Social Impact Investing

Impact Investments:
An emerging asset class
Global Research
29 November 2010
shown in Table 8.
Table 8: BoP per capita income brackets and population
Income
brackets
2002 PPP
Income
brackets
2005 PPP
(upper bound)
Africa
mm
Asia
mm
Eastern
Europe
mm
Latin
America
mm
Total
Population
mm
A 2,500–3,000 3,260 7 80 41 39 167
B 2,000–2,500 2,717 12 167 51 50 279
C 1,500–2,000 2,173 23 358 52 68 501
D 1,000–1,500 1,630 55 781 48 81 964
E 500–1,000 1,087 162 1,220 45 87 1,513
F 0–500 543 228 293 18 37 575
Total 486 2,900 254 360 4,000
Source: World Resources Institute.
Focusing on the BoP population restricts us to the population earning an annual
income of $3,000 per capita or less. For each sector we then identify the income
brackets that can afford the product or service in question, following the steps below
to identify the size of our target market.
1. Remove the lowest income segment: Those earning less than $1 a day will be
unlikely customers
We must acknowledge that there is a portion of the population at the lowest
income level that remain reliant largely on aid 48 . According to Monitor Inclusive
Markets, it would be reasonable to exclude the population earning less than $1 a
day from the potential customer base for an impact investment business model.
Constraints such as severely irregular cash-flows and the cost of distribution to
these typically more remote populations will limit the ability of a profit-making
business to deliver solutions to this sub-population. Therefore, we exclude from
all sectors the bottom segment of the population as bracketed by WRI – those
earning less than $500 per annum per capita (2002 PPP), in income bracket F of
Table 8.
48 C.K. Prahalad, author of The Fortune at the Bottom of the Pyramid, advocates that “our goal
should be to build capacity for people to escape poverty and deprivation through selfsustaining
market-based systems” even at the very base of the economic pyramid. While we
would like to cover businesses that can serve the very lowest-income households, we focus for
now on the business models that have been proven and hope to include the lowest income
bracket in future work as this sector develops solutions for the lowest part of the pyramid.
45