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The best gift this Christmas (is the one that keeps on giving)

Warren de Guzman expounds on inclusive business and what this might mean for the Filipino entrepreneur this Christmas.
Warren de Guzman | Dec 04 2018

It is Christmas time, the season for giving. I am sure everyone is figuring out how to spread Christmas joy with long lists of relatives, colleagues and friends to buy gifts for. Some may be planning on cramming it all into the last week before the holidays. Still there are others who are planning on giving in different ways. There are a great number of charities in need of donations in cash or in kind. There are orphanages and senior citizen homes also in need of financial support. But wouldn’t it be great to give something that would help the recipient become self-sufficient? An investment if you will, not just in the holidays of those in need, but rather in their future.  I’m not talking about buying mutual funds or UITFs for those in need, (although that would be a good idea if you have enough money to pull it off.) I am talking about an entrepreneurial solution that allows you to give while earning something in return.

Philippine Business for Social Progress or PBSP is a private group made up of corporations, all pulling together to promote what is called ‘inclusive business.’ It is literally pulling together P100M for an ‘inclusive business’ capacity building fund aimed at helping businesses big and small become more inclusive. It is seeking contributions and donations from businesses, including the largest corporations in the country for this purpose.  You can find out more by visiting http://www.pbsp.org.ph. If you do not have P100M lying around do not worry, most people do not either. But I do believe almost anybody can take part in inclusive business.

First, a definition. What is inclusive business? Inclusive business is not new. It has been around for years, and is agreed upon by the United Nations and the Group of 20 as a necessary form of entrepreneurship which benefits both the businessman and the poor. It is a business model where low income individuals and communities are included as customers and clients, as well as producers and entrepreneurs themselves.

There are many examples that should be familiar. There are big businesses like Human Nature, which is dedicated to buying raw materials for its soaps, creams and other products from small farming communities all over the Philippines. There is U.S. based Cargill which has set up a marinated chicken plant that sources at least a quarter of its cost of goods sold from small and medium enterprises, engaging some 300 farmers.  Cargill also contributed P7M to the inclusive capacity building fund. There is Cargill’s local partner Jollibee, which also sources a lot of its raw materials such as vegetables from farming communities across Luzon. There is Rags to Riches which partners with community artisans and uses ‘up-cycled’ overstock cloth and indigenous fabrics to create eco-ethical fashion and home accessories.

This is different from corporate social responsibility initiatives. Inclusive business makes everyone, including the poor, part of the core business. It is not about holding an annual program where the community gets to bring home a little extra income. It is about making the poor communities productive, and bringing them into the value or supply chain of the business. It sounds like a dream because it is. It is a dream in the sense that it is difficult to achieve. Running a successful business is hard enough, but running an inclusive business where the entrepreneur strives for the success of everyone involved including employees, customers and suppliers—that is a tough task. It involves training those who cannot afford it. It is about opening up avenues for the poor so they can learn to become inclusive businessmen as well. It is tough, but more importantly, it is a form of giving that will last well beyond the Christmas season. It is a vocation.

The Department of Trade and Industry launched this year an initiative to provide incentives for inclusive business models in agriculture and eco-tourism. The goal is to generate more employment, create awareness, and stimulate the business environment in rural areas so that other micro, small and medium enterprises can develop. The hope is those businesses will also evolve into inclusive formats as well. Cargill is one of the two registered IB models so far.  The other is the Econorth Resort venture of Seda Lio in El Nido, Palawan.  Seda is part of the Ayala group of companies. There are two more in the DTI’s pipeline for approval.

These sound like huge operations. But inclusive business does not have to be huge. Running a business and providing employment is already a form of inclusive business. Applying inclusive business principles takes it a step further. Sari-sari stores selling products sourced locally are a simple example. Restaurants using local ingredients is another. Construction using indigenous materials and local labor is yet another great example.

Getting communities involved in your business, bringing people together with the goal of shared prosperity, that is what inclusive business is all about. It sounds cheesy (and preachy quite frankly) but it also sounds a lot like Christmas. It sounds like a great blend of giving and receiving while being productive. It sounds idealistic, utopian, or even quixotic. Yet it sounds very reasonable and attainable at the same time.  Perhaps this is the season to give it a try. The season to start a new year of inclusivity.