The first regional report on Africa commissioned by Growing Inclusive Markets initiative and prepared by African Facility for Inclusive Markets was launched on May 10, 2013, in Cape Town, South Africa. Download report: Realizing Africa’s Wealth – Building Inclusive Businesses for Shared Prosperity.
Friday, 10 May 2013 11:09
Friday, 10 May 2013 10:37
Cape Town, 10 May – Involving low-income communities in markets and businesses across Africa is essential for economic growth to translate into sustainable development, according to a United Nations Development Programme (UNDP) report released today.
“Realizing Africa’s Wealth – Building Inclusive Businesses for Shared Prosperity” draws upon 43 in-depth case studies and a database of 600 institutions to portray the state of inclusive business in Africa, looking at a wide spectrum of sectors from banking to agribusiness.
Commissioned by UNDP’s African Facility for Inclusive Markets and representing second Growing Inclusive Markets‘ regional publication, this report examines the approaches and conditions required to bring economic growth closer to low-income communities in Africa, focusing on how businesses can more readily include them as consumers, entrepreneurs and employees. It describes the status of inclusive business in sub-Saharan Africa and the environment needed to support the enterprises and entrepreneurs. It identifies promising opportunities in enabling enterprises and entrepreneurs to build more – and stronger – inclusive businesses. The report calls for more efforts to support inclusive businesses with incentives and investment schemes as well as knowledge sharing about market information and implementation.
By working together to increase information, incentives, implementation support and investments required to make businesses more inclusive, the report makes the case that policy-makers, business owners and development practitioners in Africa will be in a position to make dramatic advances across the Millennium Development Goals (MDGs).
“Africa has seen some strong economic growth over the past decade. Nonetheless, rapid economic progress has not brought prosperity to all, and inclusive business represents a promising approach by bringing the benefits of economic growth directly to the poor by including them in value chains,” the Deputy Director of UNDP’s Regional Bureau for Africa, Babacar Cissé, said. “We need young entrepreneurs and innovators as drivers of inclusive businesses. We need organizations that are willing to take the roles of catalysts, supporters and funders of inclusive businesses.”
Making sure all African citizens can become entrepreneurs, consumers, employees or producers, requires business environments that provide opportunities for all. Market information, policies and legal frameworks that reduce transaction costs, financing and logistical assistance are key to ensuring businesses that are inclusive of the poor can succeed. Facilitating business and market creation not only generates income, but also basic goods, services and choices, with important implications for each of the MDGs, the eight internationally-agreed targets which aim to reduce poverty by 2015.
The report illustrates the impact that businesses and markets have had on the lives of the poor. In Burkina Faso, the French organic cosmetics company L’Occitane invested in the capacities of local women’s cooperatives, helping 15,000 employees to produce and export quality shea butter, and generate US$1.2 million in profits.
In Tanzania, a factory operated by local company A to Z, together with Japanese chemical company Sumitomo, produced 30 million long-lasting, insecticide-treated mosquito nets, and employed 7,500 people.
In Kenya, Equity Bank and K-Rep Bank funded the country’s national agricultural commodities exchange, which has successfully helped increase the income of thousands of small-scale farmers.
“Businesses are key to achieving these advances, but we certainly need more capacity-building entities, such as civil society organizations, governments, developing partners and research institutions, with demonstrated abilities to assist businesses in building inclusive models,” the Chief Executive Officer of Equity Bank in Kenya, James Mwangi, said.
The report calls for the development of new inclusive business ecosystem-building initiatives, at national and regional levels, with the support of finance mechanisms to provide resources for coordination, information and funding. It also calls for the creation of centres of excellence to undertake research, document successful approached and share knowledge.
The report was launched today by the President of the African Development Bank, Donald Kaberuka, and the Manager of the UNDP Regional Service Centre in Johannesburg, Gerd Trogemann, at a side event of the World Economic Forum for Africa.
