“the practice of exchanging ideas, goods or services between two entities for their mutual benefit”
To everyone at home who is under the impression that I am galavanting all over South Africa having a marvelous time... You are right. It is my fault, however, that this is probably your only impression. A bad excuse as to why this is my first time writing about my internship is that I still am trying to wrap my head around the massive black hole that is “inclusive business”. Prior to arriving in Cape Town my perception of “inclusive business” was defined by “social entrepreneurship” and the Triple Bottom Line model (people,planet,profit). But, that was just the tip of the iceberg. A lesson learned from the UNDP report that we have been writing that dissects these concepts in the context of sub-Saharan Africa. With a general understanding of social entrepreneurship many of us think of brands such as: Toms shoes or Warby Parker sunglasses, or really any of those products that you can buy where a small percentage of the profits goes to a social or environmental cause.
First off,the players involved in this system are not just trendy brands but also, policy makers, NGOs,multinational corporations, think tanks, researchers, academics, consultancy firms.... The list goes on. And this is the general idea- there are over 4 billion people that live at the base of the socio-economic pyramid (BoP) that are currently not formally included in developed economies. But what if they were? What if multinational companies like SABMiller, PepsiCo, Nestle, Colgate, molded there business models to include these 4 billion people in their supply chains, distribution channels, and consumer base? Well by empowering the BoP through employment in supply, whether it be agribusiness or textiles or manufacturing etc., you improve their livelihood by providing a solid source of income. Including the BoP in distribution channels opens up opportunities for further employment and also facilitates entrepreneurship in disadvantaged communities. Such improved economic stability then allows for general social development in education, healthcare and housing. Which then opens up a whole new market for these companies to sell their products or services. Companies are always looking for ways to penetrate new markets... Well hello people, there are 4 billion people out there with potential purchasing power that can also help your business do more business along all three tiers!
The idea of Reciprocity.
The concept makes enough sense, and despite the obstacles that have kept this from actually already happening, is still a necessary step that the developed economies of the world have to make. The economic crash of 2008 should be enough to convince you that reform must be made. The road that we are going down is not sustainable and as populations begin to increase, particularly in the BoP, even the developed economies will start to feel the repercussions. Which is why four areas of support for this change must begin to happen:
1) Policy making- governments of developing nations must implement policies that encourage businesses to invest and do business in their countries.
2) Advocacy & Research- think tanks, consultancies, academic institutions must produce and share primary research so that the market of the BoP can be understood. Companies do not implement new initiatives without first understanding the cultures, trends, and obstacles that exist in the marketplace. They are in business to stay in business and have to allocate resources efficiently. If companies understand the BoP they will be less resistant to trying new models in that market.
3) ICT (Information and communication technologies) It can not be argued that our world isn’t becoming more and more connected and reliant on technologies for information and communication. Who reading this doesn’t own an Apple product? Not everyone needs an iPhone, but basic mobile and Internet services will help the BoP immensely.
4) Implementation support- companies need guidance and support while implementing these new projects in developing communities. Language and education barriers, lack of resources and infrastructure, limited funding, all are obstacles that companies are not able, or willing, to take on independently. As they shouldn’t, there are many non-profits and NGOs that already have the skills and connections necessary to make that process more seamless. Transparency in this field, therefore, is key to making these ideas an actual reality.
Now do you see what I mean when I say the idea or “inclusive business” is a black hole? I am sure as you read through this you can come up with holes in this model (partially because I am trying to keep this to the point), but I also hope that you still walk away from your computer screen thinking – “Shit. That actually makes sense”.
Because that my friends is what I think every day I leave my office.
Lucky for me South Africa is a hot spot for inclusive business, social enterprise, sustainable business, triple bottom line models-call it what you will- innovation. It is amazing to go into the townships and see first hand the faces that make up this BoP market I talk about, and then go back to my office and work on the big picture. It’s all for them, and I hope that I find my place in this big picture and figure out how I can contribute in my time here.