New Blog: The Role of Policy in Supporting Inclusive Businesses

By Sara Enright, Business Call to Action

The Business Call to Action participated in a recent panel discussion at the BoP Summit 2013, hosted by the William Davidson Institute at the University of Michigan. 'Titled Building Institutions to Facilitate Enterprise Growth', the panel explored opportunities and challenges in building networks to support base of the pyramid (BoP) ventures, and debated the best approaches for future institution building in this domain. Stuart Hart, President of Enterprise for a Sustainable World and Founding Director of the Emergent Institute, moderated the panel, which also included Priya Dasgupta (Director of Strategic Initiatives, Emergent Institute), Fernando Casado (Founder, Director of CAD, BoP Lab Regional Network- Europe), Stefan Maard (Senior Advisor, Novozymes), and Andrea Shpak (Director, BoP Global Network).

The panel identified the different actors that are needed in a vibrant network to support inclusive businesses, including entrepreneurs, financers, donors, facilitators, policy makers, corporations, and local corporate or NGO partners. BoP ventures sit at the nexus of this ecosystem of actors, with the challenging job of aligning the diverse interests each stakeholder in support of their business goals.

Among these actors, Professor Hart pointed out that policy makers are one of the most critical and least explored contributors to the success of BoP ventures. When developed well, policy innovations can both help to promote inclusive business growth and eliminate barriers to working with the BoP.

Policy is an important tool that governments have to support and grow inclusive approaches to business, said Sahba Sobhani, Acting Program Manager of the BCtA. But governments have additional resources that they can deploy, for instance through procuring from companies that serve the poor, or acting as a guarantor for bank loans to inclusive businesses that might otherwise be rejected for their risk profile.

Local and national governments around the world are beginning to explore a variety of ways to develop policy incentives to encourage private sector engagement with low-income populations. Utilizing resources such as financing (e.g. challenge grants, investments, incentives, subsidies, guarantees) to help to de-risk initial business investments, procurement contracts, network connections, support for infrastructure (e.g. rural energy), and market information on the BoP, policy makers can further catalyze inclusive business practices by reducing barriers across the value chain.

Group participants representing JICA and Japanese corporation Ajinomoto, a recently admitted member to the Business Call to Action were called upon to share their observations. Ajinomoto has been working with JICA to scale up an initiative to provide essential micronutrients to children and mothers in Ghana. These partners are exploring opportunities for the private sector to reach more children with nutritious foods in Ghana.

A participant pointed to the 2% CSR policy recently enacted in India as an example of how policy can be leveraged to encourage greater corporate social engagement. The CSR clause requires all companies that earn revenues over a set threshold will be required to invest 2% of their net profit into social causes.

About the BoP Summit: Creating an Action Agenda for the Next Decade

Over 200 leaders from the corporate, nonprofit, development, foundation, and entrepreneurial fields gathered on October 21-23, 2013 to attend the BoP Summit 2013, hosted by the William Davidson Institute at the Ross Business School, University of Michigan. The main goal of the conference was to create a roadmap for the future development of private sector engagement with the Base of the Pyramid market, particularly focusing on how to encourage leadership, collaboration and innovation.

For more from the BOP Summit, see the Summit Blog on NextBIllion.net.