There is much talk about entrepreneurship as a driver for economic growth and social progress, but to what extent does this new generation of businesses coming up positively impact low income communities? Where are we with fostering a culture of inclusive business and supporting the otherwise high impact entrepreneurship meaningful for the Base of the Pyramid (BoP)?
An inclusive business is a sustainable business that benefits low-income communities. It is a business initiative that, keeping its for-profit nature, also contributes to poverty reduction through the inclusion of low income communities across its value chain. This means not only selling products and services to low income communities, but also incorporating them into the sourcing, production and delivery of services wherever possible. Fostering a culture of inclusive business is critical to achieving the recently designed UN Sustainable Development Goals.
Some examples of ventures listed on VC4Africa that to varying degrees operate inclusively:
|Natural Extracts Industries Ltd (Tanzania) – a social enterprise pioneering the sustainable extraction of flavours in Tanzania, starting with vanilla, cacao and orange. The company has established links with over 1,000 farmers in the Kilimanjaro, Arusha, Tanga, Kagera and Morogoro regions.|
|Bolingo Tea (Democratic Republic of Congo) – a leading premium tea company founded in 2015, in Kinshasa, DRC. Bolingo Tea seeks to produce premium Green, Black, Herbal and Fruit blended teas that are sourced 100% from the Democratic Republic of Congo.|
|Dechets a L’Or (Guinea) – an ambitious enterprise that provides waste collection and management service to growing cities, while at the same time providing fertilizer to small and medium scale farmers. The company also provides new sources of energy for local businesses and recyclable materials for local manufacturers.|
|Pig Famers (Uganda) – The company is certified in the republic of Uganda. It works together with small and medium holder pig farmers to increase productivity by offering them advisory services e.g. linking farmers to input dealers and helping them secure a reliable market for their pigs. Professionalizing the marketplace helps to ensure the selling of health risk free pork to both urban and rural community.|
The number of entrepreneurs building inclusive businesses grows by the day. As more success stories are realized, VC4A expects many new entrepreneurs will join their ranks. That said, much needed resources will only be made available when these entrepreneurs find ways to effectively measure their social, environmental and financial impact e.g. what is the change each of these businesses has on the communities they serve?
From the more than 1,000 investors and investment funds registered with VC4Africa, 10% self identify as Social Impact Investors. This group is looking for entrepreneurs that can not only explain how they are inclusive as a business, but increasingly look to back ventures that are able to measure their dollar for dollar impact.
At the same time, the number of investors that consider social impact as part of their investment thesis extends well beyond impact only capital suppliers. For example, the results from a VC4A poll conducted in 2015 show that the ‘social impact’ of a company is listed as the most important criteria investors consider after ‘quality of management team’ and ‘market potential’ when assessing new opportunities. This is not to say that these investors exclusively back businesses that positively impact low income communities, or only invest in businesses that operate inclusively, but that dedicated capital is available for entrepreneurs that make these considerations.
Fostering a culture of inclusive business
Plain vanilla entrepreneurship is hard. Making a business truly inclusive is much much harder. Reaching out to populations often living in a rural context, and/or taking the needs of sometimes fragile populations into account when designing and implementing a business model, comes with many additional challenges. In VC4Africa’s own efforts to support inclusive business, and to better champion entrepreneurs that choose this path, we host venture boost camps such as the Green Pioneer Program and operate a dedicated virtual Inclusive Business Accelerator. Through these initiatives entrepreneurs can find dedicated resources, networking opportunities and tailored support.
Entrepreneurship is indeed a powerful force for social progress and economic development. Entrepreneurs break traditional ranks in a pro-active effort to address the world’s most pressing problems. And as the world increasingly recognizes low income communities as possible markets for goods and services, we require the talent of these entrepreneurs to ensure this work is done inclusively. Here we look to the community and our network of partners to support ventures that innovate for Base of the Pyramid markets. Combining efforts we are able to better ensure inclusive economic growth wherever possible.
How can you get involved?
Are you are an entrepreneur building an inclusive business? Register your venture on VC4Africa and consider joining the Inclusive Business Accelerator. If you want to engage founders with your network and expertise, consider joining the mentorship program. As an investor you can register a Pro Account to make use of VC4Africa’s tools, meet innovative teams and to contact them directly. See other ways we can promote a culture of inclusive business again in 2016? We welcome your comments and feedback below!