18 August 2013

Happiness as a UN goal? The Inside-Out Development Paradigm?

Are we seeing a new, more holistic human development paradigm emerging? Can happiness be a UN goal? There are some interesting signs...

Since the UN General Assembly declared 20 March the International Day of Happiness in 2012 the idea of happiness as a goal for development and global well-being has gained even more traction. Discussions advance happiness not just as a personal matter but also a global development goal.

UN Secretary General Ban Ki-moon is personally very interested in the new development paradigm including global well-being, happiness and Bhutan's Gross National Happiness (GNH) index. The 2013 UN General Assembly Note called "Happiness: towards a holistic approach to development" gives a clear recognition of broader measurement of development beyond GDP and a call to further action.

Recently and during my holidays in Germany, I attended the first 'Global Well-being Lab Forum' in Berlin. It was organized by Germany's GIZ Global Leadership Academy (commissioned by the German Federal Ministry for Economic Cooperation and Development (BMZ)), the Presencing Institute and the GNH Bhutan Centre with OECD, Italy, Finland, World Bank Institute et al. also being active.

See a key diagram by Enrico Giovannini, former OECD economist pioneer, mapping the links between needs, skills, forms of capital, well-being and happiness with the new development paradigm (see also at the bottom the resource library giving an overview of other initiatives presented).

For me personally very interesting is that this new development paradigm seems neither top-down nor bottom-up but 'inside-out'. A key insight that I heard from both the Bhutanese monks at the forum but also Otto Scharmer, Founder of the Presencing Institute, is that "transformation has first to happen inside oneself, then it manifests outside".

This new field appears to be an exciting, innovative approach promising transformative impact and contributing to the realization of long-term development goals for all. Are we seeing a new development paradigm 'happiness' emerging?
At the moment this space is still relatively new and much more research is needed to make the new approach practical. Given my strong personal passion for the topic, I am considering to explore this new development paradigm through an action-oriented PhD thesis with a German university while continuing my work for the UN.

Key part of the initiative would be to interview global change-makers and transformative leaders to synthesize insights on realizing the new emerging development paradigm, from theory to reality, within the UN context. What about the title 'transformateurs'? Suggestions for interviewees?

For further information see also the very informative resource library by Stefan Bergheim, Centre for Societal Progress. Looking forward to hearing from you.

04 August 2013

Live TV Interview on Inclusive Business in Africa - UNDP Kenya Report Launch

Is the business & development paradigm changing? Last week I had the honor to travel again to Kenya to present on the key findings of the major UNDP AFIM report “Realizing Africa’s Wealth – Building Inclusive Businesses for Shared Prosperity”.

The launch event in Nairobi on 31st July 2013 brought together around 100 leaders of private and public sector, media and academia. Together with the presentation and panel discussions, my personal highlight was the Live TV interview for Kenyan national TV station KTN. Watch the 4 minute video here:

It was great to discuss with private sector companies such as Novartis, development partners (DFID, Sweden, Denmark), government representatives, media and UNDP Kenya colleagues the concept and successful cases of inclusive business models in Africa.

Kenya is such a hotbed for business innovation and together with South Africa has the most inclusive business models as identified in the report. Most cases are in agriculture, financial services, ICT, energy, water and extractive industries. Read the report for more details.

Below a photo with key representatives including UNDP Kenya Country Director Maria-Threase Keating (middle), Inclusive Economic Growth Team Leader Carolin Averbeck (2nd left) ) and Business Call to Action representatives Karen Newman (left) and PanAAC CEO Lucy Muchoki (right):

Personally I see Inclusive Business demonstrating that good business does well by taking a more holistic and long-term perspective with a shared value and triple bottom line approach of social, environmental and financial dimensions.

This goes hand in hand with the current paradigm shift in development cooperation from traditional aid towards greater individual empowerment, self-responsibility, local ownership and business engagement leading to more inclusive markets and sustainable development.

For more follow also on Twitter: www.twitter.com/Business4Good and www.twitter.com/UNDP_AFIM

08 March 2013

Inclusive Business can transform Poverty into Prosperity

Inclusive Business can transform Poverty into Prosperity:
Experiences by UNDP’s African Facility for Inclusive Markets (AFIM)
Jürgen Nagler, Programme Specialist
United Nations Development Programme (UNDP)

The need for inclusive growth and inclusive market development
Economic growth, which is essential for development, is largely driven by the private sector – from micro, small and medium-sized enterprises to multinational corporations. Six of the ten fastest-growing economies in the world over the past decade are in Africa, and the overall GDP growth rate of sub-Saharan Africa is expected to reach 5.4 per cent in 2013, making it the fastest-growing region in the world.[i] However, Africa’s impressive recent economic growth has been largely ‘jobless’ growth and has failed to provide job and income opportunities for the majority on the continent. 

