NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, February 16, 2016

Over 300 representatives of companies, social enterprises, and governments Asia-wide will gather 15-19 February at ADB for the 2nd Inclusive Business Forum for Asia.The forum, organised by ADB and eightdevelopment partners, is one of the year’s most significant regional events on inclusive business in Asia.

ADB defines inclusive business as a private sector core business activity that creates at scale innovative and systemic solutions to the relevant problems of poor and low-income people. It targets the market at the base of the income pyramid – those living below $4 (£2.76) per day, still 60% of Asia’s population – through affordable goods and services, and decent jobs. Business models only qualify as inclusive business when they pay better-than-market rates, as just engagement will not lift the poor out of poverty. That differentiates supply and value chain companies from inclusive business models. Inclusive business models also differ from social enterprises, corporate social responsibility, small and medium-sized enterprise promotion and microfinance, in the size and strategic intent of impact created, and in the business return envisaged. Inclusive business is part of impact investing, which is emerging worldwide as a new asset class with an estimated portfolio of over $10bn (£6.9bn).

Inclusive business is highly profitable and doesn’t compromise on profits and innovation to reduce costs and enlarge reach to markets. Studies from the Inter-American Development Bank and International Finance Corporation found that their inclusive business investments yield higher returns than their traditional investments because inclusive business investments often use innovative financing structures that reduce risks and increase profitability without worsening exploitation of workers.