As teams develop products for the local market, the company enables them to remain connected to, and to benefit from, the global resource base.

4. Reverse Innovation

If phase 3 is “in country, for country,” phase 4 is “in country, for the world.” Multinationals complete the reverse innovation process by taking the innovations originally chartered for poor countries, adapting them, and scaling them up for worldwide use.

5. Organizing Principles

In our view, the “first principles” of reverse innovation are as follows:

Reverse innovation requires a decentralized, local-market focus
Most if not all of the people and resources dedicated to reverse innovation efforts must be based and managed in the local market
Local Growth Teams (LGTs) must have profit and loss responsibility—this is a key hurdle for American multinationals
LGTs must have the decision-making authority to choose which products to develop, how to make, sell, and service them
LGTs must have the right (and support) to draw from the companies global resources
Once tested and proven locally, products developed using reverse innovation must be taken global which may involve pioneering radically new applications, establishing lower price points, and even cannibalizing higher-margin products.
Of course this is a simplified view of the world, but in essence it holds true. Now, more than ever, success in developing countries is a prerequisite for continued vitality in developed ones.

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A Reverse-Innovation Playbook - Related to BoP Markets

A Reverse-Innovation Playbook  - Related to BoP Markets | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

When a multinational corporation learns to generate successful innovations in emerging markets and then exports that knowledge and those innovations to the developed world, new business possibilities suddenly burst forth.

 

The limits imposed by its traditional operations become surmountable, and the company can rethink all its products and attack new markets in search of growth.

 

But few companies experience this kind of renaissance, because reverse innovation—developing ideas in an emerging market and coaxing them to flow uphill to Western markets—poses immense challenges. It requires a company to overcome its dominant logic, the institutionalized thinking that guides its actions. Typically that involves major changes: throwing out old organizational structures to create new ones from scratch, revamping product-development and manufacturing methods, reorienting the sales force.

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Forbes India Magazine - The Men Who Made Microfinance Work

Forbes India Magazine - The Men Who Made Microfinance Work | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
Chandra Shekhar Ghosh
Profile: Founder of Bandhan
Education: Son of a sweet vendor, went to Dhaka University, studied statistics, got into an NGO purely to make a living
Quote: Give me a day, and I will give you the future

 

It would seem there is nothing common between Chandra Shekhar Ghosh, founder of Bandhan, and Samit Ghosh, founder of Ujjivan—two microfinance institutions (MFI)—other than their second names.

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Discussion round-up: how can business enable energy access at the BoP?

Discussion round-up: how can business enable energy access at the BoP? | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
Our discussion, sponsored by the WBCSD, explored the role of business in providing solutions to global energy access challenges.

 

There is not a viable business model for Base of the Pyramid (BoP) customers that commands the level of revenue and profit that the typical multinational company requires. In order to reach the poorest people who lack energy access and who are largely in remote communities, you need a business model that looks at both the financial bottom line and the triple bottom line (social, economic and environmental).

 

Regulatory regimes, such as monopoly conditions, can make it hard to operate a business. There are also practical issues such as the distance of villages from the grid. The IEA's World Energy Outlook gives scenarios for creating universal energy access and says that a range of on-grid, off-grid and mini-grid solutions will be required, as well as a host of improved cooking and fuel switching approaches to cleaner cooking.

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Putting people first » “Mobile Banking: Innovation for the BoP”

Putting people first » “Mobile Banking: Innovation for the BoP” | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

Access to, and the cost of, mainstream financial services act as a barrier to financial inclusion for many in the developing world. The convergence of banking services with mobile technologies means however that users are able to conduct banking services at any place and at any time through mobile banking thus overcoming the challenges to the distribution and use of banking services (Gu, Lee & Suh, 2009).

 

This research examines the factors influencing the adoption of mobile banking by the Base of the Pyramid (BOP) in South Africa, with a special focus on trust, cost and risk including the facets of risks: performance risk, security/privacy risk, time risk, social risk and financial risk. The research model includes the original variables of extended technology acceptance model (TAM2) (Venkatesh & Davis, 2000).

Data for this study was collected through paper questionnaires in townships around Gauteng. This research has found that customers in the BOP will consider adopting mobile banking as long as it is perceived to be useful and perceived to be easy to use. But the most critical factor for the customer is cost; the service should be affordable. Furthermore, the mobile banking service providers, both the banks and mobile network providers, should be trusted. Trust was found to be significantly negatively correlated to perceived risk. Trust therefore plays a role in risk mitigation and in enhancing customer loyalty.

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Selling to the Poor or Serving the Poor? | Benjamin Ellis

In 2002 Peter Day interviewed Prof Prahalad about his Harvard Business Review article on “The Fortune at the Bottom of the Pyramid.”

 

Multinational companies, said CK, could make huge profits by turning their attention to producing goods and services for the global poor. It’s the main focus of the Radio 4 program, and it lead to a best-selling book. CK said that there are two ways to address the 4.5 billion poor people around the world: ignore them, and create a depressing world, or look at them as 4.5 billion people who want to join the market economies.

 

CK challenged multinational businesses to create affordable products and services for the poor, addressing the latent markets located in China, India, Mexico, Brazil, Africa and other developing countries. His hypothesis was that not only would this lead to economic growth that would benefit the West, but that it would also benefit the poor. Of course, that begs the question: is that serving the poor, or exploiting the poor?

