By Minja Nieminen, Business Call to Action Outreach Lead

According to the World Bank’s Global Consumption Database, low or lowest income earners make up 84 percent of household consumption in Kenya, with higher income earners contributing just 16 percent. In Kenya – as well as globally – low income earners are outspending the wealthy in sectors such as food and beverage and energy, and spend roughly as much in many others, including health.

These figures hardly come as a surprise. Yet importantly, they present a huge opportunity for companies that can provide products and services tailored to the needs of low income consumers, known in socio-economic terms as the Base of the Economic Pyramid (BoP).

Leading companies such as Safaricom and Equity bank are already serving Kenya’s BoP population daily as a key customer group. A new report launched by Business Call to Action, a global advocacy platform for companies adopting inclusive business models across sectors, sizes, regions and countries hosted by the United Nations, was published on 22 June in Nairobi. The report, New Horizons: Accelerating Sustainable Development through Inclusive Business in Kenya, provides a range of examples of innovative business which are already tapping into BoP markets in Kenya, providing better access to healthcare, sanitation, utilities, agricultural inputs or financial services, and providing employment and livelihoods to smallholders and micro-entrepreneurs, thus also building consumer markets.

To serve the growing expectations of consumers in terms of both quality and ethics, Kenya’s Vava Coffee is linking smallholder farmers to markets for ethically sourced coffee while providing them with sustainable livelihoods. Uganda-based AFRIpads on the other hand addresses sanitation needs by offering low-cost reusable sanitary pads tailored to female BoP consumers’ needs. And selling business outsourcing services to clients worldwide, Digital Divide Data Kenya leverages an impact sourcing model that simultaneously offers jobs and study opportunities to youth from low-income families, providing a motivated workforce.

New Horizons touches on an important question: how can inclusive business models be scaled to accelerate the achievement of the Sustainable Development Goals and Kenya’s Vision 2030? Creating an enabling business environment in general, where those who are reaching the BoP with quality products and good business ethics are rewarded, forms the basis of the response.
However, inclusive businesses often face specific challenges, such as inadequate infrastructure to reach potential customers; low awareness among target customers on products such as insurance; or a lack of capacity among BoP suppliers. To leverage the impact potential of inclusive business to reach the country’s development targets, both national and county level governments – and their partners – should consider additional means to support and enable these models to scale. Some of the measures include public private partnerships, smart end user subsidies, or collaboration in awareness raising and training for BoP consumers, employees and producers to enable them to fully engage in the economy.

Importantly, the key to scaled impact is a better understanding of the opportunities and impacts of inclusive business models. A lot can be learned from sources like Business Call to Action or the G20 Inclusive Business Platform, as well as the many examples of active inclusive businesses present in Kenya. Secondly, listening to inclusive businesses and engaging them in policy development is paramount to ensuring these models are fostered, as well as the innovations they bring to markets.

Third, new approaches for collaboration are needed. The public and private sector need to be open to testing new ways of working together to address development challenges, including at the county level. This will not happen without occasional failures, and this should be factored into the learning process. Similarly, inclusive businesses and civil society can be allies, engaging in collaboration that builds markets and fosters inclusion. Collaboration and dialogue are also needed between companies and educational institutions to address the skills gap; inclusive business approaches from other countries and regions, for instance from India on vocational training provision through the private sector, can provide examples. Business-to-business collaboration can open new distribution channels, provide better value for the BoP and advance more effective messaging.

There are many actors in Kenya, from government entities to corporate platforms and development partners, who are already working to advance responsible and inclusive business. This is a strong base from which to aim higher, addressing bottlenecks by listening to all stakeholders, facilitating innovation to reach markets faster, ensuring that companies providing quality solutions are successful and piloting new approaches to cross-sector collaboration.