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An entrepreneurial approach to inclusive growth

Growing wealth inequality and the United Nations’ Sustainable Development Goals’ vision of eradicating poverty have turned the spotlight on the concept of inclusive growth.

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Published by Think Business from NUS Business School
on 24 Feb 2017

An entrepreneurial approach to inclusive growth

By Audrey Chia

Growing wealth inequality and the United Nations’ Sustainable Development Goals’ vision of eradicating poverty have turned the spotlight on the concept of inclusive growth.

But what is meant by inclusive growth? The term has been used to refer both to the desired outcome, and to the process of achieving it. There is a danger that “inclusive growth”, while well-intended, may ultimately be so broad as to become an empty and meaningless catchphrase.

If inclusive growth is to have meaning and impact, it should be truly inclusive and relevant. “Inclusive” means including the poor at every stage, from defining the problem to developing the solution. It must be relevant in that efforts must be centred on the needs of the poor, appropriate for their circumstances, practical and implementable.

There have been many laudable efforts at inclusive growth by charitable organisations, individual philanthropists and multilateral organisations. However, a key assumption of traditional charity-based or aid-based solutions to poverty is that the poor are largely dependent or unable to help themselves — an approach characterised by helping the poor along. Well-meaning though they may be, they have been criticised by Nobel Laureate Angus Deaton, for example, for perpetuating reliance, helplessness and passivity among recipients.

Aid cannot go on indefinitely. Charitable donations get used up and have to be regularly replenished, so charities often run on a fund-raising model rather than one that builds self-sufficiency.

Neglected needs

Is there a better way? Social entrepreneurship offers an exciting and innovative approach to inclusive growth, tackling poverty and its attendant social and health problems. At the National University of Singapore, our research, which was recently published in the Journal of the American Medical Association, highlights the inclusive nature of social entrepreneurship that harnesses a broad range of ideas across fields of expertise to tackle fundamental health and social problems.

In social entrepreneurship, the primary purpose is to address a social need. To understand the challenges that the poor face, social entrepreneurs attempt to understand their priorities and neglected needs. Social entrepreneurship is founded on the assumption that, in most cases, the poor are resourceful, but may need a kick start to help themselves. Hence, social entrepreneurs step in to design and develop viable solutions together with the poor.

Take, for example, households’ need for reliable light sources after sunset. For many in the developing world, light comes from kerosene lamps, which deliver poor-quality light, emit harmful fumes, and are a fire hazard. Although the poor are aware of these problems, they lack the financial and technological resources to overcome them. Fishermen need a lamp at a certain level of brightness to attract fish. Others need lamps for cooking and studying. Understanding these needs, d.light, a social venture, developed a range of low-cost, sturdy lamps, among which one is for fishermen. A day of exposure to the sun charges the solar panel of each lamp to provide light for four to eight hours, while reducing exposure to harmful fumes and increasing productivity hours.

Another social venture, Kopernik, has an online platform to identify and meet needs, and deliver low-cost technologies to poor communities, particularly in remote areas. Based in Indonesia, Kopernik employs a group of female micro-entrepreneurs (affectionately termed Wonder Women) as distributors of low-cost technologies such as solar lamps, clean cook stoves and water filters. Villagers are also trained in basic finance and technical knowledge to become after-sales technicians and entrepreneurs so that they can become self-sufficient.

No panacea

Social entrepreneurs work with the poor to help themselves by co-designing, evaluating and delivering solutions. They show that social entrepreneurship can contribute to inclusive growth by creating positive economic, environmental and health outcomes for the poor. And that is what social ventures do — they demonstrate that they can be self-sustaining and depend less on other forms of funding.

Social entrepreneurship is not a panacea. First, even products co-designed with the poor have limited lifespans and breakdowns. End-of-life disposal also poses environmental problems.

Second, social ventures have varying degrees of success. A high-profile social venture that failed was Cause, a pub in Washington DC that pledged all its profits (after covering its costs) to the less fortunate, which closed in 2014 after 14 months of operation. Analyses of Cause’s failure showed that it could have done better in developing a core customer base in a very competitive food and beverage industry. More than just doing good, social ventures must also make good decisions based on sound business models.

A disciplined and focused approach to social entrepreneurship can contribute to inclusive growth that includes the poor at every stage: Sharing ideas, implementing solutions and evaluating them. This gives hope that growth will be not only inclusive, but enduring.

Last Modified Date: 18 Apr 2018