Inclusive business specialist visits SERDEF; confirms IB is for SMEs, too

markus dietrichMarkus Dietrich, founder and director of the Asian Social Enterprise Incubation (ASEI) and author of the ADB-sponsored Study on Inclusive Business in the Philippines, visited the SERDEF yesterday, December 14, to exchange views and information on how more small and medium enterprises could adopt inclusive business practices.

He asked for the meeting after reading the SERDEF article “Inclusive business not for the big boys only” published in the Philippine Daily Inquirer last December 3.

Inclusive business (IB) involves targeting the low-income groups and making them active participants in the company’s chain of activities, as employees, suppliers, contractors and service providers.

Mr. Dietrich met with SERDEF president Paterno V. Viloria, Trustee and Technical Adviser Serenidad F. Lavador and Media Consultant Myrna R. Co.

Mr.Dietrich’s scoping (preliminary) study on inclusive business in the Philippines was presented in the recent ADB Regional Forum on the subject.

Among the preliminary findings of the study are:

  1. Although there are numerous active NGOs,  social enterprises and corporate social responsibility (CSR) companies n the country, only few (maybe 50-100) can be classified as inclusive.  Even  fewer are those which are ready for commercial investments.
  2. Nonetheless, there is considerable market  for IB in the country, given that the poor have extensive unmet needs and given that social enterprises and big firms with active CSR programs are disposed to upscale to IB models.
  3. Inclusive business ventures are found mostly in the agro-processing, finance insurance and IT sectors, but there are also some interesting IB examples in the energy, education, health and transport and logistics sectors.
  4. Most of the viable IB companies are larger establishments that require debt financing and technical assistance support to transform their CSR models into core business IB ventures. In addition, some companies would also need other forms of growth capital and management advice to move up from social entrepreneurs to inclusive businesses.

He also said that awareness of the importance of inclusive growth should be fostered through conferences, and mass communication and other advocacy programs.  He affirmed that case studies on SMEs adopting IB practices will be useful to advocacy.

Mr. Dietrich said that depending on the result of the 10-nation study on inclusive business, the ADB may make available investments funds for promoting IB growth in the region.

He also observed that Filipinos, in general, lack entrepreneurial predisposition which may hamper economic growth.

Dr. Viloria then apprised him on SERDEF programs and projects aimed to inculcate entrepreneurial values  among the population, particularly the Build an Entrepreneurial Society Today (BEST) project which aims to foster entrepreneurial attitudes in young people, starting from pre- and grade school, which are the most impressionable years.

Ms. Lavador briefed him on the SERDEF-IOM project on Rechanelling OFW Remittances for Enterprise Development (CRED) which drew up pilot business schemes for OFWS and their families using the value-chain approach and are now in various stages of being implemented in three provinces in Mindanao.

She also explained the SERDEF model in developing small and medium businesses which is to focus on the person who runs the enterprise — his  inner resources, attitudes, values and personal competencies — more than the external resources he needs like capital, technology or markets.

Mrs. Co shared with the visitor her encounters with SMEs with strong inclusive-business potentials, such as fair trade enterprises in Cagayan de Oro  and community-based firms belonging to the Association of Negros Producers in Negros Occidental, which started as an answer to the mass unemployment resulting from the displacement of sugar cane farm workers in the province during the sugar crisis of the 1980s.

Mr. Dietrich thanked the SERDEF officers for shedding  light on the role of SMEs in inclusive business and apprising him of the work the Foundation does for small business.  He said he would integrate the discussions  in his final report to ADB to be published next January.

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