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Spotlight |
Inclusive Business at the Base of the Pyramid
Private sector activities that engage the poor as consumers, producers, distributors, and workers can play an important role to make growth in the Asia-Pacific region more inclusive. ADB started an initiative that will conduct market scoping studies, develop an ex-ante impact assessment tool, and prepare due diligence for setting up investment funds on inclusive business. Visit the website. |
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Private Sector Development
Supporting Pro-poor Growth
Private sector development is essential for reducing income disparity and social poverty.
Pro-poor and sustainable economic growth requires a dynamic and efficient private sector. The majority of the poor are already engaged with the private sector, particularly in agriculture and service activities.
The private sector is also often the sole provider of basic services such as water, health and education. The private sector can participate in building physical and social infrastructure that help the poor.
The private sector can contribute to improving municipal services for the poor. It also contributes essential revenues for the government to provide budgets for poverty reduction and social services.
Corporate social responsibility activities, social enterprises, and inclusive business ventures are all commercial investments with the specific objective of benefitting the poor. They all explore how the private sector can broaden its market orientation to better include the poor, but differ in the scale of impact and the expected internal rate of return.
In 2010, ADB initiated a technical assistance project that studies the social enterprise sector in various Asian countries. The project also engaged in preparations for establishing a regional Social Stock Exchange in Singapore.
Inclusive businesses engage the lower income group (up to $3/day international poverty line) as consumers, value chain producers, distributors, and laborers. Inclusive businesses are scaled-up private sector operations that balance social impact with reasonable financial profitability for the company.
Also in the same year, ADB started a program to explore opportunities for investing in "Inclusive Business at the Base of the Pyramid" (IB-BoP). The program is in cooperation with the World Business Council on Sustainable Development (WBCSD), the Netherlands’ development organization SNV, and with other think tank and development partners as well as private sector entities and funds. The project facilitates Inclusive Business market scoping studies in 9 Asian countries, develops an ex-ante impact assessment tool, and prepares due diligence for establishing investment funds in the region, the first - for the Mekong region - is scheduled for approval in 2012.
Expanding private sector activities is vital for ADB's fight against poverty in Asia and the Pacific Region. ADB supports private sector development by:
- encouraging reforms and policy environments that establish the right conditions for businesses to flourish,
- promoting public-private partnerships, and
- providing financial assistance to private enterprises and financial institutions.
| Did you know? Recently, the Base of the Pyramid (BoP) has emerged as a business model. A joint study by ADB and SNV suggested establishing an investment fund for Viet Nam that could help local and international firms develop new business ventures in which the poor and lower income group would play a major role as consumer, supplier, and provider of work. An investors forum confirmed the need and possibility for such Inclusive business for Viet Nam. |
View ADB's knowledge products and operational expertise on poverty reduction through the private sector.
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