Partnering for inclusive business in Bangladesh

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Traditionally business has sought to make money by providing products and services to those who have the

most money, whilst NGOs have sought to help the poor meet their basic needs. Today, both business and

NGOs recognize the limitations of these strategies and see that they can achieve their goals of business

growth and social impact by working together.

Collaborations between NGOs and Businesses to create market opportunities for the poor are referred to as

inclusive business models. These innovative business models take business beyond the boundaries of

traditional business and corporate social responsibility (CSR) and NGOs beyond the boundaries of traditional

development. In this new and unfamiliar space, business and NGOs need to find new ways of working

together effectively.

This publication aims to provide a simple introduction to inclusive business and the forms it can take as well

as provide basic guidance on how to make the working relationships between NGO and business in

Bangladesh more effective and successful.

The publication accompanies a series of workshops organized by CARE Bangladesh, the Business

Innovation Facility and The Partnering Initiative as part of the Responsible Business Promotion in

Bangladesh programme. See back cover for more about the organizations behind this publication.

Types of business engagement with NGOs 3

What is inclusive business? 4

What are the benefits of inclusive business? 4

Why is partnering important in inclusive business? 5

Inclusive business types and benefits 6

What are sustainable development partnerships? 8

Partnering effectively 9

Good partnering behaviour 10

Common challenges faced when partnering for inclusive business 11

Final word 11

Purpose of this publication

Contents

Written by Joanna Pyres Edited by Tom Harrison This publication uses extensive material from The Partnering Initiative and should only be used with permission.

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Traditionally businesses and NGOs have addressed poverty through philanthropic giving. However today, a

broader range of opportunities for deeper engagement between companies and NGOs exist to:

make better use of the specific competencies, useful perspectives and diverse resources that business

can contribute to development solutions;

maximise the opportunities for each organization to benefit from working together.

Choosing the right type of engagement depends on the extent to which:

the business and NGO wants to be actively involved;

the extent to which the business and NGO recognizes the broader range of resources that business can

contribute in addition to money, such as core business skills, staff time, logistics, premises, technology,

equipment, knowledge, information, contacts and networks, influence, products, endorsement,

purchasing power, employment opportunities and market development.

Partnering is a process management methodology through which other types of engagement can be

delivered:

Types of business engagement with NGOs

PHILANTHROPY COMMUNITY

INVOLVEMENT INCLUSIVE BUSINESS

e.g. donations e.g. volunteering, gifts in

kind products and services

Increasing need for PARTNERSHIP between business and other sectors

Wider BENEFITS for society

Increasing utilization of CORE BUSINESS skills, resources, assets, influence

Greater benefits for business and therefore SUSTAINABILITY

e.g. bottom of the pyramid

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The term „inclusive business‟ refers to a profitable business activity that includes

opportunities for the poor and disadvantaged in developing countries to participate in the

value chain of business operations.

Inclusive business helps the poor to participate in the market economy and bring themselves out of poverty -

providing both commercial growth and development impact.

How is this different from normal business in a developing country such as Bangladesh? Virtually any

business –not just that which is labeled “inclusive”-can help a country develop, whether through taxes,

employment, market expansion, or technology transfer. Inclusive business is a way of achieving typical

business objectives, such as profitability supply security, and market share by designing highly creative

strategies to buy from, or sell to, substantial numbers of poor people. Inclusive business is therefore about

creating new opportunities for poor people using the core competencies and thrust of the business, rather

than using business profits to pay for philanthropic or social investment activities.

Benefits to poor people can stem from the following roles in a value chain:

For business: New sources of profitable and competitive products and services

Develop more effective operations

Catalyze innovation

Achieve cost reductions

Develop viable future workforce

For society: Opportunities for all to participate in inclusive and fair growth

Access to better products and services

Greater cooperation and social cohesion

Sustainable models of self sufficiency, not aid dependency

Capacity building of marginalized groups/wider populations

Opportunities to address poverty, marginalization and vulnerabilities

What is inclusive business?

