Multiplying Impact: Aline Krämer, Clara Péron, Tendai Pasipanodya Isolated inclusive business models can achieve only limited impact. Only through replication can we reach the 4 billion people at the base of the economic Multiplying pyramid with essential goods and services and Supporting the Replication of Inclusive Business Models provide them with economic opportunities. Impact: Recent decades have seen a wave of experimentation in the development of inclusive business models. Supporting the Now is the time to build on what we have learned and multiply the impact of the models that work. We need Replication to identify these models, and provide entrepreneurs with targeted support to expand, disseminate and of Inclusive reproduce them. This publication provides 12 recommendations for Business Models companies, development partners, investors, research organisations, civil-society organisations and other intermediaries, compelling them to engage in dia- logue and take action in replicating inclusive busi- nesses, thereby nourishing an ecosystem for replication. Endeva with financial support from MUlTIPlyING Impact SUPPoRTING THE REPlicatioN of INCl USIvE BUSINESS MoDElS Imprint Endeva UG Brunnenstr 192 10119 Berlin [email protected] www.endeva.org July 2014 Editing: Barbara Serfozo, Berlin Design and layout: derMarkstein.de, Berlin Print: Königsdruck Service GmbH, Berlin The material in this publication is copyrighted. Quoting, copying, and/or reproducing portions or all of this work is permitted provided the following citation is used: Aline Krämer, Clara Péron, Tendai Pasipanodya, Alyssa Rivera, Juliane Schmidt and Nadine Köcher (2014): Multiplying Impact: Supporting the Replication of Inclusive Business Models. © 2014 by Endeva UG ISBN 978-3-00-046079-1 Multiplying Impact: Supporting the Replication of Inclusive Business Models Aline Krämer Clara Péron Tendai Pasipanodya Preface Dear Readers: In recent years, the German Federal Ministry for Eco- Most recently, we established a number of Responsi- nomic Cooperation and Development (BMZ) has in- ble Inclusive Business Hubs in several regions around creased its efforts to support the development and the world. These hubs serve as a central contact point reach of inclusive business models in our partner in driving forward regional solutions that promote in- countries. Inclusive business models have the poten- clusive business models. Most importantly, they serve tial to create win-win solutions for profit-driven and as a learning platform and broker of ideas. They do so social interests alike. They provide access to products by facilitating the collaboration between companies or services, increase the purchasing power of the poor, and organisations tasked with international develop- and generate employment and income opportunities ment cooperation. They also provide practical advice by integrating the poor into the value chain as distrib- for companies in a variety of sectors planning to rep- utors, suppliers or employees. This is what makes in- licate their particular inclusive business model. At the clusive business models such a compelling approach global level, we have initiated the Inclusive Business in development cooperation. Action Network, which aims to promote inclusive growth by economically integrating those at the bot- We have seen many great examples of such business tom of the pyramid (BOP), and scaling and replicating models being implemented in very different markets. inclusive business models. The network also builds on Through instruments such as the BoP Sector Dia- the relationships developed with participants of the logues, agents of German development cooperation global G20 Challenge on Inclusive Business Innova- have helped identify market potentials and business tion. Through these initiatives, we hope to contribute models that serve the poor. To achieve financial sus- to the reach of inclusive business models and thereby tainability, most of these businesses have to broaden generate opportunities for those individuals at the their consumer base and realise economies of scale. base of the pyramid. Yet many of these examples, as shown in this report, face great challenges when it comes to scaling up their Susanne Dorasil business or replicating their model in other markets. Specific challenges include a lack of market informa- Head of Division, Economic Policy; Financial Sector tion, insufficient access to finance and problems as- German Federal Ministry for Economic Cooperation and Development sociated with finding appropriate business partners. This is why we, as well as many other development partners, are exploring ways to improve our support for the replication of successful inclusive business models. With this report, we hope to