Corridors for Shared Prosperity Intra South-Asia Replication of Inclusive Business Models This assessment was conducted and document written for the International Finance Corporation (IFC) by Intellecap Advisory Services (Intellecap). DISCLAIMER IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. This report was commissioned by IFC through its Inclusive Business Models Group, which is leading efforts to promote inclusive business across IFC by catalyzing ideas and innovation; convening IFC clients, investment professionals and leading thinkers on inclusive business; and communicating which models work, and generating and disseminating knowledge on best practices. The conclusions and judgments contained in this report should not be attributed to, and do not necessarily represent the views of, IFC or its Board of Directors or the World Bank or its Executive Directors, or the countries they represent. IFC and the World Bank do not guarantee the accuracy of the data in this publication and accept no responsibility for any consequences of their use. For more details about this study, please write to Pallavi Shrivastava (pshrivastava1@ifc.org) Acknowledgments This project was conceptualized, guided and published by the International Finance Corporation (IFC), a member of the World Bank Group. The Inclusive Business Program at IFC has been working towards catalyzing private sector participation and inclusive business activity in the region. The report seeks to inform systematic expansion of inclusive business models amongst developing countries, with a specific focus on intra-South Asia replication. The task team for this study was led by Ms. Pallavi Shrivastava from the IFC South Asia regional Inclusive Business program. The research, interviews and documentation were conducted by Intellecap team comprising of Mukund Prasad, Usha Ganesh, Dipika Prasad, Saurabh Prakash Sinha, Anuja Kaushal, Harish Reddy, Nivedita Pooja, Rishabh Parakh. IFC would like to thank the entire team for their tireless work. IFC would also like to thank all the colleagues who contributed significantly to this report by providing constant advise and peer review - Mr. Toshiya Masuoka, Ms. Eriko Ishikawa, Ms. Kathleen Gartner Mignamo, Mr. Yuvraj Ahuja from the IFC Inclusive Business Group and Ms. Natalia Agapitova, Ms. Cristina Navarette Moreno and Ms. Ishira Mehta from the Leadership, Learning and Innovation Unit of the World Bank, for their invaluable inputs. We would especially like to thank our interview participants - impact investors, eco-system players, and entrepreneurs – for their key insights without which this report would not have been possible. We have included a full list of interviewees in the Appendix. Finally, our special thanks to Mr. Anil Sinha, former regional head of South Asia Inclusive Business program for his vision and guidance in carrying out this important work. 4 Corridors for shared prosperity Contents Foreword3 Acknowledgments4 Section A: Executive Summary 6 Section B: Inclusive Business Landscape in South Asia 8 Section C: Framework for Systematic Replication of Inclusive Businesses 14 Intent 15 Capacities 15 Dependencies 16 Section D: Lessons from Successful Replication 17 1. Overview of Replication Cases 17 Agricultural Sector 18 Healthcare Sector 19 Renewable Energy Sector 20 2. Comparison of Markets  21 3. Common Challenges of Replication Across South Asia 22 4. Opportunities in South Asian Markets 23 5. Key Learnings 24 Section E: Conclusion and Recommendations 26 Section F: Country Notes 28 1. Bangladesh  28 2. Nepal33 3. Pakistan38 4. Sri Lanka 43 5. Afghanistan 48 Annex 1: Case Study Summaries 51 Annex2: List of interviewees 60 Annex 3: Abbreviations 62 Annex 4: Inclusive Business Ecosystem Stakeholders 65 1. Regional65 2. Bangladesh66 3. Nepal67 4. Pakistan68 5. Sri Lanka 69 5 Section A Executive Summary Inclusive business models that use market-based approaches inclusive businesses, they are commercially viable and to address social inequity and create affordable access to replicable, and include low-income consumers, retailers, basic goods and services has grown rapidly in developing suppliers, and distributors in their core operations. countries over the past decade. South Asia is a global hub for these models. Over $9 billion in social impact-focused There is, therefore, an opportunity to replicate successful investments have been channeled into these models.[1] inclusive business models across the region.[2] Inclusive businesses that thrive in one South Asian country could Developing countries share several common socio- potentially identify opportunities to expand to new economic challenges. These include inequity, resource- geographies and create similar impacts. Such replication constrained public sectors, and poor business environments would reduce product development and innovation cycles, and investment climates. As a result, markets in these enable efficient utilization of scarce development funding, countries are inefficient in serving poor and low-income and open up large market opportunities to scale. However, communities at the base of the economic pyramid (BoP). successful replication is challenging due to the nascent state Over the past decade, countries such as India, Kenya, Brazil, of markets and infrastructure in most developing countries. and Bangladesh have emerged as hotspots of market-based Replication insights about ‘what works’ not only helps innovative business models that address socio-economic enterprises preempt and overcome challenges, but also challenges in scalable and sustainable ways. Also called enhances donor funding to individual inclusive businesses at the idea stages. 