Different strokes

Thursday 15th May 2008

Poverty remains one of the biggest challenges to sustainable development and global stability, calling into question the overall achievements of globalisation. While global wealth per capita has steadily increased over the last decade, nearly half of the world’s population lives on less than $2 per day, for the most part excluded from functioning markets and the benefits they can bring.

At the same time, emerging and developing countries represent the growth markets of the future. Already accounting for more than half of the world’s gross domestic product, their economic weight is likely to increase substantially over the coming decades.

Economic growth is the key to poverty alleviation. Business, as the primary driver of growth, can therefore be a leading player for development. As a group of leading companies, the members of the World Business Council for Sustainable Development (WBCSD) believe that globalisation can be made more inclusive and that the leading global companies of the future will be those that do business in ways that address the world’s major challenges, including poverty and inequity.

These businesses include low-income communities as stakeholders in every stage of the value chain. They may be included in the supply, production, distribution, and marketing of goods and services. In this way, new jobs, income, as well as technical skills and local capacity are generated – the latter being an especially important domain in which companies can have a key impact upon a country’s socio-economic development. Likewise, as consumers, low-income segments can benefit from products and services that meet their needs in an affordable way. Including these population segments in the value creation, as well as the potential consumption, of a company’s products and services, is a true hallmark of inclusive business, and demonstrates the virtuous cycle of business in development.

Here is what companies are doing on the ground: Eskom, Shell, EDF, ABB and AES are delivering energy services to the underserved, while DuPont and Dow are creating new agricultural products and markets. Vodafone has developed a microfinance payment platform for African entrepreneurs. Unilever, BP, Procter & Gamble, Coca-Cola, Anglo American, BHP Billiton and Skanska are integrating small- and medium-sized enterprises into their supply chains. Deutsche Bank and GE are enabling financial services for the unbanked, and GrupoNueva, Holcim and Cemex are creating affordable housing products.

To be successful in low-income markets, companies must understand the needs and use approaches adapted to the markets they target, and that integrate well with their core business competences. This is not always easy and can carry with it considerable business risk.

A key prerequisite for success is a favourable investment climate that is both stable and predictable. The WBCSD has therefore called upon governmental leaders to focus their attention on the following priorities in view of fostering private sector development:

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