Focus on poverty reduction

Focus on poverty reduction

By Richard Welford   |   Sunday, 07 July 2013

In the fourth article in a six-part series, the chairman of CSR Asia discusses how businesses can be profitable in Myanmar by including low-income people in their expanding value chains

One of the most challenging aspects of designing a strategy around CSR in Myanmar is to identify ways a company can integrate an inclusive business approach into its planning. Inclusive business refers to the commercially viable and scalable incorporation of low-income populations into an organisation's value chain. It expands access to goods and services to poor people and provides livelihood opportunities for vulnerable and marginalised groups. Inclusive strategies allow businesses to achieve profits by engaging in poverty alleviation.

The inclusion of low-income segments into a company's value chain is, in fact, essential for achieving sustainable development in Myanmar. CSR Asia's responsible and inclusive business framework for Myanmar identifies three areas where a business can be part of the value-creation processes that benefit the business itself as well as poor and marginalised communities: by offerring jobs,  establishing a new customer market segment and creating business linkages along the value chain.

Job creation: Poor people may be poor, but they are not stupid and they can become part of a skilled and competitive workforce within any business, if they are provided with appropriate training and skills development. For a responsible business, employment opportunities can aim to provide people that have little to no income with the capacity to improve their livelihoods. In order for the poor to become a valuable source for recruitment, responsible businesses will play a part in overcoming skills and capacity gaps through training and human-resource development. Poor people are simply a valuable workforce in need of investment. In engaging with poor people, often with non-traditional educational backgrounds, businesses will be rewarded with enthusiastic and loyal workers if they effectively manage the process of successfully integrating them into the workforce.Responsible companies will also address broader education issues within corporate training initiatives.

New market segments: Responsible businesses will examine how they can create new market segments targeting low-income populations by providing them with affordable goods and services. Although poor people may have low incomes, collectively they provide an important market to be tapped if appropriate goods and services are designed and distributed to them. New products and services will also offer poor people opportunities to be part of distribution networks serving rural areas that traditional distribution networks fail to reach. Making poor people a new target consumer segment requires companies to carefully think about the goods and services that are really needed. In particular, responsible businesses will try to improve their access to goods and services in areas such as health, food and nutrition, water, sanitation, housing, banking and insurance.

Business linkages: Different parts of the value chain, including the sourcing of raw materials, production, distribution and sales, provide inclusive business opportunities through forging new linkages with people and other businesses. Poor people can be included in value-chain activities as suppliers, producers and distributors. Inclusive approaches will help them establish or strengthen their own businesses and support entrepreneurial activities.

Responsible businesses will seek out opportunities along the value chain to include poor and marginalised people. They will provide help with developing entrepreneurial skills and business start-ups that can support their own value chains. They will place a particular emphasis on women entrepreneurs who have a track record of success in the region.

With so many inclusive business opportunities in Myanmar, companies will need to carefully assess how they can use their capabilities to best create innovative solutions for poor people.

Three industries are particularly promising: agriculture, tourism and financial services.Agriculture is one of Myanmar's most important industries, accounting for 36 percent of GDP according to the Asian Development Bank. Development of this industry also targets the population that is most affected by poverty. Tourism is growing by 30pc annually, and 1.3 million tourists are expected to visit Myanmar this year.

Responsible tourism is still underdeveloped, but it has the potential to create wealth, benefit those in need and protect the environment. Access to financial products, bank accounts and credit for low-income households and small enterprises accelerates growth. Providing a safe place to save, cheap and easy ways to transfer money, affordable insurance and loans to invest in small enterprises and productive activities will drive development and enlarge markets.

Richard Welford is the chairman of CSR Asia, which recently published "Responsible and Inclusive Business in Myanmar". The report is available at www.csr-asia.com.

Source: http://www.news.myanmaronlinecentre.com/2013/07/12/focus-on-poverty-reduction-2/