1 The Landscape for Impact Investing in South Asia, The Global Impact Investing Network, and Dalberg Global Development 2 9 cases of intra-South Asia inclusive business replication were Advisors, April 2015. evaluated as part of this study. See annex 2 for details. 6 Corridors for shared prosperity Growing government and private sector interest in bilateral • Capacity includes understanding management, trade and cooperation among South Asian countries is also financial, and operational readiness to replicate in creating a supporting environment for replication. There is a new market while ensuring business continuity growing trade and technology transfer between mainstream in the home market. corporations, as well as exchange of inclusive business models across the region. Pioneering efforts by inclusive • Dependencies involve understanding different businesses that have attempted replication to other ways in which the inclusive business model relies countries offer rich insights on the nature of successful on its external market environment to thrive, and cross-border expansion. using this information to make choices about entry markets and replication formats. In February 2015, IFC launched “Corridors for Shared Prosperity,” which presented a replication framework for This research study identified replication opportunities systematic South-South transfer of inclusive business and white spaces across focus sectors of agriculture, models with a focus on India-Africa replication. The healthcare, and renewable energy. These include short- framework was built on empirical evidence of ‘what works’ term opportunities in trade, technology transfer, and in replication, derived from an in-depth analysis of the strategic alliances to cater to immediate demand for expansion journeys of 11 inclusive businesses involved in products such as solar home systems and services such as agriculture, healthcare, and renewable energy. An industry healthcare for non-communicable diseases. Long-term report and a self-diagnostic Microsoft Excel-based tool opportunities include addressing demand that arises were created, which translated the framework to actionable from changing socio-economic scenarios and improving insights for inclusive businesses and their supporters. market efficiencies, such as organic farming and domestic manufacture of solar industry components. While Due to the positive response to the India-Africa study increasing cooperation among South Asian countries and a demand for a similar output for the South Asia might present different trends in the future, most current region, this second phase focuses on intra-South Asia replication activities are focused on India-Bangladesh replication of inclusive businesses. Cumulatively, both replication in the sectors of agriculture and healthcare. studies have incorporated insights from in-depth analyses of 20 instances of inclusive business replication and expert Finally, the study also recommends a way forward for opinions of nearly a hundred industry stakeholders. The scaling the intra-South Asia replication of inclusive South-South Replication Framework has been refined businesses with the involvement of stakeholders such as further, based on this wealth of empirical evidence and donors, investors, incubators, advisors, academia, and policy anecdotal insights. makers. Given the inherent challenges in replication and nascent state of inclusive business ecosystems in most The replication framework can help inclusive businesses countries, their early catalytic involvement is crucial. diagnose their replication readiness, and make systematic Specific action steps are proposed for each category of plans for successful replication. The framework is built on stakeholder, but from past evidence of ‘what works’ in three drivers of successful replication – intent, capacity, and building supporting ecosystems for inclusive businesses, dependencies. these organizations will be most effective when they work together to draw out opportunities for replication and • Intent entails understanding growth objectives address the key hurdles of doing business in developing and organizational preferences for replication, countries. and validating need in target markets. This helps to build better replication plans and make more informed choices. 7 Section B Inclusive Business Landscape in South Asia South Asia is one of the fastest growing regions in the Inclusive business, a sustainable and market-based world today, from an economic as well as social progress approach to development, has taken root in South Asia standpoint. Improving regulatory conditions, a resilient private sector, and one of the world’s youngest workforces South Asia accounts for more than two-fifths of the world’s make it a potential powerhouse of global growth in the poor and low-income communities.