UNDP ENGAGEMENT WITH THE PRIVATE SECTOR

Transcription

1 THE SECOND RESPONSIBLE MANAGEMENT EDUCATION RESEARCH CONFERENCE: INCLUSIVE BUSINESSES THE AMERICAN UNIVERSITY IN CAIRO (AUC) UNDP ENGAGEMENT WITH THE PRIVATE SECTOR TO PROMOTE DEVELOPMENT PRESENTED BY: Nahla Zeitoun Assistant Resident Representative Poverty Team Leader United Nations Development Programme (UNDP)- Egypt 1

2 Outline Growing Inclusive Markets Initiative (GIM). Business Solutions for Human Development (2007). Upcoming 2015 UNDP Report: Second Edition of Business Report. 2

3 UNDP Growing Inclusive Markets Initiative Insights from the first report 3

4 The Growing Inclusive Markets Initiative Conceived in 2006 following the success of Unleashing Entrepreneurship: Making Business Work for the Poor Offers a platform for collaboration and already gathers over 20 key stakeholders including business associations, academic institutions and development agencies Goals: Raise awareness about how doing business with the poor can be good for poor people and good for business. Clarify the ways that businesses, governments and civil society organizations can create value for all. Inspiring the private sector to action. Principles: Core business emphasis Empirical approach Human development framework, guided by the Millenium Development Goals (MDGs) Partnership and multistakeholder approach 4

5 Commercial business activities done right is the most effective way for business to bring development benefits Development benefits Philanthropy Contribution of financial or in-kind resources to development projects CSR / Social investment Social investment that is strategic to the core business and that contributes to achievement of the MDGs Policy dialogue / advocacy Dialogue which contributes to more effective governance institutions, rules, policies and processes Inclusive business models / entrepreneurship Enterprise solutions that accelerate and sustain access by the poor to needed goods and services and to livelihoods opportunities Business benefits 5

6 Report Main Messages 1 Opportunities exist to build bridges between business and the poor and create value for all. 2 Capturing these opportunities is challenging due to five widespread market constraints in the rural villages and urban slums where the poor live. 3 Entrepreneurs have used five core strategies to overcome these constraints. 4 Business leaders, but also governments, donors, NGOs, communities and other stakeholders must work together to create value for all and make markets more inclusive. 6

7 Poverty Remains Pervasive Challenge and Opportunity Poverty is best understood as a lack of opportunity to lead a life one values. 2.6 billion people live on less than US$ 2 per day Billions of people lack access to essentials No clean water: 1 billion No adequate sanitation: 2.6 billion No electricity: 1.6 billion No internet: 5.4 billion No job / working poor: 700 million + 7

8 Poverty in Egypt Egypt s poverty rate has increased, reaching 26.3 per cent for the year 2012/13 compared with 25.2 percent in 2010/11 A CAPMAS report stated that the domestic poverty line stands at an annual LE3,920 ($569) per person. Poverty remains predominant in rural areas compared to urban areas. The highest rates in the country are in Upper Egypt: Assiut, Sohag and Qena. Source: (CAPMAS, 2013) 8

9 Capturing these opportunities is challenging due to five widespread market constraints Constraint Area Market Information Regulatory Environment Physical Infrastructure Knowledge and Skills Access to financial services Explanation Businesses know too little about the poor, their preferences, resources, skills, etc. Regulation is not conducive to business. Rules and contracts are not enforced. Entrepreneurs lack access to the legal system. Lack of transportation and infrastructure for water, electricity, sanitation and telecom. The poor may lack knowledge / skills to benefit from a product or service or participate in a supply chain. People lack access to credit, insurance, savings and transactional banking services. 9

10 Entrepreneurs have used five core strategies to overcome these constraints. Strategies Adapt products and processes Explanation Avoid constraints through technological adaptations or business process redesign. Example Mobile banking uses wireless technology; operates without bank account. Invest in removing constraints Remove market constraints through own investments brings private and social value. Garment company trains all employees in basic and jobrelated skills. Leverage the strengths of the poor Combine resources and capabilities Engage policy dialogue with gov ts Engage the poor in the business model and build on social networks increases access, trust and accountability. Businesses collaborate with other organizations and pool resources Informing the policy making process can help to remove constraints on a broad scale. CFW franchises shops and clinics in Kenya to people in poor communities. Forestry company works with bank to provide credit to its eucalyptus growers. Mobile banking companies work with Govts to introduce appropriate regulation. 10

11 Case studies from Egypt 1. Case Study Orascom Housing Communities Youssef, Samir. "Orascom Housing Communities." GIM Case Study No. B Case Study Kheir Zaman: A New Player in Food Retail. Youssef, Samir. "Kheir Zaman: A New Player in Food Retail." GIM Case Study No. B Case Study GiroNil: Building A Payments Highway in Egypt, Nader, Pascale. "GiroNil: Building A Payments Highway in Egypt." GIM Case Study No. B Case Study Appropriate Development, Architecture and Planning Technologies (ADAPT),Nader, Pascale. "Appropriate Development, Architecture and Planning Technologies (ADAPT)." GIM Case Study No. B Case Study Siwa Sustainable Development Initiative Hatem, Tarek. "Siwa Sustainable Development Initiative. GIM Case Study No. A Case Study SEKEM: A Holistic Egyptian Initiative Hatem, Tarek. "SEKEM: A Holistic Egyptian Initiative." GIM Case Study No. A041 11

