The UNDP’s Growing Inclusive Markets Initiative Seeks to Build Viable Markets, Alleviate Poverty and Protect the Environment
“About 2.6 billion people in the world living on less than $2 a day are trapped outside of the global economy, looking in with minimal access to formal markets,” according to the United Nations Development Programme (UNDP). Living on the margins deprives the poor of opportunities, while discouraging many companies from offering the basic goods and services – things like consumer products, banking and telecommunications – that would empower the poor and improve their lives.
Among the world’s poor, there is no lack of human resources – minds and muscles – to build successful markets, and certainly no shortage of demand for goods and services. What’s missing in many cases are basic market mechanisms. Market components like financial services, physical infrastructure, government policy and regulation, and market information are the basic building blocks that make markets work.
Building viable markets that include the poor as consumers, producers and employees is the focus of the UNDP’s Private Sector Division, and specifically their Growing Inclusive Markets (GIM) initiative. GIM serves as a platform to engage all the actors in the process of building more inclusive business models. It gathers relevant information, highlights good examples through case study research, develops practical operational strategies and creates space for dialogue.
At the upcoming Social Capital Markets conference (SOCAP09), GIM Programme Manager, Sahba Sobhani, will lead a panel discussion to highlight successful triple bottom line entrepreneurs from developing markets. I recently had the opportunity to sit down with Sahba Sobhani at the UNDP offices in New York to discuss the GIM initiative and their involvement with SOCAP09.
Q&A with Sahba Sobhani from Growing Inclusive Markets
Triple Pundit: Why do you feel it’s important to be at SOCAP?
Sahba Sobhani: We feel it’s important for UNDP to be there, to bring our perspective and experiences. We have our own ecosystem of actors in this process: development groups, NGOs, multi-national corporations, entrepreneurs, government agencies, etc so we are always looking to connect with other ecosystems of actors like SOCAP. It’s all about building an enabling environment by connecting all the individual nodes and ecosystems that are working on this process.
But I want to emphasize that we are not there to showcase us. At SoCap we feel our contribution is to bring real entrepreneurs from developing countries who can describe the complex settings they work in and share their stories. These companies are focused on both environmental goods and services and specifically looking at the poor as their market. It’s important to connect these companies with the social investor community. At the conference we will be highlighting businesses that illustrate the types of opportunities available to investors.
3P: Why is it important to highlight the triple bottom line focus?
SS: The poor depend strongly on environmental resources for their livelihoods so are disproportionately affected by environmental degradation. On the other hand, improvements in living standards have typically been linked to increased resource use, but we feel this link needs to be decoupled to enable sustainable development.
One of our guiding principles is the human development framework outlined in the Millennium Development Goals, and one of those goals is environmental sustainability. This nexus of development and sustainability is going to be key, especially now with the climate change debate.
And the projects we are talking about are not just developing carbon credits. We are talking about business models that deliver clean water, energy, sanitation, nutrition, also agri-business and ecosystem services.
3P: What is an inclusive business model?
SS: These business models include the poor on the demand side as clients and customers, and on the supply side as employees, producers and business owners at various points in the value chain. For the companies we highlight in our case studies, they have to meet two criteria: they have to be financially sustainable and they have to include the poor.
3P: How is your work different than Microfinance initiatives?
SS: We are really looking to build high growth businesses, so in that sense we are working more with opportunity-based entrepreneurs, rather than necessity-based entrepreneurs who are supporting individual livelihoods. We are looking for the high growth guys that can scale a business, because these are the businesses that will also create jobs. A lot of research in this area shows that most people would rather be employees than entrepreneurs, something like 9 out of 10 would rather be employees. We are also advocating for government involvement through public policy and incentives that are important if you want to have anything go to scale.
Featured Entrepreneurs on the UNDP SOCAP Panel
The UNDP panel discussion will highlight three successful triple bottom line entrepreneurs:
SELCO Solar: A social enterprise established in 1995 that provides sustainable energy solutions and services to under-served households and businesses in India. Dr. Harish Hande, the founder and Managing Director will be at SOCAP to talk about his work building a successful commercial enterprise bringing solar technology to the rural sectors of India, most of which are off the main electric grid. The following video describes SELCO’s work.
New Dawn Engineering: Manufactures and markets appropriate technology equipment, mostly human-powered, to make building materials, fencing, seed oils, water pumps, rock crushers and other machines. They also make fuel-efficient cooking stoves. They are located in Matsapa, Swaziland, and currently employ 15 people.
New Ventures: Supports small and medium enterprises (SMEs) that drive sustainable development through “green” products and services in six emerging economies: Brazil, China, Colombia, India, Indonesia and Mexico. Since its founding in 1999, New Ventures has provided business development and investor engagement services for over 200 SMEs, leading to nearly $200 million of investment into these companies. New Ventures is a part of the Markets and Enterprise Program at the World Resources Institute. The following video discusses their work with Energy Service Companies (ESCO’s) in emerging markets:
GIM: Seeking Market-Based Solutions for the Base of the Pyramid
Launched in 2006, the Growing Inclusive Markets initiative grew out of a need to gain a better understanding of how the private sector along with market-based approaches to human development can help alleviate poverty while also being good for business.
GIM’s first report, Creating Value for All: Strategies for Doing Business with the Poor, can be downloaded from their website. They are currently developing their next set of case studies that document successful examples of inclusive business models. The case studies will focus particularly on how the successful company interacts with the other actors in the market from the public, private, civil, community and academic sectors. Also of particular interest are companies that have a high impact on poverty alleviation while contributing to environmental protection. You can meet three of these featured companies at SOCAP09. Don’t forget to register before July 8th to get the early bird registration rate.