Transcript Bimal Arora, GIZ.

Can Enterprise Development and Responsible
Business Co-exist in India?
Insights from the Growing Inclusive Markets
(GIM) Initiative of UNDP
Dr. Bimal Arora
Deutsche Gesellschaft für Internationale
Zusammenarbeit (GIZ) GmbH
08.04.2015
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The Growing Inclusive Markets Initiative
Conceived by UNDP in 2006 as platform for collaboration focused on
research & advocacy
Vision: to enable a greater contribution of the private sector to human
development and to the Millennium Development Goals
GIM Role: Guiding by convening
• To be a focal point for the various
public and private sector initiatives in
the field
• To offer a roundtable to exchange
views, identify common approaches
and interests, understand differences
and complementarities, tackle open
questions
• To guide a process where many actors
can contribute to creating and disseminating knowledge on how business can
contribute to human development
Desired Impact
• Raising awareness by demonstrating how doing business
with the poor can be good for
poor people and good for
business
• Clarifying the ways that businesses, governments and civil
society organizations can
create value for all
• Inspiring the private sector to
action
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The Growing Inclusive Markets Initiative

- Advisory Board gathering over 25 key stakeholders including business associations,
academic institutions and development agencies
Principles
• Core business
emphasis
• Developing world
focus
• Human
development
framework, guided
by the MDGs
• Local agenda
• Partnership and
multistakeholder
approach
Products
• Reports (global,
regional and
national)
• Case studies
(120
commissioned +
1,000 examples)
• Knowledge
network: 30+
Southern
academic
institutions,
Centers of
Excellence, KM
platform
• Tools: Strategy
Matrix, Heat Maps,
Actor Framework,
Training for
companies and
intermediaries
Objectives
• Deepen the
understanding of
how inclusive
business models
and inclusive
markets can
contribute to
sustainable human
development
• Enable the
creation of more
inclusive markets
by informing
individual,
collective and
policy action to
improve market
environments
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Traditional Business (“Northern” MNCs) Approach to
Development; Social Investments
Development
benefits
CSR / Social
investment
Philanthropy
• Contribution of
financial or in-kind
resources to
development
projects
• Social
investment that is
strategic to the
core business
and that
contributes to
achievement of
the MDGs
Business
benefits
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Private Sector is emerging as a development partner – now on the
threshold of a new phase: Core Business
Development
benefits
Inclusive business
models / inclusive
markets
CSR / Social
investment
Philanthropy
• Contribution of
financial or in-kind
resources to
development projects
• Social investment
that facilitates
business objectives
and the achievement
of the MDGs
• Enterprise solutions that
accelerate and sustain
access by the poor to
needed goods and services
and to income generating
opportunities and that
contribute to economic
empowerment
Business
benefits
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Core Business & Development: A Mutual Value
Inclusive Business
Profitability
Businesses benefit
from including the
poor:
 on the supply side:
finding new
customers, creating
long-term customer
loyalty, developing
transferable
innovations
 on the demand side:
improving
production capacity,
getting access to
high-quality inputs,
expanding customer
reach
Participation
of the Poor
The poor benefit
from participating
in markets:
 access to goods
and services
 access to income
opportunities as
suppliers,
employees,
distributors and
entrepreneurs
 increased choice
and power
Human
Development Impact
The goods &
services provided
have a human
development
impact:
 water &
sanitation, energy
 financial services,
ICTs
 housing,
education,
nutrition
Sustainability
Inclusive
businesses
contribute to
social &
environmental
sustainability
 clean energy,
protection against
natural disasters
 fight against rural
exodus and hyperurbanization
etc…
Many examples show that providing basic goods & services as well as income opportunities
to the poor can be a sustainable and profitable business strategy and contribute to human
development.
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Opportunities exist to build bridges between business and the poor
The poor harbour a potential for consumption, production, innovation and
entrepreneurial activity that is largely untapped
2.6 billion people live on less than US$ 2 per day; 1 billion lack access to clean water; 2.6 billion
lack adequate sanitation; 1.6 billion lack access to electricity; 5.4 billion have no access to
internet
Inclusive business models include the poor on the demand side as clients and
customers, and on the supply side as employees, producers and business owners
in the value chain
Sectors: energy, water & sanitation,
agriculture, health, financial services, ICT,
handicraft, education, housing, tourism
Types of organizations: MNCs, large
companies (public/private), MSMEs,
cooperatives, NGOs, social business
Inclusive business models create a win-win scenario between business and the
poor
Benefits for business: generating profits,
creating innovation, developing new markets,
strengthening supply chains
Benefits for the poor: meeting basic needs,
increasing productivity and incomes,
empowering communities
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IBM: Results Framework
Inclusive business
models have results...
