IFC identifies inclusive business models that create opportunity at base of economic pyramid

Friday, 23 September 2011 02:18 - - {{hitsCtrl.values.hits}}

IFC, a member of the World Bank Group, yesterday launched a new report that identifies seven inclusive business models that expand access to goods, services, and livelihoods for the world’s poorest people while generating strong financial returns. The report underscores IFC’s commitment to creating opportunity at the base of the economic pyramid.

IFC clients from South Asia profiled in the report include Dialog Telekom in Sri Lanka, and Apollo Hospitals, Husk Power, FINO, Idea Cellular, Jain Irrigation, Suvidhaa, and WaterHealth International in India.

Accelerating Inclusive Business Opportunities: Business Models that Make a Difference, was released at IFC’s second Annual Inclusive Business Leaders Forum, which took place on September 22, ahead of the Annual Meetings of the International Monetary Fund and the World Bank Group. The forum brings together IFC clients, global experts, and donors to exchange experiences and insight on inclusive business.

“Increasing our work at the base of the economic pyramid is an important part of IFC’s strategy,” said IFC Executive Vice President and CEO Lars Thunell. “We are working with our clients to design, implement, and support inclusive business models that help the world’s poorest people.”

The report’s findings are based on an analysis of IFC’s portfolio, which found that mature investments in companies with inclusive business models show financial returns very similar to those of IFC’s portfolio as a whole, while having a larger impact on development. The seven models identified in the report are:

=Micro distribution and retail, reaching base of the pyramid end consumers who tend to make small, frequent purchases through retailers who need small, frequent deliveries and the ability to buy on credit.

=Experience-Based Customer Credit, lending to customers the company knows are credit-worthy through past experience.

=Last-Mile Grid Utilities, extending infrastructure grid coverage to more distant and often lower-income neighbourhoods.

=Smallholder Procurement, turning geographically dispersed smallholder farmers into reliable sources of quality supply.

Value-for-Money Degrees, making university education accessible to low-income students.

=Value-for-Money Housing, making home ownership possible for low-income buyers through a combination of high-value-for-money housing and facilitated access to mortgage financing.

=e-Transaction Platforms, enabling low-income people to pay for goods and services electronically, at lower cost and risk than paying in cash.

IFC is strengthening its focus on the base of the pyramid, whether in the world’s poorest or middle-income countries. Its strategy is to increase the number of financially sustainable, inclusive business models operating at scale to help address the issue of access to goods, services, and livelihoods for billions of low-income people.

In the past five years, IFC has invested over $5 billion in more than 200 companies that focus on inclusive business models, in nearly 80 countries. IFC’s Inclusive Business Group, launched in 2010, is dedicated to mining IFC’s portfolio for lessons learned and connecting people, resources, and ideas in support of inclusive business clients.

For more information about inclusive business at IFC, including the report and other case studies, visit www.ifc.org/inclusivebusiness.