A clear win for responsible capitalism

“The poor don’t want shampoo they want jobs.”

Arguably this statement might be worth discussing in many contexts, however as an argument against business approaches that target the base of the pyramid (BoP) it doesn’t really do the trick for me.

Taking the show of hands at the end of yesterday’s debate -advertised as a fight between “responsible capitalism” and “business as usual”- as an indicator, I wasn’t alone with my opinion: roughly 80% of the attendees felt that business approaches targeting the BoP can be an important contribution to poverty reduction.

Even though I have to admit that I would have given the same answer prior to the debate, I was somewhat surprised by the fact that many of the panellists representing the ‘business as usual’ side –for me– missed the point that the debate around business led strategies to development has moved on considerably during the past 5 years or so and we can see more and more examples illustrating that businesses have left business as usual behind themselves a long time ago.

Increasingly we can see businesses stepping out of CSR approaches and working in partnership with other sectors –often donors and/or civil society organisation- to find commercially viable business solutions that expand opportunities for people at the BoP not only as consumer but also as producers, suppliers, workers or distributors. This is what programmes like the Business Innovation Facility and Innovations Against Poverty and many others now commonly refer to as inclusive business.

Not only did the ‘business as usual’ panellists almost exclusively focus on consumer type BoP examples and questions such as whether companies should sell skin whitening cream to the poor (if this is an argument then as some audience members rightly pointed out we should also discuss selling tanning lotions in the ‘developed world’), but also some of their criticisms around working with the poor as suppliers/ producers did simply not convince me:

“Employment creation only takes place in low skilled jobs”

Projects in the Business Innovation Facility portfolio illustrate that elements of capacity building are key to the success of agri-business projects. For many companies we work with, increasing the quantity and/or quality of supply to reduce costs/ increase profitability is their key commercial driver. Without investment in training, working in partnership with other stakeholder to e.g. increase farmer’s access to finance to ultimately improve farming practices and yields, this goal can hardly be achieved.

To name but a few, Malawi Mangoes, providing support to smallholder mango farmers to graft better quality mango material to trees with poor fruit and thereby increasing the yield and quality of the mangoes, or Universal Industries, aiming to develop a supply chain for High Quality Cassava Flour by facilitating value addition by smallholders through the processing of cassava wet cake, illustrate this.

Arguably programmes like BIF and IAP are still in their early days and evidence/ impacts are often a long way ahead. Therefore this new website http://responsiblebop.com/ whose launch coincided with the debate and seeks to ask “how BoP models work in practice, what processes of inclusion and exclusion they give rise to, and whether they can deliver development that is both ethical and sustainable”, should clearly be welcomed.

All in all an interesting debate with a clear winner.

Read more about this event in another blog by an event participant, Jamie Cross, Edinburgh University: Expand the evidence base at the bottom of the pyramid.