19.04.23 Seite 1

Insights from the Growing Inclusive Markets (GIM) Initiative of UNDP

Dr. Bimal Arora

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Can Enterprise Development and Responsible Business Co-exist in India?

19.04.23 Seite 2Page 2

The Growing Inclusive Markets Initiative

Conceived by UNDP in 2006 as platform for collaboration focused on research & advocacy

Vision: to enable a greater contribution of the private sector to human development and to the Millennium Development Goals

GIM Role: Guiding by convening• To be a focal point for the various

public and private sector initiatives in the field

• To offer a roundtable to exchange views, identify common approaches and interests, understand differences and complementarities, tackle open questions

• To guide a process where many actors can contribute to creating and dissemi-nating knowledge on how business can contribute to human development

Desired Impact• Raising awareness by demon-

strating how doing business with the poor can be good for poor people and good for business

• Clarifying the ways that busi-nesses, governments and civil society organizations can create value for all

• Inspiring the private sector to action

19.04.23 Seite 3Page 3

The Growing Inclusive Markets Initiative

- Advisory Board gathering over 25 key stakeholders including business associations, academic institutions and development agencies

19.04.23 Seite 4Page 4

Developmentbenefits

Business benefits

Traditional Business (“Northern” MNCs) Approach to Development; Social Investments

Philanthropy

CSR / Social investment

• Contribution of financial or in-kind resources to development projects

• Social investment that is strategic to the core business and that contributes to achievement of the MDGs

Traditional CSR

19.04.23 Seite 5Page 5

Private Sector is emerging as a development partner – now on the threshold of a new phase: Core Business

Inclusive business models / inclusive

markets

Developmentbenefits

Business benefits

Philanthropy

CSR / Social investment

• Contribution of financial or in-kind resources to development projects

• Social investment that facilitates business objectives and the achievement of the MDGs

• Enterprise solutions that accelerate and sustain access by the poor to needed goods and services and to income generating opportunities and that contribute to economic empowerment

19.04.23 Seite 6Page 6

Businesses benefit

from including the poor:

on the supply side: finding new customers, creating long-term customer loyalty, developing transferable innovations

on the demand side: improving production capacity, getting access to high-quality inputs, expanding customer reach

Core Business & Development: A Mutual Value

Many examples show that providing basic goods & services as well as income opportunities to the poor can be a sustainable and profitable business strategy and contribute to human development.

ProfitabilityParticipationof the Poor

The poor benefit from participating in markets:

access to goods and services

access to income opportunities as suppliers, employees, distributors and entrepreneurs

increased choice and power

The goods & services provided have a human development impact:

water & sanitation, energy

financial services, ICTs

housing, education, nutrition

Human Development Impact Sustainability

Inclusive businesses contribute to social & environmental sustainability

clean energy, protection against natural disasters

fight against rural exodus and hyper-urbanization

etc…

Inclusive Business

19.04.23 Seite 7Page 7

Opportunities exist to build bridges between business and the poor

19.04.23 Seite 8Page 8

IBM: Results Framework

8

Inclusive business models have results...

... on differentstakeholders ...

... in different domains ...

... along the life cycle.

19.04.23 Seite 9Page 9

Actor Framework

Policies, infrastructure

Awareness raising,best practices

Incentives, PPP

Tools, knowledge

hubs

Patient capital, grants

Equity, debt financing

Expertise

Networks

19.04.23 Seite 10Page 10

How can Core Business contribute to Development: Example from the mobile telephony market

Access toAccess tomobile phonesmobile phones

Increased income for farmers through instant market information (e.g. RML, India; Manobi, Senegal)

Source of income and empowerment for women (e.g. GrameenPhone ladies)

Faster access to healthcare services for remote areas(e.g. Voxiva in Peru, Pesinet in Mali)

Access to financial services through mobile banking (e.g. ALW, India; Celpay, DRC)

Reduced digital divide and increased economic growth

From Unmet Demand to Business Opportunity Africa (especially SSA) is the region that offers most promise in the telecom sector Africa’s mobile phone market is one of the fastest growing in the world (40% growth in 2006) Penetration rates are still very low (less than 15%) Mobile phone subscribers in Africa could increase to 250 million in the next 4 years

19.04.23 Seite 11Page 11

2008 Report – Main Messages

1 Opportunities exist to build bridges between business and the poor and create value for all.

2 Capturing these opportunities is challenging due to five widespread market constraints in the rural villages and urban slums where the poor live.

3 Entrepreneurs have used five core strategies to overcome these constraints.

4 Business leaders, but also govern-ments, donors, NGOs, communities and other stakeholders can take action to create value for all and make markets more inclusive.

19.04.23 Seite 12Page 12

StrategiesC

on

stra

ints

Strategy Matrix

19.04.23 Seite 13Page 13

GIM Reports

“Creating Value for All: Strategies for Doing

Business with the Poor” (2008)

“The MDGs: Everyone’s

Business” (2010)

“Business Solutions to Poverty – How inclusive business models

create opportunities for all in Emerging Europe and Central

Asia” (2011)

“Estrategias Empresariales para la Superación de la

Pobreza y la Exclusión en Colombia” (2010)

19.04.23 Seite 14Page 14

GIM Case Study Database

19.04.23 Seite 15Page 15

Description

Results

Environmental: non-polluting and renewable source of energy

Partners

Suppliers: Tata BP, Shakti Electronics, Anand Electronics

ClassificationInclusion: Consumer, Entrepreneur

Sector: Energy

Type: MSME

Case Study #1: SELCO (India)

Investors: IFC, USAID, E+Co, Lemelson, Good Energies Foundation

Economic: 25 service centers, average sale price of INR 20,000, broke even after 7 years, now worth INR 150 million, won national and international awards

Social: provision of solar lighting to >110,000 rural homes and 4,000 institutions (orphanages, clinics, schools), creation of jobs (170) and income opportunities for the rural poor (entrepreneurs renting SELCO lamps to street vendors daily), savings in energy costs, improved children’s education and health.

Constraints:• Negative perception about solar technology• Different clients’ needs and payment capacities

Opportunity: most of India’s rural population does not have access to electricity; 400 million depend on highly polluting and inefficient sources of energy, thus hindering productivity

Business model: make solar lighting technology accessible to the rural poor (Karnataka) through credit

Loans: rural banks, credit cooperatives, MFIs

Implementation: SEWA

Solutions:• Demonstration effects: maintained solar street lights to demonstrate viability of the technology• Customized products (e.g. head lamps for midwives and flower pickers) and payback options

“We set up SELCO to bust 3 myths: the poor cannot afford technology, the poor cannot maintain technology and it is not possible to run a commercial venture that fulfills a social objective.” - Dr. Harish Hande, Founder

19.04.23 Seite 16Page 16

Thank your for your attention

For more information:

www.growinginclusivemarkets.org

E-mail: bimal.arora@giz.de