Filipino businesses have been found to have a low level of awareness and engagement with the poor, notably in their operations, a joint survey by the Board of Investments (BOI) and the United Nations Development Programme (UNDP) showed.
In the “Business+” study developed by the UNDP and implemented by the BOI involving the country’s top business associations, the survey found that the concept of inclusive business (IB) remains an “unfamiliar” phrase to local traders.
“Inclusive business is still an unfamiliar concept to most companies, and the enabling environment for IB is still [has] to be improved. This is where the study becomes relevant. Through the conducted baseline survey, enhanced by in-depth interviews, it was revealed that Philippine companies had low level of awareness on IB, with a mean score of 1.51 out of 7, meaning ‘not aware at all,” BOI Assistant Secretary for Investment Promotion Assistant Secretary Felicitas Agoncillo-Reyes said.
The study said a quantitative tool of the UNDP seeks to gauge the inclusivity of the poor in the private sector in different countries to guide development thrusts to a more inclusive economy.
The lack of awareness of what IB is led companies to shroud the concept in other terms, such as philanthropy or corporate social responsibility, instead of development concept, with implementation rules and principles.
In terms of actual engagement, the survey measured inclusiveness through a seven-point scale that describe to what extent the poor, or those living below the poverty line or earning less than P 9,140 for a family of five, are integrated into a company’s core operations.
These “entry points” into the company’s operations, for example, include: being an employee, consumer/customer, supplier, distribution channel member, entrepreneur or local community.
On this scale, the levels are modest as well; the highest mean score collectively notched by respondents on indicators of inclusiveness (employing the poor as the indicator) is 4.4.
Companies had the lowest mean score on the inclusiveness indicator measuring to what extent are the poor targeted as customers, with a mean rating of 3.35.
“The entry points that would have contributed greatly to sustainable human and economic development—such as doing business with the poor as suppliers, entrepreneurs, or distribution-channel members—had relatively lower scores,” the report read.
By type of business, unsurprisingly, social enterprises had the highest level of engagement, with the poor with a score above 5. This was followed by large national companies, and small and medium enterprises. The least engaged with members of the base of the pyramid are multi-national corporations.
On the bright side, companies do see the value of IB models, when asked to evaluate the effectiveness of the IB model in creating market value and social impact.
The BOI, in its latest Investments Priorities Plan (IPP), had already incorporated IB as an area eligible for incentives. However since the concept is new, there has yet to be registrants to the plan as an IB.
“BOI has been doing the roadshow of the new IPP, featuring Inclusive Business. Now, we’re doing special road shows on how to become an IB. It’s something new in the IPP,” Agoncillo-Reyes said.
Moreover, Agoncillo-Reyes said many companies may be doing what they perceive to be IB—that is engaging the poor in their own way—but have not met BOI’s criteria to become a full-fledged IB.
The IB area in the IPP has already attracted considerable interest from a few big companies, Agoncillo-Reyes said, but declined to name them. There are no registrants yet.
To avail themselves of the incentives in the IPP, companies have to disclose their IB plan for the next four years, which should include the generated employment, the percentage of materials are sourced locally, and at least an increase in income of the poor of 20 percent.
The projected increase in the income of the poor in the plan should be through a business innovation that could be translated via different mode. A stock-taking will be done on the third year.
The BOI is planning to create a unit next year to propagate IB concept and practice.