Inclusive Business (IB):

Generating Profits and Social Impact

2nd Inclusive Business Forum for the Philippines

16 September 2013, ADB Manila

The views expressed in this presentation are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use. The countries listed in this paper do not imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's terminology.

What is Inclusive Business ?

Inclusive Businesses are Commercially viable companies, whose core business solutions are designed to address pressing social (and environmental) issues, by engaging low-income groups as producers, employees, distributers, +/or consumers through the provision of i. goods and services relevant to poor people, or ii. income and decent work opportunities

In a manner that improves their living standards and reduces poverty

2

Who is doing Inclusive Business ?

SMEs and social enterprises that upscale their businesses

above

Inclusive Business

Domestic or international Producing for the national or export markets

market returns

Larger established companies that develop new models with a larger social impact

mainstream business

inclusive business

social enterprises

below low social impact

3

high

IB is found in diverse sectors

relevant and affordable education and skills health of the poor energy for all inclusive transport safe water livable cities affordable housing productive financial services
nutritious food pharmaceuticals others agriculture + related industries manufacturing services (incl. tourism, trade, environmental) clever IT solutions

basic services for the poor and vulnerable ($3)

access to

essential goods better living

opportunities for

higher and reliable income

decent employment
4

Achieving both Financial and Social Objectives

The Base of the Pyramid in the Philippines

Financial : Standard due diligence Social Impact Assessment: Reach Depth Relevance for poverty reduction and inclusiveness Scale/growth for impact
percent of population

$3
poverty line

62.5%

60 million people

$2

41.5% 27.8%

PhP 18,000 $1.25

18.4%

Source: International poverty data (for 2009) are taken from the World Bank's PovCalNet. National poverty data (for 2012) are taken from NSCB

Social Impact Assessment

Depth
How intensively does the IB project impact poverty?

Jobs / employment / income How are employment conditions?

How much is the impact increase?

How sustainable is the job or income?

Access to essential services/products

How meaningful is the product for poor people?
6

Social Impact Assessment

Relevance and Systemic Contribution

How systemic does the IB model contribute to poverty reduction? Scale Replicability

Other benefits for poor people? Participation in the company Gender empowerment

Positive working relations / decent work / core labor standards

7

ADB support for IB

Rationale for ADBs engagement in IB Strategy 2020 Public and nonprofit sectors cannot tackle major social challenges alone Knowledge Scoping study on the Philippines, two forums, cooperation withy PBSP Operations Private sector operations Sovereign operations Value chain agriculture (e.g.,agrarian reform) Potential: agriculture, housing, education, health, SME promotion PPP through a guarantee facility 8

ADB: Inclusive Business website:

http://www.adb.org/themes/poverty/inclusi ve-business-base-pyramid