Ready to Connect – Finding solutions for business constraints of Smaller Inclusive Businesses and Social Enterprises

Written by Mirko Zuerker, SEED & Mareike Grytz, Inclusive Business Action Network

Smaller inclusive businesses (IB) and social enterprises (SE) aim to provide, at scale, innovative and systemic solutions and create a tangible impact on a core problem of developing countries. In recent years supporting organisations, financial institutions and governments in developing countries have started to develop strategies supporting the growth of IBs and SEs.

How can IB and SE companies overcome key challenges and obtain solutions to successfully run their business and create long-term impact after launching their business? One answer is directly connecting the smaller IBs and SEs with supporting and financial organizations to back their growth and expansion plans.

Ready to connect: Face-to-Face counselling for smaller IBs and SEs constraints

For unlocking solutions for the poor, more than 300 representatives of companies, SEs and governments gathered from 15^th to 19^th February at the Asian Development Bank (ADB) for the 2^nd Inclusive Business Forum for Asia in Manila, Philippines. In the line-up of the ADB Forum the IBAN/SEED Ready to Connect side-event provided a platform for selected smaller IB and SE to get advice from a group of experts. The purpose of the side event was to discuss specific challenges they face and to develop new business relationships, together with peers and experts. Jointly implemented by the Inclusive Business Action Network (IBAN) and SEED, this needs-oriented event provided a unique opportunity to support IB and SEs in Asian countries in accessing suitable finance, scaling operations and broadening reach, making business financially more suitable, intensifying social impact by creating innovative and relevant solutions for the poor, and engaging with right partners.

Identifying key problems and needs of smaller IBs and SEs as a first step

Before the event, 16 IB and SE companies from four sectors (Retail/Textile, Agriculture/Food, Tourism, Water) and from five Asian countries (operating mainly in the Philippines, Thailand, Viet Nam, Indonesia and India) were selected. The companies were namely AIDFI, EcoFarm, Friggies, Heifer International, Jacinto & Lirio, Jollibee Foundation, Last Forest Enterprises Pvt Lt, Local Alike, Mimosa Technology, Nazava Water Filters, Theo and Philo Chocolate Factory, TripTrus, and Verylocaltrip. All offer innovative ways of working with low-income people in developing countries.

In the course of the side-event challenges faced by those companies when scaling-up and running inclusive business models were then discussed in a roundtable setting. The roundtables focused on pressing challenges identified by companies during a preparatory assessment. The following four challenges were identified as most important for companies:

Finance & Funding

• Capital to facilitate scaling-up and replication
• Understanding financing processes

Markets & Customers

• New approaches to raise customer awareness
• Effective patterns and tactics to expand reach in existing or new markets

Innovation & Impact

• Proven products & service innovation approaches
• Steps to advance business model innovation
• Innovations through Impact Measurement

Skills & Staff

• Steps to enhance business and management skills
• Effective ways to find, retain and train staff

Connecting experts with smaller IBs and SEs with interactive methodology

Through an interactive dedicated methodology the side event provided participants with the opportunity to work together in order to foster the spread of inclusive business models that combine significant potential with development impacts. The companies briefly presented their companies and two of their key challenges they had identified beforehand. Together with experts from financing institutions and supporting organizations they then discussed and developed collaborative solutions to their specific challenges and exchanged experiences. In this way the event gathered inputs and advice from experts representing organisations such as ASEI, Aavishkaar, Inclusive Business Accelerator, Dalberg Consult, GIZ, Intellecap, LGT Venture Philanthropy, Orion Investments, Oxfam, SEED, S3IDF, UNDP, and VSO International. By such the session helped to build new linkages and facilitated potential investments or consultancy engagements for the participating companies. The advice given by the experts ranked from:

1. Suggesting collaborations with partners and service providers not taking part in the workshop and pointing out their innovative approaches; e.g. using the online lending platform KIVA to win more customers by making their initial investment smaller,

2. Offering to directly cooperate with each other; e.g. VSO International following up on the discussion with companies on how to participate in the volunteering program and addressing needs for expert inputs or management skills within the company.

3. Approaching development agencies like JICA, AusAID, GIZ among others when using foreign technologies in order to explore funding opportunities around research and development activities as part of their technology or knowledge transfer partnerships.

4. Considering mobile payment solutions when working with rural customers. Exploring tried and tested technology solutions from Eastern Africa (e.g. M-Pesa, Millicom etc.) which might work also with Southeast Asian customers and consumers.

Inclusive Business Action Network (IBAN):

Promoting inclusive businesses around the world. As a Network, IBAN connects the dots between the vast number of businesses, existing initiatives, support mechanisms and stakeholders around the world. Compiling and sharing publications, guidelines, checklists and market research from a broad range of sources, IBAN facilitates access to relevant information and knowledge. Online and offline peer-learning and exchange formats provide numerous opportunities for interaction between the different members of the inclusive business community. A network of local hubs and partner structures provides direct access to local partners and BoP markets.