Serving Brazil’s poorest micro-entrepreneurs

The Tenda Atacado Group provides products, credit, and learning opportunities that support entrepreneurs at the Base of the Pyramid – the poorest of the poor.

Courtesy of Skoll World Forum
Marco Gorini is executive director of VoxCred S/A. In Brazil budding entrepreneurs who are among the Bottom of the Pyramid – the world's poorest of the poor – are offered credit, products, and learning opportunities by the Tenda Atacado Group.

The Tenda Atacado Group has 19 cash & carry stores in São Paulo, Brazil. By the end of 2013, we’re projecting revenues of $900 million. Every month, we serve 1.3 million clients in our stores, 25 percent of whom are entrepreneurs, representing 50 percent of our sales.

We understood that entrepreneurs at the base of the pyramid (BoP) represented a strategic client segment for the company, as well as for the development of Brazil. With this in mind, the Tenda Entrepreneurs Project was born as a pilot business model that targets the formal and informal entrepreneur at the BOP.

This new business model has its conceptual and strategic foundation on a win-win approach. Its primary objective is to take advantage of our existing distribution platform – which already has scale and economic strength – as leverage to provide solutions to help the nano- and micro-entrepreneur in the evolution of their business.

Tenda contributes to a clear market failure: a harsh ecosystem that doesn’t provide entrepreneurs the proper tools to increase their income and improve their business. In response, Tenda provides a portfolio of products, credit, and learning that support entrepreneurs and their desire to improve their quality of life.

At the same time, from a broader perspective, this project aims to build a new relationship with our value chain through the adoption of a new social, environmental, and sustainable attitude that involves suppliers, partners, the Tenda Group, and our clients.

This project assumes that a company can only last if it acts in a sustainable manner. Therefore, evolving our business strategy to reflect this principle is not charity or welfare.

Tenda’s clients are 100 percent at the BoP. They’ve been traditionally in the so-called “poverty trap,” as the system doesn’t serve them and, very often, punishes them for their condition. Our clients are nano- and micro-entrepreneurs with incomes between $250 and $1,500, low levels of education (eight years on average), and mostly informal (90 percent).

Most of these entrepreneurs are in the food retail industry, they don’t hire people and if they do, it’s usually a family member. They aren’t connected to any business network, and their only motive is survival.

The ecosystem in which they have to survive is characterized by three features: no access to productive credit; no access to information, knowledge, and learning opportunities; and no access to an entrepreneur network that allows them to share experiences and learn from others.

We have accumulated valuable experience and knowledge on the BoP in the last 20 years. This allows us to conclude that the success of a BoP business model depends on really getting to know the client’s purchasing behaviors and needs, maintain a personal relationship with them, and understand scale.

Tenda came to realize that in order to launch a sustainable business and contribute to poverty reduction, the company needed to change its paradigm: Tenda now considers clients as human beings with needs, dreams, and the desire to improve his or her family’s quality of life.

We now understand that we have to innovate, structuring a coordinated action that allows entrepreneurs access to the whole equation — credit + learning opportunities + network — all critical for their development, our future markets, and the ecosystem in which they play such an active part.

The business model is based on two characteristics: Microcredit and Learning & Network. In our 19 stores we offer credit to our nano- and micro-entrepreneurs so they can access working capital and financing to make small investments in new machinery. Entrepreneurs are also offered a learning methodology that was development jointly with them over the last two years: a platform of knowledge and interaction.

The program is implemented in one of our stores and focuses on topics such as sales, finances, logistics, production, and marketing. A third phase of the program will be implemented in 2014 with an exclusive online web portal for entrepreneurs. We’ve achieved great results with partnerships with the private sector, academia, social networks, local governments, and multilateral organizations.

The Inter-American Development Bank’s Opportunities for the Majority initiative has supported the microcredit pillar of the program with a loan of $10 million, as well as the academic component with technical cooperation with funds from the Korean Fund for Poverty Reduction.

Our work has been recognized internationally, including being part of the 15 winners of the G20 Challenge 2012 for Inclusive and Innovative Business.

Our program has proven successful not only in empowering entrepreneurs, but also in improving their quality of life, increasing their incomes, helping their businesses evolve, and educating them in business administration.

Tenda Atacado’s model is directly linked to the UN Millennium Development Goals. As the entrepreneurs’ incomes increase and their businesses grow, the program indirectly enables the creation of more jobs, of more spending on education and health, and of higher levels of women's empowerment, given that half of the clients are women who run their own nano- or micro-business.

As of July 2013, our program had approved credit lines to 50,000 formal and informal entrepreneurs. In 2012, we generated between $30 million and $35 million in working capital operations for entrepreneurs.

We expect this number to grow to $60 million in 2013 and to serve between 70,000 and 80,000 entrepreneurs. The impact of our model is evident, and its impact over poverty reduction is outstanding. Currently, the learning methodology is being taught to three groups of 25 people each. During the second semester of 2013, our goal is to teach the program to 10 groups of 25 people, and to organize five conferences with 120 entrepreneurs.

Expanding or facilitating access to productive credit, learning tools, low-cost products, and a business network, we promote the entrepreneurs’ sustainable development by creating opportunities to generate new income, more jobs in the communities where we operate, and strengthening the social capital that consequently reduces vulnerability and poverty.

We’re convinced that if entrepreneurs are guided by a logic of development rather than subsistence, we change their paradigm of living. This inevitably impacts their lives and that of their families.

• Marco Gorini is executive director of VoxCred S/A.

This article originally appeared at the Skoll World Forum on Social Entrepreneurship, the premier international platform for accelerating entrepreneurial approaches and innovative solutions to the world’s most pressing social issues.

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