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Inclusive Business G Uide Inclusive Business Guide Business Inclusive How to Develop Business and Fight Poverty Christina Gradl and Claudia Knobloch How to Develop Business and Fight Poverty Business and Fight Develop to How — Inclusive Business Guide Supported by ISBN 978-3-00-032960-9 Acknowledgements To begin with, we would like to thank everyone who contributed to this publication. Partners We would like to extend a special thanks to our partners. The German Federal Ministry for Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung) financed this publication and provided expertise on content together with the Gesellschaft für Technische Zusammenarbeit. The International Chamber of Commerce supports the communication of the publication. Publication information Copyright © endeva Additional acknowledgements www.endeva.org Several sections in the publication were written by experts. This publication was financed in part We would like to express our gratitude for providing their expertise. by the German Federal Ministry for Economic Cooperation and Development We are grateful to: (Bundesministerium für wirtschaftliche Martin Herrndorf Zusammenarbeit und Entwicklung). (section on financing, IT sector profile, Mexico country profile) Published by: Fritz Jung and Jonas Naguib endeva (sections on “Partnerships between German development organizations Brunnenstraße 192 and the private sector” and “The develoPPP.de program”) 10119 Berlin Prof. Dr. Genia Kostka Germany (China country profile) Tel.: +49 30 4738 3959 Email: [email protected] Aline Krämer www.endeva.org (Siemens AG case study, Nokia case study, MicroEnergy International case study, Brazil country study) Authors: Tobias Lorenz Christina Gradl – [email protected] (water sector profile) Claudia Knobloch – [email protected] Jakob Schmidt-Reindahl Layout & typesetting: (INENSUS case study) derMarkstein.de, Berlin Louise Kantrow (section on “The role of business in achieving the MDGs”) Translation: Libby Bunn, Berlin Leonie Vierck www.eco-accents.com (SAFO case study) Proofreading: Ann Marie Bohan Reviewers Experts from the realms of business, academia and development work Cover photo: contributed with comments and suggestions. Their ideas and advice Siemens AG gave the publication structure and clarity. A woman in Kenya uses an OSRAM lamp charged by solar power. This business idea Our gratitude goes to: arose from the Siemens ideas competition Michael Anthony (Allianz SE), that is described on page 35. Katharina Averdunk (endeva), Dr. Andreas Blüthner (BASF SE), Dr. Michael Grewe (BMZ), Printing: Martin Herrndorf (endeva and the University of St. Gallen), Lokay Druck Prof. Dr. Genia Kostka (Frankfurt School of Finance & Management), Printed on FSC-Paper Aline Krämer (endeva and the TU Munich), Jonas Naguib (GTZ), Daniel Philipp (MicroEnergy International), Publication date of the Christine Polzin (SERI), Isabel Reingruber (SAP AG), English translation (with updates): Heiko Schwiderowski (DIHK), Nicolai Tewes (Allianz SE), December 2010 Piera Waibel (University of Zurich) Publication date of the German version: November 2009 ISBN 978-3-00-032960-9 Inclusive Business Guide Business Inclusive How to Develop Business and Fight Poverty Christina Gradl and Claudia Knobloch Photo: Susanne Ullerich Photo: Imagine this: You see a $100 bill lying on the Preface street. Would you keep walking and think to your- self: “That’s impossible – someone would have picked it up already”. No? You would pick it up? Then you’re exactly the right person to read this publication. Developing business and fighting poverty offers you real opportunities for sustainable growth – if you know how to capitalize on them. This know- how is augmented with every business model that is developed at the base of the economic pyramid. While many questions remain to be answered, we already have substantial information and experi- ence at our disposal for how to integrate people living in poverty into value chains. Every com- pany and entrepreneur has to learn their own les- sons through trial and error to some extent. Thus, the learning journey continues. This publication is the first comprehensive guide on “inclusive business”, or business that includes people living in poverty as producers and consum- ers. It brings together existing knowledge, pres- ents several practical examples and provides in- formation about contacts and further reading. We would like to thank everyone who helped compile this knowledge including the entrepreneurs, in- novators and experimenters, the financers, inves- tors and brokers, the observers and academics. Inclusive business provides answers to the great challenges of our time – making poverty a thing of the past and preserving ecosystems for the