Many countries in the region have broadened their approach toward economic development - promoting inclusive growth strategies that can sustainably benefit the poor and vulnerable. While the private sector has been a key contributor to the economic boom in Asia, it has yet to fully realize its potential in creating shared value and impact for income groups below the $3 vulnerability line (the base of the income pyramid, BoP).
Inclusive Businesses are for-profit enterprises that directly engage - in innovative ways - BoP populations in their value chain as consumers, suppliers, distributors or employees. India provides a vibrant market for innovative inclusive business experiences in many sectors. ADB's Inclusive Business (IB) initiative comprises - among others - a study on the opportunities of inclusive business in the Philippines.
While economic growth is persistently high in the last decade at around 6%, the country faces major challenges in providing productive employment and adequate and affordable social and municipal services for the poor and low income population. About 26% of the Philippine population live below the national poverty line, and 63% are vulnerable to poverty with income less than $3 a day a person.
The Inclusive Business Forum discussed the results of the market scoping study done for the country and came up with suggestions to support inclusive business in the Philippines, eventually in conjunction with ADB's proposed Inclusive Business Fund for the Mekong and Southeast Asia region. The forum highlighted inclusive business models through thematic discussions and sectoral roundtable discussions.
The Philippines market scoping study found that of the large number of NGOs and social enterprises and corporate social responsibility (CSR) companies active in the country, only a small number (maybe 50-100) can be classified under inclusive business, of which few are ready for investments on commercial terms. Nevertheless, the market potential for IB in the Philippines remains large, especially given the large unmet needs of the poor, their strong consumption behavior, and the large number of social enterprises and bigger firms with strong corporate social responsibility programs that would like to upscale to IB models.
Inclusive business ventures in the Philippines are found mainly in the agro-processing, finance insurance and IT sectors, but there are also some interesting IB examples in the energy, education, health and transport and logistics sectors.
The equity market in the Philippines is not so suitable for IB investments. There are very few smaller IB companies on a growth path for which equity investments would tally. Rather, most of the viable IB companies are larger establishments that require debt financing and technical assistance support to transform their CSR models into core business IB ventures, thereby addressing in a more systemic way poverty reduction and inclusiveness in the Philippines. In addition, some companies would also need other forms of growth capital and management advice to move up from social entreprises.
Organizers and participants
A variety of stakeholders, including representatives from inclusive businesses, fund managers, government bodies, industry associations and development partners, attended the event.
The forum presented a unique opportunity for IB leaders to network and share experience and suggestions for providing technical assistance and financial support to the industry. Private sector chief executive officers presented inclusive business models, fund managers and possible investors discussed their interest in investing in such ventures, and government representatives and development partners shared how they can support IB in the Philippines.
The Forum was organized by ADB, in cooperation with the Asian Social Enterprise Incubator (ASEI) and the Philippines Business for Social Progress (PBSP).