Partnering for Inclusive Business in Zambia - The Practitioner Hub For ...

Partnering for Inclusive Business in Zambia

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Purpose of this publication Traditionally business has sought to make money by providing products and services to those who have the most money, whilst NGOs have sought to help the poor meet their basic needs. Today, both business and NGOs recognise the limitations of these strategies and see that they can achieve their goals of business growth and social impact by working together. Collaborations between NGOs and Businesses to create market opportunities for both companies and the poor are referred to as inclusive business models. These innovative business models take business beyond the boundaries of traditional business and corporate social responsibility (CSR) and NGOs beyond the boundaries of traditional development. In this new and unfamiliar space, business and NGOs need to find new ways of working together effectively. This publication aims to provide a simple introduction to inclusive business and the forms it can take as well as provide basic guidance on how to make the working relationships between NGO and business in Bangladesh more effective and successful. This publication accompanies a series of workshops organized by The Partnering Initiative (TPI) of the International Business Leaders Forum (IBLF) and the Business Innovation Facility (BIF). See back cover for more about the organisations behind this publication.

Contents What is inclusive business?... 3 What are the benefits of inclusive business?... 4 Why is partnering important in inclusive business?... 5 Types of business engagement with NGOs... 6 Inclusive business partnership types and benefits... 7 Partnering effectively... 9 Good partnering behaviour...10 Common challenges faced when partnering for inclusive business... 11 Final word...11

Written by Jessica Scholl and Mabel Mungomba, 2012

Adapted from Partnering for inclusive business in Bangladesh (2011), written by Joanna Pyres and edited by Tom Harrison This publication uses extensive material from The Partnering Initiative and should only be used with permission.

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What is inclusive business? The term „inclusive business‟ refers to a profitable business activity that includes opportunities

The term inclusive business refers to profitable core business activity that also tangibly expands opportunities for the people at the base of the economic pyramid (BoP). Such business ventures engage poor people as producers, suppliers, workers, distributors, consumers - or even as innovators. for the poor and disadvantaged in developing countries to participate in Inclusive business is a way of achieving typical business objectives, such as profitability, supply security, and market share by designing highly creative strategies to buy from, distribute through, or sell to substantial numbers of low income people. For businesses trying to enter new markets or circumvent the challenges of imperfect markets—such as, inadequate infrastructure, weak rule of law, limited or asymmetrical market information, knowledge or skill gaps, and restricted access to finance—inclusive business offers an exciting path forward. Regardless of the specific market, IB can enhance overall competitiveness by stimulating innovation, cutting costs, strengthening supply chains, and reducing risk.. On the development side, inclusive business helps the poor to participate in the market economy and bring themselves out of poverty - providing both commercial growth and poverty alleviation. As consumers, low income populations can enhance their productivity and meet more of their basic human needs through greater access to products and services.1 Alternately, low income populations that engage in value chain as suppliers, producers, distributors or retailers may benefit from increased incomes, skill development, or the overall wealth creation within the community. Inclusive business is about creating new opportunities for poor people using the core competencies and thrust of the business, rather than using business profits to pay for philanthropic or social investment activities. Benefits to poor people can stem from the following roles in a value chain: Producers Business

Retailers Distributors Customers Employees Suppliers

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Note: this does not mean to say that all products and services accessible to the poor will help them meet their basic needs and increase productivity.

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What are the benefits of inclusive business? For business:

• • • • •

New sources of profitable and competitive products and services Develop more effective operations Catalyse innovation Achieve cost reductions Develop viable future workforce

For society:

• • • • • •

Opportunities for all to participate in inclusive and fair growth Access to better products and services Greater cooperation and social cohesion Sustainable models of self sufficiency, not aid dependency Capacity building of marginalized groups/wider populations Opportunities to address poverty, marginalization and vulnerabilities

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Why is partnering important in inclusive business? Inclusive business is often achieved through business engagement with non-traditional business partners, such as producer associations, NGOs or public sector agencies. Each of ese Inclusive business offers exciting new opportunities for both companies and society. However, it is not easy to do. Market imperfections, prohibitive start-up costs, cultural differences, and low levels of trust are among the many challenges facing inclusive business endeavours. By collaborating with non-traditional partners—including NGOs, government bodies, industry competitors, community organisations, micro-enterprises, producer associations, cooperatives, trade bodies, or donor agencies—organisations may be able to access the resources, skills, and capacities needed to overcome these challenges. However, each of these non-traditional business partners has its own organisational culture, distinct operating procedures and set of drivers which differ from those of business and from each other. Working together effectively in these new collaborative arrangements requires understanding of these differences and learning how to capitalize on diversity to make projects more successful, rather than allowing differences to be an obstacle that leads to failure or under-performance. Multi-stakeholder partnering requires the skilful navigation of sector differences to develop innovative solutions for business and sustainable development alike. There are a number of ways for these non-traditional business partners to work together ranging from conventional transactional and contractual relationships on the one hand, to partnerships and joint ventures on the other. While the potential for innovation grows as the degree of co-design, co-working and co-delivery increases, so does the need for understanding and communication. •

If the initiative lends itself to a transactional relationship, one party may design the project and then seek out an organisation to implement according to a set of pre-determined criteria.

