Insights from the Growing Inclusive Markets (GIM) Initiative of UNDP

1. Can Enterprise Development and Responsible Business Co-exist in India? Insights from the Growing Inclusive Markets (GIM) Initiative of UNDP Dr. Bimal Arora Deutsche GesellschaftfürInternationaleZusammenarbeit (GIZ) GmbH

2. Conceived by UNDP in 2006asplatform for collaboration focused on research & advocacy • Vision: to enable a greater contribution of the private sector to human development and to the Millennium Development Goals The Growing Inclusive Markets Initiative • GIM Role: Guiding by convening Desired Impact • To be a focal point for the various public and private sector initiatives in the field • To offer a roundtable to exchange views, identify common approaches and interests, understand differences and complementarities, tackle open questions • To guide a process where many actors can contribute to creating and dissemi-nating knowledge on how business can contribute to human development • Raising awareness by demon-strating how doing business with the poor can be good for poor people and good for business • Clarifying the ways that busi-nesses, governments and civil society organizations can create value for all • Inspiring the private sector to action

3. The Growing Inclusive Markets Initiative • - Advisory Board gathering over 25 key stakeholders including business associations, academic institutions and development agencies

4. Traditional Business (“Northern” MNCs) Approach to Development; Social Investments Development benefits Traditional CSR CSR / Social investment Philanthropy • Social investment that is strategic to the core business and that contributes to achievement of the MDGs • Contribution of financial or in-kind resources to development projects Business benefits

5. Private Sector is emerging as a development partner – now on the threshold of a new phase: Core Business Development benefits Inclusive business models / inclusive markets CSR / Social investment • Enterprise solutions that accelerate and sustain access by the poor to needed goods and services and to income generating opportunities and that contribute to economic empowerment Philanthropy • Social investment that facilitates business objectives and the achievement of the MDGs • Contribution of financial or in-kind resources to development projects Business benefits

6. Inclusive Business Core Business & Development: A Mutual Value Participation of the Poor Human Development Impact Profitability Sustainability Businesses benefit from including the poor: • on the supply side: finding new customers, creating long-term customer loyalty, developing transferable innovations • on the demand side: improving production capacity, getting access to high-quality inputs, expanding customer reach The poor benefit from participating in markets: • access to goods and services • access to income opportunities as suppliers, employees, distributors and entrepreneurs • increased choice and power The goods & services provided have a human development impact: • water & sanitation, energy • financial services, ICTs • housing, education, nutrition Inclusive businesses contribute to social & environmental sustainability • clean energy, protection against natural disasters • fight against rural exodus and hyper-urbanization etc… Many examples show that providing basic goods & services as well as income opportunities to the poor can be a sustainable and profitable business strategy and contribute to human development.

7. Opportunities exist to build bridges between business and the poor

8. Inclusive business models have results... IBM: Results Framework ... on different stakeholders ... ... in different domains ... ... along the life cycle.

9. Actor Framework Policies, infrastructure Incentives, PPP Awareness raising, best practices Expertise Tools, knowledge hubs Networks Patient capital, grants Equity, debt financing

10. How can Core Business contribute to Development: Example from the mobile telephony market Access to mobile phones Increased income for farmers through instant market information (e.g. RML, India; Manobi, Senegal) Faster access to healthcare services for remote areas (e.g. Voxiva in Peru, Pesinet in Mali) Source of income and empowerment for women (e.g. GrameenPhone ladies) Access to financial services through mobile banking (e.g. ALW, India; Celpay, DRC) Reduced digital divide and increased economic growth From Unmet Demand to Business Opportunity • Africa (especially SSA) is the region that offers most promise in the telecom sector • Africa’s mobile phone market is one of the fastest growing in the world (40% growth in 2006) • Penetration rates are still very low (less than 15%) • Mobile phone subscribers in Africa could increase to 250 million in the next 4 years

11. 2008 Report – Main Messages • Opportunities exist to build bridges between business and the poor and create value for all. • Capturing these opportunities is challenging due to five widespread market constraints in the rural villages and urban slums where the poor live. • Entrepreneurs have used five core strategies to overcome these constraints. • Business leaders, but also govern-ments, donors, NGOs, communities and other stakeholders can take action to create value for all and make markets more inclusive.

12. Strategies Strategy Matrix • Constraints

13. “Creating Value for All: Strategies for Doing Business with the Poor” (2008) “Business Solutions to Poverty – How inclusive business models create opportunities for all in Emerging Europe and Central Asia” (2011) GIM Reports “Estrategias Empresariales para la Superación de la Pobreza y la Exclusión en Colombia” (2010) “The MDGs: Everyone’s Business” (2010)

14. GIM Case Study Database

15. Case Study #1: SELCO (India) “We set up SELCO to bust 3 myths: the poor cannot afford technology, the poor cannot maintain technology and it is not possible to run a commercial venture that fulfills a social objective.” - Dr. Harish Hande, Founder Description Opportunity: most of India’s rural population does not have access to electricity; 400 million depend on highly polluting and inefficient sources of energy, thus hindering productivity Business model: make solar lighting technology accessible to the rural poor (Karnataka) through credit • Constraints: • Negative perception about solar technology • Different clients’ needs and payment capacities • Solutions: • Demonstration effects: maintained solar street lights to demonstrate viability of the technology • Customized products (e.g. head lamps for midwives and flower pickers) and payback options Partners Suppliers: Tata BP, Shakti Electronics, Anand Electronics Investors: IFC, USAID, E+Co, Lemelson, Good Energies Foundation Results Loans: rural banks, credit cooperatives, MFIs Social: provision of solar lighting to >110,000 rural homes and 4,000 institutions (orphanages, clinics, schools), creation of jobs (170) and income opportunities for the rural poor (entrepreneurs renting SELCO lamps to street vendors daily), savings in energy costs, improved children’s education and health. Implementation: SEWA Classification Inclusion: Consumer, Entrepreneur Environmental: non-polluting and renewable source of energy Sector: Energy Economic: 25 service centers, average sale price of INR 20,000, broke even after 7 years, now worth INR 150 million, won national and international awards Type: MSME

16. Thank your for your attention For more information: www.growinginclusivemarkets.org E-mail: bimal.arora@giz.de