Building Inclusive Businesses for Shared Prosperity
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Empowered lives. Resilient nations. Building Inclusive Businesses for Shared Prosperity A UNDP African Facility for Inclusive Markets Report United Nations Development Programme This report was produced under the leadership, coordination and funding of the UNDP African Facility for Inclusive Markets (AFIM). AFIM is a regional private-sector and inclusive market devel- opment programme of UNDP’s Regional Bureau of Africa. Its objective is to accelerate progress towards achievement of the Millennium Development Goals (MDGs) by supporting the de- velopment of inclusive, pro-poor markets across Africa. AFIM works to build capacities within regional economic commu- nities (RECs), governments, UNDP country offices and other stakeholders so as to support inclusive market and inclusive business development in the region. The initiative facilitates knowledge sharing, access to finance and the dissemination of best practices in seeking private-sector-led, market-driven solutions to problems of poverty reduction, environmental sustainability, post-conflict recovery and gender equality. In conducting this research, AFIM was supported by the UNDP Growing Inclusive Markets (GIM) Initiative. GIM built on its expertise in inclusive business research to provide conceptu- al input and feedback. Conceived in 2006, GIM is a UNDP-led global multi-stakeholder research and advocacy initiative that seeks to understand, enable and inspire the development of more inclusive business models around the globe, thus help- ing to create new opportunities and better lives for people within the world’s low-income communities. The research for this report built on the experiences and best practices estab- lished by the GIM’s previous research efforts. In partnership with local researchers, GIM has produced 166 in-depth case studies on inclusive business, and has published a number of global, regional and national reports, including “Creating Value for All: Strategies for Doing Business with the Poor” and “The MDGs: Everyone’s Business”. The UNDP Regional Bureau for Africa Strategic and Advisory Unit provided guidance and technical backstopping. Invalu- able expertise and feedback were provided by the Advisory Board with representatives from regional institutions (African Union Commission, African Development Bank, NEPAD – Comprehensive Africa Agriculture Development Pro- gramme) as well as leading advocates in the field of inclusive business (Alliance for a Green Revolution in Africa, Ashley Insight, Business Fights Poverty, Business Unity South Af- rica, Gordon Institute of Business Studies, NEPAD Business Foundation, Pan African Agribusiness & Agro-Industry Consortium, Southern Africa Trust, TechnoServe). s 2 REALIZING AFRICA’S WEALTH Realizing Africa’s Wealth Building Inclusive Businesses for Shared Prosperity A UNDP African Facility for Inclusive Markets Report 2 REALIZING AFRICA’S WEALTH FOREWORD Mr. Babacar Cissé Deputy Director of the Regional Bureau for Africa United Nations Development Programme Dear Reader, Africa has seen strong economic growth over the past dec- Our research shows that more public-private collaboration ade. Indeed, some of the world’s fastest-growing economies and coordination efforts are required in order to bring togeth- are in Africa, and they have expanded despite ongoing un- er the different ecosystem players. Companies and entrepre- certainty in the global economy. This has brought a renewed neurs need support with information, incentives, investment sense of optimism and has helped reduce poverty in the con- and implementation in order to successfully implement and tinent. Nonetheless, rapid economic progress in Africa has scale inclusive businesses. The power of each individual con- not brought prosperity to all. Inclusive business, as a feature tribution is magnified when the others are also in place. of inclusive market development, represents a promising ap- proach to bringing the benefits of economic growth directly More importantly, we need more action! We need young en- to low-income people by including them within value chains. trepreneurs and innovators as drivers of inclusive businesses. We need organizations that are willing to take the roles of The case studies underpinning this report illustrate how in- catalysts, supporters and funders of inclusive businesses. We novation and entrepreneurship within companies and entre- also need more concerted action by the private sector, Africa preneurs of all types and sizes can foster business and human Union, the Regional Economic Communities, governments, development by realizing Africa’s greatest wealth: its people, development agencies and banks, civil society organizations, a young and growing population. The