‘Inclusive business’ not just for the big boys
If we cannot make globalization work for all, in the end it will work for none—Kofi Annan, former UN secretary general
The author
Nations are urged not only to grow but to grow in an “inclusive way,” in the same way companies are encouraged to adopt “inclusive business” practices.
“Inclusive”—inclusive business, inclusive growth—seems to be the buzz word of the moment. But is it anything new?
“Inclusive growth” has been generally taken to mean economic growth where all sectors of society, including the poor, actively take part in the development process while at the same time enjoying its benefits.
Thomas Bender of the European Commission says it is “growth based on a high-employment economy delivering social inclusion and economic, social and territorial cohesion.”
The Asian Development Bank characterizes inclusive business practices as “those targeting the low-income group and contributing to poverty reduction by making the poor involved in the company’s chain of activities, such as by employing them and making them community suppliers and service providers.”
Decades ago, countries have embraced the “trickle down” approach in economic strategizing.
It is based on appropriating more resources for big businesses to grow even bigger, on the assumption such growth will provide jobs and income opportunities for those at the bottom and automatically make them prosper, too.
In “trickle down,” the poor are passive players waiting for the ‘manna’ to reach their level.
It seems, however, they waited in vain. Growth from the top has generally resulted in greater poverty, more unemployment over the long term, in-work poverty, and, yes, exclusion of the common man.
Clearly, including the poor to take part in the benefits of growth has long been an elusive ideal. However, today’s “inclusive growth” advocates see the poor as active contributors as much as beneficiaries in the growth process. The concept has moreover been refined into “doable” programs that private businesses can adopt, with government providing conducive fiscal and regulatory framework.
It is, thus, business-government sector-labor partnership in action.
From where I sit, another way to look at it is this: An integration by business of its social responsibilities—usually regarded as something extraneous to the business—into the core of its operations.
Jollibee Corp. is exemplary of a business actively pursuing the inclusive-growth ideal.
The fast-food giant sources its meat, vegetables and other supplies from rural farmers and livestock raisers and keeps its meals affordable to the man on the street.
Small businesses can take the same high road to growth.
Here are examples of small to medium-scale entrepreneurs who have, wittingly or unwittingly, adopted inclusive business practices.
Figaro Coffee Corp.
Figaro Coffee Corp. sources the barako coffee it is known for from what used to be marginal farmers in Cavite.
It has pushed farmers to go back to coffee planting and add value to their crop by teaching them modern ways of planting, harvesting and handling coffee post-harvest. The farmers are also encouraged to plant other varieties of coffee and intercrop them with cash crops like papaya and banana. Those using organic farming methods are paid premium rates.
In the Figaro case, what started as a “selfish” motive to ensure the business a stable supply of coffee turned out to be a movement that has managed to benefit the supplier-farmers as well.
Heritage Arts and Crafts
Heritage Arts and Crafts, a company engaged in piña weaving and piña products production in Aklan, solved its raw material problem in much the same way Figaro managers tackled theirs.
Heritage collaborated with the Philippine Textile Research Institute (PTRI), Product Design and Development Center of the Philippines, Fiber Industry Development Authority, and Aklan State College of Agriculture in projects aimed to revive the piña industry and improve piña-breeding and weaving in the province. The resulting innovations helped improve the quality of the fiber as well as raise the productivity and income of farmers and weavers.
On its own initiative, Heritage conducted training in in-laid weaving/embroidery, or sinuksok, the use of four-pedal looms for textured weaving, and the improvement of sinamay-weaving in Aklan.
In 10 years, the training provided livelihood opportunities to about 1,750 piña and abaca farmers, fiber extractors, knotters, warpers, weavers, finishers and embroiderers.
Sr. Pedro
Sr. Pedro, a lechon-manok chain that originated in Cagayan de Oro and has expanded to Metro Manila, contracts out its supply of chicken to small farmers.
It provides training on broiler-breeding as well as chicks, feeds, medicines and vaccines.
All the farmer has to do is build a cage that will pass company standards and take care of the chicken until it is ready to roast.
Sr. Pedro does business with almost 2,000 farmers all over the province. The 200 chicks the foundation provides each farmer translates to P11,200 investment per farmer.
Contract-growing by marginalized farmers accounts for 10 percent of the total chicken supply of the chain, estimated at 11 million birds per year.
Salay Handmade Paper
Salay Handmade Paper was a social enterprise at the outset and is thus inherently oriented toward involving the poor in its core activities.
From its inception in 1987, its workers and even some of its key staff come from low-income households of Salay, Misamis Oriental.
Many of those engaged in production are women who work from home.
For a time, the workers were encouraged to create their own product designs and paid a royalty every time the design is replicated in a greeting card, picture frame or some other item produced by the company.
In the early 1990s Salay Handmade made available to its workers a stock ownership plan that they pay for monthly salary deductions.
Today, 14 of the rank-and-file staff are company stockholders.
Arte Cana
Arte Cana, a furniture company based in Metro Manila, makes it a point to pay its workers higher-than-market rates. Although this policy initially made its products less competitive, it ultimately raised the company’s productivity. “When workers feel they are well compensated, the quality of their work goes up,” explains Arte Cana owner Jofel Babaran.
These cases—mostly drawn from the “Dreamers, Doers, Risk-takers” series of the Small Enterprises Research and Development Foundation (Serdef) and UP Institute for Small-Scale Industries (UP ISSI)—imply that going “inclusive” is win-win for all players.
Whatever worker empowerment results from these practices bounces back to the employers who made it possible and, thence, to the supportive government, and ultimately to the larger society.
(The author is president of Serdef, former director of UP-ISSI, and former chairman of the Small Business Corp. For more articles on small-scale entrepreneurship, visit the Serdef website at www.serdef.com.)