What are the benefits of inclusive business?

Producers

Suppliers

Customers

Employees

Business

Distributors

Retailers

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Inclusive business is often achieved through business engagement with non-traditional

business partners, such as producer associations, NGOs or public sector agencies. Each

of these non-traditional business partners has its own organizational culture, distinct

operating procedures and set of drivers which differ from those of business and from each

other.

Working together effectively in these new collaborative arrangements requires understanding of these

differences and learning how to capitalize on diversity to make projects more successful, rather than allowing

differences to be an obstacle that leads to failure or under-performance.

Cross-sector partnering is the skillful navigation of sector differences to provide innovative collaborative

solutions to sustainable development challenges.

There are a number of ways for these non-traditional business partners to work together ranging from

conventional transactional and contractual relationships on the one hand, to partnerships and joint ventures

on the other. As the degree of co-design, co-working and co-delivery increases, so does the need for

understanding and communication.

If the initiative lends itself to a transactional relationship, one party may design the project and then

seek out an organisation to implement according to a set of pre-determined criteria.

If a partnership relationship is preferable, although one party is likely to initiate proceedings, the

complete project definition and final composition of the partnership partners will be determined at a later

point, in order to benefit from the input and perspective of those involved.

Inclusive business models exist to empower the poor not exploit them, consequently all involved need to

understand how to build equitable, transparent and mutually beneficial working relationships. This is the art

and science of partnering for sustainable development.

Experience of numerous cross-sector initiatives has shown that a partnering mind-set combined with

partnering skills and tools can equip those involved to better:

navigate the complexities of multi-stakeholder collaboration;

manage communication and relationships;

optimize the quality of collective activities/outputs;

reap the rewards of resource efficiency and innovation;

understand and be able to measure ensuing business and development impacts;

position themselves to reach scale.

Why is partnering important in inclusive business?

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Engaging low-income suppliers or producers in the supply

chain:

Case example

Systain Consulting Ltd, the compliance partner of German retailer KIK, approached CARE to help secure artisans to

produce rugs for the international market. They partnered with a local entrepreneur to co-ordinate timely and quality

production from a number of very low-income rural women, who were paid to train for 6 months to produce to

international standards.

Benefits to business

Kik experienced increases in profits through a strengthened supply chain and the local entrepreneur saw profits increase

by up to 15%. As a result of high demand additional units have been set up by the entrepreneur.

Benefits to society

Financially, the women are earning a high enough wage to start saving and purchasing economic assets such as poultry

or nursery plants as well as reduce their loan burden and remain solvent during the off season (Monga). Socially, they

are also able to invest in household health and nutrition and gain a higher standing in the community and in their own

homes. Kik reinvested 50% of profits into education, financial literacy and health programmes to support the women.

Role of partnership

CARE mobilized the women, coordinated technical for women workers, helped set up production units, supported and

managed relationships, and monitored attendance. The local entrepreneur provided administrative, managerial and

operational oversight to production process, and provided handlooms and raw materials. Systain provided compliance

oversight and did quality control. Kik served as the export market buyer.

Employing low income or marginalized workers in the business:

Case example

Apex Adelchi Footwear Limited started a scheme using factory premises to train 200 individuals as laborers on the

production line every three months. This resulted in 2400 operators trained over three years. It is expected that 50% of

trained people will go on to work for the company. Next steps are to expand training to other core staff areas such as

machine technicians, supervisors and quality control.

Benefits to business

Building skilled workers is a long term investment in core capabilities. The scheme has proven successful and essential

for scaling up existing operations.

Benefits to society

Apex Adelchi training scheme directly benefits low income communities by providing employment opportunities and

skills training.

Role of partnership

PRICE, a non-profit scheme supporting private enterprise in Bangladesh, formed an umbrella agreement with LFMEAB,

a trade association, to leverage its members resources to facilitate skill development and the supply of new skilled

workers to the sector. These organizations worked in partnership with Apex Adelchi Footwear Limited.