scope of the present research institutes and foundations to realize the potential of report is rather ambitious. It aims to understand not only the inclusive business. state of inclusive business, but also the support landscape, which we refer to as an ecosystem. UNDP’s Regional Bureau for Africa (RBA) has played a key role here through the African Facility for Inclusive Markets (AFIM). Previous research by UNDP has shown the potential of inclu- As a platform, AFIM brings together the public and private sive business in contributing to poverty alleviation and achiev- sectors on regional and national levels to advance inclusive ing the Millennium Development Goals. This research has also market development. In summary, inclusive business can turn revealed the important role of other actors in supporting en- poverty into prosperity and thereby contribute to inclusive trepreneurs and companies in their endeavours. This report is growth and sustainable development. Our hope is that this re- the first step in mapping the landscape of existing support for port will inform and inspire readers to take action in fostering inclusive business in Africa. It provides initial insights into the more inclusive business in Africa. different players and roles required to make inclusive business a widespread reality in realizing Africa’s wealth. Mr. Babacar Cissé REALIZING AFRICA’S WEALTH 3 Table of Contents The Inclusive Business Ecosystem Diamond is the framework for the report. Chapter one provides an overview of business- es that include low-income people into their value chains in sub-Saharan Africa. There are four Ecosystem Functions sup- porting these businesses: information, incentives, investment and implementation support. Chapters 2–5 take a close look at each of these four functions by identifying challenges, high- lighting current achievements, and pointing to opportunities for further support. The final chapter offers suggestions on how to build inclusive business ecosystems. 1 2 3 About the Patterns and Providing Creating report prospects information incentives page 6 page 12 page 30 page 38 EXECUTIVE SUMMARY CaSE STudy CaSE STudy CaSE STudy page 8 L’Occitane en Provence Ecotact Aspen Pharmacare page 13 page 31 Holdings Ltd. page 39 INTErviEW INTErviEW INTErviEW Sagun Saxena, Daniel Annerose, Liban Egal, CEO of CleanStar CEO of Manobi CEO of First Somali Bank Mozambique page 34 page 45 page 23 4 REALIZING AFRICA’S WEALTH STEM INVestment OSY EC INFOrmatiON INCLUSIVE BUSINESS INCENTIVES SUPPORT STEM IMPLementatiON OSY EC 4 5 6 Making Implementation Building inclusive Annexes investments support business ecosystems page 71 page 48 page 56 page 62 Endnotes CaSE STudy CaSE STudy CaSE STudy page 72 GADCO Mondelēz M-Pesa Acronyms page 49 page 57 page 63 page 74 Case study summaries INTErviEW INTErviEW INTErviEW page 76 Dr. James Mwangi, Gerry Van Den Houten, Gerhard Coetzee, Head of CEO of Equity Bank Director of Enterprise Inclusive Banking Strategic Useful resources page 55 Development, SAB Miller Initiatives, Absa Consumer page 100 page 61 Banking page 68 Further reading page 105 Acknowledgements page 106 REALIZING AFRICA’S WEALTH 5 About the report This report is the first UNDP study to look specifically at -in The research was grounded in a strictly empirical approach. It clusive businesses in sub-Saharan Africa and the region’s in- builds on insights generated in previous UNDP research, start- clusive business support systems, which will be referred to as ing with a solid understanding of the broad constraints com- “ecosystems” throughout this report. Methodologically, the panies and organizations face within low-income markets, the report draws on four streams of data: generic solutions they use to address these constraints and the broad categories of support they receive.1 Against this frame of • Case studies: A total of 43 in-depth enterprise case studies reference, all data was analyzed to identify patterns character- written between 2008 and 2012, drawing on experiences izing inclusive businesses and their supporting institutions in within 16 sub-Saharan African countries, were analyzed for sub-Saharan Africa. In particular, the research team sought to this report. Summaries are available in the annex. understand the challenges related to developing inclusive busi- nesses, the scope of existing support structures, and the means • Interviews: Between May and October 2012, a total of 30 by which the support landscape might be improved. Results in-depth interviews were conducted with experts from re- were reviewed by and discussed with the members of the advi- gional companies and support institutions, along with other sory board (see acknowledgements for the full list of members). high-level experts. Note that this report focuses on sub-Saharan Africa. • Survey: