May 10, 2013
Report Touts Inclusive Business as Means for Reducing Poverty in Africa
by Robert Kropp
The African Facility for Inclusive Markets calls on diverse stakeholders to help create appropriate
conditions for the growth of inclusive business in Africa and bring the benefits of economic growth
directly to the poor.
Albert Einstein once said, "We can't solve problems by using the same kind of thinking we used when
we created them," a quote which came to mind while I was reviewing a recent report entitled Realizing Africa's Wealth: Building Inclusive Businesses
for Shared Prosperity by the African
Facility for Inclusive Markets (AFIM), an initiative of the United Nations Development Program.
Given capitalism's centuries of
exploitation of the people and natural resources of Africa, can we reasonably expect that
capitalism might be "rebooted," as Peter Bakker, president of the World Business Council for Sustainable Development (WBCSD), has
said? Can a global economic system that too often seems rigged in favor of the profit motives of
corporations actually serve to advance the Millennium Development Goals (MDGs), which seek to
halve the incidence of extreme poverty by 2015?
"Business as usual is not an option for a
future-proofed economy in which nine billion people live well within the limits of the planet by
mid-century," Bakker said.
According to the AFIM report, inclusive business offers
opportunities for entrepreneurship as well as the involvement of more of the continent's poor in
economic growth and sustainable development. "The post-MDG framework will ask the private sector to
contribute to development goals," the report states, "often by engaging in core business
The report defines inclusive business as integrating "low-income individuals
into value chains in various capacities, be it as consumers, producers, employees and
entrepreneurs. Thus, they bring the benefits of growth directly to low-income communities." It
details numerous instances of successful inclusive businesses in Africa, most of which are in the
agribusiness, energy, financial services, and ICT sectors. In sub-Saharan nations such as South
Africa and Kenya, where more supportive ecosystems for inclusive business have been developed,
sustained economic growth and responsible governance systems contribute to the comparative success
of such endeavors.
"However," the report continues, "many people remain excluded from the
benefits of this growth, without access to basic goods and services or opportunities for employment
and regular income."
"International actors are the dominant players in providing support
to inclusive businesses in sub-Saharan Africa," the report observes. But in the aftermath of global
economic insecurity, many developed nations have failed to maintain their commitments to supporting
sustainable growth and reducing poverty in Africa and other developing regions. According to a 2012
MDG Gap Task Force Report, official development assistance decreased by three percent in 2011, and
poor nations faced reduced market access for their exports.
AFIM also identified
deficiencies in local support institutions as well as problems inherent to market conditions in
low-income communities. What is needed, the report states, is "a network of interconnected,
interdependent actors whose actions make it possible for inclusive businesses to succeed and
generate impact at increasingly large scales."
All stakeholders—companies and
entrepreneurs, governments, development partners, civil society organizations, research
institutions, and intermediaries—have roles to play in encouraging the growth of inclusive business
in Africa, the report advises. Inclusive business ecosystems, supportive financial mechanisms, and
platforms for knowledge-sharing are all necessary if sustainable development and significant
poverty reduction are to be realized.
"We certainly need more capacity-building entities,
such as civil society organizations, governments, developing partners and research institutions,
with demonstrated abilities to assist businesses in building inclusive models," James Mwangi of the
Equity Bank in Kenya said.
"Africa has seen some strong economic growth over the past
decade," Babacar Cissé, the Deputy Director of UNDP’s Regional Bureau for Africa, said.
"Nonetheless, rapid economic progress has not brought prosperity to all, and inclusive business
represents a promising approach by bringing the benefits of economic growth directly to the poor by
including them in value chains."
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