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As a model forsocio-economic
development inUganda
Inclusive
Business
a knowledge managementinitiative
Oct 23, 2014
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Objectives Meet B-Space
IB - case studiesIB Lessons from
facilitatorsTowards an IB
coalition in Uganda
1 3
4 5 6
Why InclusiveBusiness
2
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What is understood by Inclusive Business?
Inclusive business broadly describes the deliberate and strategic
efforts to integrate low income populations as key stakeholderswithin a company's business model.
An Inclusive Business is a
profitableand
sustainableentrepreneurialinitiative, that seeks to include the
low-income population within its value chain either as:
o Suppliers;
o Employees;
o Distributer;
o Consumers.
Definition
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Why Inclusive Business will be theBusiness as Usual of tomorrow
Rationale behind InclusiveBusiness
Globally In Uganda
A significant part of theglobal population survivesunder economicallychallengingcircumstances.
More than 4 Billionpeople survive on lessthan $4dollars a day
About 9 million people[25%] are living at theBoP (< $1 a day)
Economic Inclusionopportunities for the BoPlie in self employmentrather than formalemployment
Small Scale Farmers,
manage about 85% ofthe worlds farms, theiroutput supports apopulation of roughly2.2 billion
Only 20% of Ugandasworkforce is in paidemployment, of which3 million are workingpoor
Agriculture is the primarysource of livelihoodopportunities for the BoP..
Agriculture provides
jobs for roughly 1.3billionsmall holdersand landless workers
80% of Ugandans that
are self employedare involved insubsistence farming
Source: CIAT Source: UNHS 2010
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Businesses that developsupply chains that..
Improve rurallivelihoods
include
small
holderscan
Businesses that developproducts that..
Create newProfitable
opportunitiesfor business
growth
are
affordable &accessible
can
IB
BOP
Sharedvalue
Creation
Rationale behind InclusiveBusiness
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Doing business with poor people
brings them into the marketplace
a critical step in the path out of
povertyand for entrepreneurs and
firms it drives innovation, buildsmarkets and creates new spaces for
growth
Source: United Nations Development Programme (UNDP)Creating Value for All: Strategies for Doing Business with the Poor, 2008
Rationale behind InclusiveBusiness
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An organized whole is perceived as more than
the sum of its parts (Gestalt)
Rationale IB KnowledgeSharing Event
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Objectives
IB - case studiesIB Lessons from
facilitatorsTowards an IB
coalition in Uganda
1
4 5 6
Why InclusiveBusiness
2Meet B-Space
3
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Meet B-Space
Meet B-Space
B-Space Ltd is a Ugandan socialenterprise, consisting of a
multicultural team of Associates.
We build impact coalitions andaccelerate business solutions toaddress development challenges inUganda.
About us Expertise Our Story Recent work
Creative
Iterative
Systemic
Co-creation
Tailor-made
Market-based
Our DNA
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Meet B-Space
Meet B-Space
Consumer Insights
Market Insights
Innovation Management
Inclusive Business Advisory
Business mentoring
Orchestration of Public PrivatePartnership Initiatives
Finance brokering (social impactfunds)
Our complementarity in expertise means
that we take a holistic approach, and amarket assessment might follow up in theactual implementation of the marketingplan with one of our managementconsultants
About us Expertise Our Story Recent work
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Meet B-Space
Meet B-Space
How can private and developmentsectors effectively work together, tomake markets work more sustainablyand beneficially for the low incomehouseholds?
What kind of innovations are neededto generate return on investment, butalso include the lower incomepopulation as suppliers, employeesand consumers?
Oxfam, SNV and BoP InnovationCenter identified the need for inclusivebusiness advisory services in Uganda.B-Space Ltd was born.
About us Expertise Our Story Recent work
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Meet B-Space
Meet B-Space
Strengthening the Ugandan SME sector through tailor- made businesssupport.B-Space provides business development support services to SMEs inUganda, and thereby develops a pipeline of investment ready SMEs for
the Oxfam Impact Investment Fund and other social impact investors.
Crickets the new superfood?In Uganda, the 2SCALE consortium is establishing a new value chain forcricket as a food product. But, how do you market the nutritional benefitsof crickets?
Identify PPP interventions to address menstrual care issues in UgandaSNV invests in business development support for companies, to facilitateaccess to affordable and quality menstrual care products for the BoP.
Market assessment seed cotton oilIs there market for cotton seed oil as a finished consumer product for theBoP?