[3] At the same time, next few decades. However, challenges of poverty and economic and social progress has resulted in a growing inequity that crippled the region in the past persist, and middle class[4] and traction in achieving the Millennium it is still home to a vast segment of the world’s poor and Development Goals for 2014 (see Figure 1), and a positive low-income communities. Traditional philanthropic outlook towards the Sustainable Development Goals for approaches have been working to bring about inclusive 2030.[5] Over the past few decades, the region has become a growth and social change. Over the past two decades, a new fertile bed for experimentation, and has seen the emergence movement that uses market-based approaches for inclusive of new models for development. Many such successful development has taken root in the region. Often described models generate revenues to cover at least some, if not all, as ‘inclusive business’, this approach blends scalability and of their expenses. Several generate profits and returns for sustainability with a mission focus on social impact. investors. The models range from community-led farm-to- market linkage programs by organizations such as Amul in India, to more recent business-led approaches of Grameen Figure 1 and BRAC in Bangladesh. SOUTH ASIA PROGRESS ON MILLENNIUM DEVELOPMENT GOALS[6] MDGS/COUNTRY BANGLADESH INDIA PAKISTAN SRI LANKA NEPAL $1.25 per day On track Early achiever Early achiever Early achiever Early achiever poverty Country line On track Early achiever Early achiever Early achiever NA poverty Underweight On track Slow Slow On track Slow children Primary school Regressing/ NA On track Slow Early achiever enrollment No progress Reaching last Regressing/ Regressing/ Regressing/ NA Early achiever grade No progress No progress No progress Completion of Slow Early achiever Slow Early achiever Early achiever primary schooling Gender primary Early achiever Early achiever On track Early achiever Early achiever 3 South Asia Regional Overview, World Bank, 2015. 4 The Rise of Asia’s Middle Class, Asian Development Bank, 2010. 5 Making it Happen, Asia Pacific Millennium Development Goals Report, UNDP and ADB, 2014/15; http://www.un.org/ 6 Ibid sustainabledevelopment/sustainable-development-goals/ 8 Corridors for shared prosperity MDGS/COUNTRY BANGLADESH INDIA PAKISTAN SRI LANKA NEPAL Regressing/ Gender secondary Early achiever NA NA Early achiever No progress Gender tertiary Slow Slow Early achiever Early achiever Slow Under-5 mortality Early achiever Slow Slow Slow Early achiever Infant mortality Early achiever Slow Slow Slow Early achiever Maternal mortality Slow Slow Slow Slow Early achiever Skilled birth Slow Slow Slow Early achiever Slow attendance Antenatal care Slow Slow Slow Early achiever Slow HIV prevalence On track Early achiever On track On track Early achiever TB incidence On track Early achiever On track On track On track Regressing/ TB prevalence Early achiever Early achiever Early achiever Early achiever No progress Regressing/ Regressing/ Regressing/ Regressing/ Forest cover Early achiever No progress No progress No progress No progress Protected area Early achiever Early achiever Early achiever Early achiever Early achiever CO2 emissions per Regressing/ Early achiever Early achiever Early achiever Early achiever GDP No progress Safe drinking water Early achiever Early achiever Slow Early achiever Early achiever Basic sanitation Slow Slow Slow Early achiever Slow 9 Figure 2 INCLUSIVE BUSINESS APPROACHES INCLUSIVE BUSINESS INCLUSIVE BUSINESS SOCIAL ENTERPRISE MODELS ACTIVITIES INITIATIVES BoP’s relationship to Ancillary or core Core value chain Ancillary business value chain Financial return Market returns or below Not profit Market returns expectations market returns maximizing Primary funding type Commercial Commercial Mixed Inclusive business models are commercially viable as they inclusion of underserved low-income communities by depend primarily on commercial sources of financing providing them with affordable products and services for operations and aim to realize market returns. They and linking them to market value-chains and jobs for include low-income and under-served consumers, retailers, better livelihoods. Pioneering work by these early social suppliers, or distributors in core operations. The inclusive entrepreneurs or inclusive business entrepreneurs began business approach helps build capacities of low-income to gather more support and momentum,[10] especially in businesses and entrepreneurs; increase access to finance Bangladesh and India. Today, South Asia has emerged as a for businesses and consumers; create or adapt products to global hub of inclusive business activity. meet local needs and requirements; and develop innovative distribution approaches for hard-to-reach communities. South Asian inclusive businesses show diversity in These business models can be part of a successful long- their approaches to create impact term growth strategy that creates new market-based opportunities, eliminates market inefficiencies, solidifies Inclusive business models in South Asia engage with low- supply chains, and builds future brand loyalty.