For more information, please contact:
In South Africa: Tiina Turunen, +27 794592434, firstname.lastname@example.org
In New York: Romain Desclous, +1 212 906 5358, email@example.com
UNDP partners with people at all levels of society to help build nations that can withstand crisis, and drive and sustain the kind of growth that improves the quality of life for everyone. On the ground in 177 countries and territories, we offer global perspective and local insight to help empower lives and build resilient nations. www.undp.org. Follow us on twitter and facebook.
UNDP African Facility for Inclusive Markets (AFIM) is a regional private-sector and inclusive market development programme of UNDP’s Regional Bureau for Africa. Its objective is to accelerate progress towards achievement of the MDGs by supporting the development of inclusive, pro-poor markets across Africa.
Friday, 08 June 2012 06:11
If you or your organization supports inclusive business initiatives through raising awareness, capacity building, funding, involvement in policy-making, research, or in any other way: Make your support for inclusive business known by participating in our survey – or providing expert input in an interview!
Survey participants will be featured in a UNDP database which will be disseminated globally. Further, the results of the survey and the interviews will inform a Growing Inclusive Markets report on “Inclusive business models and their ecosystems in Africa”. commissioned by the African Facility for Inclusive Markets (AFIM) and written in collaboration with Endeva and Reciprocity.
A crucial part of this report is examining the status of support mechanisms for inclusive business in Africa. Support mechanisms may exist – but companies may often not be aware of them, a gap this work will aim to bridge. The report thus aims to create transparency for companies operating on the African continent on what type of support they can attain, and from whom. Ultimately, this action-oriented project seeks to inspire and facilitate further collaboration between key actors – namely the private sector, donors, policy-makers, NGOs, investors, research and other support institutions – by delivering useable tools to practitioners: a written report, a series of inspiring case studies, and a searchable actor database.
Friday, 11 May 2012 13:15
Excerpt. For full article, please use this link.
“Players in the financial-services industry are traveling to the world’s most cash-rich locales, scouring rural villages in an effort to tap an untouched market where some 2.4 billion people have yet to open a bank account.
“I don’t think there’s any doubt that there’s a tectonic shift in technology here, a leapfrog opportunity,” said Gordon Cooper, Visa’s head of emerging market solutions. “We are quite certain that the real opportunity lies in non-traditional growth.”
Sobhani, who focuses on U.N.’s growing inclusive markets initiative, said providing the poor access to financial services through mobile platforms is a “critical enabler.”
That ranges from governments and relief programs providing and tracking direct aid to earthquake victims in Haiti to the ability of hooking rural farmers up to the grid in what led to the creation of Sub-Saharan Africa’s first commodities exchange in Ethiopia.”
Friday, 13 April 2012 14:10
GIM delivers a keynote speech at the Sixth World Water Forum: Testing solutions for water products at the BOP must take a multi-product approach, instead of a single product-driven approach
In a keynote presentation at the Japan Water Forum Side Event at the Sixth World Water Forum, Marseille, 14 March 2012, Sahba Sobhani (Growing Inclusive Markets Initiative, UNDP), reflected on the challenge of growing inclusive markets for water products in low income communities, where the challenge is to find strategies that are replicable and scaleable. The session focused on business-based pro-poor approaches on water and sanitation for better sustainability.
Mr. Sobhani said, “research and pilot testing is essential to take into consideration the cultural characteristics and ease of use in water sector products. Awareness building and community mobilization are also necessary cost factors. He noted that a sector approach testing multiple products can be more beneficial compared to the standard ‘product’ based approach pursued by most companies when entering the BoP market. Sectoral approaches enable comparative benchmark analysis of pro poor impact, demand for the products and business cases. The presentation included findings from a recent UNDP multi product testing undertaken with two Japanese water purification products as part of a Japanese Ministry of Foreign Affairs funded initiative -perhaps one of the first multi-product feasibility studies of its kind.
The BoP business model can apply not only to point of use systems, but also to support the construction of water supply systems for the unserved, in order to sustainably improve public hygiene with safe water supply. The JICA experience with the BoP business experience has so far demonstrated that these businesses are more difficult than other ordinary private water projects because they are small, target low income groups, and are high risk. Therefore, private finance is very limited. Osamu Murata (JICA), explained that this is why JICA is supporting the costs of feasibility studies by private companies that are willing to invest in the BoP business model. JICA will continue to welcome collaborations with other donors, NGOs and private companies.