Woman in FieldTherefore, inclusive growth must address the phenomenon of ‘jobless’ growth and must tackle critical issues to create inclusive employment and income-generating opportunities for the majority in Africa. Jobs are first and foremost created in the private sector, and as Helen Clark, the head of the United Nations Development Programme (UNDP), states: “Businesses are engines of growth and have the potential to help improve the lives of people through their investments and activities.”

The landscape of global human development and official development assistance is changing rapidly. Especially, the area of engaging and partnering with the private sector has received a significant increase of interest over the recent years, as recently embodied in discussions at the Busan Forum for Aid Effectiveness[ii] and the statement issued by 11 of the world's largest bilateral donor agencies.[iii]

There is a paradigm shift from traditional aid to sustainable development, from official assistance focusing on governments to the inclusion of the private sector with its core business. This stresses the importance of inspiring the private sector to use inclusive business models, and governments and development partners to develop inclusive markets.

The UNDP’s Inclusive Market Development (IMD) approach
The UNDP has been a leading agency in promoting private sector partnerships and inclusive market development through projects and initiatives such as the Growing Sustainable Business (GSB) initiative which started 2003. The UNDP´s ambition is to foster broader and more strategic alliances with the private sector around key development challenges of common concern, such as the provision of energy, job creation and supporting green growth.

IMD focuses on developing private sector markets to make them more inclusive of and beneficial to low-income groups as producers, consumers and employees. Specifically, IMD seeks to strengthen value chains to empower small enterprises, producers and distributors to participate in and benefit from the existing and potential markets in which they do business.[iv]

The UNDP’s global private sector strategy for IMD combines private sector development and private sector engagement.[v] The objective is to stimulate the sustainable economic growth that creates jobs and thereby reduces poverty – primarily by ensuring that small enterprise owners and their employees participate in the growth of expanding markets. The most frequently employed approach to IMD is the development of value chains with growth, job and income generation potential.

IMD is a useful approach to employ when partnering with the private sector to inform, inspire and initiate inclusive business models and to integrate low-income populations into their value chains. To support IMD implementation, the UNDP published an IMD handbook and three related tools: Assessing Markets, Inclusive Business Models and Brokering Partnerships.[vi]

The power of inclusive business models and value chains
Inclusive business is a relatively new approach, encompassing those businesses that consciously include low-income people into their value chains as producers, consumers, employees and entrepreneurs. Such businesses are not only profitable, but also improve the lives of low-income people and communities. Therefore, it is key for scale and sustainability to engage the private sector as a strong partner, i.e. with their core business - beyond philanthropy and corporate social responsibility (CSR). 

In 2008, a global UNDP report noted that
inclusive businesses include low-income people on the demand side as clients and customers, and on the supply side as employees, producers and business owners at various points in the value chain. They build bridges between business and the poor for mutual benefit. The benefits from inclusive business models go beyond immediate profits and higher incomes. For business, they include driving innovations, building markets and strengthening supply chains. And for the poor, they include higher productivity, sustainable earnings and greater empowerment.[vii]

Inclusive business models by the private sector and supported by public sector and development partners, can turn poverty into prosperity. The UNDP promotes exactly such business models, where the pursuit of wealth creation, human development and environmental sustainability are seen as fully compatible.[viii] What can the private sector do to contribute to sustainable development? 

First, businesses can benefit low-income people by including them in their core business operations, whether as suppliers or business partners in their value chains, as employees in the workplace, or as consumers in the marketplace. There are many examples of companies which have successfully integrated low-income people into their business models. 

For example, A to Z Textile Mills of Tanzania is an African producer of long-lasting insecticide bed nets. Its products help in the fight against malaria, and the production provides work for more than 3000 women. This was made possible by a broad public–private partnership involving, among others, the Japanese chemical company Sumitomo, which is member of the UN Global Compact and the Business Call to Action (BCtA), a UNDP-supported initiative challenging companies to develop innovative business models.[ix]

Second, the private sector can make important contributions to advancing sustainable development by bringing low-cost innovations to market. The low-cost mobile technology exists to conduct life-saving heart scans; there are energy-efficient LED lamps which enable children to do their homework at night; there are smokeless stoves which support better health; and mobile phone and Internet applications which help small farmers and fishermen get access to better information and prices. 

One such innovative product solution in the agribusiness field comes from Amiran Kenya, which won the 2011 Youth Empowerment Millennium Development Goals (MDGs) award in Kenya. Amiran’s Farmers Kits offer local small-scale farmers affordable access to modern agricultural technologies, methods and inputs to suit the climate, terrain and agricultural experience of the farmer. Innovations like these, when accessible to low-income people, have the potential to significantly contribute to making markets more inclusive.     

