Helping Small Enterprises to Grow
In Latin America, small-scale shopkeepers – Tenderos – are a critical sales channel for SABMiller, accounting for 40% of sales volume in the region. We estimate that 400,000 Tenderos in our value chain in Latin America fall in to the “survival” or “necessity entrepreneur” category, meaning that they run their stores to generate income to meet their families’ day to day needs.
From a social investment perspective, Tenderos for us are unique not only because of their fundamental role in our value chain, but also because their enormous potential to help hundreds of thousands of families to escape poverty in one generation through their own efforts.
We know that, overall, the survival Tiendas are effective vehicle of social progress, albeit at a very slow speed. The small but steady income generated by their informal trade, over time – circa 30 years - allows them to send children to school, formalise their business and accumulate a small capital.
These Tenderos face many obstacles– both in terms of running their businesses effectively and ensuring their own personal security. As a business supporting Tenderos, there are practical actions we can take to help them improve their performance in areas like inventory and cash flow management for example, by re-organising our ordering and delivery processes to meet their need for smaller and more frequent product deliveries.
However, the action we can take through our core business, whilst being important, is clearly not sufficient to address the complex inter-connected business and social challenges facing Tenderos. To ensure truly sustainable and scalable impact, we have increasingly recognised that Tenderos need to be embedded in strong and supportive processes that empower them to formalise their business and bring their families out of the cycle of poverty more rapidly.
By this we mean that Tenderos can only flourish in the long-term if suppliers like ourselves offer the right products and services at affordable prices, with payment and delivery terms that suit their cash flows; when banks offer appropriate payment, investment, and risk management services; when educational institutions equip them and their employees with the knowledge and skills they need to succeed; when government provides an enabling regulatory and tax environment and puts relevant infrastructure and public services in place.
As the new report by the Harvard Kennedy School Corporate Social Responsibility Initiative and Business Fights Poverty: “Sustaining and Scaling the Impact of Enterprise Development Programmes” highlights, large companies like ourselves can play an important role in building these ecosystem by engaging communities of interconnected, interdependent stakeholders, and catalysing more co-ordinated collective action.
Take the challenge of financial inclusion, for example, which is key barrier for Tenderos. Through our Oportunidades Bavaria programme in Colombia, we have been helping to facilitate access to finance and financial services by referring our trusted Tenderos customers to banks, reducing the bank’s perception of risk, and increasing their willingness to lend. To date, we have catalysed alliances with three financial institutions to provide Tenderos with credit and financial services, and we are also exploring with them the scope for Tenderos to become branchless banking agents to further boost their incomes. To date in Colombia, over 10,000 Tenderos have received microcredit with a total value of US$ 15.6 million, and 3,550 Tenderos have active savings accounts.
Alongside financial inclusion, developing the business and leadership skills of Tenderos is also an important and inter-related challenge, and we are working to deliver financial literacy and business skills training in Colombia and in El Salvador through FUNDES, supported by the Inter-American Development Bank (IADB).
Finally, in addition to harnessing our core business and strengthening the wider business ecosystem, we have learned that leveraging our geographical scale can make a real difference to our overall impact, enabling us to deliver more powerful regional programmes, which attract development partners interested in scaleable solutions. In recognition of this, we announced back in August 2013, the launch of the 4e Camino al Progreso programme, which builds off Oportunidades Bavaria in Colombia and the programme Progresando Juntos of Industrias La Constancia in El Salvador and will support 40,000 Tenderos in six Latin American countries, in partnership with IADB /MIF and FUNDES.
With 4e the Tenderos will have the opportunity to develop their skills and competencies to improve the sustainability of their businesses, the quality of life of their families and contribute to improving the welfare and development of communities in which they live. The programme will also serve as a new model of poverty alleviation, formalisation of businesses and social inclusion.
Our experience to date suggests that if we can more effectively combine the comparative advantages of business, government and civil society in support of enterprise development, we stand a much greater chance of driving economic growth and human development more sustainably and at scale.