Inclusive development agenda bolsters inclusive business in Africa

English
Policy and Government
Sub-Saharan Africa
27. Mar 2019

Inclusive Development in Africa: Synthesis Report Series

• 60 pages • INCLUDE

This study by INCLUDE captures current views of inclusive development challenges in Africa, and identifies key interventions to reduce poverty and inequality in the region. It explains why addressing inequality matters for development on the long run and provides a definition of inclusive development: “Inclusive development is achieved when improvements are realized in the income and non-income dimensions of development and inequalities in these dimensions fall.”

 

This study by INCLUDE captures current views of inclusive development challenges in Africa, and identifies key interventions to reduce poverty and inequality in the region. Inclusive development (ID) requires a multilateral approach focuses on both the income and non-income dimensions of development, which requires national governments, the private sector, NGOs, and international development partners to work together in crafting and evaluating current policies, programmes, and investments in Africa.

The inclusive business community in Africa is growing but there are several actions businesses can take to contribute further to its growth:

  • Forge partnerships with strategic actors such as local governments, NGOs, the academe, and others in the private sector. Multisectoral collaboration helps maximize business outcomes and sustainability. NGOs can create spaces for advocacy and help civil society hold governments accountable, the private sector can influence consumer behavior to demand sourcing from sustainable and inclusive value chains, and the academe can provide context-specific and evidence-based solutions. It is important to continually assess which players are strategic (or who can potentially become strategic) partners for specific contexts, and whether people’s needs or priorities have shifted. Cross-sectoral partnerships can help inclusive businesses bridge the gap between companies and communities, provided that all stakeholders are able to set out clear common goals and strategies. Corporations can supplement the functions of the state through the provision of different goods and services best done through public-private partnerships, and regular communication with the people being served.
  • Businesses should strive to move away from reactive strategies, i.e.., mindset of simply “doing no harm” and merely complying with regulations, in favor of adopting proactive development strategies that “do good” and have transformative social impact. More companies are beginning to recognize their social responsibilities, including adopting models used by social enterprises. Regardless of size (microenterprises, cooperatives, multinational corporations), businesses can create a more conducive entrepreneurial landscape for IB in African countries by paying attention to building social capital, which in turn increases business standing and reputation.
  • Businesses should attempt to actively integrate the base of the pyramid (BOP) throughout the value chain, not just as consumers. Engaging low-income groups through productive participation can contribute to long-term poverty reduction and community-building.
  • Businesses can help expand the African IB landscape by promoting and supporting local entrepreneurship by contributing financial resources and trainings for local entrepreneurs. This can create spill-over effects when integrated with other interventions, create synergy across the policy-business environment, and create multiplier effect by engaging different sectors.
  • Assess if policies/practices labelled “inclusive” are successfully creating inclusive outcomes. For both policymakers and businesses, it is important to note that providing opportunities for inclusion does not automatically translate to inclusive outcomes. Target partners at the BOP have different capabilities and limitations--asset ownership, income, education, gender, geographical location, access to networks, internal power imbalances, social stigma, low self-esteem--that dictate the extent to which they can utilize the opportunities made available to them. Some examples of these are. In Uganda, for example, using mobile technology for financial transactions requires a basic level of literacy, and women who have low education did not benefit as much from tech-based interventions. Nurturing grassroots participation and capacity building becomes important.

Despite improvements in ratings for development indicators, improvement in quality of life is still uneven in Africa, where women, ethnic minorities, indigenous peoples, persons with disabilities and migrants are often left out of development interventions. The impacts of inequality not only limits future economic growth prospects but also have social and political implications, including threats to national and global stability, i.e., shifting patterns of migration and violent extremism. INCLUDE’s Research for Inclusive Development in Sub-Saharan Africa (RIDSSA) points out that current one-size-fits-all policies for inclusive growth and resource redistribution are insufficient to tackle different forms of inequality. Another issue is the disparity in the inclusive development concepts used and the way they are interpreted in different contexts. Some studies and development actors use the umbrella term “inclusive development” but limits its discussion to one or two dimensions. Thus, it becomes important to consider geographical, political, institutional, and socioeconomic contexts in crafting ID programmes and interventions. For inclusive businesses and policymakers alike, community consultation and engagement becomes critical to identifying varying needs and wants, foreseeing potential challenges, and putting in place appropriate risk mitigating strategies. Information and communication channels used for ground level interactions should be consistently evaluated and updated as necessary, and interventions sensitive to marginalized groups—determine their willingness to be engaged and how.

While increasing intra-African foreign investment (up 30% from 2007 to 2015) and Chinese foreign direct investment are boosting local economies, INCLUDE notes that the development of local enterprises is a more sustainable pathway to a thriving entrepreneurship ecosystem and to promoting inclusive development. This report also outlines six policy domains for inclusive development that require attention: economic growth and structural transformation (increasing employment in the formal economy, strengthening agricultural and household enterprises, and empowering smaller entrepreneurs); productive employment (promoting fair and stable remuneration, and decent working conditions); social protection (safety nets that prevent people from falling into poverty and improve productivity, health, and psychological wellbeing); provision of basic services (strengthening childcare, sanitation, nutrition, and infrastructure); spatial equity (addressing disparity between rural and urban contexts, where the rural poor are more prone to multidimensional deprivation); and inclusive governance (promoting transparency, improving domestic resource mobilization, and increasing local participation). These interconnected domains form a comprehensive inclusive development framework that is critical to achive lasting and meaningful development outcomes.