There is a Case for NGO Corporate Partnerships for Development Through Inclusive Business
Private Sector Engagement Coordinator, CARE Bangladesh
Over the last ten years, as an integral part of CARE’s mission to eradicate poverty in Bangladesh, we have been engaging with the private sector more and more to identify and implement innovative solutions to the most pressing development challenges of our time. To our private sector partners, we contribute 55 year of grass roots level development experience; technical understanding on what works and what doesn’t at the bottom of the pyramid; bottom-up innovations that can potentially engender transformative business models; and credibility in delivering social and business impact for all. Equally enough, our partners invest top-down ideas and help us reach people at scale; they contribute valuable resources, skills and expertise; ensure sustainability through inclusive business models and team up with us to influence other members of the development ecosystem to join us, in a common goal to fight poverty. At the end of the day, in a fast changing world that is incrementally turning over to a new leaf, it is this very convergence and coming together of bottom-up and top-down innovation that enables CARE and its private sector partners to try, test, fail and succeed in transforming systems and in the way things work- a transformation that is unfolding organically around the world now, as you shall see.
In a 2011 Wall Street Journal article titled, “Manifesto for Sustainable Capitalism”, I read former Vice President of the United States Al Gore and David Blood, Managing Partner of Generation Investment Management claim: ”We are once again facing one of those rare turning points in history when dangerous challenges and limitless opportunities cry out for clear, long-term thinking, and companies and investors will ultimately mobilize most of the capital needed to overcome the unprecedented challenges we now face.”
Many companies today are beginning, or have already begun to realize the imminent need to address Sustainability as part of their core business strategy. Indeed, findings from Accenture Development Partners’ United Nations Global Compact CEO Survey 2010, indicates 93% of 766 CEOs (98% in Asia Pacific) around the world believe sustainability issues will be “critical” to the future success of their business. This comes at a time when from the market perspective, the 2010 Biodiversity Barometer reveals that over 80% consumers across the globe reportedly said the following, “I would definitely stop buying a brand if I knew that the brand did not take good care of environmental or ethical trade practices in its sourcing and production processes”.
On the flipside, although the 2010 Edelman Trust Barometer survey shows that 70% of 4,875 informed public are saying that trust in NGOs across the globe has increased over the last decade; fact is that despite over one trillion dollars in aid flowing into underdeveloped countries over the last three decades, poverty and inequalities are still at large– for instance, the World Bank estimates that around 44 million people have been driven into poverty in the second half of 2010 due to rising food prices alone.
The message is clear. There exists now, more than ever, a clear case for significant new thinking- one that is characterized by innovative, integrated and value-enhancing alliances between the private sector, government, NGOs, and myriad other stakeholders and actors in the ecosystem, centered on sustainable business and development practices.
However, this is easier said than done. We all know how companies and NGOs speak different languages and often find it hard to begin to talk, let alone achieve something together. Good news is that things are changing and there are examples out there of how opposite forces can attract to work towards designing, implementing, and expanding on creative solutions that create “shared value”- a term now popularized by none other than Mr. Michael Porter.
CARE Bangladesh for instance, is attempting this with over 27 strategic alliances with frontline national and international companies in the areas of: (a) sourcing products and services from rural and urban population at the bottom of the pyramid and creating sustainable market access in the process; (b) developing sustainable distribution systems that seek to divide the cavernous gap between formal market systems and the poor, and in the process reach out to them with products and services that they need to thrive socioeconomically as citizens; and (c) building opportunities for millions of unskilled men and women to form part of the mainstream labor economy as productive and dignified wage-earners. Furthermore, we believe in investing sufficient resources to develop and promote the understanding of and underlying mindset behind sustainable and inclusive business in Bangladesh amidst all stakeholders and potential collaborators.
Two short examples from CARE’s private sector engagement experience should serve to exhibit the above to some extent:
A European buyer and entrepreneurs looking to decentralize production units in rural areas (potentially reducing migration) in her supply chain in Bangladesh suffer from the lack of availability of skilled workers and experience huge unmet demand, low production volumes and profit margins. Poor and disadvantaged women in rural areas are excluded from the mainstream economy due to lack of productive skills and access to dignified employment and income opportunities, among other things. CARE partnered with the buyer and local entrepreneurs, and using co-investments trained up 1000 plus extreme poor women with export market oriented production skills. These investments also help set-up decentralized production units, within a few kilometers of women’s homes- the outcome? Women now earn at least Taka 4,000 per month and save around 500; local entrepreneurs experience growth by production volume of up to 15% per month; and the European buyer happy making profits, has invested back over 350,000 Euros to expand this supply chain and address the health, safety, security, and nutrition needs of workers and their families.
Bangladesh’s highly informal rural marketing system is not inclusive of the majority poor; depriving them access to products and services of need- failing to reach rural consumers. Companies on the other hand are increasingly looking to design, develop and sell these products (such as sanitary napkins, fortified nutritious food, mobile talk-time, soaps and detergents, quality seeds and agri-inputs, etc) to consumers within this large untapped market. CARE made a win-win convergence happen- simply by training marginalized women as rural sales agents, who sell private sector products door-to-door, and by setting up rural enterprises that procure from private sector suppliers and sell to rural saleswomen in turn. The project, which began in mid 2000s, follows a sustainable business model where actors, including rural poor women accumulate wealth based on a viable commission structure. The initiative was so successful that in 2010 it was transformed into a social enterprise with investment support from Danone Communities- now soon-to-become a global brand name, “JITA”. As of now 3,300 rural women earn as much as 3500 Taka a month, while the total sales figures of private sector products has increased from Taka 963,000 in 2005 to Taka 157 million in 2012! The enterprise now plans to create employment and income for 12,000 marginalized women; serve as alternate marketing-distribution outlet for 1,000 rural SMEs; deliver agri-inputs and information to 10,000 farmers; make products-of-need available to around 2 million rural consumers; and companies are expected to continue to expand markets- a truly win-win scenario!
Nevertheless, numerous challenges remain- these mostly center on integrated programming with companies for the purpose of “women empowerment and poverty alleviation”; on beginning to speak a common language and create spaces for both NGOs and companies to understand each other, respect priorities and grow; on exploring and rolling out sustainable business models to address challenges and bank together on impending opportunities; and on creating an evidence base, to foster more strategic investments from the private sector, donors, institutional investors, and NGOs- particularly in the exciting new realm of inclusive business at the “bottom of the pyramid”.