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The Era of Inclusive Business

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In Fall 2015, the Sixth Annual Forum of the group Business Call to Action (BCtA) was held in New York City to discuss the increasingly popular concept of inclusive business.

The inclusive business model consists of private sector companies collaborating with people at the “base of the pyramid” — that is, those in developing countries with low incomes or who live in poverty — to improve livelihoods and expand market opportunities.

In this model, the global poor are not viewed simply as consumers or recipients of charity. Rather, they are involved in every level of business from production to distribution to management.

The benefits to the global poor of this business strategy are obvious. By connecting with successful companies from more developed nations, participants gain access to goods and services that are better, cleaner and more cost-effective. Furthermore, the model creates new jobs and provides resources for people to learn marketable skills.

Businesses are also able to access new markets, customer bases and sources of supply. In addition, partnering with NGOs and other businesses in more developed nations often helps build reputation and credibility.

Speakers at the BCtA Forum stressed that business interests and development goals are closely intertwined. The Forum also highlighted the importance of improving the health of people in developing nations. BCtA explained that a healthier population leads to more stable consumer markets and more productive workers.

Untapped Potential for Developed Countries

Accenture’s Financial Services Operating Group has estimated that the inclusive business model presents a $380 billion market opportunity. However, generally speaking, companies in developed nations have underestimated the value of inclusive business.

A Care International poll showed that 77 percent of 30 banks surveyed were largely uninterested in establishing long-term financial connections with poor people in developing nations.

The concept of inclusive business is not just theoretical in nature — its success has already been proven. For instance, agronomists from German chemicals giant BASF ran training programs in India for smallholder Samruddhi farmers and the results were staggering. Within just three years, the farmers nearly doubled their grain yields and their incomes increased by 64 percent. In addition, BASF saw sales of crop protection products consequently increase by 60 percent.

In order to successfully leverage this business model, companies should work in collaboration with the global poor instead of simply in their service. Including communities’ voices ensures that the products, training and technology being introduced are useful and appropriate. Moreover, these communities are sources of talent, so folding them into the business process will encourage profitable innovation relevant to their respective regions.

Perspectives on the relationship between business interests and SDGs are changing. There is a consensus among groups like BCtA that government, NGOs and civil society need to collaborate with the private sector in order to able to achieve SDGs. Indeed, fully embracing the era of inclusive business could be the next step in reducing global poverty.

– Joe D’Amore

Sources: Business Fights Poverty 1, Business Fights Poverty 2, Business Fights Poverty 3, G20 Challenge
Photo: Flickr

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MicroSave Counters Poverty in India with Micro-financing

MicroSaveThe MicroSave international consulting agency has been operating for more than 20 years. The organization uses micro-financing techniques to create value-led projects and organizations in India in order to counter poverty.

Their team consists of more than 175 professionals in the field, who use their skills to assist professionals in underdeveloped countries. Their work focuses on a market-led approach, which allows them to find customer-driven solutions. They take the time to visit low-income customers personally and to learn about their interests, strengths and circumstances to better help their clients target these customers, along with helping them hone their skills and implement maximum impact in their field.

The MicroSave team aspires to create a world where everyone from different backgrounds and cultures can obtain financial services tailored to their needs, and use these services to create anti-poverty solutions.

Their mission is to strengthen the capacity of institutions in underdeveloped countries through a series of financial inclusion models that help deliver financial services to people in a more effective manner. MicroSave has created a large number of these models to cover multiple fields of business, including sales and retail, small and medium enterprise financing, energy financing and digital financial services. The models connect people with a large range of stakeholders including self-help groups, banking correspondents and community-based financial organizations.

MicroSave also offers training and workshops that teach leaders how to build strong institutions, by effectively reaching out to customers through proper services, marketing, product development and innovation. These workshops provide clients with the knowledge needed to successfully become businessmen and women.

MircoSave’s team is divided into four groups to help apply services effectively. These groups include training, research, finance and risk management. The training group ensures knowledge is leveraged among their clients through preparatory materials, classroom training and certification.

