In resource-constrained communities, commercially viable business models are having success around the world improving livelihoods
A tiny solar lamp provides light to a family under a tarpaulin tent in India, saving them from health issues caused by wood fires. An acai berry farm in the jungles of Colombia is the only legal means of employment for indigenous communities for miles. A quick swipe on a mobile phone brings a Mexican coffee farmer into the formal economy.
These are all solutions being implemented in geographies of extreme poverty, where individuals earn less than $1.9 a day. These aren’t part of any social policies or welfare programmes; they are innovative solutions offered by inclusive businesses – where companies include the very poor across their value chain through commercially viable models.
These business models are perhaps more relevant today than ever before as the Covid-19 pandemic threatens to push an additional 40 to 60 million people into extreme poverty. Business Call to Action, a global platform advocating the private sector’s contribution to development, recognises businesses who have committed to having such models. It has 250 companies in 73 countries tackling poverty in resource-constrained environments while helping fill the development gap in many low-income countries, providing innovative solutions to poverty reduction.
Low-income women as leaders of change
BCtA member Pollinate Group, a social enterprise operating in India and Nepal, empowers women living in poverty as leaders of change to distribute products, such as solar lights and modern cooking appliances, that improve health, save time and money for their communities.
Across India and Nepal 256 million people live in extreme poverty and “the heart of our social business is a network of women entrepreneurs who, through the company’s inclusive business model, are helping build-up their local communities with access to affordable, reliable household products”, explains CEO Sujatha Ramani.
Since 2012 the company’s women-led, last-mile distribution network has reached more than 650,000 low-income people, with customers saving more than $23m by replacing kerosene for lighting solutions.
These women through the company provide other much-needed products as well, including solar fans, LED bulbs and water filters. The product range is informed by the communities, with the intent to improve the quality of life for households living on less than $3.20 per day.
By partnering and providing products to low-income communities in India and Nepal, Pollinate Group is seeing up close the impact of Covid-19, as a business working with the extreme poor. “The private sector has an enormous opportunity to impact the neglected communities that Pollinate Group serves… [and] Covid-19 is undoing a lot of progress made before 2020,” explains Ramani, as the company remains steadfast in its mission. “We will continue to serve the people who fall through the cracks of government programmes or are seen too risky or transient by other organisations,” she explains.
Driving development in some of the poorest regions in the world
Meanwhile, multinational corporations, with their vast reach and scale, continue to bring solutions to some of the world’s most pressing problems. BCtA member Mastercard has been expanding financial access to under-served communities across some of the poorest regions in the world.
There are 1.7 billion people excluded from financial services according to the World Bank’s Findex report, with almost all living in the developing world. As the report states, financial services can drive development, help people escape poverty and make it easier to manage financial emergencies that can push families into destitution.
As part of their financial inclusion commitment, Mastercard has brought more than 500 million excluded individuals into the digital economy. In April, the company doubled down on its commitment by pledging to connect 1 billion people and 50 million small businesses to the digital economy by 2025.
Through creative partnerships with public and private sector organisations they have been able reach low-income communities in ways that would be challenging to pursue alone.
For example, mobile usage is seen as a tool in improving access to services for the unbanked but additional resources are needed to ensure under-served communities utilise it in a meaningful way. The company partners with small businesses, governments and local stakeholders to increase inclusion by expanding financial literacy, helping with the adoption of electronic payments and providing flexible point-of-sale technologies.
“It’s clear that the benefits of inclusion come when both usage and access are increased,” says Ann Cairns, executive vice chair at Mastercard. “It’s vital that the tools and solutions we develop are customised to meet the needs of individuals and businesses. We view our financial inclusion programmes as an opportunity to develop commercially-sustainable and scalable social impact with government and private sector partners – and to do it in a way that helps society-at-large thrive.”
In jungles of the Colombian Amazon, a company is supplying superfood acai berry, which will make its way to the plates of the health conscious the world over. BCtA member company CorpoCampo incorporates local communities into their value chain while working in one of the poorest states in Colombia.
The Putumayo region is the country’s biggest producer of the illicit coca crop and the effects of Colombia’s long-running civil war are still evident there. Many parts of the countryside lack infrastructure and basic services, and despite a decrease in poverty overall in the country, the disparity between urban and rural remains; extreme poverty is three times higher in rural areas of Colombia.
Working in such a region, where local income levels are barely $50 a month, CorpoCampo runs an inclusive business with the community at the heart of its model.
They engage with smallholder suppliers and partner with farmers, ex-guerrilla combatants and indigenous communities to guarantee the sustainable extraction of high-quality organic acai berry and palm heart. By supporting producers with access to markets and technical assistance, they have provided a commercially viable alternative to coca crop. With guaranteed purchase at fair prices local communities have been able to make a legal, stable income.
“The communities we work with are the mainstay of our business; thanks to these communities and to their lands we can foster the continued production of acai,” explains Edgar Montenegro, CEO of CorpoCampo.
As the business continues to grow so do the livelihood opportunities for the community. Around 66% of the company’s annual income comes from the export of their products abroad, with 80% of sales coming back to the community. As demand surges for this superfood – three times higher than what CorpoCampo can currently supply – they estimate farmers could increase income by almost $300 a month.