Inclusive Business Policies
Governments play an important role in scaling up inclusive business (IB) through the development and implementation of enabling environments. They can make it possible for inclusive businesses to enter and operate in the market, support them to integrate people living at the base of the pyramid (BoP) into their value chains, and empower people at the BoP in collaboration with IB companies. This can be achieved through specific policy instruments laid out in national and regional strategies and action plans on enabling environments for IB.
There has been an increase in supportive policy action on inclusive business around the globe since the G20 endorsed the G20 IB Framework in 2015, 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 in 2018.
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In order to reach a much needed common understanding of IB, the leading stakeholders in the field have collaborated in a working group (led by the United Nations Development Programme, the Istanbul International Centre for Private Sector in Development, Business Call to Action and the Inclusive Business Action Network) to define the key characteristics of IBs. As a result, the Inclusive Business Features were launched on September 23, 2021 as part of the Business Call to Action side event at the 76th Session of the UN General Assembly. This document, designed for businesses, investors and governments, seeks to provide a structured set of features to identify IBs more effectively. It is to be used by policymakers to create a more enabling environment for IBs.
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Inclusive Business policy developments in Asia
Recent policy reforms in Asia show a strong political will to spur inclusive growth and improve the lives of the poor and the low-income population through IB. In 2017, the leaders of the Association of Southeast Asian Nations (ASEAN) acknowledged the strong support for inclusive business among their member states. They called for greater emphasis on creating an enabling environment for inclusive business in ASEAN, among others through conducive rules and regulations.
The ASEAN Economic Ministers endorsed the “Guidelines for the Promotion of Inclusive Business in ASEAN” in August 2020. These guidelines outline a series of policy instruments for the advancement of IB, which ASEAN Member States can consider and implement. The document, a non-binding reference framework for member states, was introduced and discussed with the public and private sectors during the 3rd ASEAN Inclusive Business Summit in September 2020. It was also referred to in the Chairman’s Statement of the 37th ASEAN Summit in November 2020.
In September 2021, the 4th ASEAN IB Summit explored how governments could put these Guidelines into practice. Two of the core measures proposed in the guidelines – the establishment of an accreditation and registration system, as well as the provision of business coaching services for companies – were discussed in detail. Furthermore, the ways how inclusive businesses and social enterprises were helping low-income and marginalized populations to recover from the economic crisis caused by the Covid-19 pandemic were explored.
ASEAN has made significant progress in advancing the promotion of IB also on a national level. Cambodia, Malaysia and Viet Nam conducted IB landscape studies, which resulted in concrete policy recommendations. Cambodia already turned those recommendations into a national IB strategy. In the Philippines an IB Bill was introduced in the parliament and Indonesia progressed on an IB roadmap for wellness tourism.
Evidence that inclusive business policies work emerged from the Philippines. In 2018, the first full year of implementation of tax incentives for IB in the context of the Philippine Board of Investments Priority Plan, five projects were approved, which target to source USD 55 million worth of goods and services from the BoP. Also, they will directly hire more than 185 workers and engage over 1,000 individuals from the marginalised sectors, including at least 300 women.
Growing momentum for Inclusive Business
Outside of Asia, several countries in Subsahara Africa are considering IB as a pathway towards inclusive growth, such as Nigeria and Zambia. IBs are also supported through programmes of development partners. In Nigeria, the GIZ NICOP programme, for example, uses an IB approach to efficiently achieve its objective of SME competitiveness and engages policymakers for supporting measures.
The momentum is significant – a clear indicator that policymakers globally aim for enabling environments for inclusive business to improve the lives of people living at the BoP.
Likewise, many individual countries have already recognised the potential of inclusive businesses as resources to leverage private-sector development and, simultaneously, help the poor. In the coming years, IB will become even more important to mitigate the effects of the Covid-19 crisis on the livelihoods of the most vulnerable.