... on different
stakeholders ...
... in different
domains ...
... along the life
cycle.
8
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Actor Framework
Policymaking
institutions
Policies,
infrastructure
Institutions with
complementary
capabilities
Expertise
Networks
Incentives,
PPP
Awareness raising,
best practices
Inclusive
Business
Models
Patient
capital,
grants
Tools,
knowledge
hubs
Research &
Advocacy
institutions
Equity, debt
financing
Finance
institutions
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How can Core Business contribute to Development:
Example from the mobile telephony market
Access to
mobile phones
Increased income
for farmers through
instant market
information (e.g.
RML, India; Manobi,
Senegal)
Faster access to
healthcare services
for remote areas
(e.g. Voxiva in Peru,
Pesinet in Mali)
Source of income
and empowerment
for women (e.g.
GrameenPhone
ladies)
Access to financial
services through
mobile banking (e.g.
ALW, India; Celpay,
DRC)
Reduced digital
divide and increased
economic growth
From Unmet Demand to Business Opportunity
 Africa (especially SSA) is the region that offers most promise in the telecom sector
 Africa’s mobile phone market is one of the fastest growing in the world (40% growth in
2006)
 Penetration rates are still very low (less than 15%)
 Mobile phone subscribers in Africa could increase to 250 million in the next 4 years
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2008 Report – Main Messages
1
Opportunities exist to build bridges
between business and the poor and
create value for all.
2
Capturing these opportunities is
challenging due to five widespread
market constraints in the rural villages
and urban slums where the poor live.
3
Entrepreneurs have used five core
strategies to overcome these
constraints.
4
Business leaders, but also governments, donors, NGOs, communities
and other stakeholders can take
action to create value for all and make
markets more inclusive.
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Strategy Matrix
Strategies
Adapt
products
and
processes
Invest in
removing
constraints
Leverage
the
strengths of
the poor
Combine
resources
and
capabilities
with others
Engage in
policy
dialogue
with
government
Constraints
Market
information
Regulatory
environment
Physical
infrastructur
e
Knowledge
& skills
Access to
financial
products
and services
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GIM Reports
“Creating Value for All:
Strategies for Doing
Business with the Poor”
(2008)
“Business Solutions to Poverty –
How inclusive business models
create opportunities for all in
Emerging Europe and Central
Asia” (2011)
“The MDGs:
Everyone’s
Business” (2010)
“Estrategias Empresariales
para la Superación de la
Pobreza y la Exclusión en
Colombia” (2010)
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GIM Case Study Database
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Case Study #1: SELCO (India)
“We set up SELCO to bust 3 myths: the poor cannot afford technology, the poor cannot maintain
technology and it is not possible to run a commercial venture that fulfills a social objective.” - Dr. Harish
Hande, Founder
Description
Opportunity: most of India’s rural population does not have access to
electricity; 400 million depend on highly polluting and inefficient sources of
energy, thus hindering productivity
Business model: make solar lighting technology accessible to the rural poor
(Karnataka) through credit
Constraints:
• Negative perception about
solar technology
• Different clients’ needs
and payment capacities
Solutions:
• Demonstration effects: maintained solar
street lights to demonstrate viability of the
technology
• Customized products (e.g. head lamps for
midwives and flower pickers) and payback
options
Results
Partners
Suppliers: Tata BP, Shakti
Electronics, Anand Electronics
Investors: IFC, USAID, E+Co,
Lemelson, Good Energies
Foundation
Loans: rural banks, credit
cooperatives, MFIs
Social: provision of solar lighting to >110,000 rural homes and 4,000
institutions (orphanages, clinics, schools), creation of jobs (170) and income
opportunities for the rural poor (entrepreneurs renting SELCO lamps to street
vendors daily), savings in energy costs, improved children’s education and
health.
Classification
Environmental: non-polluting and renewable source of energy
Inclusion: Consumer, Entrepreneur
Economic: 25 service centers, average sale price of INR 20,000, broke even
after 7 years, now worth INR 150 million, won national and international
awards
Implementation: SEWA
Sector: Energy
Type: MSME
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Thank your for your attention
For more information:
www.growinginclusivemarkets.org
E-mail: [email protected]
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