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Breakthrough SMEs and Multinationals in Inclusive Business

24. Sep 2014

With Tomohiro Nagasaki, Impact Measurement consultant, Business Call to Action

Business Call to Action (BCtA) was founded in 2008, with the conviction that businesses can play a key role in reducing poverty, by providing access to quality goods and services to people at the Base of the Pyramid (BoP), or by including them in their value chains as suppliers, employees, or entrepreneurs. There was great excitement around the idea that businesses can do good for the society, but there was not a great deal of evidence. Breaking Through, a flagship report co-authored by BCtA and Ashley Insight, tries to fill this gap. The report shows how BCtA’s 94 initiatives have progressed so far, and how inclusive businesses are benefiting the poor while being commercially sustainable. It was launched on September 24th at BCtA’s 2014 Annual Forum in New York.

Who are the members of BCtA?

BCtA’s portfolio of 94 companies represents a truly diverse mix of sectors, geographies, types of company and stages of initiatives. BCtA members offer a wide range of products and services, from emergency medical services to solar lamps to insecticide treated bed nets to low-income housing. The locations of their initiatives span four continents, and our members include emerging start-ups as well as large, established multinationals. The research shows, however, that ‘breakthrough’ SMEs based in the Global South are now becoming major players in their sectors. Some of them are outperforming initiatives of larger and more established companies in terms of revenue, and matching the numbers of people reached at the BoP.

The ‘breakthrough’ SMEs and ‘large and established’ multinationals

ClickMedix, a BCtA member that offers mobile health application to improve access to quality health care for low-income populations is one of such ‘breakthrough’ SMEs. Founded in 2010, the company is already working internationally. Through a recent strategic partnership with Medtronic, a major medical device company, it is reaching 30,000 people a year with ear-screening services in India, and expects continued scale. SolarNow, a provider of high quality solar home systems to low-income populations, is now poised for rapid growth following its first round of venture capital investment. The injection of new capital will allow them to further expand their distribution network. Like ClickMedix and SolarNow, external investment and the right types of partnerships have helped many of these breakthrough SMEs reach stage of accelerated growth.

The multinationals, too, are spearheading inclusive business initiatives in their respective sectors. BASF India, the Indian operation of the global chemical company, provides crop protection products and capacity building services for smallholder farmers in the country to introduce more sustainable agricultural practices. The company’s SAMRUDDHI program has a dedicated team that interacts directly with farmers to ensure correct usage of their products to maximize agricultural yields.

Commercial drivers behind inclusive business initiatives

Although the SME and the multinational models of inclusive businesses are all actively benefiting the low-income populations, the commercial drivers behind them are quite different. For SMEs, the inclusive business is their business, so their survivals depend on the success of their initiatives. Hence they prioritize achieving competitive advantage and generating profit through their initiatives. For the large multinationals, inclusive business initiative is one of their many business lines. Even though they intend to generate a profit from their inclusive business initiatives in the long-term, they prioritize a range of other strategic objectives, such as accessing new markets and increasing brand value. Some multinationals do not even intend to make their initiatives a profit-generating cost center ultimately as long as their activities are serving other corporate objectives.

The mix of such ‘emerging’ and ‘large and established’ companies makes BCtA a unique platform to draw insights into different types of inclusive business models. The next blog post will uncover some of the findings from Breaking Through that shows the nature of the benefits that these companies are providing to people at the BoP.

MORE INFORMATION

Tomohiro Nagasaki provides impact measurement as a consultant for the Business Call to Action.

Launched at the United Nations, the Business Call to Action (BCtA) is a global alliance hosted by the United Nations Development Programme Headquarters in New York. Follow: @BCtAInitiative

About ‘Breaking Through’

The report covers BCtA members’ 94 initiatives and draws heavily on surveys and interviews conducted with 49 initiatives during mid-2014. It is authored by Caroline Ashley and Suba Sivakumaran, in conjunction with Tomohiro Nagasaki, Lara Sinha, Suzanne Krook and Tom Harrison.

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