A platform to promote inclusive markets on the continent was the topic of discussion at a side event at African Development Week. The African Inclusive Markets Excellence Centre (AIMEC) is set to become the premier pan-African regional platform for thought leadership and action on inclusive business and inclusive markets.
Inclusive business will improve the lives of millions of people in Africa and help to implement the provisions of the African Union’s Agenda 2063 and the UN’s Sustainable Development Goals, said Anthony Mothae Maruping, Commissioner for Economic Affairs, ACU, as he introduced the session.
The Centre would promote growth by encouraging transformative inclusive regional value chains, which in turn would lead to income generation and poverty alleviation across the continent.
“The Centre will need active participation from established business. It will target clients in the public and private sectors, including SMMEs,” Maruping said. “It will need the efforts and support of all stakeholders.”
According to studies, economic inequality remains a big problem in Africa. Some African countries have a Gini coefficient of 65% compared to an average of 42% in other developing countries. (A Gini coefficient of zero expresses perfect equality, where for example, everyone has the same income. A coefficient of 1 – or 100% – expresses maximal inequality where only one person has all the income or consumption, and all others have none.)
The AIMEC centre will respond to that challenge.
Inclusive business includes the poor as clients and customers as well as employees, producers and business owners at various points in the value chain. Inclusive businesses build bridges between the established business sector and the poor, for mutual benefit.
“’During our research, we found that technology has supported inclusion in many ways. One of the big cases of inclusion in Africa is the mobile banking network M-Pesa in Kenya. They have 25 million Kenyans now who have access to finance through their cell phones,” says Tomas Sales, Special Advisor, Private Sector, Inclusive Growth, and Sustainable Development Cluster, UNDP Regional Service Centre for Africa.
“Picture that in other sectors. For instance, the government of Rwanda has supported a business which uses drones to give access to health care products in remote rural areas. So, inclusion can be promoted through technology. It is actually a powerful driver for it,” he says.
Based in Senegal, Bonergie is a social business providing solar energy to people living in poverty. Its founder and Managing Director is Gabriele Schwarz. She says: “The inclusive market has a lot of potential for economic growth of African countries because we involve the bottom of the pyramid. We look at people we call poor as customers, as employees, as market players, and this is quite a new approach.”
“There are many opportunities for Africa to establish a wide range of inclusive businesses because the old structures like we have in Europe or the Western world are not so strong here, so here you could really start something new,” she continues.
Most such initiatives have taken place in English-speaking Africa in the areas of mobile banking, energy and agriculture. “I am sure there are many more examples which we don’t know of, that is why it is so interesting to be together and to have a platform and meeting and look at what is working and what is not. Because if you focus on things that are not working, you lose a lot of time, energy and also money. And that is why it is so important to replicate the things that are working,” Schwarz says.
She describes inclusive business as a mix of NGO and business, which is very attractive to young people who are trying to open new businesses because they’re looking for a meaningful way to do business. The collaboration it fosters is ideal to address issues like eliminating poverty.
Finding funding for inclusive business is difficult at the moment as it is a new sector. Traditional funders of NGOs don’t fund the private sector. Traditional investors don’t fund inclusive business because poor customers are not seen as bankable. “So, we really have to set up a new funding infrastructure as well, like impact investors,” says Schwarz. “Some people call this patient money. There are already some good initiatives on the market, and impact investing is also for the financial business a growing market.”
Nana Oumou Toure-Sy, Coordinator, UNDP Regional Service Centre for Africa, West & Central Africa Sub-Regional Platform, describes AIMEC as a flagship for UNDP’s work in Africa. The UNDP’s 2013 report on inclusive business recommended the establishment of such a centre as it would support innovative private sector development.
Tomas explains: “One of the main ideas is to bring the different stakeholders together – big companies, small companies, government, academics, civil society – and the point is to review what is happening in the sector, what are the needs, what are the opportunities. Make no mistake, regulation and incentives are a critical part of this.”