Third and perhaps a more traditional way for businesses to support development goals, is giving back to the community through CSR activities and philanthropy. The scope and magnitude of these kinds of activities have grown exponentially in recent times – and indeed they need to be brought to scale more consistently, to have a wider and more sustainable impact. 

In conclusion, inclusive business models and inclusive value chains generate jobs, help low-income populations increase their productivity and income, and enable people to access affordable products and services. Several prominent examples show that this paradigm shift towards a new way of doing business is possible, and that it pays off in sectors as diverse as agriculture, healthcare and financial services. 

UNDP’s continental platform: The African Facility for Inclusive Markets (AFIM)
In November 2010, the UNDP launched the AFIM, specifically for Africa. This project constitutes a continental platform working in partnership with the public and private sectors, development partners and UN agencies in Africa. AFIM works to reduce poverty and accelerate progress towards sustainable development, by supporting inclusive growth and inclusive market development across sub-Saharan Africa.
The facility aims to achieve four main goals:
  1. Increase private sector-related capacity of targeted, regional institutions and governments;
  2. Strengthen regional and country-level initiatives;
  3. Build a broad-based alliance of partners for IMD in Africa (private sector, regional institutions, UN agencies, donors and other development partners); and
  4. Improve access to finance for small producers and micro, small and medium enterprises (MSMEs).[x]
AFIM, which builds on the work of existing pro-poor national and regional initiatives, serves as a platform for coordinating inclusive growth activities between various partners. The platform also facilitates knowledge sharing and access to finance, advances tangible value chain projects, and disseminates best practices in inclusive market development where the emphasis is on creating opportunities for low-income groups – especially women and youths.

The project’s particular focus is on promoting inclusive market development in Africa through developing and expanding regional value chains in job-creation sectors. Due to the importance of agriculture (which employs about 60 per cent of people in sub-Saharan Africa) and its key relevance for food security, AFIM focuses on agriculture and agribusiness.[xi]

Thus far, AFIM has undertaken and published several mappings and studies on the ‘Roles and Opportunities of Private Sector in Africa’s Agro-Food Industry’ and ‘Inclusive Business Finance’. The AgriBusiness Forum 2011 (in Johannesburg) and 2012 (in Dakar) were co-organised with the NGO EMRC, and aimed to boost Africa’s agricultural sector by bringing together African agri­business representatives, investors and policy makers from all over Africa and beyond. 

More specifically, the UNDP-led high-level public–private dialogue held in Johannesburg in October 2011 led to the adoption of the Johannesburg Declaration: “Engaging the Private Sector in Furthering Africa’s Agribusiness, Food Security and Nutrition Agenda”. This, the first joint declaration by the public and private sectors, calls for joint action to advance Africa’s agro-food agenda.[xii]

AFIM has built an alliance of Inclusive Market Development partners, including African Development Bank (AfDB), the African Union Commission (AUC), the New Partnership for African Development (NEPAD) Planning and Coordination Agency (NPCA), the NEPAD Business Foundation (NBF), the Pan-African Agribusiness Consortium (PanAAC), Regional Economic Communities (such as EAC, ECOWAS, COMESA), UN agencies and bilateral development partners.

AFIM’s innovative way of engaging the private sector through project facilitation platforms (PFPs)
AFIM has been establishing PFPs in East, West and southern Africa to boost food production as well as job and income opportunities for farmers, through engaging the private sector to advance agriculture value chains. Through these platforms, government stakeholders, UN agencies, the private sector, farmers, financiers and civil society discuss partnerships and their respective value-add as partners, in terms of strategic agri-food value chains.[xiii]

For example, the first such platform for East Africa was launched in Nairobi, bringing together East African Community (EAC) partners from Kenya, Tanzania, Uganda, Rwanda, Burundi and Ethiopia. Project promoters presenting planned interventions included Africa Harvest, East Africa Dairy Development Project and UNIDO/UNDP to advance specific value chains of sorghum, dairy and soy.

The platforms are unique in that they focus on cross-border and regional value chains, bringing together all the relevant players and building the capacity of regional institutions to organise such platforms themselves in the future. Furthermore, bridges are built between the public and private sectors, and resolve issues arising between policy level and practical project implementation. The West Africa platform, attended by representatives from 13 countries and launched together with ECOWAS in Dakar, Senegal, has been advancing the value chains of cassava, mango, onions and palm oil.