Inclusive business types and benefits

Producers

Suppliers

Customers

Employees

Business

Distributors

Retailers

Producers

Suppliers

Customers

Employees

Business

Distributors

Retailers

Producers

Suppliers

Customers

Employees

Business

Distributors

Retailers

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Engaging low income workers in distribution networks

to reach into remote markets:

Case example

The Rural Sales Program (RSP) is an innovative rural marketing and distribution initiative. 1200 marginalized women

have been trained as rural sales agents who sell private sector products door-to-door and earn income from sales

commission. CARE is now spinning RSP off as a social enterprise with support from Danone Communities.

Benefits to business

CARE initiated the project by approaching Unilever. As the distribution network proved successful, more businesses

came on board such as Square (spices), Bata (shoes), Danone (fortified yoghurt), Lal Teer (agri-seeds) and

Grameenphone (mobile connectivity) amongst others. These businesses are reaching previously un-served customers,

opening new markets for their products, and increasing revenue.

Benefits to society

RSP provides opportunities for disadvantaged women in rural areas to earn money which both empowers them and also

supports social inclusion. The new social enterprise will create employment and income for 12,000 marginalized women,

serve as alternate marketing-distribution outlet for 1,000 rural SMEs, bring agri-inputs and information to 10,000 farmers;

and make products-of-need available to around 2 million rural consumers.

Role of partnership

CARE has provided the expertise and local contacts required to create RSP, and the private companies have provided

tailored products and the necessary commercial drive, supply-chain management and investment.

Serving the poor as customers or clients:

Case example

IDE Bangladesh, an NGO that creates market based income opportunities for the rural poor, identified the need in the

market for a technology to improve the field water management of boro rice cultivation. Research of available

technologies lead them to find a plastic pipe technology called Alternative Wetting and Drying (AWD) developed by the

International Rice Research Institute. IDE facilitated market creation and development with Hatim Industries Limited to

produce the pipes at scale in Bangladesh, and production started in 2010.

Benefits to business

The core business of Hatim Industries Limited is plastic pipes and consequently the business now has a new product in

its range that requires limited additional tooling costs, responds to agriculture market need, and can be marketed across

Bangladesh.

Benefits to society

Farmers have seen a reduction in costs due to a 20% reduction in irrigation water as well as 5-7% increase in yield due

to more effective management of available nutrient and increased tillers. On a larger scale the product addresses the

issue of food security.

Role of partnership

IDE provides market identification and commercialization as well as facilitation between partners and assists with rural

marketing communications. Hatim Industries Limited manufactures and markets the plastic pipe product as AWD.

Producers

Suppliers

Customers

Employees

Business

Distributors

Retailers

Producers

Suppliers

Customers

Employees

Business

Distributors

Retailers

Producers

Suppliers

Customers

Employees

Business

Distributors

Retailers

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Sustainable development partnerships are based on the understanding that certain goals

cannot be achieved by one organization working alone and that cooperative working

between different sectors in society can draw on a variety of distinct competencies,

resources and perspectives to provide greater value than each organization could alone.

Partnering is:

the process by which organizations from different sectors build sound relationships and operational

structures to deliver a common project;

the way a group of people, organizations and mechanisms collectively deliver a project not the project

itself.

Partnership:

is an ongoing working relationship where risks and benefits are shared;

recognises that partners share a common interest (the partnership goal);

recognises that each partner also has diverse drivers and interests that need to be met;

recognises the need for and value of each partner and therefore requires consensus, equitable

contribution (of different kinds) and mutual accountability;

involves co-design of and consensus on project and partnership operating procedures and review

mechanisms;

involves partners defining a common language in which to communicate.

Not all collaborative arrangements can or should be called partnerships:

It is worth noting that even within a transactional business model; some project partners may form a

collaborative working relationship. For example producers might form a network or co-operative, or a new

joint venture or Special Purpose Vehicle (SPV) might be formed to produce a new good or service.

