INCLUSIVE BUSINESS: CREATING OPPORTUNITIES AT THE BOTTOM OFTHE PYRAMID FOR PROFITABLE PRIVATE SECTOR INVOLVEMENT TO PROMOTE INCLUSIVENESS

OF GROWTH

Examples of 18 models 1

Background document for the

ADB~ MPI, SNV Inclusive Business Investment Forum, 1 April 2011, Ho.Chi Minh City

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1 This document was prepared by Gladys Morales (morales.gladys@ymail.com) and Armin Bauer (abauer@adb.org)

Acronyms and Abbreviations

B4P

benefits for the poor

B4PS

benefits for the private sector

BoP

base/bottom of the pyramid

EBITDA

earnings before interest, taxes, depreciation and amortization

IFC

International Finance Corporation

IPO

initial public offering

NGO

non-governmental organization

Notes:

IS rating for private sector impact (IB-PS): Ranging from 1 to 5 with respect to the level of gains for the private sector. 1=low gains, 2= mediurn-Iow gains; 3= medium gains; 4=medlum-high gains; and 5= high gains.

IB rating for poverty and social impact (IB-P score): Ranging from 1 to 5 depending on the level gains for the BoP defined as people living under $2.5 dollar a day, unless otherwise specified. 1=low gains, 2= medium-low gains; 3= medium gains;

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IB requires different business models

"Study your customers from the way they think to the way they live. Also remember thatirmovotion isn't purely technical. You have to consider social and political complexities to come up with the riqht solutions." Gerardo C. Ablaza Junior, CEO, Manila Water Company, Philippines (Jetkins et al..2010).

"/ would, say do not approach the model asyou do with your standardbusiness. If you simply replicate standard business models at the base of the pyramid, you will lose money. "Yara Argueta, CEO, Grupo Solid, Centra! America (Jetkinset al, 2010):

"Another emerging opportunity is rural distribution. Because volumes-and sales drop off, you need to partner with other companies to get the scale to operate.cost-effectivelv." Tielman Nieuwoudt, Former Market Development Manager,Coca-Cola SABCO,. East Africa; and Principal, The Supply Chain Lab; vletriarn.Uetklnset al. 2010).·

IB should have impact on the poor and on the private sector

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"Like business linkages, inclusive business models involve the poor in corporate value chains-whether as

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employees, entrepreneurs, suppliers, distrlbutors.francnlsees, retailers, customers, or sources of

. innovation =utidore or have the potentia!to become j{nancially vfable;"(UNDP, 2008);

"We realized that through inclusive business, it was possible to increase the company's efficiency, benefit the.local population, and contribute to the overall development of the state." Gisomar Marino, CFO, CEMAR, Brazil (Jetkins et a!'2010).

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References and other examples

Jenkins, Beth, Erika Ishikawa, Alexis Geaneotes, and John Paul (2010). "Inclusive Business Solutions: Expanding Opportunity and Access at the Base of the Pyramid." Washington, DC:

International Finance Corporation.

Jenkins, Beth, Erika Ishikawa, Emma Barthes, and Marisol Giacomelli (2008). "Supporting Entrepreneurship at the Base of the Pyramid through Business Linkages." Washington, DC:

International Finance Corporation, the Harvard Kennedy School and the International Business Leaders Forum.

United Nations Development Programme (UNDP). 2008. "Creating Value for All: Strategies for Doing Business with the Base of the Pyramid." New York, NY: UNDP.

Unilever, 2010. Online: http://www.unilever.com/images/es Project Shakti tcm13-13297.pdf United Nations Development Programme (UNDP), 2011. Growing Inclusive Markets, Business Works for Development - Development Works for Business. Online: http://www.undp.org/gimlaunch/press/docs/INDIA%20SULABH%20CASE%20SUMMARY.pdf

Other examples:

Aaveskaar Fund: http://www .. aavishkaar.in/

World Business Council on Sustainable Development: http://www.wbcsd.org/templates/TemplateWBCSD5I1ayout.asp?MenulD=1

M4P in Viet Nam: http://www.markets4poor.org/?language=english; http://www.markets4poor.org/vi

IADB: Opportunity for the Majority Program; http://www.iadb.org/en/topics/opportunities-for-themajority/opportunities-for-the-majority, 1377 .html

DFID: Buslness Innovation Facility covering 5 countries including 2 from Asia (http://businessinnovationfacility.org/);

IFC: BoP Inclusive Business program (http://www.ifc.org/ifcext/advisoryservices.nsf/ContentlBOP _Inclusive_Business),

SECO and DEZA: Responsibility

Funds: (http://www.responsability.com/site/index. cfm?id_art=44197 &actMenu Iteml D=21192&vsp rache=EN), Financial Systems Development Services (FIDES; www.fidesgroup.org) and development facility for income and employment (SCBF). T

SIDA: Innovation against Poverty: http://www.sida.seJGlobaIJPartners/N%c3%a4ringsliv/innovations_against_poverty%5b1 %5d.pdf

SNV: Inclusive Business: http://www.snvworld.org/en/ourworklPages/inclusivebusiness.aspx UNDP: Business Call to Action initiative (http://www.businesscalitoaction.org/);

William Davidson Institute: The Next Billion project: http://www.nextbillion.netl

World Resources Institute (2007): The next 4 billion: http://www.wrLorg/publication/the-next-4- billion

World Bank: http://blogs.worldbank.orgJdmblog/category/tags/inclusive-business-model),among

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