About us Expertise Our Story Recent work
Want to know more?www.bspace.co.ug
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Objectives Meet B-Space
IB Lessons fromfacilitators
Towards an IBcoalition in Uganda
1 3
5 6
Why InclusiveBusiness
2
IB - case studies4
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Several Multinational and Local for-profit firmshave inclusive business at their core strategy
IB - Firms
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Including the BoP as Suppliers
The Firm perspective
Case Study
IB Initiative Benefits
Nile Breweries wanted to reduceits direct costs. They established alocal supply chain of starchsources (sorghum, Cassava,Barley) through contract farming,substituting the expensive
imported malt.
By citing the impact of their localsourcing intervention, NBL wasable to attract excise dutyconcessions from government,ensuring that bottled products
could be priced cheaper.
Result Eagle Lager could be produced
and sold for 1/3 of the originalprice, and extend market share to
lower income consumer groups
Eagle Lager captured 30% marketshare
Eagle is currently best selling beerin Uganda (Sales: 2003: 1mncrates; 2009:4mncases; 2011>7mcrates.
By 2011, 9,000 farmers were included
in SAB Millers supply chain, >100,000 direct and indirect
beneficiaries supported Ush 7.6 billion was income
from NBL into its supplyecosystem-(farmers, inputsuppliers, dealers etc.)
Result: lower
production cost,increased marketshare
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Including the BoP as a Consumer
The Firm perspective
Case Study
IB Initiative Benefits
Revolutionary initiative to bank theunbanked through a mobile basedsavings and payments system
Theadoption of Mobile Moneyfor the previously unbanked(rural poor), increased level offinancial inclusion in Ugandafrom below 30% to > 60%
MTN benefited from a new andhighly lucrative profit center,easing pressure from the verycompetitive prepaid telecomsegment
A lucrative business
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Including the BoP as Distributor
The Firm perspective
Case Study
IB Initiative Benefits
Coca-Cola needed to deepenmarket penetration in EastAfrica, and launched the ManualDistribution Center model.
The MDC is characterized by a
hub and spoke system: a centralwarehousing point in the regionwith manual distribution viapush carts
Introduced in 1999, Coca-Colanow relies on the MDC model as
its core distribution model inEastern Africa
MDC Model has deepenedmarket penetration to last-mileretailers where previous truckdeliveries did not reach.
The Coco Cola Company created
>2,500 MDCs in Africa generating> 12,000 jobs supporting an estimated
48,000 households Promoted women
empowerment.
Did you know, there
are only two countriesin the world whereCoca Cola is not sold?The soft drink giantmust be doingsomething good.
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Including the BoP as Suppliers
The Firm perspective
Case Study
IB Initiative Benefits
Yield Uganda recognizes shift inglobal food trading dynamicsaway from delinked spotpurchasing towards long term,vertically integratedpartnershipsbetween buyers
and sellers.
We also believe that smallholderproducers are increasingimportant stakeholders in thefood trade and food security,sector.
Smallholder production isattractive due to its scalabilityand relatively low productionrisk.
Global food businesses are
becoming as concerned aboutquality, security of supply andtraceability through theproduction chain, as with price.
Currently Yield Uganda has 600smallholder producers in
Northern Uganda contracted togrow chia seed and pumpkinseed for export to Europe.
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Objectives Meet B-Space
IB - case studiesTowards an IB
coalition in Uganda
1 3
4 6
Why InclusiveBusiness
2
IB Lessons fromfacilitators
5
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Several Development Organizations &Investors are working to unlock potential of IB
IB The Facilitators
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The IB Facilitator - Lessons learnedThe Facilitatorperspective
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IB Strategies can be distinguished into 4major subsets
Why Distinction?
The Facilitatorperspective
Lesson 1
Inclusive Business Strategies
are tailor made, there is no
one size fits all methodology
Each direction unique
challenges & opportunities
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Strategies focus on catalysing Innovativesupply chains, that equitably include
producers or entrepreneurs at the BoP asstrategic suppliers of goods or services.
These strategies are designed for start-ups, in which inclusive business is thecore business model (initiative) of the
company.
The IB design is for an establishedmedium/large company, that is
diversifying towards more inclusiveness.
The IB initiative normally represents asmall component of the whole business.
Strategies to produce and market goodsand services, that meet the needs of the
BoP consumer. For firms, this means
tapping into a new growth market andincreasing market share.
4 major subsets of IB strategiesThe Facilitatorperspective
Lesson 1
Diversifying
into IB
Producerfocused IB
Core IB
Consumer
focused IB
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IB should not be mistaken for CRS, but it will also notbe a quick win cash cow: Locating IB within CSR, risks
it being kept away from mainstream business,whereas when IB is mainstreamed, it could fall shortwhen measured against short term KPIs and notbenefit from a structure where innovation and failureare tolerated.