Partnership is not appropriate for all forms of collaborative relationship.

Not all inclusive business models will involve partnership. Those seeking to set up an inclusive business

model will need to decide between a transactional or collaborative process for engaging non-traditional

business partners.

Network Coalition Partnership

Participants want greater

coherence between activitiesParticipants want to coordinate

activities, resources, skills

SPV/

Joint venture/

new institution

What are sustainable development partnerships?

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Evidence of certain core principles and behaviours define whether a relationship is a

partnership or not and adhering to these principles greatly enhances the success of a

partnership.

EQUITY?

What does ‘equity’ mean in a relationship where there are wide divergences in power, resources and influences? Equity is not the same as ‘equality’. Equity implies an equal right to be at the table and a validation of those contributions that are not measurable simply in terms of cash value or public profile.

TRANSPARENCY?

Openness and honesty in working relationships are pre- conditions of trust –seen by many as an important ingredient of successful partnership.

Only with transparent working will a partnership be truly accountable to its partner donors and other stakeholders.

MUTUAL BENEFIT?

If all partners are expected to contribute to the partnership they should also be entitled to benefit from the partnership.

A healthy partnership will work towards achieving specific benefits for each partner over and above the common benefits to all partners. Only in this way will the partnership ensure the continuing commitment of partners and therefore be sustainable

Partnering effectively

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Whether an inclusive business initiative is formed as a partnership or not, in this unfamiliar

cross-sectoral context, the way organizations and individuals acting as their

representatives behave has a tremendous effect on the success of the initiative. „Good‟

partnering behavior involves fostering a culture of mutual respect and can provide the

„fertile soil‟ in which innovation, trust, smooth running operations and effectiveness can

grow.

Attitude

Be flexible and open to new ideas wherever possible.

Recognize and respect the value of each partner‟s contribution, verbal and actual.

Encourage a culture of transparency by being transparent yourself.

Be honest about your interests, needs and constraints and ensure that other partners understand them.

Recognize that in order to get your interests met, you also need to help others get their interests met.

Seek to understand

Ask questions to gain a more fulsome

understanding.

Listen to and understand the real interests,

needs, and constraints of your partners.

Appreciate that different sectors have

different motivations, different cultures and

may use a different vocabulary and try to

translate these into your own understanding.

Practical suggestions

Spend time reflecting on your interactions

with other partners. Are there things you

/they may not have understood? Does this

build equity, transparency, mutual benefit?

Are there things you could do differently?

What assumptions am I making? What

expectations do I have?

Be aware and pay attention.

Be prepared, where necessary / feasible to

help build the capacity of partners to allow

them to perform their roles more effectively.

Ensure that you fulfill all the commitments

you make to the partnership.

Invest in training to build partnering skills and

a partnering mindset in key staff members.

Good partnering behaviour

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Internal buy-in

Both partnering and inclusive business challenge the

existing ways of doing things within both NGOs and

businesses. This can lead to internal tension and

opposition to change. Programmes can be seen as

high risk with long-term and uncertain returns and

therefore too challenging.

Internal commitment of senior and middle management

is helpful in overcoming this.

External environmental challenges

The poor are often underserved by public

infrastructure. Poor electricity, water access, old or

non-tarmacked roads, weak public transport and

communication systems, inexistent internet and

telephone connections and unexpected changes in the

socio-political context are all realities that may need to

be navigated.

Be flexible and create a working environment in which

problems become opportunities for learning, collective

problem solving and innovation.

Capacity

Partners often lack the partnering expertise needed or

may think they lack the time.

Open discussions about capacity building needs can

be helpful.

Timeframes

Building relationships and new ways of working takes

time and models often need refinement through trial

and error. The poor may need time to reach anticipated

productivity and quality standards.

Be patient but don‟t lose momentum.

