The Growing Inclusive Markets initiative [2] is a UNDP program that aims to "raise awareness by demonstrating how doing business with the poor can be good for poor people and good for business." The forum hosted a mix of development specialists, academics, and practitioners, who were all debating the growing role of the private sector in development.
There was a great energy throughout the weekend, and the people in the room seemed to have no problem connecting across the issues and committing to action. I thought that one of the best aspects of this conference was that numerous citizens from the developing world were in the room. Representatives from over 45 countries [3] were present, and this shaped the conversation considerably.
In a conversation about the role of ICT in Development, one of the panelists was a Tanzanian Ashoka fellow, Joseph Sekiku [4], whose organization, Family Alliance for Development and Cooperation (FADECO) [5], is utilizing a combination of mobile phone networks and radio to get accurate market prices to rural farmers. His most salient comment was probably that, "Africa has been dependent on donors for too long." In a discussion regarding the role of carbon markets for the poor, an organic farmer from the Caribbean shared her struggles with reaching the scale and capital required to access the established carbon markets. It was wonderful to hear these voices and witness their influence on the conversation.
The following outline was presented during the last session, and does a good job of summarizing the constraints and opportunities that were highlighted over the short conference. It is also a concise summary of many of the same overall challenges and hopes we all face when considering the role of the private sector in addressing poverty and inequality in the developing world.
Constraints & Barriers
- Enabling Environment
- Lack of regulation or enforcement of regulation
- Lack of infrastructure
- Unstable political environment
- Finance
- Models need to be revised to match the different contexts in the developing world
- Both startup and continued growth capital in necessary to build up the private sector in the developing world
- Trust
- The poor have a history of being exploited, and are subsequently mistrusting of the private sector (i.e. Coca-Cola in India [6])
- There is continued worry about private sector provisions of what many see as "public goods" such as clean water [7], healthcare, and education
- Human Capital
- There is a need for building entrepreneurial skills in the developing world (there was an ongoing debate throughout the conference about the nature vs. nurture of entrepreneurial tendencies [8])
- Need to strengthen and retain the overall labor pool
- Market Awareness
- Extra effort is needed to inform citizens of the market opportunities / there is still a great problem with information asymmetry and lack of communication technology
- Market Access
- Lack of intermediaries
- Scaling Up
- It is difficult for businesses to scale while considering local cultural and geographical sensitivities and preferences
Innovations
- Enabling Environment
- Advances in streamlining the regulatory process (for example many countries have significantly shortened the amount of days that it takes to register a business after they received sub-par rankings in the World Bank's Ease of Doing Business Index [9])
- Finance
- Advances in the localization of loan instruments
- Human Capital
- Advances in tertiary education (after many years of the development communities' neglect of the importance of higher education)
- Better mentorship programs [9]
- Improved partnerships with intermediaries
- Technology and Communications
- Communications advances that allow organizations and entrepreneurs to leverage networks to build legitimacy and overcome capital constraints
- Business Model Innovations
- The private sector is now realizing the importance of engaging with local stakeholders from the beginning [9]
- There has been an increased dissemination of best practices and business cases
- Business models have adapted according to business life cycle
- Scaling Up
- Improved awareness of the necessary "ambidexterity" (the concept of adapting to the local context while scaling business processes)
- Leveraging context-specific partnerships
Thanks again to the organizers of GIM for bringing everyone together around the table to examine this movement at a very crucial time in history. I think that the NextBillion community can appreciate how far we've all come in terms of mobilizing action and discussion in both catalyzing innovation and overcoming barriers for private sector activity at the BoP. However, there is still a long way to go to harness all of the power and good intent that is active in this space.