Public Policy Support for Inclusive Business in Asia

Transcription

1 Public Policy Support for Inclusive Business in Asia Experiences on IB Accreditation and Policy Setting Seminar at the Launch of the Inclusive Business Action Network, Nov 2014, Berlin Breakout Session on Public Policy for IB For further questions, please contact: Dr. Armin Bauer, Principal Economist, ADB Manila, mail: Tel:

2 What is IB? IB are commercially viable companies whose core business is to provide in scale Innovative, and systemic solutions to the problems of the poor and low income people (those below the $3 international poverty line, i.e. lowest 60% of population in Asia) IB deals have to be made; they are not found 2 Types of IB: creating jobs and income Providing essential services and goods IB engage the poor as Supplier, laborer, distributor consumer

3 What is it not? IB is different from 3 Livelihood programs the poor are not businessmen CSR lack of scale in impact; lack of sustainability from a business perspective, not core business contract farming often exploitative SME (informal sector work) involves the poor, but does not provide systemic solutions microfinance ( creation/production ) focus on production not financial inclusion, social enterprise Start ups often lack scale in impact and confidence in business success; Impact investment needs to focus on low income people, not on environment or other impact Triple bottom line Shared value share profit/share value; sharing is not yet a systemic solution to problems of the poor

4 Why IB? Who creates the jobs and provides the services for the poor? But: the private sector not all jobs and services/goods for the poor are also good for the poor many jobs (for example in the informal sector, but also in contract farming) are exploitative, and services are expensive or not available or often less relevant for the poor We need another private sector approach to the poor (it is not only about reaching the poor) Seeing the poor as a major customer/consumer or distributor Involving the poor in production (decent paid laborer, but more important are value chain suppliers) 4 Very few companies do that: the difference between: mainstream business (bottom line) informal sector (work for or with the poor, but often highly exploitative) social enterprise (no scale, often not commercially viable) inclusive business ( shared value in scale) Government has a major role need to set up a system on how the private sector can help the poor directly beyond assumed trickle down and small-scale CSR Accreditation and stimulation

5 What is ADB doing on IB? 5 Between 2011 and 2012: market scoping studies in 8 countries, investment fora, due diligence for Mekong and South Asia IB funds, learning from Inter-American development Bank and from IFC, partnership building In 2014 ADB made IB part of its strategic development goals (Strategy 2020 Update; Operational Plan by March 2015) IB in Strategy 2020 Update ()May 2014); Action Plan (March 2015) Increased investments of ADB s private sector operations in IB deals and funds Between 2000 and 2012: only 7% of ADB s private sector projects were IB projects In 2013: 6 of 22 projects were IB; In 2014: we are working already on 4-5 IB projects Ex ante impact assessment Ex-ante, not ex-post (go beyond Reach towards Depth, Relevance, and Systemic Contribution) Harmonization Policy work in selected countries: possible in INO, MYN, PHI, VIE, (BAN, CAM) PHI: IB accreditation and priority access to existing government services VIE, INO, MYN? Public sector loans on job creation through IB in PHI and PAK Knowledge work and partnerships Sector studies, workshops Training with banker Working with partners (WBCSAD, IADB, IFC, SEAPAC, SIDA, KfW/GIZ, AfD, Credit Suisse ) due diligence support

6 Why does IB need the government? enabling role of government 6 IB is private sector investment, but private sector s goal is not social development but profit maximization IB needs Government support and facilitation Accreditation and Licencing Incentives: taxes, Special support programs for value chain farmers (PHI shared services facility ) Access to finance risk guarantee for banks Impact bonds; stimulate impact investments What else can we do for companies? Support for business plan development Impact stories Examples in Asia METI/JIBC in Japan: studies and active promotion through JIBSC/JETRO/METI IB accreditation; then aligning industrial policies towards IB Public sector loan for private sector IB: The example of the proposed PHI job creation through IB loan ($200 million) Business development and business-ngo links IB guarantee finance Shared services program LGU financing for private sector driven slum upghrading and climate adaptation

7 IB Accreditation in the Philippines 7 Setting up the criteria together with industry associations Criteria and weight different by sector Accreditation in cooperation with business associations Linking accreditation to support policies Accreditation helps companies also through branding (access to finance, licences) Link accreditation to one-stop shops for removing bureaucratic impediments and corruption Implemented by Board of Investments under the Philippines Department of Trade and Industries

8 Some issues for discussion in the working group on encourage 8 Finance Is finance really the key impediment for IB? How to help start ups with good growth plans and a good IB story, but little revenue and profit history? what is the role of grant? How can guarantees help? Are IB really more risky and need therefore to be priced higher? Would bankers training help? Business case Do SE always have a business case? Accreditation helps branding and opening doors How to use the ex-ante impact assessment to enhance the business case Addressing bureaucratic impediments Can accreditation help giving priority to IB, support services are many and depend on the business and the subsector tax brakes or grants may not be the best incentives Other help: public procurement, etc.

9 More information ADB Inclusive Business website Inclusive Business website: Philippines IB Site: Some studies we did together with BoI: World Bank / IFC: Inter-American Development Bank 9 WBCSD:

10 Further information

11 IB accreditation in PHI 11 Setting up criteria together with industry associations for the sector Then evaluating ex-ante the business plan on its potential to contribute to values for society in scale and under a systemic approach Weighting and rating The impact matrix comprises reach, depth, and systemic contribution Innovation Business and growth Sustainability and governance Projects are rated on a scale 0-5 Above 3.5 will be granted accreditation, and get access to priority government support services Between : potential IB will get technical assistance for business plan development and pilot testing Below 2.5: no IB; traditional industries

12 percent of population IB certification in BoI - Scale and Reach The Base of the Pyramid in the Philippines Reach is more than number of people Distribution, Gender How long do you reach How deep do you reach poverty line $3 $2 62.5% 41.5% 27.8% PhP 18,000 $ % 60 million people Source: International poverty data (for 2009) are taken from the World Bank's PovCalNet. National poverty data (for 2012) are taken from NSCB

13 IB certification in BoI - Scale and Reach How many of the beneficiaries / consumers are under the $3; S2; S1 poverty line? whether impact is high or low depends on sector and mode of engagement 13

14 IB certification in BoI - What are systemic solutions in IB models related to agroprocessing?

15 Social Impact Assessment Depth How intensive does the project impact on the poverty situation? Jobs / employment / income How are the working relations? How much is the impact increase? How sustainable is the job or income? Access to service/product How relevant is the product for the poor? (Not everything poor people spend their money on is useful for them) 15

16 IB certification in BoI - What is innovation in agroprocessing IB models?

17 IB certification in BoI - What is sustainability in agroprocessing IB models?

18 IB certification in BoI - What is sustainability in agroprocessing IB models?