To meet the ambitions of the 2030 Agenda for Sustainable Development, we will need a vibrant and innovative private sector able to seize opportunities to solving the problems that hamper progress and to take solutions to scale.
Inclusive businesses have shown that it is possible to provide goods, services and livelihoods on a commercially viable basis to people often forgotten by traditional businesses and left behind.
In agriculture and the food sector, where smallholder farmers are vulnerable, with limited income opportunities and activity sensitive to economic and climate shocks, inclusive business shape core business processes to address the needs of low-income smallholder farmers and create value for these groups as well as the company.
As part of its work in promoting inclusive growth, ESCAP has engaged in a significant partnership with the Bill & Melinda Gates Foundation to promote inclusive business models in agriculture in India, Thailand and Viet Nam. This partnership will address the needs of thousands of farmers by augmenting the success of inclusive agri-businesses. As the Bill & Melinda Gates Foundation notes, participation of the private sector through inclusive business models can create significant and sustainable impact for the agriculture sector, especially smallholder farmers and women. A holistic model will encourage such businesses and entrepreneurs to get support with adequate trainings, networks and investment infusion to be able to innovate and find market fitments.
In India, ESCAP will be working alongside Invest India, the national investment promotion and facilitation agency, to identify valuable models, expand coaching services to businesses ready to become more inclusive, explore investment opportunities in these business models, and identify opportunities on how government agencies and other organizations can further support these business models. For Invest India, new India’s growth story will be driven by leveraging the ‘untapped business potential’ of these resilient, self-sustaining and inclusive models. Private-public partnerships will be essential for galvanizing ‘systematic investments’ into solutions that are scalable, resource-effective, affordable and more importantly sustainable to bring social impact.
Businesses around the Asia-Pacific region are already supporting smallholder farmers. Our Food is an Indian business that franchises low-cost micro-processing units for rural entrepreneurs. It is creating agri-infrastructure for rural areas and providing increased income opportunities to farmers.
Kennemer Foods in the Philippines sources high quality cacao beans from a network of 12,000 growers. It provides farmers with end-to-end support, including access to high-quality planting material, technology and training in good farming practices, through a cacao doctor network. Farmers that follow the basic protocol can experience a four-times increase in yield.
In Cambodia, Amru Rice works directly with more than 20,000 farmers and pays 20–30 per cent more than similar enterprises and is highly profitable.
Inclusive businesses are different from traditionally-run businesses. They are:
- Intentional: They have clear objectives for improving the livelihoods of poor and low-income groups.
- Accountable: They set out measurable goals and targets towards both bottom lines - social and economic.
- Innovative for low-income segments: They adapt business models to suit low-income contexts, for example, by introducing flexible product pricing, providing supplier training and credit support.
Building inclusive business models does not come naturally. It requires access to specialized advice on designing commercial operations that bring social benefits alongside commercial benefit and on building robust reporting structures that incorporate diverse social and economic metrics. It also needs sufficient capital infusion to test innovative business models and enter new markets. In addition, to perform well in remote markets and communities, inclusive businesses often rely on market facilitation and partnerships.
ESCAP is committed to promote inclusive businesses as they will be critical to build more sustainable, inclusive and resilient economies. We believe that inclusive businesses have the potential to provide impact at scale. For example, evidence from the joint ESCAP and iBAN Landscape Study of Inclusive Business in Viet Nam indicates that 19 businesses alone were benefiting 2.6 million low-income and people.
There is clear potential for inclusive business to deliver solutions at scale.
But for this to happen, we need innovative government policies that incentivize businesses to focus on creating social and environmental value, as well as economic value. Governments can play a critical role in recognizing these efforts – through accolades, such as the ASEAN Inclusive Business awards, to more formal registration and accreditation of inclusive business models. Governments can facilitate the offer of specialized advice services. Governments can also incentivize more investments in these intentional businesses through tax breaks, risk-reduction schemes, partnerships and market facilitation support.
Some governments are realizing that inclusive business are a great source of inclusive growth and are backing the development and expansion of such business models. For example, the ASEAN Economic Ministers’ have endorsed the Guidelines for the Promotion of Inclusive Business in ASEAN. The Government of Cambodia has developed the Strategy for Inclusive Business Enabling Environments in Cambodia and has accredited the first set of inclusive businesses. Earlier this year, the Prime Minister of Viet Nam approved a Programme to promote inclusive business models.
Investors are also realizing these opportunities and are seeking to invest in these impact businesses. In 2021, nearly 900 million dollars were mobilised by 69 impact enterprises in the agriculture sector in India.
ESCAP, the Bill & Melinda Gates Foundation and Invest India are ready to support the emergence and growth of more inclusive business models through our partnerships and our joint action. If we are to build back better and achieve the Sustainable Development Goals by 2030, promoting inclusive businesses must be part of the answer.