I recently attended a meeting of the Advisory Board of the UNDP’s Growing Inclusive Markets (GIM) Initiative. GIM released its first report, Creating Value for All, last July, and is now considering its next steps – GIM 2.0. High on participants’ minds was the fact that Creating Value for Allwhile awareness and interest in inclusive business seem to be growing, relatively few inclusive business models have actually gone to scale.
For every SMART Money there are 10 CocoTechs: innovative models that have some success but struggle to grow. And for every CocoTech there are 10 PURs: innovative models that simply fail (to be profitable, at least). What is the role of a global, multistakeholder initiative like GIM, headed by a multilateral like UNDP, in this context? The barriers to inclusive business success are unusually high. The GIM report highlights five fundamental, systemic constraints:
- Limited market information
- Ineffective regulatory environments
- Inadequate physical infrastructure
- Missing knowledge and skills
- Restricted access to financial products and services
Fortunately, there are a couple of solution spaces that, in the context of inclusive business, remain largely untapped. One is social entrepreneurship. Social entrepreneurs, the way we think about them here at Ashoka, at least, are people with system-changing ideas for solving precisely these kinds of problems. I’ll share some examples of the role social entrepreneurs are playing in inclusive business over the coming months.
Another solution space is policy innovation. Policy becomes particularly important when we start aspiring to scale: building businesses that reach millions of people, and going beyond individual businesses to make entire industries work for the poor. For example, sooner or later, all BOP housing businesses bump into the problems of land tenure and property rights. No rational economic actor will invest in her home if there’s a chance she will lose it when the next municipal administration comes in. Similarly, rural healthcare will only go so far as long as skilled, licensed, and therefore expensive physicians are the only ones who can prescribe drugs. Why couldn’t a local health worker be trained and equipped, with the help of technology, to diagnose and prescribe drugs for the most common ailments?
In mobile money, we’re already starting to see business models reaching significant scale. SMART Money, G-Cash, M-PESA, and others serve millions of low-income people, and now stand poised to transform the financial services industry for low- and high-income alike… if policy innovation can keep up.
There is currently a disconnect between the innovation that is happening in the business and social sectors and the innovation that could happen, and needs to happen, in the policy domain for inclusive business to scale up. We have to find ways of narrowing this gap.
There are good examples of engagement, such as WBCSD/SNV’s experience in Ecuador. And in a few cases, real feedback loops have been established. For instance, in the Philippines, financial regulators are closely following the progress of SMART and Globe (the parent of G-Cash), learning from their experiences and adjusting regulatory policy as needed to balance the twin goals of increasing financial access and preserving financial stability.
More cases like these should be identified and analyzed. But not just for the purposes of research and awareness-raising. UNDP and the Growing Inclusive Markets group could play a pivotal problem-solving role, actually implementing dialogues, feedback loops, like these. Businesses and social entrepreneurs don’t always know the right ways in to the relevant government agencies. They can be greeted with skepticism, as interest groups. In contrast, UNDP and its GIM partners have the contacts and the clout to bring policymakers to the table. Could GIM 2.0 be about creating spaces for business innovation, social innovation, and policy innovation to feed off each other, allowing inclusive business activity to go to scale?