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If a partnership relationship is preferable, although one party is likely to initiate proceedings, the complete project definition and final composition of the partnership partners will be determined at a later point, in order to benefit from the input and perspective of those involved.

Many inclusive business models require active engagement with a diversity of stakeholders. However, to extract maximum benefit from engagement, all involved need to understand how to build equitable, transparent and mutually beneficial working relationships. This is the art and science of partnering for inclusive business. Experience from numerous cross-sector initiatives has shown that a partnering mind-set combined with partnering skills and tools can equip those involved to better: • • • • • •

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navigate the complexities of multi-stakeholder collaboration; manage communication and relationships; optimize the quality of collective activities/outputs; reap the rewards of resource efficiency and innovation; understand and be able to measure ensuing business and development impacts; position themselves to reach scale.


Types of business engagement with NGOs Traditionally businesses and NGOs have addressed poverty through philanthropic giving. However today, a broader range of opportunities for deeper engagement between companies and NGOs exist to: • •

make better use of the specific competencies, useful perspectives and diverse resources that business can contribute to development solutions; maximise the opportunities for each organisation to benefit from working together.

Choosing the right type of engagement depends on the extent to which: • •

the business and NGO wants to be actively involved; the extent to which the business and NGO recognises the broader range of resources that business can contribute in addition to money, such as core business skills, staff time, logistics, premises, technology, equipment, knowledge, information, contacts and networks, influence, products, endorsement, purchasing power, employment opportunities and market development.

Partnering is a process management methodology through which other types of engagement can be delivered:

PHILANTHROPY I NVOLVEMENT COMMUNITY Increasing need for PARTNERSHIP between business and other sectors Wider BENEFITS for society Increasing utilization of CORE BUSINESS skills, resources, assets, influence Greater benefits for business and therefore SUSTAINABILITY

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Inclusive business partnership types & benefits Engaging low income workers in distribution networks2

Case example The Coca-Cola Company’s (TCCC) Micro-Distribution Centres replace traditional product delivery methods (i.e. Producers periodic large stock delivery by trucks) with a network of micro distributions centres (MNCs), independently owned and Producers operated by local entrepreneurs. The Sales and Marketing Division of regional TCCC bottlers—such as Zambian Breweries—recruit, train, and assist local entrepreneurs as they establish MDCs and develop distribution methods appropriate to the context in which they operate. (BCTA Case Study, 2010) Benefits to business Including MDCs in TCCC’s distribution system enables Coca-Cola products to be sold in more than 25,000 Zambian outlets, including supermarkets, hotels, bars, restraints, petrol stations, and ntembas (small kiosks). (Oxfam, 34) Benefits to society The Coca-Cola/SABMiller value chain is estimated to have supported around 3,741 formal and informal jobs in Zambia. (Oxfam report) The local entrepreneurs that own MDCs make an average monthly salary of $1000 USD. Zambian Breweries invests around $92,000 a year into boosting the entrepreneurial and business skills of retailers. Role of partnerships Cross-Sector: TCCC contracts and works with independent audit firms and NGOs to measure the social impact of their supply, bottling, and distribution processes. For instance, TCCC, Oxfam America, and SABMiller partnered in 2008 to study the companies’ value chain impact in Zambia and El Salvador. B2B: The formal business partnership between local bottlers and MDCs has relied heavily on non-traditional B2B partnering practices, such as capacity building and mentoring.

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References: Oxfam America, The Coca-Cola Company, SABMiller. 2011. Exploring the links between international business and poverty reduction: The Coca-Cola/SABMiller value chain impacts in Zambia and El Salvador. http://www.oxfamamerica.org/publications/exploring-the-linksbetween-international-business-and-poverty-reduction. Accessed 20 August 2012. Business Call to Action (BCtA).( 2010). The Coca-Cola Company: Enabling Jobs and Opportunity. Case Study. http://www.businesscalltoaction.org/wp-content/files_mf/cocacolacasestudyforweb40.pdf Accessed 15 July 2012.

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Engaging low-income suppliers or producers in the supply chain: ers Case example E The Luangeni project was launched to build the capacity of rural communities of Chipata to produce high quality vegetables and to forge economic relations with Shoprite to ensure increased production translated into increased incomes for farmers. Benefits to business The model proved successful in securing the supply of high quality horticultural products. By sourcing locally, Shoprite had greater input into other variables, such as the quantity and time of deliveries. Benefits to society Several benefits were realised by the Luangeni communities. Farmers saw a monthly increase in average income from US$1.67 to US$48.55. This enabled many families to to pay for social services such as education for children and access to health care. A gender empowerment component was incorporated into the model, leading to the election of a female chairperson for the cooperative society. Role of partnerships Brokered by The Partnership Forum, several organisations joined the partnership. The farmers in Shoprite’s supply chain were offered space to sell their produce on ‘special offer’. ZamSeed and the Ministry of Agriculture Food & Fisheries ensured efficient agricultural practices were employed. The Catholic Organisation for Relief and Development joined the partnership in year two with financial contributions. At a later date, Eastern Seed & Vet Ltd. engaged the partnership with the provision of extension services on the use of chemical sin vegetable production.

