Adopt inclusive business models


Asia-Pacific Economic Cooperation (APEC) members were urged on Thursday to adopt inclusive business (IB) initiatives as a tool to reduce poverty during a high-level dialogue that kicked off the final week of the grouping’s annual summit.

Eriko Ishikawa, global head of the Inclusive Business Team of the World Bank’s International Finance Corp., said IB refers to core business models of commercially viable companies that provide solutions to poverty.

These private sector investments specifically target the low-income segment by providing decent and well-paying jobs as well as access to relevant services such as financing, health, education, housing, water and others.

Ishikawa said IB models could be found across industries, locations and company types. These differ from social enterprises in terms of scale of impact, and from corporate social responsibility initiatives in that IB models have a profitability objective.

In the Asia-Pacific region, more than 700 million people are said to live below the $1.25 a day poverty line, a group collectively called the base of the pyramid.

IB models transform the base of the pyramid into a new market for goods and services, as well as a resource pool of talent, skilled labor, and entrepreneurs.

The Department of Trade and Industry and Board of Investments (BOI) have been advocating for the integration of IB into public policy. The BOI, in particular, is working to grant IB certification to qualified enterprises.

“Many of these IB or enterprises have been growing without government intervention,” Trade Undersecretary and BOI Managing Head Adrian Cristobal Jr. said.

“To the rules part and accreditation we are studying it carefully,” he added.

One of the successful IB models in the Philippines is Manila Water’s “Tubig Para Sa Barangay” program, which effectively lowered the cost of clean, potable water for low-income residents in Manila.

Jaime Augusto Zobel de Ayala, Chairman and CEO Ayala Corp., the parent firm of Manila Water, said the government and the private sector both played important roles in promoting inclusive business.

“The wide scale adaptation of inclusive models can only happen once industries are resolved to reinvent its business models. More companies must champion inclusive business models and disrupt underserved sectors in the economy,” said Ayala, who is also the Philippine representative at the APEC Business Advisory Council.

“Further, it is imperative that key government agencies step in as well to implement policies that provide clear incentives supporting these business models that will help achieve critical mass in the private sector,” he added.

“APEC, as a forum at the forefront of reform efforts in business facilitation, is a highly relevant and effective platform to usher in enabling policies and initiatives that support inclusive business.”

The outcome of Thurday’s high-level dialogue will guide the next IB discussions when Peru hosts the APEC summit in 2016.

Other successful IB models cited were Kennemer Foods’ Cacao Growership Program, which has boosted yields and farmer incomes while providing the firm a reliable supply.

Nestlé’s NESCAFÉ Plan, meanwhile, offers technology, training and technical support to tens of thousands of Filipino farmers, developing them into long-term direct suppliers for the company.


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