Governments have an important role in scaling up IB through the development and implementation of enabling environments for the development of inclusive business models.
The good news is that globally, there is an increase in supportive policy action on inclusive business.
2018 ended with significant momentum on inclusive business policy as the G20 published the G20 Call on Financing for Inclusive Business and relaunched the G20 Global Platform on Inclusive Business with a summary of G20 inclusive business policies.
Recent policy reforms in Asia show the strong political will to spur inclusive growth and improving the lives of the poor and low-income population. In 2017, the leaders of the Association of Southeast Asian Nations (ASEAN) acknowledged the strong support for inclusive business by its member states and called for greater emphasis on creating an enabling environment for inclusive business in ASEAN, among others through conducive rules and regulations.
Evidence that inclusive business policies work emerged from the Philippines. In 2018, the first full year of implementation of the policy, five projects were approved which target to source USD 5 million worth of goods and services from the BoP and directly hire at least 185 and engage over 1,000 individuals, at least 30 per cent of which are women, from the marginalised sectors.
Countries in the European Union and the EU support inclusive business through their overseas development aid programmes. This momentum is significant and is a clear indicator that policymakers globally aim for enabling environments for inclusive business, so that the lives of people living at the base of the pyramid will improve.
According to the G20 Inclusive Business Framework, “Inclusive businesses provide goods, services, and livelihoods on a commercially viable basis, either at scale or scalable, to people living at the base of the economic pyramid (BoP) making them part of the value chain of companies’ core business as suppliers, distributors, retailers, or customers. In addition to these commercially inclusive activities, businesses may also pursue broader socially inclusive goals. Inclusive business should promote sustainable development in all its dimensions – economic, social and environmental.” The G20 Inclusive Business Report for the 2016 Summit explains that inclusive businesses do thereby contribute to the Sustainable Development Goals in several ways. IB can reduce poverty, shrink inequality, and contribute to sustainable economic growth. The two main reasons why IBs have difficulties to scale their business are a lack of financing and capacity among the BoP. Other obstacles are a shortage of market information and sector-specific frameworks. Pioneering companies implement IB models to tackle these problems. However, government support can increase the impact even more. This can be done by enabling inclusive businesses to enter and operate in the market, supporting them to integrate the BoP into their value chains, and empowering the BoP themselves to participate in value chains.
Many countries have already recognised the potential of inclusive businesses as resources to leverage private-sector development and simultaneously help the poor.