Strengthening local supply chains s Case example Retailers Since 2004, Sun International Hotels in Zambia has partnered with ASNAPP, an agricultural technical assistance provider, and CETZAM, a microfinance institution, to manage a local food sourcing programme through which it procures fresh fruits and vegetables from 400 smallholder farmers. This has resulted in security of supply and reduced costs for their two hotels and provided livelihoods opportunities to smallholders in the region. Benefits to business This partnership aims to reduce the costs of procuring fresh produce. Local procurement is estimated to generate savings of 20%-35%. Local sourcing also helps reduce SI’s carbon footprint. Local livelihood development also strengthens SI’s license to operate. Benefits to society In 2011, smallholder incomes increased to an average of $2,500 with the support of the partnership. The anticipated adoption of new climate change resilient technologies and products could reduce vulnerability of smallholders to market and extreme weather conditions. Role of partnerships ASNAPP’s training has helped increase smallholder yields and income. CETZAM has provided the microfinance needed by smallholders to invest in and develop new agricultural practices.

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Good partnering behaviour Whether an inclusive business initiative is formed as a partnership or not, in this unfamiliar cross-sector context, the way organisations and individuals acting as their representatives behave has a tremendous effect on the success of the initiative. ‘Good’ partnering behaviour involves fostering a culture of mutual respect and can provide the ‘fertile soil’ in which innovation, trust, smooth running operations and effectiveness can grow.

Attitude Be flexible and open to new ideas wherever possible Recognise and respect the value of each partner‟s contribution, verbal and actual. Encourage a culture of transparency by being transparent yourself Be honest about your interests, needs and constraints and ensure that other partners understand them.  Recognise that in order to get your interests met, you also need to help others get their interests met.

Seek to understand  Ask questions to gain a more fulsome understanding.  Listen to and understand the real interests, needs, and constraints of your partners.  Appreciate that different sectors have different motivations, different cultures and may use a different vocabulary and try to translate these into your own understanding.

Practical suggestions  Spend time reflecting on your interactions with other partners. Are there things you /they may not have understood? Does this build equity, transparency, mutual benefit? Are there things you could do differently? What assumptions am I making? What expectations do I have? What assumptions am I making? What expectations do I have?  Be aware and pay attention. Be prepared, where necessary / feasible to help build the capacity of partners to allow them to perform their roles more effectively.  Ensure that you fulfil all the commitments you make to the partnership.  Invest in training to build partnering skills and a partnering mindset in key staff members. 

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Final Word Despite all these challenges, and more, there are numerous examples of successful sustainable development partnerships that provide real social, environmental and economic value. There are many inclusive business initiatives that are profitable and effective at providing market access to marginalized groups thereby demonstrably improving livelihoods and lives. Today‟s businesses, NGOs and governments house the change agents who are evolving the way we operate as a society, creating a more equitable and cooperative system. The process requires courage and awareness at both the individual and organisational levels. The patronage and personal involvement of senior management within all participating organisations is strongly recommended to provide the necessary support and influence and give their teams the best chance of success. Inclusive business and partnerships build the capacity of people, the organisation and society to work more effectively and cohesively. For specific information and guidance on setting up and managing partnerships, please refer to: Step by Step - a simple guide to setting up and managing partnerships (http://businessinnovationfacility.org/forum/topics/partnering-step-by-step) The Partnering Toolbook - a more comprehensive guidebook and The Brokering Guidebook – a comprehensive guide to facilitating/brokering partnerships (http://www.thepartneringinitiative.org/publications.jsp) For specific guidance on setting up and managing inclusive business models, please refer to: The Business Innovation Facility Practitioner’s Hub gateway to resources (http://businessinnovationfacility.org/page/gateway-to-useful-resources

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International Business Leaders Forum E: [email protected] T: +44 20 7467 3632 W: http://www.iblf.org, Disclaimer: The Business Innovation Facility (BIF) is a pilot project funded by the UK Department for International Development (DFID). It is managed for DFID by PricewaterhouseCoopers LLP in alliance with the International Business Leaders Forum and Accenture Development Partnerships. It works in collaboration with Imani Development, Intellecap, Renaissance Consultants Ltd, The Convention on Business Integrity and Challenges Worldwide. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP and the other entities managing BIF (as listed above) do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. The views presented in this publication are those of the author(s) and do not necessarily represent the views of BIF, its managers, funders or project partners.

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