Background

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-$4 vulnerability line (the base of the income pyramid).

Inclusive businesses are for-profit enterprises that directly engage – in innovative ways – populations at the base of the income pyramid in their value chain as consumers, suppliers, distributors or employees. In Sri Lanka, about 59% of the population can be categorized as the base of the pyramid (on living on less than $4 a day) and these people would have a purchasing power of about $45 billion. While access to social services are relatively high, the country is facing a large need for skilled jobs among the educated youth, a high percentage of people in the pension age (18% by 2025) and new opportunities to target poverty reduction and inclusiveness in the geographical areas of war-torn North-East.

ADB’s inclusive business website comprises – among others – a study on the opportunities of inclusive business in Sri Lanka. 

Objectives and content

The  Sri Lanka Inclusive Business Forum -- held on 28 August 2012 in Colombo -- aimed to discuss the findings of the inclusive business country assessment study for Sri Lanka, and the recommendations for the ADB to support inclusive business scale-up through possibly establishing an investment fund for India and Sri Lanka.

The Sri Lanka inclusive business study recommends that ADB creates a sub-regional investment fund (covering India and Sri Lanka) of about USD 100 million focusing on the education, health, water/housing and tourism sectors with some investment targets for remote areas in the country. The fund would promote Inclusive Business investments through equity and debt investments as well as credit guarantees in the range of $1-10 million, and would have a reasonable net financial return of 10-12%. Fund investments would be supported by a technical assistance facility worth 5-10% of the invested capital.

Organizers and participants

A variety of stakeholders, including representatives from inclusive businesses, fund managers, government bodies, industry associations, as well as fund managers, development partners and ADB joined the forum. Private sector chief executive officers presented inclusive business models; fund managers and prospective investors discussed their interest in investing in such ventures, and government representatives and development partners presented how they can support inclusive business.

The Sri Lanka Forum was organized by the Asian Development Bank, in cooperation with Dalberg Consult. ADB’s inclusive business initiative is understaken as a partnership with the Netherlands’ development organization SNV, the World Business Council on Sustainable Development, and other development partners including DFID, the Ford Foundation, KfW, SIDA, and the Inter-American Development Bank (IADB).

Contacts

For inquiries:
Armin BAUER
Principal Economist, ADB
Tel: + 632 632 5550