I have been re-reading Prahalad's book on the fortune at the bottom of the pyramid lately. The thesis of the book, which I wholeheartedly subscribe to, is that there is a big opportunity to turn back the scourge of poverty by providing services and technology to the large percentage of the world's population living somewhere around the poverty line. These services and technology are not provided as charity but as profitable business operations. An interesting corollary, of course, is that if you can find a way to provide profitable services to people living on less than one dollar a day, you will also probably have developed business models and practices, which should even be more profitable when serving customers living at a thousand dollars or more per day.

In the financial sector, Grameen Bank in Bangladesh and ICICI in India are show cased as companies finding innovative ways to exploit this bottom of the pyramid market. In Africa, the bottom of the pyramid market is even bigger than elsewhere on the planet. In theory therefore, the fortune at the bottom of the pyramid here will even be richer. If Nigeria were a barometer of the rest of the continent, it is safe to say that the FIs on the continent have largely ignored this segment.

Services and technology from the financial sector have focused almost exclusively to serving the needs of the lower middle class to upper classes in the society. The rage is all for private banking, credit cards, Internet banking and ATM cards, wealth management and all the other services that make sense to customers far from the bottom of the pyramid.

Discussing this once with a banker friend, he did a back-of-the-envelope calculation to show me that providing services to this segment is not profitable. Imagine the cost of providing a chequebook and processing cheques for a customer with no more than $50 in her account and turnover of not more than $200 in a year. He insisted it is a dead end. The recent surge of MFIs did little to convince him. I got his attention when I pointed out that there is actually, in most countries, an informal banking sector which has been servicing this sector. In Nigeria, they are called daily contribution operators. Therefore, you can save ten to twenty cents a day for a long period. You can take out loans depending on the level of your saving or the guarantee your group can provide.

The operators visit their subscribers in their homes and their places of work that is, the bank follow the customer to where ever he is. He is also a counselor, a friend, a motivator and a member of the community. He understands the needs of the community. He understands the needs of the subscribers. Can the big banks utilise this model?

Technology, of course, can make it possible. The banks can recruit and empower daily contribution operators who will in effect operate as agents for the banks. With a personal digital assistant (PDA) or a phone, the operators can keep records of the contributions, cash withdrawals and loans of the subscribers. These records can be synchronised with the banks' central servers at intervals or online using GPRS and 3G mobile services increasingly available across the continent. Records can also be kept on smartcards with the subscribers. Such smartcards can be used to effect P2P payment, money transfer and identity management. Technology alone will not, of course, solve all these problems. However, by enabling the existing informal business, the banks can easily penetrate and enable the entire sector. In fact, the peculiar needs of this sector may lead to the creation of a situation where banking services will be provided by traditionally non-financial institutions.

For instance, retail chains providing credit in Brazil or Cemex credit for house building and cement purchase. In Nigeria for instance, a motor cycle manufacturer can easily seed the market with credit for the commercial motor cycle operators. In Nigeria, the telecoms market is a pre-paid market. If the telcos were to start paying interest on the prepayments they receive, they would easily become a massive bank with access to customer base in the tens of millions. The telcos' platform can easily provide additional services like P2P payment, and with their network of agents and dealers, they can also offer services like micro-loans, which typically require face time with the customer.

Interestingly, Grameen Bank has used similar synergy to create GrameenPhone. I am waiting for the first bank to collaborate with a telco to provide services to the market at the bottom of the pyramid.