Making profits from the poor?

I have a thing or two against the current crop of business books, quite a few of them are not worth the tissue paper that could be made from them. Most of them attempt to rehash the same points with scant pints of intellectual profit. Read how the Economist talks on the same lines over here. In an age when very few books break new ground, here comes along a book that “allows you to see the same ground with new eyes”. Many of us want to do good while earning well, but are constrained by the conditions of the under developed markets for the poor. Government aid programs do not work and corporate social responsibility will not deliver enough. That businesses have no business putting shareholders’ wealth to non-profitable (psychic or monetary) uses is another issue, altogether! Recently, I balked at the suggestion of hearing a senior Professor of asking banks to lend money at lower interest rates to the poor, instead of allowing for a competitive banking industry to emerge with diverse micro-financing options for the poor. There is a reason why banks lend money at three times interest rate to the poor than to a Reliance company: credit worthiness and recovery of little amounts dispersed widely. But consider at what rates the poor actually borrow money. A street hawker in front of AIIMS hospital borrows a hundred rupees and gives it back along with an interest of Rs 10 for the same day. Figure out for yourself the astounding interest rate! The market structures for the poor need to be uncovered in order to be able to dealt with them profitably. For fascinating glimpses on these lines read C K Prahlad’s latest book “The Fortune at the Bottom of the Pyramid. Eradicating Poverty Through Profits” (Wharton School Publishing). Read reviews of it here in the Economist. Through this understand why companies make sachets and they make do so well for the poor in India. Understand how 5 billion of the world’s poor can benefit through innovative strategies devised to take their poor purchasing powers into account!