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| Murphy Okpala |
The Business Innovation Facility helps the development and uptake of inclusive business models by companies in developing countries. The term inclusive business refers to profitable core business activity that also expands opportunities for the poor and disadvantaged. The Business Innovation Facility is managed for the UK Department for International Development (DFID) by PricewaterhouseCoopers LLP (PwC) in alliance with International Business Leaders Forum (IBLF), Accenture Development Partnerships (ADP), Imani Development, Intellecap, Renaissance Consultants Ltd. and The Convention for Business Integrity. Click here to learn more about the Business Innovation Facility.
Traditionally the idea behind going into business is profitability/profit making. The universal strategy to achieve this (in the most simplistic nuance) is ‘minimize your cost and profit will be maximized’. That is the traditional mindset of the average entrepreneur and company in Nigeria and considering the dearth of infrastructure which gives rise to rising cost of production there is little wonder why this mindset prevails. Businesses need to create shareholders value (the primary objective) hence the drive of the executives is to develop strategies that will ensure the organization remains profitable over the long term.
Now here comes the crux of the matter for inclusive business, convincing companies in a comfortable safe and profitable zone to venture into doing business with the poor. The definition of inclusive business which is leveraging on core business activities to create social benefits and impacts for the poor can set off a red flag to a business executive. Most businesses have a wrong but founded perception that including the poor and disenfranchised into their value chain comes with so many challenges (high transaction cost, poor capacity, low margins, high risks, etc) that they would rather avoid. Hence most businesses have adopted models that will effectively and profitably shield them from interacting with the poor, Micro and Small businesses. For large companies they rather avoid the “headache” while mid-sized companies rather avoid the risk.
Hence Innovation is the Key to unlocking the potentials of the poor in business and that’s what inclusive business is all about. You can’t have a successful inclusive business without the element of innovation. Inclusive business can create huge changes in the way an organizations carries out its operation and naturally, man is averse to change. Except we can expose businesses to innovative ways of engaging the poor profitably in a way that creates shareholders value rather than diminish, it will be a herculean task to convince the business to embark on an inclusive project. Innovation here does not necessarily mean creating something new, it can be adapting a successful model that has been tested in a different context to the uniqueness of a project as far as it can be viewed by the business to increase value rather than diminish.
Extensive research is required via networking and reading in between the lines in order to touch an organization’s “sweet spot” with a proposal, especially for large companies because they are not necessarily attracted by the free or subsidized technical support being offered except it is addressing an inherent problem or desire within the organization that they either don’t have the competency or resource in-house to address. For mid-sized companies though they might be attracted by the idea of inclusive business and the “freebies” from BIF, but it tends to be more challenging in conceptualizing how they can achieve large scale social impact with their inclusive business model from the start-point. Innovation is more critical for this category of companies in order to achieve scale. With the Line-up of mid-sized organizations in the BIF Nigeria Pipeline, potential for learning abounds.
A few of this pipelines that are billed for takeoff include a mid-sized FCMG who intends to incorporate the Base of the Pyramid (BoP) in its distribution framework for milk and margarine products used for inputs by small and medium enterprises (SMEs) such as bakeries, Ice-cream makers, confectioneries, etc. Another is an NGO focused on developing smallholder Agribusiness entrepreneurs through education and capacity building on best practices who intends to leverage its commercial agribusiness arm to provide access to market for the agribusiness entrepreneurs it trains.