[7] This income populations in three distinct ways. Some models definition; categorizes inclusive businesses differently from serve the poor as consumers of affordable products and social enterprises and inclusive business activities as shown services; others focus on improving livelihoods by linking in Figure 2.[8] small producers (for example, farmers and artisans) to markets; and yet others focus on improving livelihoods by The concept of inclusive business in South Asia providing vocational training and connections to jobs.[11] gained prominence with the growth of the for-profit Since 80 to 90 percent of South Asia’s poor live in rural microfinance movement in the late 1990s areas,[12] a majority of inclusive businesses have a rural focus. However, the inclusive businesses working in sectors such Although microfinance—in the form of informal lending as healthcare and thematic areas such as climate change and buying—has existed in South Asia for centuries, the also engage with communities residing in urban slums and idea of ‘modern’ microfinance was born in Bangladesh in other underserved communities. While these communities the mid-1970s.[9] The success of microfinance in providing are relatively smaller than the rural BoP segment, they financial services using social collateral in place of real represent a sizable market for inclusive businesses. assets validated the feasibility of doing business with the poor. Around the same time, development experts and Inclusive businesses reach consumer groups in rural and entrepreneurs were exploring ways to drive economic urban areas using a blend of B2C (business-to-consumer, 7 Inclusive Business Models at IFC, May 2015. 10 Invest. Catalyze, Mainstream – The Indian Impact Investing Story, Intellecap, 2015. 8 Reproduced from IFC publication G20 Inclusive Business Framework 11 Primary interviews with key stakeholders, Intellecap analysis. 9 Microfinance in South Asia, World Bank, December 2006. 12 Rural Poverty Portal IFAD, Accessed in October 2015. 10 Corridors for shared prosperity in which a product or service is directly sold to the end Inclusive business models in South Asia have customer) and B2B (business-to-business, in which a attracted significant impact capital product or service is sold to another business, which may in-turn sell it to end customers) models. Indian More than $9 billion of risk capital has been invested and Bangladeshi ventures show greater innovation in in such businesses[17] in South Asia, showing their outreach, using models such as village-level entrepreneurs potential to grow and scale. Within South Asia, inclusive or door-to-door sales agents (for instance, Dharma Life[13] businesses in India have received the most impact in India and Jita[14] in Bangladesh), and collaborating with capital, with investments estimated to be more than grassroots organizations to mobilize, reach, and service $5.4 billion to date.[18] Approximately 92 percent of total end-consumers (for instance, Digital Green[15] in India impact capital has come from development finance and Mobile Alliance for Maternal Action(MAMA)[16] in institutions (DFIs). In Pakistan, while political instability Bangladesh). There is also considerable diversity in models and terrorism discourage foreign investors, an engaged across the three focus sectors of agriculture, healthcare, community of domestic investors is quite optimistic and renewable energy. Some models are based on product about the market. Bangladesh has a well-established innovation (for example, VisionSpring and Solaric), others presence of large domestic donors as well as DFIs. In Sri provide innovations in service delivery (for example, IHS Lanka, though the regulatory environment is favorable Informatics and MAMA), and yet others address market for investors, inclusive business is a relatively new inefficiencies (for example, eKutir and AquAgri). Some concept and is yet to take off at scale. In Nepal, inclusive common examples of approaches adopted by inclusive businesses in South Asia are shown in Figure 3. Figure 3 EXAMPLES OF INNOVATIVE APPROACHES ADOPTED BY INCLUSIVE BUSINESSES IN SOUTH ASIA Leveraging technology to provide affordable end-to-end TB solutions to underserved patients IHS Pakistan is a healthcare focused technology firm that creates technologies for use among underserved communities. While its main area of expertise lies in developing and implementing eHealth and mHealth solutions, it also provides long-term technical assistance as well as training and institutional capacity building. It specializes in solutions that involve mobile-based interfaces for frontline healthcare workers and low-income patients. It has in-house domain expertise in building open-source products for TB screening, diagnosis, and compliance. Its TB- related solutions have been customized and adapted by clients and partners across 13+ countries in Asia, Africa and Latin America. Delivering high performance, durable and affordable clean technology solutions to the last mile Envirofit India manufactures and distributes clean technology solutions that improve health, livelihoods, and environment while enhancing energy