The session concluded that the BoP business model can be successful in meeting the needs of poor people for improved water service provision at an affordable cost. It can also open up significant new markets for businesses and enable them to make a profit. And finally, the BoP model provides a long term contribution to sustainable poverty reduction by using more energy and resource-efficient technologies, increasing economic activity and creating opportunities. Unserved communities, private companies, and the international development community can all achieve their objectives by working together using the BoP business approach. Work by the Japan Water Forum, JICA and colleagues on the BoP solutions will build on the suggestions made during the Side Event in preparation for further presentation and discussion on this topic during the 7th World Water Forum in Korea.
Friday, 13 April 2012 14:05
From Business Fights Poverty, written by Sahba Sobhani and Subathirai Sivakumaran, Growing Inclusive Markets Initiative, UNDP
What next after microcredit?
The last few years of news scandals in the microfinance arena has created a gap in the credibility and viability of providing effective, low-cost and impactful financial services to the poor. Newer studies calculating the impact of microcredit find controversial development impact. SKS Finance’s $347 mn IPO (coming after Compartamos’ record-breaking IPO and profits in 2007 ) was followed by a dramatic stock price fall in 2011, amidst allegations that aggressive lending practices led to increased impoverishment of poor borrowers, and farmer suicides. Increased regulatory burdens in many countries amidst an environment of constrained credit and diminishing grants has squeezed microfinance break-even profitability and limited its scaling.
But one should be careful not to throw the baby out with the bathwater.
What are other successful financial products for the poor?
What the developed world thinks of as formal bank accounts is not what works for the poorest populations. Rather, no-frills bank accounts (that limit transactions and reduce the cost of ‘servicing’), mobile wallets, prepaid debit cards that can be reloaded are all currently enjoying great success in the markets of the poor. Low cost payment systems (a Visa/Mastercard/Amex system for the poor) are using innovative channels and technologies to reach the poor, achieve a volume of transactions and turn a profit. These systems and ‘accounts’ offer the poor the ability to save, transact and build wealth securely and at lower costs than otherwise. A slew of exciting product innovation in commitment savings products, micro-insurance, and others are also being piloted.
How can scale be achieved in introducing these products to the poor?
All of these methods have been used successfully to reach the poor through government to person transfer programs, such as Latin American conditional cash transfer programs, emergency cash transfer programs, government salary payments to low income employees and a variety of other programs. But there is still a way to go in advocating for governments and donors to change the way they do business.
The Consultative Group to Assist the Poor (CGAP) reported in 2009 that over 170 million people are receiving cash transfers from their governments. Yet only one quarter receive these benefits into a financially inclusive bank account. While advances have been made since 2009, the majority of the poor still receive their recurring payments through lining up, and receiving cash envelopes.
It is not only governments who need to transform their practices, but also donors who need to find a third way for official development assistance. In the humanitarian sphere, innovative advances in the disbursement of hundreds of millions of dollars of cash transfers to the disaster or war-affected, annually, have enabled effective financial inclusion through the use of mobile phones, debit cards and bank accounts.
In an upcoming database soon to be published by UNDP, nearly 25% of 168 emergency cash transfer programmes in the last 5 years have used either mobiles, prepaid cards or bank accounts to transfer cash. These practices ensure that money goes directly to the recipient without endemic leakages, and ensure greater aid-effectiveness through increased monitoring ability. In Haiti, in 2012, for the first time in the world, mobile enabled cash transfers are being used by UNDP for a housing repair voucher system to earthquake-affected victims who reside in camps and insecure dwellings.
What is the increased development impact in doing so?
Linking government cash transfer programs to some form of accounts to the poor can provide participants with greater social empowerment, positive psychological impacts, increased investment in human capital, future-oriented outlooks, the ability to weather shocks, and contribute towards the Millennium Development Goals.