future. We hope that the words that follow help you dis- cover and act on new opportunities. Christina Gradl und Claudia Knobloch endeva Write to us! [email protected] [email protected] 3 endeva | INCLusiVE BusiNEss GuidE PREFACE CC Photo: I Photo: Photo: BMZ Photo: For many years, German development organizations have The eight Millennium Development Goals (MDGs) are the most been working hand-in-hand with the private sector. With- comprehensive and universally agreed development goals, em- in the framework of the Federal Ministry for Economic Co- bodying the international community’s pledge to create a better operation and Development (BMZ) program “develoPPP. and healthier future for billions of people in developing coun- de”, more than 3,000 development partnerships in over 70 tries by 2015. The goals strive to substantially reduce poverty and partner countries have helped make business ideas stem- hunger, empower women, increase access to education, health- ming from private companies a reality and, at the same care, clean water and sanitation, reduce the incidence of a num- time, employment and income have risen in our partner ber of deadly diseases, protect the environment and forge strong countries and poverty has been reduced. But in many global partnerships for development. countries, the poorest of the poor are still excluded from economic development. Over the last decade considerable progress has been made in achieving the MDGs but significant challenges remain. Reaching Under the catchphrase “base of the pyramid”, business the MDGs calls for collaboration among all stakeholders. When models that begin at the intersection between the private the 2015 targets for the MDGs were set in 2000, the private sector and development organizations have started to sector’s contribution to meeting these targets was not as well- emerge over the years. They can bundle the interests of the understood and accepted as it is today. In that same year, the private sector and development organizations: new mar- International Chamber of Commerce launched the World Busi- kets for companies – new products and services and new ness and Development Awards to showcase creative initiatives by sources of income for poor sections of the population. corporations who apply their core business expertise to achieve the MDGs. Today, the role of the private sector as an engine of There is a lot of potential here from the company perspec- growth and development is widely recognized, as are benefits tive. Together with partners from civil society and develop- that business can bring: creating jobs, building skills, developing ment organizations, projects can often be carried out faster technologies. and the risks of failure can be easier to overcome. One of the most important innovations in this arena has been I hope you learn a lot from this publication and that it the emergence of inclusive business models which are conceived sparks lots of new innovative business ideas that form the as sustainable business solutions that increase access to goods basis for new development partnerships. and services and create new sources of income for low-income communities. These models involve doing business with low- income populations anywhere along a company’s value chain: they are incorporated into the supply, production, distribution Susanne Dorasil and/or marketing of goods and services. This generates new jobs, incomes, technical skills and local capacity. Likewise, poorer Head of Department for Economic Policy; Finance Sector consumers can benefit from products and services that are not Federal Ministry for Economic Cooperation and Development (BMZ) only more in line with their needs but are also affordable. By focusing on business viability, these new models have the capac- ity to be increased in scale, thus including thousands of people living in poverty. The emphasis is on “core business” rather than on philanthropy. I am certain that both the newcomer and the experienced prac- titioner in this field will find this guide invaluable to their work. Jean-Guy Carrier ICC Secretary General 4 endeva | INCLusiVE BusiNEss GuidE Inclusive business brings added value for The ,market at the base of the global pyramid In brief companies and people living in poverty is large and growing fast. 4 billion people in the alike. Broken down into three sections, world – two-thirds of all human beings – live on less this publication provides answers to three than $3,000* per year. Together they spend $5 tril- basic questions about this new type of lion (measured in terms of local purchasing power) approach to business and social develop- a year. By 2050, there will be 3 billion more people ment: The “What”, the “How” and the on the planet, almost
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