The group responsible for research helps keep MicroSave and its clients afloat by making sure tactics are up to date and reliable in the specific industry they are working in.

The finance team teaches responsibility in finances to their clients, so money is used properly during and after their time with their clients.

Lastly, the risk management group focuses on training clients to work efficiently, decreasing their margin of error.

Over the last few years, MicroSave has expanded its services throughout Asia and Africa, working toward the goal of spreading proper financing techniques, and decreasing poverty throughout the world.

– Julia Hettiger

Sources: MicroSave, Bloomberg, Microfinance Focus
Photo: Madhyame

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How Can Businesses Alleviate Poverty?

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You may have never heard of Corporate Social Responsibility or Corporate Shared Value, but you have more than likely come across the products TOMS shoes, Newman’s Own or a slew of other companies who contribute goods to the impoverished with every purchase you make.

Many of these companies have taken advantage of new business models that consider a “triple bottom line,” instead of the traditional single bottom line-profit. A triple bottom line does not abandon the importance of profit margins, but incorporates the importance of social and environmental concerns in their business practices. For too long, international and even local corporations have continued the practice of making money at the expense of the most vulnerable populations, and often simultaneously consume or contaminate the basic resources these populations need to survive.

Wouldn’t it be remarkable if every purchase we made helped alleviate poverty? The following is a brief guide to help you not only understand how businesses can contribute to the greater social welfare of the impoverished, but to help you choose which businesses you invest in. After all, our money is one of our most powerful resources for implementing change.

1. Contribute to Sustainable Infrastructure

Is the business promising to donate 5% of all proceeds to a charitable organization that helps provide education to children in need, or are they claiming to donate one jacket for each one you purchase? There are many business models that fall under the category of “socially responsible,” but very few businesses implement sustainable ones.

Sustainable strategies have the added advantage of not only providing one-time support, but providing the tools necessary for people to empower themselves and break the cycle of poverty altogether. Businesses who invest in programs or initiatives designed to build sustainable infrastructures, which the poor can utilize to better their financial and social circumstances, inevitably end up having a much greater impact.

Such practices as “buy one, give one” models do not necessarily accomplish this. In fact, many companies who utilize “buy one, give one” models need poor people without their product in order to sell their product.

2. Pay Attention to Supply Chains

Earning a living wage in working conditions that respect human rights is essential to alleviating rates of global poverty. However, in today’s globalized economy, it’s hard to know where exactly the product you buy is being made and in what kind of conditions it was produced.

Though the company may be based out of the U.S., the raw supplies may be imported and the product manufactured in South East Asia via numerous factories with no association to one another. Despite the barriers, there are mechanisms available for consumers and businesses to identify supply chains behind the products they purchase to ensure the fair and respectable treatment of the workers who produce it.

Those businesses who have taken the extra effort to guarantee ethical supply chains usually will indicate so on their website. There are also organizations such as the United Students Against Sweatshops (USAS) who can help you locate such businesses, as well as online shopping sites such as fashiongchange.org that claim to only allow businesses to operate through their website if they meet certain socially responsible prerequisites.

3. Work with Local NGOs

Businesses who work with local NGOs (local, as in where their product is manufactured) have a higher probability of not only adhering to sustainable practices, but also actually addressing the most pressing problems of that region. If a business donates high-strength eye glasses to a population that suffers from an unusually high percentage of cataracts, the business would most likely categorize this effort as socially responsible.

However, what they might not know is that the high presence of cataracts is largely due to malnutrition. Cooperation with local nonprofits increases the amount of knowledge businesses have about the population they are trying to help, and increases the likelihood that their efforts do not bypass the actual causes of the problem they attempt to alleviate.

During the holiday season there is often a sharp increase in charitable donations. However, using the above guidelines, you can also ensure the gifts you purchase make an equal, if not greater impact on those who need it the most.

– Jamison Crowell

Sources: New York Times, Huffington Post
Photo: Global Envision