For example, a new and exciting randomized control trial in Niger in 2011 found that the mobile delivery mechanism (called zap) strongly reduced the variable distribution costs for the implementing agency, as well as program recipients’ costs of obtaining the cash transfer. The zap approach also resulted in additional benefits: households in zap villages used their cash transfer to purchase a more diverse set of goods, had higher diet diversity, depleted fewer assets and grew more types of crops, especially marginal cash crops grown by women.
It’s not just about opening bank accounts for the poor.
The answer is not to open more ‘traditional’ bank accounts for the poor. Shortsighted pushes to expand financial services to the poor have resulted in distorted incentives and many dormant bank accounts. The last mile still has to be accomplished. Ensuring that the poor receive access to a suite of saving, wealth-building and cheaper transactional methods necessitates efficient pro-poor payment systems. This means not only using low-cost technology, but finding the appropriate distribution agents and points of service that allow the poor to effectively use mobile phones/prepaid cards/basic bank accounts effectively and frequently.
In case studies written by the Growing Inclusive Markets initiative at UNDP, examples of A Little World in India, MAP International in Uganda and GiroNil in Egypt show promising private sector providers who have begun innovating low cost payment systems (like Visa or Mastercard in the developed world) that use innovative technologies such as mobile transmission, RFID chips and offline capabilities to lower the cost of transacting electronically for the poor. Partnerships with state postal institutions in Egypt ensure an extension of low cost payment possibilities to the poor. Working with the rural employment guarantee scheme in India (NREGA) allows ALW to achieve volume in payments (and open 4 million accounts for the poor) and therefore achieve profitability quicker.
There is great momentum, knowledge building, implementation of pilots and attempts to scale the universe of safe, effective and transparent financial services of the poor. Credit is only one cog in the wheel. What is even more essential is the overlooked but critical factor of access to pro-poor accounts (whatever form they take) and cheap and effective transactional methods. To accelerate the adoption of these systems and achieve scale, governments and donors need to change their own practices. It is only then that financial services for the poor will achieve its great promise of contributing to the eradication of poverty.
Friday, 13 April 2012 13:44
Washington—Major changes in the multilateral landscape have paved the way for new partnerships and a concrete, recognized role for the private sector in development, UNDP Assistant Administrator for External Relations and Advocacy Sigrid Kaag said here.
“The geopolitical and multilateral landscapes have changed, creating new opportunities to partner and co-create,” Kaag told a panel discussion at the Center for Strategic and International Studies (CSIS) Feb. 24. “The development experiences and approaches coming from emerging economies provide new examples and new insights.”
“Meaningful, equitable, inclusive growth requires the active engagement of all partners, and the private sector is critical to job-rich economic growth,” she said. “In many countries, the private sector shares its expertise, access to technology, and innovative practices and tested business models.”
“UNDP’s experience in working with the private sector, in growing inclusive markets, has given us ample experience to build on and apply in our work with all development partners,” she said, citing “tremendous momentum” for accelerating progress toward the anti-poverty Millennium Development Goals (MDGs).
UNDP draws on its legitimacy, neutrality, and global reach to further promote trilateral cooperation and private sector engagement, she said, adding that the agency seeks to foster inclusive markets with jobs and services for the poor, predictable economic bases, and good governance.
‘Revolution in development’
In 2005, UNDP, the US Agency for International Development (USAID), and Government of France launched a study of the role of the private sector in development, Daniel Runde, director of the CSIS Project on Prosperity and Development, said.
The resulting report, “Creating Value for All,” was published in 2008, launched in more than 50 countries, and translated into seven languages. It also prompted UNDP’s “Growing Inclusive Markets” initiative.
“You have something [here] that has caused a real revolution in development,” Runde said. “Having the UN say that private sector-led development is important really means something, because the UN can reach folks other people can’t.”
The Growing Inclusive Markets initiative comprises 28 business schools in developing countries along with other partners to build and share knowledge related to private sector effectiveness among low-income populations and to develop capacity. UNDP also hosts a multi-partner initiative, the Business Call to Action(BCtA), which challenges companies to develop innovative business models with commercial and development outcomes.
Emerging economies play a key role
The 34-member Organisation for Economic Cooperation and Development (OECD) now includes Mexico, Chile, Israel, the Republic of Korea, and Turkey. Such emerging economies are now partners in shaping and implementing development policy, Kaag said.
