CAMBRIDGE, Massachusetts — Developing inclusive business models that can accomplish development impact as well as commercial success; this is the challenge that Business Call to Action, or BctA, issued to companies across the world in 2008. Launched at the U.N. and supported by several international development organizations, BctA provides a global leadership platform for participating companies to establish commercially-viable ventures that focus on low-income populations.
One hundred and four companies across the world have taken up this challenge to “engage low-income populations as consumers, producers, suppliers and distributors of goods and services.” The BctA hopes to stimulate progress toward achieving the Millennium Development Goals by directing the energies of the private sector toward development projects. BctA supports these companies by giving them an arena to share expertise and knowledge for market-based approaches to development, as well as linkages with other companies and donors.
In its 2014 report, BctA highlights that three-quarters of initiatives under its umbrella target people living in poverty as consumers for the goods and services it produces such as financial services, vocational training and agricultural inputs. The remaining 25 percent of its initiatives involve target populations in its supply chain by, for example, sourcing raw materials from small holder farmers or involving them in manufacturing, sales and distribution. These initiatives provide employment and boost the incomes of those living in poverty.
Sumitomo Chemicals in Tanzania is manufacturing insecticide-treated bed nets for distribution at just above the cost price via NGOs and U.N. agencies. This much needed product is protecting vulnerable populations from malaria. However, Sumitomo’s real engagement with people at the “Base of the Pyramid,” as BctA terms it, is at its Tanzanian production facility where it employs 8,000 workers, making its bed net production distinctive.
BctA’s initiatives cover both emerging companies and large established ones which incorporate inclusive business models into its existing framework. In 2014, around half of the initiatives had broken even and the majority had a timeline for breaking even. Annual revenues were commonly between $1 million and $10 million.
These initiatives had different motivations for viewing inclusive business models as commercially sensible. While most hoped to eventually make inclusive business profitable, many saw it as a way to access new markets, establish their brand and gain a competitive advantage for their other products and services.
Under the BctA program, Access Afya, based in Kenya, is providing a decentralized model for health care delivery. By developing “micro-clinics,” Access Afya is using small community spaces to provide quality health care within easy access for the community and is able to integrate community engagement and education in its delivery. It has also launched a Healthy Schools program through which it provides preventive health care and education to children. By identifying innovative ways to generate service-based revenue streams, Access Afya is looking forward to scaling up its programs.
Lotus Foods, established in 1995, has made a commitment under BctA to increase the incomes of 3,000 additional farm households by 2017. Lotus, with its partnerships with Whole Foods and Costco, is providing market access for the small farmers who use the ecological and climate smart method for rice cultivation, known as System of Rice Intensification, or SRI. With this system, farmers are able to grow rice sustainably to ensure more regular incomes.
Lotus’s exports from Cambodia, Indonesia and Madagascar have increased from one container (20 metric tonnes) from each country in 2009 to four times as much in 2015. Lotus aims to double the amount of rice imported from SRI farmers and increase their incomes in a fair-trade manner. The company is continuing to invent new product lines including rice crackers and ready-to-eat meals to increase its market reach. This kind of commercial support for the small farmer can go a long way to making the farm profitable.
Business Call to Action is reaching millions of lives through its initiatives and demonstrating that development oriented businesses can in fact be successful. It is supporting innovation and providing the expertise to help development be commercially viable in its efforts to tackle poverty alleviation through the private sector.
– Mithila Rajagopal
Sources: Business Call to Action, CSR Wire, The Guardian
Photo: United Nations Office For Partnerships