efficiency across Asia. Its primary product is a range of cookstoves that have been designed using natural draft technology to decrease smoke, toxic emissions, fuel consumption, and the time taken to cook. It partners with MFIs and NGOs, as well as large donor programs for distribution and customer financing to reach the last-mile. It has positively impacted 2.5 million people across 3 countries in South Asia. Engaging local communities to serve farmers and low-income population with a multitude of solutions to improve livelihoods eKutir India takes a holistic approach to improving the income and quality of life of small farmers by providing them with farming advice, inputs, financing, and market linkages. These services are provided through kiosks managed by micro-entrepreneurs who leverage technology to provide high quality, locally contextualized services. It also manages a rural distribution network that helps corporates and inclusive businesses reach the last-mile with affordable services to improve quality of life. It has impacted more than 58,000 farmers and low-income consumers across 4 countries. Source: Intellecap primary research, IHS Informatics, Envirofit India, eKutir. 17 The Landscape for Impact Investing in South Asia, The Global 13 http://www.dharma.net.in/ Impact Investing Network and Dalberg Global Development 14 http://www.jitabangladesh.com/ Advisors, April 2015. 15 http://www.digitalgreen.org/ 18 The Landscape for Impact Investing in South Asia, The Global Impact Investing Network, and Dalberg Global Development 16 http://www.mobilemamaalliance.org/mama-bangladesh Advisors, 2015. 11 businesses are mostly supported by DFIs. Figure 4 is a sector arm of the World Bank Group, alone has snapshot of capital deployment and impact fund activity committed approximately $2.2 billion in the across the region.[19] region in debt and equity between 2005 and 2015, primarily in India. Financial services, followed by renewable energy, healthcare, and agriculture are sectors that have attracted The private sector ecosystem for inclusive most of these investments.[20] Companies at more mature businesses is becoming more diverse and growth stages have attracted most investments in terms of mature, with stakeholders providing financial value of funding, since smaller investments in early-stage and non-financial support companies (start-ups as well as companies in early-growth phases) are challenging and there is limited investor access Diverse stakeholder groups are present in the to high-quality deal-flow at this stage. Debt is the most inclusive business landscape of South Asia as shown popular investment instrument used, followed by equity, in Figure 5. guarantees, and quasi-equity instruments.[21] IFC, the private Figure 4 NUMBER OF FUNDS ACTIVE AND AMOUNT OF CAPITAL DEPLOYED IN SOUTH ASIAN REGION Number of funds 50 7 9 11 6 5421 Amount of capital deployed 1989 (US$ mn ) 955 488 17 India Pakistan Bangladesh Sri Lanka Nepal Source: The Landscape for Impact Investing in South Asia, April 2015, The Global Impact Investing Network and Dalberg Global Development Advisors 19 The landscape for impact investing in South Asia, GIIN, 2014 20 The Landscape for Impact Investing In South Asia, GIIN, 2014 21 The Landscape for Impact Investing In South Asia, GIIN, 2014 12 Corridors for shared prosperity Figure 5 ECOSYSTEM SUPPORT FOR INCLUSIVE BUSINESSES IN SOUTH ASIA INVESTORS ECOSYSTEM ENABLERS Financial intermediation Debt Provider Investment Banks Mainstream Business VCs Provide support & Advisory Provide Capital services INCLUSIVE BUSINESSES Impact Associations Funding for Funds market building Some funds are members Incubators Angels and Angel Invest Directly Forums and Networks Platforms LIMITED PARTNERS Family Offices/ HNIs DFIs Government Others Foundations Governments support inclusive business through While all three focus sectors for this study have received sector-focused tax breaks, subsidies and budgetary support, governments tend to intervene more directly in allocations healthcare by providing primary healthcare. In contrast, they play more of a market-making role in agriculture and Governments across the region provide support through renewable energy by providing tax breaks, subsidies, and enabling regulatory environments, capacity-building and budgetary allocations. On a comparative basis, governments infrastructure-building programs. However, this support is of India and Sri Lanka have been most supportive, while generally available to private sector enterprises operating the governments in Pakistan, Bangladesh, and Nepal have in particular sectors. A key challenge in institutionalizing shown limited participation owning to political instability. support for inclusive businesses is the difficulty in defining an inclusive business in developing countries with large low-income populations. As few businesses self-recognize as inclusive businesses, governments prefer to recognize businesses by size and sector. 