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FastCoDesign: Why Designers Need To Stop Feeling Sorry For Africa

FastCoDesign: Why Designers Need To Stop Feeling Sorry For Africa | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

Earlier this year, the Cooper-Hewitt wrapped up "Design with the Other 90%: Cities," the second in a series of exhibitions intended to demonstrate how design can address the world’s most critical issues.

 

This time around, the focus was on the challenges created by rapid urban growth in informal settlements. Some highlights were Digital Drum in Kampala, Uganda, a solar-powered information access point made from two durable, low-cost oil drums welded together, rugged keyboards, solar panels, and low-power tablets; a large-scale oven that uses trash as fuel to power a communal cooking facility in Kibera, Nairobi; and M-Pesa, a money-transfer service that enables urban migrants in Kenya to send money back to their villages via a mobile device.

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Daniel Izzo on Brazil's First BoP Impact Investing Venture Capital Firm - Forbes

Daniel Izzo on Brazil's First BoP Impact Investing Venture Capital Firm - Forbes | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

Recently, the Opportunities for the Majority (OMJ) Initiative of the Inter-American Development Bank hosted Daniel Izzo, co-founder and partner of Vox Capital, Brazil’s first impact investing venture capital firm, which focuses on high potential businesses that serve the Brazilian low income population through products and services with the potential to improve their lives. In addition, Vox Capital is the first Brazilian fund OMJ is investing in.

 

In this wide-ranging interview, I spoke to Daniel about his motivations, the portfolio of companies currently under Vox Capital’s belt, the social entrepreneurship sector in Brazil and Latin America more broadly, leadership lessons he’s acquired throughout his career, and much more.

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Pricing Excellence: MBA's Experiential Learning @ the Bottom of the Pyramid (BoP)

Pricing Excellence: MBA's Experiential Learning @ the Bottom of the Pyramid (BoP) | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

The Ambernath fair is an annual fair organized on the day of Maha Shivratri, when the Ambernath temple is overcrowded with pious devotees who come there to seek the blessings of Lord Shiva. This was the venue for the field activity in the “Business at the Bottom of the Pyramid” course, and the objective was to experience the art of selling to rural and semi-urban customers.

 

A brainchild of our professor, Dr. Anshu Jalora, all the second year students of NMIMS’s MBA Core program, who had taken up this elective, were divided into a total of 9 groups each comprising of around 6 students. The task given to each group was to choose a product which could be sold in a rural market, pool money within the groups, buy items from wholesale markets, and sell the same in the fair.

 

An experiential marketing campaigm was deemed a must. The groups chose products like food products, stationary items, sports goods and games, while one group chose a service of applying mehandi and nailpaint.

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Changing Lives through Products in New Markets for Poor (BoP)

Changing Lives through Products in New Markets for Poor (BoP) | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

 What works for the Bottom (or Base) of the pyramid (BoP) marketing or markets for poor, as regards products, services or technologies being introduced, is reflective of creating a market where the poor operates to earn a living, and not await humanitarian donations. In this piece, ‘product’ will be applied interchangeably with services or technologies, for consistency, as the essence is the application of these in livelihood enhancement of the poor.

 

Product designs for this new market should be created around customer need, often involving manufacturing from local materials, cheap and affordable to the poor. In other words, within the BoP marketing concept, products must be useful to the poor and allow them to get out of the poverty trap. Products for BoP can evolve from the agriculture, housing, consumer goods, and financial services sectors.

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Transforming business education in Pakistan | DAWN.COM

Transforming business education in Pakistan | DAWN.COM | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it

There is indeed fortune lying at the bottom of the pyramid. C. K. Prahalad, a renowned business professor who was born in Coimbatore, Tamil Nadu, made this point in his book, The fortune at the bottom of the pyramid. He wrote: “Collectively, the world’s 5 billion poor have vast untapped buying power.

 

They represent enormous potential for companies who learn how to serve this market by providing the poor with what they need. This creates a win-win situation: not only do corporations tap into a vibrant market, but by treating the poor as consumers they are no longer treated with indignity; they become empowered customers.”

 

 

I would argue that one needs not to rely solely on corporations to serve the needs of those at the bottom of the pyramid. In the presence of an enterprising culture, the untapped value can be captured by the young indigenous entrepreneurs who are intimately aware of the constraints and opportunities that lie in a resource-constrained market place as the one existing in Pakistan. There is therefore a need to educate the youth about entrepreneurship and value creation.

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Mobile Operators: White Knights of Financial Inclusion at the BoP? (SSIR)

Mobile Operators: White Knights of Financial Inclusion at the BoP? (SSIR) | Base of the Pyramid (BoP) Markets, Marketing at the BoP & Inclusive Business | Scoop.it
Two issues are dogging existing mobile money systems: excessive system downtime and lack of interconnection.

 

An estimated 70 percent of people in developing countries do not have access to a basic bank account—the challenge of financial inclusion is daunting. Banks hesitate to deploy dedicated retail infrastructures in slums and rural areas, and generally do not see a business case for low-value accounts.


Over the last decade, mobile network operators have stepped in to try to fill the vacuum by offering mobile money services, with varying degrees of success. Unlike most banks, they have a true mass market vocation, well-known brands that are relevant for the poor, experience running extensive third-party retail channels, a deployed base of smartcards (SIM cards) with secure identity elements, and an increasingly ubiquitous mobile network that can be used for remote real-time transaction authorizations and confirmations. Smart Communications in the Philippines was the path-breaker, but Safaricom in Kenya has become the poster child. MTN, Vodacom, Tigo, Orange, and Airtel are all trying to make it work in various other countries.

 

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