promote the discussion on successful support mechanisms while drawing on the many good ideas already being put into action Multiplying iMpact Supporting the replication of incluSive BuSineSS ModelS Improving scope, reach and impact The scope, reach and impact of inclusive business Now is the time to learn from past mistakes and suc- models have grown considerably in the last 10 years. cesses by consolidating the lessons learned so that During this time, we’ve seen a multitude of pilots we can effectively replicate and grow what works. being developed in a variety of sectors on all conti- We need to stop wasting effort by trying to re-invent nents. Some of these projects have failed but none- the wheel. Identifying and replicating success allows theless generated important lessons from which us all to create significant change for the billions of others can learn. Other projects have overcome their people living in poverty. challenges and stand today as models of success. However, the majority of inclusive business models Providing 12 actionable recommendations, this report are still “island solutions,” that is, they are scattered shows how a variety of actors can support companies and of a small scale. in identifying, replicating and ultimately growing suc- cessful inclusive business models. Regardless of size or scope, each actor, from small think tanks to large development organisations, can help nurture the rep- lication ecosystem. We hope this report marks the beginning of a journey in which we learn from each other, triggering along the way not only more dialogue on the whys and hows of replication, but effective action. Aline Krämer Clara Péron Tendai Pasipanodya Endeva, Berlin Table of contents Preface page 2 Executive summary page 6 Recommendations Introduction page 12 Chapter David Keogh, 19 Aravind Eye Care Hospitals 25 Understanding Grameen Village Phone Program 1 and supporting bKash 27 replication page 16 Microcredits 29 Chapter Information 1 Provide information on replication-relevant topics 34 Match inclusive businesses with replication experts to 37 2 2 Donika Dimovska, R4D 38 Ashoka Globalizer Summit 39 and knowledge share knowledge page 30 Create service providers that offer information and 40 3 Eoghan Mackie, Challenges Worldwide 41 knowledge Foster second movers by providing granular 42 4 Grameen Village Phone Replication Manual 43 information on vetted business models Chapter People 5 Help inclusive businesses pursuing replication find talent 48 3 The Lions Aravind Institute of Community and partners 6 Build a talent pool 49 Sean McKaughan, Fundación Avina 50 55 Ophthalmology page 44 Connect inclusive businesses with potential replication 7 52 Shameer Khanal, GIZ Uzbekistan 53 partners and second movers 8 Train second movers 54 Chapter Use financial innovation to make replication more 62 finance 9 4 attractive page 56 Bring in new players to participate in inclusive-business 65 10 financing 11 Create market infrastructure and intermediary bodies 66 Provide incentives for the dissemination and reproduc- 68 12 Oliver Kayser, Hystra 69 tion of inclusive business models Chapter Taking action 5 page 70 Multiplying iMpact Supporting the replication of incluSive BuSineSS ModelS inteRviews case studies Introduction page 12 David Keogh, 19 Aravind Eye Care Hospitals 25 Understanding Grameen Village Phone Program and supporting bKash 27 replication page 16 Microcredits 29 Information 1 Provide information on replication-relevant topics 34 Match inclusive businesses with replication experts to 37 2 Donika Dimovska, R4D 38 Ashoka Globalizer Summit 39 and knowledge share knowledge page 30 Create service providers that offer information and 40 3 Eoghan Mackie, Challenges Worldwide 41 knowledge Foster second movers by providing granular 42 4 Grameen Village Phone Replication Manual 43 information on vetted business models People 5 Help inclusive businesses pursuing replication find talent 48 The Lions Aravind Institute of Community and partners 6 Build a talent pool 49 Sean McKaughan, Fundación Avina 50 55 Ophthalmology page 44 Connect inclusive businesses with potential replication 7 52 Shameer Khanal, GIZ Uzbekistan 53 partners and second movers 8 Train second movers 54 Use financial innovation to make replication more 62 9 finance attractive page 56 Bring in new players to participate in inclusive-business 65 10 financing 11 Create market infrastructure and intermediary bodies 66 Provide incentives for the dissemination and reproduc- 68 12 Oliver Kayser, Hystra 69 tion of inclusive business models Taking action page 70 Further reading Acronyms Acknowledgements Authors Imprint page 76 page 77 page 78 page 79 page 81 execuTIve suMMary 6 |7 Executive summary In recent years, companies both large and small have