13 Section C Framework for Systematic Replication of Inclusive Businesses The structured framework for inclusive business replication is • Diagnose their replication readiness based based on the three pillars of Intent, Capacity, and Dependencies on management, operational, and financial as shown in Figure 6. This framework was first launched capacities. Inclusive businesses can also in February 2015 by IFC and Intellecap. It was informed specifically measure their replication readiness by empirical evidence of nine cases of inclusive business based on the nature of their business models replication from India to Africa, and two from India to South and their key dependencies. and South East Asia.[22] Eleven new intra-Asia replication cases were studied in August and September 2015[23] to extend the • Identify suitable replication destinations across scope of the framework to South Asia, and further refine and South Asia (covering Bangladesh, India, Nepal, strengthen the framework by adding more sector specificity Pakistan, and Sri Lanka), and Sub-Saharan Africa and greater cross-linkages between them. (Ghana, Kenya, Nigeria, Tanzania, and Uganda) Overall, close to 100 industry experts comprising inclusive • Identify lucrative replication formats based on businesses, funders, advisors, and others provided insights to intent, capacities, and dependencies across seven build the South-South Replication Framework. It is applicable formats (knowledge sharing, licensing, trade to for-profit as well as sustainable non-profit models, and partnerships, strategic alliances, franchising, is specifically intended for small and medium businesses. joint ventures, and acquisitions/wholly owned Inclusive businesses can plan structured replication by using subsidiaries) the tool to: Figure 6 FRAMEWORK FOR INCLUSIVE BUSINESS REPLICATION INTENT CAPACITY DEPENDENCIES Objectives and Organization readiness Macro-level, sectoral, and preferences of replication for replication organizational dependencies • Management capacity: for example, • Macro-economic dependencies: for • Growth objective bandwidth, networks and relation- example economic stability and • Control preferences ships in target markets investment climate • Outlook towards financial risk • Financial capacity: for example, • Sectoral dependencies: for example • Efforts put into early market validation financial sustainability and access to policy environment and presence of • Preferences of working in partnership funding for expansion suppliers and distributors with others • Operational capacity: for example, • Organization-level dependencies: for • Country and format preferences. decision-making structure and com- example market viability, access to petitive strengths. finance, and need for skilled talent. 22 An interactive Microsoft Excel-based tool was also developed to make the framework more action-oriented. It allowed inclusive businesses to use the framework logic overlaid with data from focus countries and sectors to understand their internal readiness for replication, and also make more informed choices of destination formats and countries. Please refer to Corridors for Shared Prosperity: Spotlight on India-Africa Inclusive Business Transfer, and accompanying technical notes for more details. 23 See Annex 1 for approach to refinement 14 Corridors for shared prosperity INTENT organizations and partners. A key outcome of such efforts is that the business understands the potential horizon of The intent of replication is a combination of three key returns and the need to work with other organizations in factors – growth objectives, organizational preferences, new markets. This helps refine its own preferences around and early analysis of destination markets. Understanding working with partners, as well as preferences for countries these can help businesses understand the implications and replication formats. of ‘Intent’ on replication plans and outcomes and make more informed choices. CAPACITIES Growth Objective Inclusive businesses have limited resources to expend on Growth objectives include short-term goals such as replication, and hence are far more likely to succeed if increasing revenues and market share, and long-term they invest time in building capacities prior to moving to goals such as global positioning and scaling impact in a new market. The three pillars of organizational capacity new geographies. They are usually driven by a mix of are financial, management, and operational capacities. A internal and external factors. Internal factors include comprehensive assessment of these three factors can help intent to increase business footprint and expansion of proactively plan the development of capacities required for the impact of its business model in the target market. replication. External factors include replication incentives from government agencies and donor organizations, as well as Management Capacity specific invitations to partner with local firms. The two pillars of management capacity for replication are the availability of senior management time and bandwidth Outlook Towards Financial Risk to focus on a new market, and the relationships and Outlook and appetite for taking financial risk in new networks that these senior leaders have in new markets. markets also shape Intent by narrowing or opening In the absence of these building blocks, replication can up country and replication format choices. Financial be time-consuming and fraught