To catalyse the field implementation of selected regional value chains, AFIM has put in place a catalytic funding programme for promising value chain projects, in addition to developing an African Supplier Development Programme (SDP). The SDP aims to develop the capacities of African suppliers, i.e. smallholder farmers and SMEs in agricultural supply chains, to increase their productivity, reduce post-harvest losses and thereby increase income and production levels. The programme has received strong interest from African and international lead firms which want to strengthen and grow their supply chains.

Increased importance of innovation for transformational results
To achieve greater development effectiveness and unleash the power of the markets and of people, innovation and inspiration are increasingly recognised as key drivers. Leading thinkers on the theory of development change pose the question: ‘How are transformational results achieved?’ As yet there are no widely accepted answers. 

What seems to come to the fore is a recognition of the importance of people, societies and institutions in developing their own innovations, sometimes inspired by leading examples which are shared rapidly through communication technologies. Transformation differs from change in the sense that it is more fundamental, sometimes even ‘disruptive’ (e.g. the Arab Spring), an (r)evolution that has grabbed the attention of many African governments. 

Transformation comes from a deeper level within the entity being transformed, and gives rise to a change in status level, just as a caterpillar transforms into a butterfly. In terms of international development, this could see one form of governance changing into another, typically not without difficulties and periods of disruption. In terms of business it could mean a drastically different business model applying a new way of thinking and doing business. ‘Breakthrough’ innovations and related shifts in awareness can inspire such transformations.

Transformation from jobless to inclusive growth through inclusive markets
A paradigm shift is taking place in the spheres of both business and development actors. Inclusive business models provide a useful new approach in advising new business thinking beyond CSR and base of the pyramid (BoP) approaches. For development and government actors, IMD represents an innovative, holistic conceptual framework integrating economic and social development elements into a pragmatic multi-stakeholder development approach.

There is a clear need for inclusiveness and collective action, because no single actor alone can develop new markets in an inclusive way. Only through inclusiveness and (self-)empowerment will the transformation from jobless to inclusive growth happen. Further research is recommended to build the evidence base of inclusive business models, related value chain development and the more holistic inclusive market development paradigm.[xiv] Advancing both the evidence base and practical action-oriented implementation will build the envisaged future on a step-by-step, leap-by-leap basis.

Looking forward, one of the UNDP´s ambitions is to build broader and more strategic alliances with the private sector and other partners around key development challenges of common concern, such as the provision of energy, job creation and supporting green growth. In doing so, not only is development stimulated, but the potential of as-yet-unrealised markets is unlocked. Innovation and new ways of development and doing business will increasingly play vital roles in achieving transformative results, towards an envisaged and desired future.

[i] African Economic Outlook 2012, www.africaneconomicoutlook.org
[ii] The 2011 High Level Forum on Aid Effectiveness in Busan stresses the importance of partnering with the Private Sector, see Joint Statement on Expanding and Enhancing Public-Private Cooperation
[iii] Eleven of the world’s largest donor calling for more private sector partnerships, see Bilateral Donors' Statement in Support of Private Sector Partnerships for Development at the UN Private Sector Forum 2010, http://www.enterprise-development.org/page/download?id=1645
[iv] See UNDP’s Inclusive Market Development (IMD) approach, www.undp.org/content/undp/en/home/ourwork/partners/private_sector/IMD.html
[v] See UNDP’s Private Sector Strategy (2007), www.undp.org/content/undp/en/home/ourwork/partners/private_sector/OurStrategy/
[vi] For UNDP’s Inclusive Market Development (IMD) handbook and related tools (2010) see www.undp.org/africa/privatesector
[vii] See UNDP global Growing Inclusive Markets report Creating Value for All: Strategies for Doing Business with the Poor, www.growinginclusivemarkets.org
[viii] For more inclusive business cases and relevant reports see UNDP’s Growing Inclusive Markets (GIM) initiative
[ix] Sumitomo Chemical is a Business Call to Action (BCtA) and Global Compact member company
[x] For more information on UNDP’s African Facility for Inclusive Markets (AFIM) see www.undp.org/africa/privatesector
[xi] See UNDP AFIM’s Roles and Opportunities of the Private Sector in Africa's Agro-Food Industry report, www.undp.org/africa/privatesector
[xii] For the Johannesburg Declaration and the conference report on the AgriBusiness Forum see www.undp.org/africa/privatesector
[xiii] See article on UNDP’s Project Facilitation Platform on Business Fights Poverty, www.businessfightspoverty.org/profiles/blogs/undp-s-innovative-way-on-private-sector-development-through
[xiv] UNDP AFIM and GIM have been working on documenting African inclusive business cases and will launch a major report on this topic in 2013.

This article was originally written for the publication of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) "Value chain development by the private sector in Africa: Lessons learnt and guidance notes" due to be published in March 2013.