Inclusive Business Knowledge Pack-by BSpace Uganda Ltd

8/10/2019 Inclusive Business Knowledge Pack-by BSpace Uganda Ltd.

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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

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4 5 6

Why InclusiveBusiness

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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



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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



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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

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4 5 6


2Meet B-Space

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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



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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.



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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?


Want to know more?www.bspace.co.ug
http://www.bspace.co.ug/http://www.bspace.co.ug/


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IB Lessons fromfacilitators

Towards an IBcoalition in Uganda

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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


Case Study


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


Case Study


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


Case Study


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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IB - case studiesTowards an IB

coalition in Uganda

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4 6


2

IB Lessons fromfacilitators

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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


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?


Lesson 3


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Why is the Investment decision in IBChallenging?


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


Lesson 4

l i k h ld l f i l f


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Multi-stakeholder platforms are essential forsuccess


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.


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


.. 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


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


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 [email protected]

Gustaaf van de MheenStrategy Director


Stanley MusiimeInclusive Business Advisor


Documents

Inclusive Business Knowledge Pack-by BSpace Uganda Ltd