Scaling up Inclusive Solutions: a Dichotomy?
Most experts agree that both scale and inclusive growth are necessary to eradicate global poverty. Yet reaching scale and achieving inclusive growth can be at odds with each other. Markets tend to expand rapidly when they focus on the middle class, potentially leaving behind the most vulnerable.
At the SEEP 2014 conference (September 22-25), members of the private sector and development community ambitiously set out to share their experiences in order to to resolve this seeming dichotomy and answer the question: How do we scale impact in inclusive market systems?
Is the Private Sector the Answer?
Conventional development aid has failed to reach scale because “you can’t donate people out of poverty,” says Paul Polak, who kicked off the SEEP 2014 conference with a keynote on achieving scalable solutions to poverty worldwide.
Moreover, corporate social responsibility is cosmetic and impact investing confuses social mission with profit, adds Polak, founder and CEO of two social ventures that aim to revolutionize how companies design, price, market, and distribute products to benefit the 2.6 billion people living on less than $2 a day.
Polak’s solution: Open private sector access to developing markets to achieve the scale needed to sustain economic growth.
Development programs should treat the world’s poorest as customers rather than recipients of charity, Polak says, adding that the growth of many international and local businesses plataeu because they are interested only in middle class markets. Fully 40 percent of the world’s potential customers are in the poverty margins, a market segment that is largely untapped, he adds.
If the private sector could effectively market high-quality, essential services and products to the world’s poor at affordable prices, Polak says, then markets can reach scale, achieve enough profit to attract global investment, and ultimately pave the way for sustainable economic development.
Is Private Sector Investment Enough for Systemic Change?
Mercy Corps’ Craig Redmond, countered that frontier multinational companies may be able to put forth a business solution, but that alone may not be enough to address systemic causes for market stagnation such as conflict, poor governance, and corruption.
Redmond’s solution: Lean on the development community’s experience in this area.
The development community has valuable inclusive market experience to offer, Redmond says, such as creating savings groups, using facilitative approaches to influencing behavior change, and implementing push/pull strategies to ensure a balance between inclusivity and scale. That said, these methods require time investment, Redmond adds, which can clash with profit-seeking entities’ agendas.
So where did the conference community end up after two-and-a-half days of fruitful discussions and peer learning on the question, ‘are inclusiveness and scale incompatible?’
“It depends,” says World Visions’s Kyhl Amosson, who led the session that closed the SEEP conference, adding there are multiple ways to define ‘inclusive’ and multiple ways to define ‘vulnerable.’
When we use the term “poorest” and “most vulnerable,” we have to ask to whom we are referring, Amosson says. Is it impoverished single mothers? HIV-affected populations? Orphans? The elderly? People with disabilities? Hired laborers who don’t own land? Youth lacking job opportunities and capital? Each of these groups have different starting points, risks, and aspirations, Amosson adds.
What we do know, is that initial subsidies and basic service provision are required for most of these vulnerable groups, Amosson says.
Where Do We Go From Here?
So where do we go from here? In a separate conversation with Microlinks, Mercy Corps’ Redmond suggests that learning exchanges, such as Microlinks and Agrilinks, are key to next steps in achieving scale in inclusive market development.
“We have to ensure that we continue to actively learn from one another,” Redmond says, “that we have a lot of communication going on between organizations, between the private sector and government, and in organizations like ours [Mercy Corps].”
“Let’s take what we’ve learned and influence decision makers,” Redmond adds.
Conferences like SEEP are the perfect platform to build these bridges and continue these conversations.