Implementing requires a long termstrategic outlook, the implication
The Facilitatorperspective
Lesson 2
Ideation
Incubation
Implementation
Moving
to Scale
IB needs high level Championship: Dedicated and
smart Partnerships are needed for successful IBinitiatives. Passion is important, but IB teams equallyneed to have clear commercial focus, to push the IBinitiative towards profitability.
Realistic expectations of resource requirements iscritical: A realistic appraisal of the internal andexternal financing that is required is essential, andmust be planned for before IB projects can be initiatedto avoid stalling midway.
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IB requires patience capital
Why is the Investment decision in IBchallenging?
The Facilitatorperspective
Lesson 3
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Why is the Investment decision in IBChallenging?
The Facilitatorperspective
Lesson 3
Ideation
(Blueprint)
Incubation(Validate)
Implementation
(Prepare)
Moving to
Scale
Most IB Initiative are at early stage of development: Generatingminimal returns, within high risk situations as innovators of new oruntested business solutions. Implying trial and error, longer timeto market and/ or scale.
Dilution of investor returns due to first mover disadvantage:Investor capital may also be unable to support heavy upfrontexpenditures required for BoP market creation . Especially where
limited barriers to entry, provide opportunities for copycats, thatdilute the returns that can be recouped by the first mover firm andits investors .
Unwillingness to finance VC activities: Creating successful IBinitiatives in developing countries, depends greatly on creating anenabling external infrastructure to the firm. This is not a space thatimpact investors are structured or willing to finance as it result infurther dilution of investor returns..Most pioneers in Inclusive Business are still in the early blueprint,validate and prepare stages, so this is where disproportionate supportis needed. Investors finance proven technology and business models
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Scaling IB successfully depends on Multi-Stakeholder cooperation
Multi-stakeholder platforms are essential
for success
The Facilitatorperspective
Lesson 4
l i k h ld l f i l f
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Multi-stakeholder platforms are essential forsuccess
The Facilitatorperspective
Value chain Facilitators RegulatorsIB
The InclusiveBusiness will haveinternaland externalbarriers, thatrequire thecooperation of
external partnersand facilitators.
VC actors comprisesuppliers,customers andintermediaries, eachof whom presentunique challenges in
forging a sharedvalue ( mutualbenefit) relationship
IB facilitators, playan important role,especially infacilitating thoseessential butexpensive activities
that the IB orimpact investorsare unable tofinance
Regulation that issupportive of IB isessential, forunlocking barriersto implementationand scale.
Multistakeholder platforms that bring together all actors to find mutuallybeneficial solutions that advance the implementation and scaling of Inclusive
business initiatives, is essential for success.
Lesson 4
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s aspirations for IB in UgandaTowards an IB coalition inUganda
Steer Inclusive Business towardsBusiness as Usual
And widely recognized and adopted
for poverty elevation in Uganda.
as a sustainable & high impact driver
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The Inclusive Business Accelerator Approach
The IB Accelerator exists of four components
1/ The IB Accelerator Collective: consisting of the foundingpartners SNV, BoP Innovation Center, Venture Capital for Africa,and Neyerode Business University. The core objective of theirinterventions is to elevate inclusive business to the mainstream.
2/ The IB Accelerator Local: consists of a network of local inclusivebusiness advisory services, to identify, incubate and acceleratebusiness solutions to development challenges. B-Space is thelocal IB office in Uganda ( next to Vietnam and Mozambique asof now)
3/ IB Accelerator Commercial: a window of impact investors ableand willing to invest in the leads prepared by IB Collective. The
Inclusive Business Fund, provides an initial fund of 10 millioneuro risk capital.
And the connector of the three?
4/ Inclusive Business online (see next slide)
Towards an IB coalition inUganda
IB A l t O li Y i t l
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IB Accelerator Online- Your virtualincubation center
The IB Accelerator Onlineis a virtual incubation centre,connecting start-ups, investors and business coaches.
The platform has been built by VC4Africa, the largest onlinecommunity of entrepreneurs and investors in the world (> 1,200venture profiles registered, > USD $2 million raised byentrepreneurs in funding). Entrepreneurs will have access to freeonline tools, mentorship opportunities and private deal rooms.Investor Pro Account users get tailor-made update feeds on thetype of deals they are looking for, and connect directly with theentrepreneurs.
What is the difference between VC4Africa and IBA online?
IBA online is not confined to Africa, but global.
IBA focuses on more established businesses instead of start-ups.
Besides BDS coaching and finance brokering, IBA will also offerlocal intelligence services through its local Inclusive BusinessOffices (as of now, Vietnam, Mozambique and Uganda).
