Inclusive business ventures and poverty reduction

Following successful experiments in 'inclusive business ventures' in a dozen of developing countries of the world, the Government of Bangladesh and the country's development partners are now talking about inclusive business initiatives. Inclusive business ventures have attained success in the Eastern European and Central Asian countries. In Asia, Vietnam adopted the strategy for inclusive business and showed remarkable success.
Some development partners are actively considering launching inclusive business ventures in Bangladesh. The World Business Council for Sustainable Development (WBCSD) took the primary initiative to conceptualise and formulate a strategy to implement the inclusive business model for the benefit of the low-income people in the developing countries.      
Filippo Veglio, Director of WBCSD, wrote, "Inclusive business ventures create new market, employment opportunity and affordable products and services to spur entrepreneurship and sustainable livelihoods in developing countries."  
Inclusive business model is a new type of business that benefits low-income  people. This business initiative contributes to poverty reduction through the inclusion of low-income communities in the business value chain. Inclusive business is designed for the benefit of the poor as producers and consumers. Inclusive business tries in profitable ways to engage the low-income people in business operations that benefit these communities and reduce poverty.
The term inclusive business was coined by the World Business Council for Sustainable Development in 2005. It refers to sustainable business solutions that go beyond philanthropy and expand access of low-income communities to goods, services, and livelihood opportunities in commercially viable ways. Inclusive business ventures lead to the creation of employment opportunities for low-income communities as producer and consumer, and companies' value chains as supplier, distributor, retailer and service provider. Alternatively, companies can develop ways to supply affordable products and services to meet the basic needs for food, water, sanitation, housing and health care. They can develop innovative business models to enhance access to energy, communication, finance and insurance.
Inclusive business models try to find synergies between development goals and the companies' core business operations. Sound inclusive models can deliver higher socio-economic value for communities and present an exciting opportunity for the private sector, because it is good for business. A variety of commercial returns such as market entry, market share, secure supply chains, product line innovation and competitive advantage, all help to build market value.
Through employers and suppliers, the low-income segments gain access to the formal economy including job, training, access to finance and income. As consumers, low-income customers can benefit from products and services to meet their needs at an affordable cost.
This business model faces various challenges, such as internal challenges of commitment and initiative, economic challenges of basic infrastructure, roads and communications, social challenges of trust, respect and community relationship.
Inclusive business models expand access to goods, services, and livelihood opportunities for those at the base of the global economic pyramid in commercially viable and scalable ways.  
Inclusive business models are opportunities for market growth and competitive advantage for companies. This venture comprises a powerful approach to achieving the goal of inclusive growth and development.
IFC (International Finance Corporation) investments are supporting this emerging business at the base of the pyramid. IFC has invested over $7 billion in inclusive business for more than 300 clients in over 80 countries since 2005. The Inclusive Business Models Group at IFC is at the forefront of identifying inclusive business successes, analysing models, and providing a platform for private sector actors around the world to collaborate and learn from one another.
Inclusive business models include people with low income on the demand side as clients and customers, and, on the supply side, as employers, producers and business owners at various points in the business chain. Inclusive business models build bridges between businesses and the poor for mutual benefit. The benefits from inclusive business models go beyond immediate profits and higher incomes. These businesses include potential customers, expansion of the workforce, and strengthening of the supply and delivery chains. People with low income can meet the basic needs, earn adequate income for their livelihoods and achieve higher productivity.
Some of the inclusive business models studied by WBCSD were not just created to increase profits, but also to provide economic opportunities for low-income communities.  Supporting institutions for inclusive business would be governments, business associations, public agencies, NGOs (non-governmental organisations) and development agencies. These actors can play a critical role in the success of inclusive business models. They can create the necessary foundations through policy-making, research and advocacy. They can act as partners and providers. Bangladesh can be an ideal place for successful implementation of inclusive business ventures, which will invariably reduce poverty and benefit huge numbers of low-income people of the country.
(The writer is a former Executive Director, Bangladesh Bank, and CEO, BCFInAS.
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