Building a robust ecosystem for inclusive business at the BoP

Andre Nijhof
By on March 10, 2016

This blog was co-authored by Nishant Parekh and Andre Nijhof of Nyenrode Business School, our Monitoring and Evaluation partner.

Playing a pivotal role in a BoP market, the Inclusive Business Accelerator has designed an ecosystem for entrepreneurs, investors, and mentors to improve and stimulate the growth of businesses in low-income markets. Since its launch in November 2014, the IB Accelerator has grown to support nearly 200 ventures across 37 different geographies with the required ammunition to scale up their business. IBA’s intervention logic is to develop a range of complementary products and services which promote the Inclusive Business (IB) solution at both the global and local levels.

The majority of the ventures registered on the platform operates in the Energy and Agri-business sectors. 

With ventures spread across 37 countries, IBA foresees great opportunities for scale and replication

At IB Accelerator, we understand the specific needs of low-income markets. They require unique products, services and technologies in the sectors of water, food, finance, housing and energy. By focusing on three key sectors – Water, Sanitation and Hygiene (WASH), Agribusiness, and Renewable energy – which actively involve people as producers, employees, distributors and consumers we had registered over 180 SMEs with IBA by the end of 2015.

The ventures registered with IBA provide a rich outlook on what opportunities exist to apply best practices, replicate business models and scale up business anywhere. Our partnerships with a variety of companies, universities and organisations aim to develop market intelligence and advisory standards which improve services provided to people living at the BoP.

 

Supporting SMEs at all stages of development

Through our support offices in Vietnam, Mozambique, and Uganda, we have come to realise that local entrepreneurs are continuously challenged to understand customer needs, develop a business plan, conduct market trials and test business model assumptions, build organizational capacity and supply chain network, and to move into new markets and geographies and invest in assets and talent.

Upon registration of a new entrepreneur or venture, we obtain a better understanding of the requirements of the SMEs and their expectations from IBA. These elements help us to assess their current development stage and necessary tools and processes required to grow their business.

Using this knowledge, in 2015, we developed an Inclusive Business Accelerator Toolkit. The tool offers an array of options to develop and grow a business depending on the stage of the company and covers the business essentials: business model canvas, customer segmentation, marketing and distribution tools, and financial planning and risk analysis. To complement our training package, the online platform provides free online courses that further capacitate inclusive business ventures in key business processes.


Understanding barriers to scale and providing appropriate interventions to improve, scale and innovate

Companies targeting people at the Base of the Pyramid (BoP) face several challenges as they progress from initial idea to business at scale: identifying market demand, developing entrepreneurial skills, and accessing finance.
IBA examines different types of interventions – initiate, incubate, implement, and invest – necessary for the business to mature and innovate, work with companies to assess the most pressing barriers, and execute appropriate interventions. We monitor and evaluate these parameters every quarter to ensure suitable directions are provided to each company.

The results from the fourth quarter of 2015 in the local IBA Vietnam and Mozambique hubs highlight that the major barriers for entrepreneurs are access to finance and a weak business plan. The local IBA hubs (Vietnam and Mozambique) are actively working to overcome these barriers. In the fourth quarter of 2015, IBA Vietnam assisted ten companies with their funding proposal and negotiated with over ten investors, providing opportunities to raise capital. Similarly, IBA Mozambique partnered with VIA waters to support projects with innovative solutions for cities that face water problems in seven African countries.

We, at IBA, strive to support BoP markets players through toolkits for entrepreneurs, strengthen the ecosystem by bridging the gap between entrepreneurs, impact investors, and contribute to sustainable development by facilitating the growth of inclusive business models.