12 Example 1: SEKEM: A Holistic Egyptian Initiative Group of 8 companies (focused on organic agriculture) and a development foundation, which goal is to contribute to the comprehensive development of the individual, society and environment Key constraints Knowledge and skills: Lack of education, literacy and vocational training in the community Lack of technical organic farming knowledge among farmers Regulatory environment: complicated government administration and regulation to introduce organic certification Development outcomes SEKEM sources from 850 farmers and provides work to 2,000 people Opportunities to enhance education, health and living conditions for the community SEKEM Medical Center provides healthcare services to approx. 300,000 patients Organic agriculture protective of the environment Key solutions Invest in removing constraints: SEKEM invested part of its profits to establish a foundation to administer programs in education, literacy and vocational training Combine resources and capabilities: SEKEM partnered with IFC to introduce a technical assistance program SEKEM engaged alliances w/ NGOs and corporations to introduce an organic certification into the market Business outcomes Revenues of US$19 million in 2005 (original investment US$1 million in 1977) 3,500 hectares of land under cultivation (vs. 70 ha in 1977) 45% of products exported, including to key European markets 79% national market share in herbal drinks 12

13 Example 2: SIWA Sustainable Development Initiative Community-based eco-tourism initiative including lodges, women artisanship, organic farming and art projects that provide income-generating activities to the local Siwan community Key constraints Knowledge and skills: lack of trust and awareness in the initiative amongst the local community Access to financial services: lack of access to affordable financing schemes Development outcomes 75 local employees + income-generating activities for 300 local people (esp. women) Employees provided on-the-job training EQI helped providing healthcare and financial services to the community and built library, cinema, craft stores and social gathering area Respect for Siwan culture, including traditional building methods and materials Organic agricultural protective of the environment Key solutions Leverage the strengths of the poor: Holistic approach based on intensive consultations with the local community EQI set up community development projects and ensured that the preservation of the community was paramount Combine resources and capabilities: EQI partnered with IFC, which provided technical assistance and loan (at market rate but rebate if targets achieved) Business outcomes SIWA has become a key destination for European eco-tourists (inc. royalty) Women s artisanship workshop sells to Italian haute couture Biodigesters converts animal waste into energy and organic fertilizers, thus reducing costs 13

14 Cases from Africa: Tiviski (Mauritania): Africa s first camel milk dairy Key constraints Physical infrastructure: inexistent infrastructure for milk collection, processing and distribution. Scattered herders and lack of transportation facilities Knowledge and skills: herders lack knowledge about business and best animal husbandry practices + cultural challenges Regulatory environment: lack of regulation to export camel products to the EU Development outcomes 1,000 semi-nomadic herders earning income as suppliers while keeping their traditional way of life 200 direct local jobs created Local milk substitutes imported milk Key solutions Adapt products and processes: flexible collection system (collective transportation, donkey carts, etc) Invest in removing constraints: Building own dairy facilities Creating NGO to support herders (credit for animal feed, veterinary care, etc) Engage in policy dialogue with gov t: EU delegation working towards establishment of standards and quality assurance institution Business outcomes Sufficient cashflow to invest 1 million euros in new milk processing plant Processed milk sold twice the price of raw milk purchased Camel cheese now sold in NY 14

15 Actors in Society Must Collaborate to Support Development of Inclusive Markets and Inclusive Business The State / Government / The Private Sector Civil Society Bilateral & Multilateral organizations 15

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17 Key Messages - The importance of partnerships and neutral brokers to act as intermediaries to facilitate these partnerships. - Examples include: Partnerships with universities and schools, Partnerships with intermediaries such as business associations, Public private partnerships (PPPs), with quasi-governmental agencies or ministries. - Concrete model presented for future engagement. - New role of each sector outlined: government, private sector, and civil society - Mapping of proposed future actions. 17

18 Private Sector Recommendations Government NGO - Assign dedicated CSR executive/personnel to plan and implement well designed initiatives - Seek and identify credible partners and projects -Plan corporate engagement for the long term seeking to engage the poor in their core business and value chain - Work through intermediaries and neutral brokers - Reduce bureaucracy and red tape. - Understand and promote CSR, actively encourage the private sector to participate in the country's development by supporting and co-financing projects - Establish a CSR monitoring and evaluation system to ensure accurate identification of gaps and effective implementation of solutions - Co-design specific activities with private companies, particularly those related to basic needs. - Collaborate on sectoral and/or regional issues. - Seek support from the private sector to professionalize NGO sector management capability Inform the private sector about the MDG s and development work. - Familiarize corporations about severity of situation and range of options for corporate engagement. 18

19 Upcoming 2015 UNDP Report: Second Edition of Business Report (under Publication) Sustainable Business Models Base of the Pyramid (BOP) New Forms and Types of Private Sector Engagement Social Enterprise Global Compact principles Women equality & empowerment in the workplace Identify Policies related to the way forward for all stakeholders including government, civil society, academia and private sector 19

20 Thank You 20