Friday Roundup ? 9/30/11: The IFC’s 7 Business Models for Inclusion, Are There More?
The International Finance Corporation (IFC) took a close look at its investment portfolio and found seven common traits of successful inclusive businesses. In its recently released report, Accelerating Inclusive Business Opportunities, success is defined in both terms of financial returns, building building market bridges to serve the poor with goods and services.
Quoting from the report, those seven models include:
- Micro distribution and retail, reaching base of the pyramid end consumers who tend to make small, frequent purchases through retailers who need small, frequent deliveries and the ability to buy on credit.
- Experience-based customer credit, lending to customers the company knows are credit-worthy through past experience.
- Last-mile grid utilities, extending infrastructure grid coverage to more distant and often lower-income neighborhoods.
- Smallholder procurement, turning geographically dispersed smallholder farmers into reliable sources of quality supply.
- Value-for-money degrees, making university education accessible to low-income students.
- Value-for-money housing, making home ownership possible for low-income buyers through a combination of high-value-for-money housing and facilitated access to mortgage financing.
- E-transaction platforms, enabling low-income people to pay for goods and services electronically, at lower cost and risk than paying in cash.
Buttressing those findings, the investment arm of the World Bank Group also released 31 case studies on IFC’s portfolio companies with inclusive business models.
For those well acquainted with business success stories at the base of the pyramid, this report only adds to the evidence of what advocates have preached for some time: Implemented correctly, inclusive business practices work, and work profitably. (I’m curious if our readers would add any additional models to this list).
The seven models also have cross cultural implications, even for building enterprise from poverty the U.S. CGAP’s Microfinance Gateway provided another strong reminder this in a post on the Unbanked In America, noting that microfinance in America, while known by other names through the years, isn’t at all an unfamiliar concept. And, we know that the need is here too, as nearly 26 percent of all American households are unbanked. With poverty rising in the U.S., American financial institutions would be wise to follow the innovations and the pitfalls of microfinance throughout the world. Some of them can be found in our Big Idea: Microfinance at a Crossroads.
An Opportunity Reminder
NextBillion is proud to be a media partner for the Colombia University Business School Social Enterprise Forum, next week (Oct. 7). There’s still time to register and to take in what promises to be an interesting discussion on scaling social innovation with Cheryl Dorsey, president of Echoing Green and Matthew Klein, executive director Blue Ridge Foundation New York. It will be moderated by Nancy Barry, president of Enterprise Solutions to Poverty and former president of Women’s World Banking. We plan to be bringing you several updates from one of the premiere events on the calendar.
In Case You Missed It … This Week On NextBillion