Over the past two decades, the Asia and the Pacific region has sharply reduced the share of its population living in poverty to 21% ($1.25 per capita income/expenditure at purchasing power parity of 2005) and 47% ($2). Many countries in the region have also broadened their approach toward economic development and moved from poverty reduction to promoting inclusive growth strategies that can sustainably benefit the poor and vulnerable. However, the pace and pattern of growth has not created sufficient opportunities for the lower-income women and men, and governments' efforts to promote basic services and income opportunities remain often limited in scope, depth, and scale, indicating challenges for public action to make economic growth more inclusive.
While the private sector has been a key contributor to the economic boom in Asia, commercially viable market-based solutions to create better opportunities for the lower income segments in Asia are getting increasingly visible. Financial institutions - both in the markets as well as governments and development partners - also increasingly engage in this "base of the pyramid" sector. With the emergence of impact investing and social enterprises, it is timely to have a meaningul dialogue on how best to leverage these private sector led opportunities for poverty reduction and inclusive growth through finance, capacity building, knowledge sharing, and strategic alignment.
Inclusive business is defined as profit making companies (with IRR of 10-20%) that bring systemic impact in scale to the poor and vulnerable people under the $3 international poverty line (i.e. about 60% percent of developing Asia's population) by engaging the poor as suppliers, consumers, employees, and distributors. Inclusive business differs from corporate social responsibility activities and social enterprises in scale of impact and financial return.
The Regional Forum on "Investing in Inclusive Business in Asia", a culmination of ADB's two-year, Inclusive Business initiative, highlighted the innovative and impactful inclusive business models from across the region, the growing interest of private investors in this marketplace, and the important role development finance institutions (DFIs) can play in accelerating the growth and impact of this field in the region. The Forum also discussed the findings and recommendations from the various inclusive business market studies ADB did in 10 Asian countries.
The Forum offered expert-led discussions for both experienced and new investors, inclusive business practitioners, thought leaders from academia and civil society, as well representatives of the development assistance community.
It also highlighted the body of practice from Latin America through the participation of the Inter-American Development Bank (IDB) which has played a catalytic role in promoting impact investing and inclusive business development in Latin America through successfully deploying US$260 million in more than 40 investments across the region over the last six years.
The event was organized by the Asian Development Bank (ADB) in partnership with the Inter-American Development Bank (IDB), with additional inputs and support from the following institutions: the Asian Social Enterprise Institute (ASEI), Dalberg Consult, the Indonesian Business Council for Sustainable Development (IBCSD), the Ford Foundation, Philippine Business for Social Progress (PBSP), the Red Mantra Group, SNV - the Netherlands Development Organization, and the World Business Council for Sustainable Development (WBCSD).
About 150 participants from private sector, funding agencies, development partners, and thought leaders participated in the forum.