The ability to serve micro-markets presents tough problems, but it may be worth considering if your products lend themselves to “informal economies” and your imagination lets you find a path. Throughout the developing world, 4-5 billion people live an informal existence, where many are entrepreneurs (street vendors) and have their non-liquid wealth locked in the asset of their home – not unlike 55% of Americans living in their “savings account.” Six years ago, such frozen assets or “dead capital” was estimated to be about $10 trillion globally. In poor countries, this largest of all discrete capital pools is relegated to the margins – banks do not deal with poor people. Legal, regulatory and bureaucratic barriers block entry to the formal economy and, with ever-increasing urbanization worldwide, informal economies are growing. To make this issue clear, in 2000 the century-old Mexican cement manufacturer CEMEX became the largest producer in the world, primarily by selling bags of cement to poor people one bag at a time. Studies show that in all economies, excess capital is invested in shelter and even more so in the parallel universe of informal economies.

Reaching these micro-markets is perplexing. Businesses are not philanthropies – even if the bottom of the economic pyramid holds the largest market share. Consider several points. First, the world of micro-finance shows dynamic growth. In spite of negativists like Thomas Dichter, author of “Despite Good Intentions: Why Development Assistance to the Third World Has Failed,” many organizations like Fraser Institute, Heritage Foundation, Hoover Institution and the Mercatus Center at George Mason University – through high-profile studies – have made banking for the poor a viable consideration. Great praise should be extended to Dr. Muhammad Yunus, the 2006 Nobel Peace Prize recipient and a pioneer known as the “banker to the poor.”

Secondly, I urge readers to explore how this process works and see non-profit organizations such as, and Kiva partners with micro-finance organizations with “boots on the ground” in developing countries to vet loan proposals, provide technical assistance, and monitor and manage loans and their repayment. Loan money is transferred directly to the borrower, corrupt third-world banks and governments are bypassed completely, costs to the borrower and lender are minimal, and the focus is on the individual borrower to repay the loan, with history showing excellent performance in meeting responsibilities. When reviewing these websites, it is evident that the micro-finance system works and is key to converting informal structures to a stable, formal economy.

Another matter must be assessed, and that is how to gain access to the widely distributed micro-markets. A different strategy is needed than past trade protocols where an export manufacturer deals with a foreign industrial representative and payments for goods and services are handled via bank letter-of-credit. Customers in the micro-markets may not be exposed to modern manufactured goods, so they may need help in utilizing them effectively. Just like any sales and marketing activity, local help in meeting customer needs is critical. Indigenous people who have received training from the U.S. manufacturer typically provide this assistance.

Several examples make the point. Suppose that your firm makes sheet-metal products. If your company assists in the supply of forming equipment that is used by a micro-financed, value-added business, your firm can develop an export market. If your business makes wire, a small business in a developing nation could become a sales and marketing outlet. If your company makes a small furnace, it might be ideal for a craftsman to use for heating metals used in fabricating utensils.

The point of this piece is to encourage readers to investigate export activities and to do so in a way that is innovative in meeting market needs in the great world of informal economies. These economies need what U.S. industry has to offer but have not been in a position to obtain it, primarily because there is no method available to define market needs and finance the objective. The days are numbered where this enormous pool of customers continues to be ignored. Some very credible economists believe that serving micro-markets in the developing world by micro-financed enterprises is the next big thing for global business.IH