NextierCatalyzing Last-Mile Economic Development through Inclusive Business
By Stanley Zebulon
What is Inclusive Business?
Inclusive business (IB) provides goods, services, and livelihood on a commercially viable basis either at scale or scalable to people living at the base of the pyramid (BoP) by making them part of the value chain of companies’ core business as suppliers, distributors, retailers, or customers. This definition by the Inclusive Business Action Network (iBAN) encapsulates the need to ensure inclusive business models by improving financing opportunities, digital knowledge products, and policy frameworks.
A vital element of the IB business model is the inclusion of the BoPs in the business value chain. Businesses achieve inclusion in the business ecosystem through various means. With the focus on last-mile penetration and integration, there are many ways to involve the BoPs. The retailers can be integrated into the value chains of the companies further up the supply chain. Mom-and-pop shops in village squares, kiosks in neighbourhoods, and mobile door-to-door peddlers and others can improve their livelihoods from the additional incomes that accrue from being part of a larger supply chain. A similar structure is proposed for micro-entrepreneurs operating as mini wholesalers supplying the retailers, smallholder farmers in the agribusiness value chain, farm produce aggregators, and many others.
The Inclusiveness of Inclusive Business
Inclusive business models are a unique way of doing business, where all the parties involved win. For companies, IB models are an opportunity for growth and competitive advantage. Governments see it as an effective approach to overall social and economic growth and development. For the population, IB models serve as a source of a better life, social integration, employment, and sustainable livelihoods.
For a business to be termed inclusive, it must create a model that ensures the inclusion of vulnerable segments of the population in the business’ value chain. Thus, the most vulnerable individuals in the population get a chance to become part of the company either as employees, suppliers of raw materials, distributors, retailers, or service providers. Another option for creating an inclusive business involves the production of targeted products for the BoP.
Supporting Inclusive Business
Inclusive businesses face challenges at different levels ranging from the organizational, operational, ecosystem, and environmental. A hindrance to inclusive business in Nigeria today is the lack of an enabling business environment. Inhibitive policies and hostile relationship between the business community and the government characterize most business environments. To gain control of these challenges, the IB industry needs support from all stakeholders in the ecosystem. These support systems can be through the provision of market-based information for IBs for adequate decision-making, ranging from businesses’ strategies to the engagement methodology with the BoPs.
Similarly, the support can be through providing information to the BoPs regarding improved products and income generation opportunities. Micro-entrepreneurs will benefit from financial support, capacity development, and enabling rules and regulations to drive business and economic growth in the IB ecosystem. Multiple stakeholder groups provide the support initiatives individually or collaboratively to the enterprises. These stakeholders include government and government institutions, companies, international organizations, research institutes, non-governmental organizations, development partners, the media, individual philanthropists, multilateral development banks, other financial institutions, and many others.
Benefits from Inclusive Business
Inclusive Business models bring about inclusive benefits to all players in the ecosystem. Generally, the IB models provide innovative approaches to lift people out of extreme poverty, offer relevant and affordable products and services needed by the BoPs, create income generation opportunities for the BoPs, and provide new solutions to low-income earners, thus enhancing a healthier and more productive lifestyle. For the companies, it provides access to a market of above 4.5 billion customers globally, translating to a consumer market of over $5 trillion.
As African countries push towards the frontier of international recognition as developed nations, IB models will serve as a veritable mechanism to fast track the achievement of the United Nations Sustainable Development Goals (SDGs). This reality is feasible because of the inclusiveness across major players in the ecosystem, including the government, companies, investors, the population at the base of the pyramid, and gender equality.
As a government, IB models will strengthen economic development, poverty alleviation and create employment opportunities. The promotion of sustainable development in all dimensions (economic, social, and environmental), the pursuit of inclusive growth to bridge the last-mile developmental gap, and achieving national impact objective efficiently through the alignment of support and incentive measures for companies with their social impact can all be accelerated the implementation of IB models.
Similarly, companies will benefit through access to new markets and improved supply chain because of access to new channels (for example, smallholder farmers in the agribusiness industry), improved innovation in distribution as it relates to last-mile penetration strategies, access to new sources of finance and partners, and the transformation of corporate social responsibility (CSR) impact to core business strategy.
For investors conscious of positive impact, they will simultaneously achieve social impact and financial returns, doing good while doing well (making money). Also, portfolio diversification and economics of scale will ensue as a result of syndicated finance.
At the core of the IB model is the integration of the BoP in the ecosystem. This model will deliver improved access to affordable and relevant goods and services, a better quality of life, improved income generation ability, and enlarged choices.
With the renewed drive towards ensuring gender equality in all aspects of our economic life, IB models provide an excellent opportunity to create a level playing field for women. Statistics show that women represent more than 60 percent of small-scale businesses, especially in the agro-value chain. Consequently, support for this group will translate to an improved livelihood for families at the BoP. Approaching IB models with a gender lens will ensure many advantages for women with the larger community spillover effect. These advantages will include providing goods and services tailored towards meeting women’s needs, targeted support initiatives for women-owned and managed businesses, and income generation opportunities for BoP women by involving them as suppliers, distributors, and retailers.
Conclusion
Inclusive business models allow all parties involved to gain mutual benefit. Such synergies between the public and private sectors and the population lead to several outcomes, such as sustainable solutions to problems, innovation, competitive advantage, better reputation, a market share, and much more. That is why inclusive business models must be promoted as a powerful tool for economic and social development at the federal and state levels, thus opening new growth opportunities for BoP entrepreneurs and corporations.
