LCF: Leave it to traders to effectively reduce poverty

The Philippines recently posted a stunning 7.8 percent growth rate, making it the fastest-growing economy in Asia during the first quarter of the year.

But while the growth rate looks good on paper, many Filipinos have yet to enjoy the fruits of this development.

Malacañang spokesperson Abigail Valte explains that the trickle-down effect does not happen overnight. Economic managers also describe the state of the economy as a “work in progress.”

While the country’s economy appears to be blossoming, the Philippines is believed to be suffering from non-inclusive growth, where poverty incidence remains high.

In a recent report, the United Nations Development Programme says that 27.9 percent of the country’s population lives below the poverty line.

The government must now focus on how to make this growth an inclusive one, where people get to actually improve their fortunes.

Five commitments

The League of Corporate Foundations (LCF) recently held its 12th Corporate Social Responsibility (CSR) Expo. In this gathering, representatives from the private sector attended seminars and breakout sessions to learn how to make the positive economic figures work for them and effectively reduce poverty incidence.

LCF aims to address social problems through business solutions, and carries out its advocacy through its five commitments: arts and culture, health, education, enterprise development and environment.

“We believe that corporate social responsibility requires a holistic approach to benefit everyone in the long run,” says Augusto Carpio III, chair of LCF.

Armin Bauer, principal economist of the Asian Development Bank, says in a press briefing that there is a disconnect in the CSR and business agenda of Philippine companies.

Bauer says that CSR must not just be a department in a company, it has to be part of the business model itself.

“The business model and CSR should be synchronized,” Bauer explains.

Inclusive business

He adds that, in a recent study conducted by ADB last year, there are 20,000 social entrepreneurs in the country. But only a hundred of these entrepreneurs possess the scale to create an impact on the lives of other Filipinos.

And out of the hundred, only 30 companies have sound business portfolios on which banks have stamped their approval.

Bauer says that there are more or less 30 companies in the Philippines that may be considered “inclusive business.”

“There is a need to scale up the impact on poverty reduction,” he says.

Bauer says inclusive business must be mindful of the problems of society.

A business “must consistently create jobs in small areas. Generating just 50 jobs for 50 people is not systematic,” he says.

Also, a social enterprise must take a look at and study the core problems in the Philippines such as jobs, social security, and housing in urban areas.

“It is not CSR, not social enterprise, if it does not have the scale nor the impact on the lives of ordinary Filipinos,” he adds.

Bauer also advises CSR managers to recalibrate their focus on what is most relevant for the country.

For the Philippines, he recommends that agri-production and agri-processing areas must be further developed. Social entrepreneurs can teach farmers a thing or two about sound entrepreneurship and creativity in selling their goods.

Health is also another area that needs to be improved. The UNDP report states that the Philippines scored low in improving maternal health. The country also received a red mark on controlling HIV/AIDS, malaria and other diseases.

Another aspect is housing for the urban poor.

“For growth to be inclusive, it must create equitable social opportunities, affordable housing, affordable education, affordable health benefits, and it must build up a pension system,” Bauer explains.

According to UNDP report, the Philippines needs to resolve crucial issues before it can achieve inclusive growth.

The challenges include: disparities in income, socioeconomic inequalities, and disasters, both natural and man-made.

Smart structures

Toshihiro Tanaka, country director of UNDP Philippines, says that in order to achieve inclusive growth, PH needs smart structures to help more people benefit from the improvement of the economy.

These smart structures must include strategies to generate decent jobs in higher value-added sectors, he adds.

The demand for skills must meet the education system, and youth participation must be at the forefront, he explains.

For Tanaka, it is necessary that the government must sustain social stability and peace.

This serves as a bedrock to further cement inclusive growth in the country. It is also important to weed out corruption.

Corruption creates an imbalance and often leads to events that disturb the system, Tanaka, says. The government must also seek ways to make cities and provinces more resilient toward climate change.

“The key principles to achieve inclusive growth are participation, accountability, transparency and integrity,” he says.

A synergy between the government and private sector must also exist in order to spur inclusive growth.

“We have to encourage the private sector to refocus their corporate responsibility toward social development,” he adds. “Making growth inclusive and sustainable necessitates participation, commitment and collective effort of all stockholders, particularly those who are vulnerable, as well as both public and private sectors, the academe and media.”