Launch of Transforming Business Relationships: Inclusive Business in Latin America
Today, the Multilateral Investment Fund is proud to present the publication “Transforming Business Relationships: Inclusive Business in Latin America”. The story of this publication’s creation started a few years ago when the MIF committed to funding what at the time was a very innovative regional project in Ecuador, Peru, Nicaragua, Honduras and El Salvador. Our partner for that adventure was (and still is) SNV. Together, we have come a long way in learning how best to support initiatives where a company changes its way of doing business to partner with commercial ventures created by vulnerable sectors of the population. We learned that it is essential to build confidence, create a common goal and maintain perseverance and a long-term vision.
The projects showed us the reality of the communities and businesses involved, examining both problems and possible solutions so that these business initiatives could become profitable for both parties. You can ask our MIF specialists Paula Auerbach, Elizabeth Minaya and Ana Cecilia Sanchez about their experiences supervising these interesting projects that had so much impact potential, but were, at times, very challenging.
We had the opportunity to reflect on what these projects had created and started conceptualizing, developing and coordinating so that we could share these experiences with the world. The research behind the book is based on quantitative results of revenue, turnover, etc. but it also uses qualitative methods to investigate how inclusive business initiatives contribute substantially to improving the living conditions of low-income groups and how companies identify the necessary incentives to scale up these initiatives. Three key questions were the starting point of this report:
Is there a business case to implement different inclusive business models - both for the communities and the companies involved – that can effectively reflect the value created for both sides?
When we analyze these models, what do we mean by inclusiveness and how do we assess it?; and
What are the necessary conditions to include in an inclusive business initiative in order for it to achieve results, become sustainable and be scaled?
These questions are not easy to answer. During an initial phase, 150 possible cases from around the world were analyzed to create a hypothesis and identify generalizable guidelines and learning. In a second stage, 27 cases were selected (22 of them are from MIF projects) for ethnographic studies in communities that had participated in the projects. The studies were complemented with in-depth interviews with the companies involved.
The selected cases illustrate a range of experiences in which companies have changed how they do business in different links of the value chain: procurement (Dole, Pronaca, Ecom, Perhusa, Floralp, Centrolac, Novacero), production of goods or services (Edyficar, Rainforest Expeditions) or distribution (Farmaenlace). There is also diversity in the industries studied, which range from agriculture (bananas, corn, coffee or cocoa) to the financial sector, energy, construction and tourism. One point worth highlighting that sets these initiatives apart is that, with the exception of Dole, the rest of the companies deploying these innovative models are large national or Latin American businesses and not necessarily the "usual multinational suspects".
Some of the pilot projects financed have already been scaled through IDB Group loans, as in the case of Pronaca (Ecuador) and Ecom (Nicaragua), or through loans from MIF’s Social Entrepreneurship Program (SEP), such as Rainforest Expeditions (Peru) and Farmaenlace (Ecuador). The report also discusses the important role that the ecosystem and public policies play in better understanding who are the key stakeholders and what role they should play in helping inclusive businesses thrive.
We hope the business cases presented in this publication will contribute to greater replication and scaling of models that work for companies in Latin America and other regions. In fact, as part of our joint dissemination efforts, the SNV Asia Office will present the findings at the 2nd Inclusive Business Forum Asia on February 17 in Manila, Philippines. We are spreading the word far and wide!
Apart from the satisfaction of having the final product completed, the publication is the end result of a lengthy process of defining priorities, securing needed resources, coordinating with a large team of field consultants and managing the expectations of three very different organizations (SNV, Ford Foundation and MIF), that was a challenging yet, very enriching experience. During this journey, some of us got married, others had children, changed jobs, organizations themselves changed; through it all, the team has been dynamic in every sense of the word. More importantly, we realized that building trust, maintaining a common goal, persevering and having a long-term vision were just as important for us during this process as they are for inclusive business initiatives!
The blog was written by Estrella Peinado-Vara as part of a blog series on Inclusive Business. In our next blog we will talk about how companies can contribute to the Sustainable Development Goals through inclusive business initiatives. Stay tuned!