Despite all these challenges, and more, there are numerous examples of successful sustainable

development partnerships that provide real social, environmental and economic value. There are many

inclusive business initiatives that are profitable and effective at providing market access to marginalized

groups thereby demonstrably improving livelihoods and lives. Today‟s businesses, NGOs and governments

house the change agents who are evolving the way we operate as a society, creating a more equitable and

cooperative system. The process requires courage and awareness at both the individual and organizational

levels. The patronage and personal involvement of senior management within all participating organizations

is strongly recommended to provide the necessary support and influence and give their teams the best

chance of success. Inclusive business and partnerships build the capacity of people, the organization and

society to work more effectively and cohesively.

For specific information and guidance on setting up and managing

partnerships, please refer to:

Step by Step - a simple guide to setting up and managing partnerships

(http://businessinnovationfacility.org/forum/topics/partnering-step-by-step)

The Partnering Toolbook - a more comprehensive guidebook and The Brokering

Guidebook – a comprehensive guide to facilitating/brokering partnerships

(http://www.thepartneringinitiative.org/publications.jsp)

For specific information and guidance on setting up and managing inclusive

business models, please refer to:

The Business Innovation Facility Practitioner’s Hub gateway to resources

(http://businessinnovationfacility.org/page/gateway-to-useful-resources

Common challenges faced when partnering for

inclusive business

Final word

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About RBPB

Following close to a decade of experience in private sector engagement and engendering positive impacts in

communities, as well as in businesses, CARE Bangladesh is implementing in 2011, a project titled "Responsible

Business Promotion in Bangladesh (RBPB)", with funding from U K Department for International Development

(DFID) and CARE International UK, CIUK. The initiative seeks to research and professionally document gaps in

understanding of inclusive business and partnerships amongst both the private and civil society sectors through

a series of interviews with prominent figures in these sectors, and respond effectively to reducing these gaps by

holding a seminar, two training sessions and two workshops which bring private sector and civil society actors

together, and which will also lay the foundations from which discreet and concrete private sector-CSO

partnerships are likely to develop.

About CARE

CARE is a global emergency response and development organization, which was established in 1946, and has

over 60 years of development experience. CARE is a network of 12 national member countries with operations in

over 70 countries across the globe. In Bangladesh, CARE has been operational for over 55 years! Working in the

poorest pockets of the country, with the most marginalized and vulnerable population groups, we address the

underlying causes of poverty and exclusion. Women‟s empowerment in fact is central to our development vision.

CARE's long range strategic plan governs the way we direct more than 80% of resources towards developing

innovative and sustainable programs that seek nothing less than engendering transformational changes in the

lives of the millions of Bottom of the Pyramid (BoP) clients we work with. CARE is also a trusted partner of

choice, amongst some of the most influential institutions in the country- such as the government, civil society,

and as of late, the private sector. CARE has established over 30 sustainable private sector partnerships that hold

the promise of creating and enhancing business and development value alike. www.carebd.org

About The Business Innovation Facility

The Business Innovation Facility helps the development and uptake of inclusive business models by companies

in developing countries. Funded by the UK Department for International Development (DFID), the Facility

supports companies that are developing inclusive business projects in Bangladesh, India, Malawi, Nigeria, and

Zambia. In these 5 countries the Facility helps companies directly by facilitating the process of developing

inclusive business, brokering partnerships, signposting to other sources of support, and/or sharing the cost of

consultancy support. The Facility also aims to help practitioners of inclusive business in any country through the

Practitioner Hub, an online community of practice that provides a gateway to the latest information, insights from

peers, good practice, useful resources, and lessons learnt about developing and implementing inclusive

business. To join the Practitioner Hub and become a member of the community visit

www.businessinnovationfacility.com

About TPI

The Partnering Initiative (TPI) is a programme of the International Business Leaders Forum (IBLF). The

Partnering Initiative aims to promote and support the use of cross-sector partnerships worldwide by

disseminating learning about partnerships, facilitating the sharing of practical experience, contributing to cutting-

edge knowledge, offering support, training and advice, as well as setting standards in what constitutes good

partnering practice. www.ThePartneringInitiative.org

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