Middle-income countries with growing economies are clear in their demand for cutting-edge knowledge and tested expertise to develop equitably and create opportunities for the present and future, she said. “The Arab Spring has taught us a number of valuable lessons in this respect. Employment and employability remain driving forces in society,” she said.
In March 2011, UNDP and the Government of Turkey opened the Istanbul International Center for Private Sector in Development. The Istanbul center supports inclusive, competitive markets and business models that engage poor people into value chains as producers, employees, consumers, and entrepreneurs, with the end goal of economic development.
Opening the center, UNDP Administrator Helen Clark cited “outstanding examples of inclusive approaches in Turkey and other countries in the broad UNDP region of transition in Europe and Central Asia,” such as a textile industry entrepreneur who invested in poorer regions.
“Through lower labor costs, and with government incentives, this business became profitable and generated new jobs and opportunities, especially for local women,” Clark said. “The private sector itself has a critical role to play in fostering inclusive growth.”
UNDP has meanwhile signed new partnership agreements with Brazil, China, Turkey, Mexico, and South Africa, committing to work together to support other developing countries to meet development challenges.
Thursday, 01 March 2012 16:15
Haiti’s earthquake-affected households started to receive cash installments through the first ever mobile money transfer mechanism to support post-disaster housing reconstruction. Over the next three months, 1,000 low-income households will be receiving monetary subsidies totalling US$500 to purchase high-quality construction materials at certified stores. The initiative is part of the ‘Community Support Centres for House Repairs’, a partnership between the UN Development Programme (UNDP), the Government of Haiti, and Digicel. Read more about it by clicking here.
Monday, 13 February 2012 15:49
The ‘African Facility for Inclusive Markets’ (AFIM) is a regional private sector and inclusive market development programme for poverty reduction in Africa. Based in Johannesburg, it is supported by UNDP’s Private Sector Division and Regional Bureau for Africa. As part of its objective to increase the capacity of regional organizations, governments, and other stakeholders to support inclusive market development in the region, AFIM will develop a report based on the ‘Growing Inclusive Markets’ (GIM)Initiative’s methodology, including the research and analysis of case studies of inclusive business models. The GIM Initiative has already documented 120 case studies of such business models across regions – for more details, see http://cases.growinginclusivemarkets.org.
Inclusive business models are defined as commercially viable business models that include the poor on the demand side as clients and customers, and/or on the supply side as producers, employees and entrepreneurs along value chains. The Case Studies work stream of the AFIM/GIM Report process seeks to establish a network of case writers comprised of academics/consultants from a selection of countries, including Liberia, Ethiopia, Ghana and Burkina Faso. The new pool of case studies created under this work stream will increase the depth of analysis by providing quantitative and qualitative data on the business benefit of inclusive business models as well as their social and environmental impact. The case studies to be documented will focus on the following sectors: agribusiness; small, medium and micro-credit; construction; water and sanitation; education; and energy.
Description: Case writers will produce (identify, analyze, and write up) a minimum of 2 case studies based on the GIM Research Protocol. A minimum of 1 field visit to each case site, and interviews with a variety of stakeholders will be required. Throughout the entire process the writer will interact with the GIM and AFIM teams through an iterative process.
For more information, including how to apply, click here to see the job description.
Friday, 10 February 2012 16:24
The oikos UNDP Young Scholars Development Academy 2012 provides PhD students and young scholars working on poverty, sustainable development, and the informal economy from an Organisation and Management Theory perspective a platform to present and discuss their on-going research projects with fellow students and senior faculty.
The 2012 academy focus, “Matching Culture and Markets for Inclusive Development”, aims to attract papers analysing the strategies of businesses, governments, multilateral agencies, NGOs and other interest groups shaping moral markets that build on local capabilities, include the poor and create opportunities for sustainable development. The event aims to advance academic research at the nexus of informal and formal economies on the Base of the Pyramid (BoP), build networks across disciplinary boundaries, and to prepare the ground for research that is relevant for both academic and business audiences.
For further information, click here.