September 3, 2018
By 2030, emerging market economies will account for 70% of global GDP, dramatically reordering our global economic landscape. Since 1990, more than a billion people have lifted themselves out of extreme poverty, gained access to healthcare and education for their families, and capitalized on opportunities for gainful employment. Yet for the ‘next billion,’ access to opportunity remains a critical challenge.
India provides one example of the enormity of the challenge. It is set to be the world’s most populous country by 2027, with a million citizens turning 18 every 30 days and three people accessing the internet for the first time every second. This young population is filled with both aspiration and ambition, neither of which are being met. Meanwhile, Africa is on track to be the most populous continent by the end of this century and is struggling to prepare for this demographic shift. As a continent, Africa spends the least amount of money globally on healthcare per capita. Its internet and communication services are among the most expensive in the world and infrastructure development is far behind any other region.
Across the world, rising inequality threatens to diminish the most recent gains made in emerging markets and rip apart social fabric. Solving the problem of inequality in these rapidly transforming markets is a challenge as well as an extraordinary opportunity. Emerging markets present tremendous growth opportunities for consumer companies targeting the growing global middle class. There is also undiscovered promise in engaging underserved communities at the bottom of the economic pyramid.
The global base-of-the-pyramid market accounts for some 4bn people and represents a $5trn consumer market. By identifying opportunities and clearing obstacles that prevent services to this population, private sector players can generate significant returns while building a more inclusive global economy.
Just as critical, governments and other public sector stakeholders need to take steps to ensure growth is inclusive. If this challenge is not addressed, it could metastasize into an existential threat to political and social stability that could erase the gains of the last three decades. Without a clear, collective focus on broad inclusive growth, the threat of social unrest becomes greater.
Prevailing models of economic inclusion have failed to raise the fortunes of millions around the world, including in large segments of the West. But emerging markets can change this course with their sudden rise in GDP growth, rapid urbanization, and global connectivity. What is needed is fresh thinking on how to engage this next billion. The missing piece is a viable inclusive growth model that sees the next billion people as partners and customers instead of beneficiaries.
In an inclusive growth model, technology can either be an enabler or a hurdle. We believe it has the potential to be a game changer. Technological innovation is the secret ingredient needed to disrupt the inclusive growth formula and arm those on the ground with the tools to address their society’s most pressing challenges.
Across all sectors of society, nowhere is technological innovation and disruption more visible than in the realm of financial inclusion. Addressing the world’s unbanked population will unlock the potential of the next billion, and financial services are a key frontier in the fight for an inclusive growth model.