Entrepreneurs wanted: how governments and the private sector can work together to build more supportive inclusive business environments
Tell us about the work of the United Nations ESCAP.
ESCAP is the regional commission of the United Nations, covering Asia and the Pacific from Iran to the Pacific islands, from New Zealand to Russia. We provide policy advice to governments in a range of economic and social development issues. We do that through different means, such as providing technical advice, supporting intergovernmental debates and conducting policy research and analysis.
The ASEAN countries have called for greater efforts to create an “enabling environment” for inclusive business. What does this mean?
Leaders in the ASEAN community have realised that the private sector has a key role to support sustainable and inclusive development in their countries, and that one of those methods is through the promotion of inclusive businesses.
When people talk about an “enabling policy environment,” what does this look like? What are possible policy instruments that create this kind of environment?
Inclusive business, by definition, is purely a market-based business activity. However, governments can support the emergence and growth of inclusive businesses. They can provide an enabling environment for businesses to develop inclusive business models.
First and foremost, a government can create awareness about the potential for businesses to provide relevant goods and services to those at the base of the economic pyramid. It can also recognise inclusive business by offering formal accreditation. Governments can also facilitate access to impact financing by, for example, providing financial mechanisms that reduce the risk for impact investors to invest in inclusive businesses. In addition, governments may provide incentives and technical advice to business leaders that are considering developing an inclusive business model.
In ASEAN, there are several countries that have started to consider how they can promote more inclusive businesses. One of the first ones has been the Philippines, but also Myanmar and Cambodia are putting in place strategies to promote—from the public sector—a more enabling environment for inclusive businesses.
While the rationale for creating an enabling environment for businesses with a social purpose is quite clear to some people, critical voices may claim that these kind of actions by governments are also distorting the market. What is your take on that?
My take is that the public and the private sector have different and complementary roles. When it makes market sense, the private sector can drive economic and social development, yet there will, of course, be areas where it is not possible to provide a market-based solution. In those cases, the government needs to address the gaps and social needs. The role of the government, including in the case of promoting inclusive business, it is not about taking over the work of the private sector. On the contrary, it is about facilitating the private sector to develop, for example, affordable energy options, low cost housing, or other market-based solutions to social and environmental challenges.
Is it important for inclusive business entrepreneurs to be involved in shaping inclusive business policy? How do they do so?
Absolutely. Each country has a different environment for inclusive business to operate and faces specific challenges. So, before governments can design public policies, they need to understand the challenges that businesses are facing when they want to develop inclusive business models. For example, an agribusiness may want to develop and incorporate local farmers in their value chain, but may have difficulty identifying who the farmers are, or how to access them, given infrastructure challenges. By participating in public policy and working closely with the government, entrepreneurs can help direct government action to address those specific challenges.
Policymaking processes span different levels, from local to regional to national. How do you ensure that each of these layers of policymaking is being covered and considered?
As a starting point, you need to understand the current market for inclusive business, in a given context and country. For example, which businesses have already developed inclusive business models? Which businesses are almost ready to develop an inclusive business model? What do they need? When you have that market information, together with an analysis of the opportunities and challenges these businesses face, then you can inform the government of the low hanging fruit opportunities and policy priorities to enable businesses to develop more inclusive business models.
Involving the private sector from the beginning is crucial. Understanding the specific stage they are at and the specific environment they face is essential to developing meaningful strategies that generate an enabling environment. This is a two-way street, and it is also often important for business to engage with the public sector and work in partnership to be able to develop inclusive business models. Some of the most ambitious inclusive business models require action, not just by the business leader, but also by a number of public institutions. The only way to develop that inclusive business model is by working in partnership.
Getting more concrete, I heard that there have been exciting new policy recommendations in Cambodia. Can you tell us more?
In Cambodia, ESCAP and iBAN have been conducting a landscape study, which will be reported in November. Our early findings tell us that there are around 20 inclusive businesses already operating in Cambodia, and that with some further support and an enhanced operating environment, in three years those businesses could provide insurance to 600,000 people at the base of the economic pyramid, train and place 10,000 people in skilled jobs, and provide healthcare to 20,000 people.
So, the landscape study indicates that there is a lot of potential for businesses to increase their social and economic impact and to ensure that those at the base of the economic pyramid are not left behind. Now, to do that, businesses may need some nudging and an enhanced operating environment. That nudging can come through recognising the work that they do, providing incentives, and also through providing technical assistance (business coaching) to those businesses that are close to developing a viable inclusive business model.
Do you think that businesses are always aware of the positive impact that the work of UN ESCAP—and other organizations, too—can have on their operations?
That is a complex question. I would say that not all of them are aware. Larger businesses are very conscious of the role that public policies may have on their operations. What we've found is that some business leaders are not aware of the potential impact that they can have on creating opportunities for those at the base of the economic pyramid and creating awareness about how they can have a great economic and social impact is important. Business associations and chambers of commerce are aware of the role that the public sector and international organizations, like iBAN or UN ESCAP, can have in creating a more enabling environment. We hope that by working with those institutions, awareness will also reach to a larger number of business leaders and ultimately to smaller businesses, which are the ones that often have little participation in the development of business-related policy.
Tell us, do you enjoy working on inclusive business policy, as compared to other policy development work? What makes it special?
I am lucky to be able to work in the areas of innovation and private sector development. I enjoy working in any policy area that has a substantive impact in leaving no one behind. Increasingly, the private sector is understanding the impact that they can have on leaving no one behind, which is very rewarding. Investors, too, are becoming more interested in financing inclusive business models. Because of this, policymakers are very interested in supporting policies that create an enabling environment for inclusive business. So, in a way, it's a win-win situation for everyone.
Thank you, Marta.