IB Online will be launched and goes viral in November 2014! It willoperate as a peer-to-peer network and open source approach,efficiently connecting the power of Network, Knowledge andCapital.
B-Space will organize an launching event in January next year.
Towards an IB coalition inUganda
C h i d t d di
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Can we harmonize and standardizeeffective IB support services?
IB advisory services are
developed in 3 core clusters
For each cluster, B-Space defines
a clearo IB Strategy
o IB Target Group
o IB Offer/ Initiative
Towards an IB coalition inUganda
.. And is typically a6 cycle
process
Gold
Silver
Bronze
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The Inclusive Business Graduation StrategyTowards an IB coalition inUganda
Mapping the Inclusive Business Graduation
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Mapping the Inclusive Business GraduationStrategy
Towards an IB coalition inUganda
Eff ti IB S t S i id g f
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Effective IB Support Services covers a wide range ofinterventions and calls for a multidisciplinary team
Towards an IB coalition inUganda
We welcome talent
Understanding the market,assessing gaps, defining
business opportunityonline sharing and connectingDonor & Policy liaison, IB ImpactMeasurement
Impact Investorlinkages, Incubation
support towardsinvestor readiness
Go-to-market
planning,Branding &Positioning,Supply chaindevelopment
Developing capacityof IB ServiceProviders, PublicPrivate PartnershipProgramme design
Feasibility assessment,Validatingassumptions; Testingmarket readiness
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IdeationTowards an IB coalition inUganda
Role andObjective
ClientBenefits
Deliverables
Supportactivities
B-Space supports clients to materialize their ideas and identify
Inclusive Business opportunities that represent the highestpotential gains for companies and BoP communities
A clear idea of the IB Opportunity, to make an informed go/no godecision
A framework upon which to initiate or further develop the IBInitiative
Assembling effective teams and innovation coalition partners
Sector/Industry innovation opportunities IB Opportunity Assessment & Business Readiness at the firm level
Business Needs Assessments for improving IB Operations Mapping the Market Analyses Market & Consumer Research - including stakeholder workshop,
retail audit, sensory testing, consumer panel validation (online,text message, telephone interviews, door-to-door surveys)
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case studies: Intervention MHMTowards an IB coalition inUganda
Client: SNV
Objective: To map the market for MHM in Uganda, in order to understand
business models and market segmentation within the supply chain ofmenstrual pads;
Advise on the strategic choices SNV could make to maximize its addedvalue for the MHM market sustainably, whilst promoting informedchoice with consideration to consumer needs and preferences
How:1/ Space engaged with various market actors in the MHM sector inUganda, in order to understand: If and how they try to reach the low income consumer How development actors can facilitate improvement of the MHM
sector at large
The deliverable was a Mapping the Marketreport with suggestions forPPP interventionsand presenting the findings at the world MenstrualHygiene Day.
2/ Facilitation multi-stakeholder workshop, based on findings of report
3/ Orchestra BDS support
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Why Inclusive Business is an sustainable
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Why Inclusive Business is an sustainableapproach to poverty alleviation:
Re-cap
Re-
Firm Level
BoP Level
Facilitatorlevel
Opportunities to increase volume and market share among anew consumer segment. Generate new areas of profitable
growth and easing reliance on highly competitive mainstreammarkets. Confers higher security & guarantee over supply sources. IB can reduce production costs ( import substitution) IB can be a powerful reputation and brand building initiative; IB initiatives can unlock additional profit generating incentives
(e.g. tax incentives)
Increased formal job employment. Sustainable inclusion intoprofitable market systems is created, where small holders canachieve guaranteed of future earnings
Streamlining of supply chains increases share of value chainincome to the primary producers
Empowerment of the consumer: access to affordable,appropriate and often livelihood improving goods and services
IB is a proven and affordable model for generating sustainedshare value. (Business Innovation Facility estimates that the totalcost of IB TA per household impacted in their 2010-2014 project,will approximate $4)
There are a number of strategic partnerships that
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IBCoalition
PolicyMakers
Leadfirms
IB TAproviders
Riskinvestors
There are a number of strategic partnerships thatcan be leveraged for IB Initiatives in Uganda
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We would like to keep in touch
And keep the discussion going on how we could help
filling the gaps across the IB cycle
We are always interested to discuss:
o What services might be missing?
o Identifying competencies needed
o Where do market actors see their participationacross the cycle?
Th k Y !
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ThankYou!
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Contact us:
Laura van DijkManaging Consultant
+256 788 925 799laura@bspace.co.ug
Gustaaf van de MheenStrategy Director
+256 773 832 736gustaaf@bspace.co.ug
Stanley MusiimeInclusive Business Advisor
+256 752 449 590stanley@bspace.co.ug