This RETA (as revised) aims to help develop viable BoP enterprises in selected Asian countries, with the end in view of creating a whole new class of private equity funds looking at BoP enterprises to play a stronger role in promoting inclusive growth in the region. The project will (a) analyze the BoP market in the 6 selected Asian countries (mapping exercise); (b) analyze how such potential cooperation could promote inclusive growth, and develop ex-ante impact assessment; (c) facilitate partnerships with private sector and development finance institutions to better serve the BoP market (feasibility studies); and (d) facilitate ADB's private sector operations and public-private partnership modalities to increasingly support BoP enterprises (promoting investment opportunities in a BoP fund).
The project will be coordinated and implemented as follows:
-ADB will be the Executing Agency for the project, with the Poverty Reduction, Gender and Social Development Division (RSGS) of Regional and Sustainable Development Department acting as the TA supervising unit in close collaboration with PSCM.
-An interdepartmental steering committee will be established to guide the TA implementation.
-In addition, for the actual implementation of the project in Bangladesh, Indonesia, India, and the Philippines, regional activities, and the viability study of the multi-country private equity and bank financing modalities, ADB will engage an international consulting firm through a competitive process in accordance with its Guidelines on the Use of Consultants (2007, as amended from time to time). For the country studies in Viet Nam and Pakistan, ADB will hire individual consultants to work with SNV, and coordinate with the ADB-financed consulting firm. ADB will separately engage consultants on an individual basis for the editing work and for the website design. In addition, some miscellaneous administrative costs will be provided to finance ADB participation in the national and regional investment fora. SNV will implement through its own funding the country studies in Viet Nam and Pakistan, and will provide content input to the regional knowledge component and the regional investors' forum.
|Project Rationale and Linkage to Country/Regional Strategy
Over the past two decades, the Asia and the Pacific has sharply reduced the share of its population living under the extreme poverty line of $1.25 in daily income. Many countries in the region have broadened their approach toward development, promoting inclusive growth that benefits not only those in extreme poverty, but also others with daily incomes of up to the international vulnerability line of $2 per day or more.
ADB's approach to inclusive growth, one of the three strategic agendas under Strategy 2020, goes beyond in the income dimensions of poverty. Inclusive growth is a process that is non-discriminatory and which reduces disadvantages. It aims to broaden economic and social opportunities for lower income groups, as well as for those excluded in some way from the economy's growth.
In recent years a new discussion has emerged on the role of the base of the pyramid (BoP) in promoting inclusive growth. It is posited that businesses, governments, and donor agencies should stop thinking of poor people as victims, and instead start seeing them as resilient and creative entrepreneurs - as well as value-demanding consumers. A private sector dimension of inclusive growth would seek to contribute towards poverty reduction and vulnerability by including the BoP, not only as consumers, but also as suppliers, distributors or employees within the value chain of a company in a profitable and sustainable relationship. When multinational enterprises and small and medium sized enterprises create new local business models involving those at the lower ends of the economic ladder, they contribute to both growth and poverty reduction gains.
Several major organizations are promoting BoP in different parts of the world, including the International Finance Corporation, the private sector arm of the World Bank Group, and the Inter-American Development Bank (IDB). In 2007, ADB carried out some preliminary work on the BoP concept, especially regarding its financial aspects, but has neither systematically explored nor promoted its development. The regional technical assistance project on "Promoting Inclusive Growth through Business Development at the Base of the Pyramid" provides an opportunity for ADB to do both.