WB: Inclusive businesses must thrive sans gov’t help

The Philippine government can aggressively ramp up its information-awareness campaigns and capacity-building efforts in order to develop a conducive environment for sustainable businesses aimed at benefiting low-income communities.

Development finance expert Eriko Ishikawa of the World Bank’s International Finance Corp. (IFC) said, however, there are already a number of inclusive business models that are thriving both here and abroad even without government interventions. Ishikawa is global head and founder of the inclusive business team of the IFC.

“The biggest thing we need to do is awareness raising. Inclusive business has to be something that all of us would think that it is the future, specifically the younger people, the social entrepreneurs. We need to mobilize more people to think that this is the kind of work they want to do,” Ishikawa said.

Ishikawa defined inclusive business as a “private sector approach to providing goods, services and livelihoods at a commercially viable basis that is scalable to people at the base of the pyramid by making them part of the value chain of companies or business as suppliers, distributors, retailers or customers.”

She said an inclusive business does not need the help of the government to survive. “The government could stay out of the way or they can actually do a part… in capacity-building, which is needed especially in the rural areas.”

In the Philippines, such models already exist as in the case of Kennemer Foods’ Cacao Growership Program. Small farmers, numbering around 10,000, have been tapped to supply cacao beans to the company over a 10-year period. The farmers are seen to benefit from a seven-fold increase in annual incomes.

Marcos Athias Neto, team manager for private sector and foundations at the United Nations Development Program, cited the lack of market information on low-income communities as a hindrance to developing sustainable businesses.

“Governments have that kind of information by way of the conditional cash transfer program. So how can the government now sanitize that data and make it available to entrepreneurs that want to invest in the bottom of the pyramid? The data is available but is not being shared and [it] should be sanitized,” Neto said.

Ayala Corp. chair Jaime Augusto Zobel de Ayala also said a wide-scale adaptation of inclusive business models can only happen once industries have resolved to reinvent themselves.

“More companies must champion inclusive business models and disrupt underserved sectors in the economy. Further, it is imperative that key government agencies step in as well to implement policies that provide clear incentives supporting these business models that will help achieve critical mass in the private sector,” he said.