with false starts and security allows the enterprise to explore more replication uncertainties. Other factors that contribute to improved formats. For instance, among the businesses evaluated for management capacities for replication include senior this study, Beej Sheetal[24] was most financially secure, and management’s experience in initiating and scaling business could withstand the financial risk; hence it was able to expansion, strength of talent management practices, and replicate to multiple countries using different replication the availability of a well-trained second line of leadership formats and was able to give its international teams that can step up to take strategic roles in new markets. significant working capital advances without needing them to break-even in the short-term. On the other hand, Financial Capacity IHS, which is structured as a technology consulting Financial capacity for replication is a function of the firm, can take limited financial risk. Hence, it only enters fundamental sustainability of the business model and markets once it has a signed contract from a client in access to sufficient funding for replication until break-even place – this narrows down the choice of replication is achieved in a new market. While inclusive businesses markets and formats considerably. are by nature focused on sustainability, not all models are entirely devoid of risk. In fact, businesses that have at least Efforts Put into Early Market Validation one well-established revenue source that is not at risk from Understanding market demand and consumer behavior seasonal spending patterns or payments from a small set in target geographies also helps to shape Intent of of clients are more ready to replicate than those that lack replication. All the inclusive businesses we studied these strengths. Not only should a significant portion of the carried out such early validation efforts—primarily revenue be de-risked and predictable, but it should also be focusing on secondary research and inputs from network sufficient to cover operational expenses without the need to 24 Refer to Annex 2 for details on all inclusive businesses mentioned 15 rely on external gap funding. In the absence of these financial to adapt to ground realities; determine what constitutes strengths, replication is likely to rely on grant funding and be management, financial, and operational readiness; less sustainable in the long run. and make informed choices about new markets. In the context of this study, ‘dependencies’ are the sum total Operational Capacity of all the market conditions, third-party services, and The existing and planned operational capacity of a firm—in infrastructural support that inclusive businesses require terms of the resources and processes required to develop to thrive in any market. and deliver the product or service in a new geography—is a key driver for success in replication. Inclusive businesses Any business that is established in a country has built that possess necessary components and indicators of a its value proposition, strategy, and operating model to mature operational model, such as ease of replicability and suit that market. As it seeks to move out to new markets, efficient asset utilization, will find themselves better prepared it is critical to understand which dependencies must be for replication. These factors, coupled with supporting met in exactly the same fashion as they are in the home competitive advantages and technical strengths such as market (for example, reliance on highly-skilled talent) intellectual property, knowledge and processes, and strong versus which dependencies can be met by adapting the research and development focus, serve to build operational business model (for example,. shifting from B2C to B2B capacity for replication. sales where last-mile distribution infrastructure is nascent or absent). DEPENDENCIES To make this distinction, it is useful to think of While ‘intent’ and ‘capacities’ are inward-looking aspects dependencies in three categories: ecosystem level, sector of successful replication, understanding a model’s business and sub-sector level, and organization-level dependencies dependencies can bring in an outward-looking perspective as shown in Figure 7. that includes market nuances. This understanding is necessary Figure 7 UNDERSTANDING BUSINESS DEPENDENCIES FOR SUCCESSFUL REPLICATION ECOSYSTEM LEVEL SECTOR LEVEL ORGANIZATION LEVEL ■ Economic growth and stability ■ State of value chains ■ Geographic focus (rural/urban) ■ Investment climate ■ Suppliers and distributors ■ Import reliance ■ Ease of doing business ■ Regulatory system ■ Customer financing ■ Infrastructure ■ Private-sector activity ■ Talent ■ Political and social risk ■ Competition ■ Cultural context ■ Market characteristics ■ FDI restrictions ■ Priority-sector lending 16 Corridors for shared prosperity Section D Lessons from Successful Replication OVERVIEW OF REPLICATION CASES availability of funding for expansion helped them replicate faster, while IHS’s advisory-focused business model led Of the nine case studies outlined in this report, six them to countries where clients were active. originated in India, two in Bangladesh, and one in Pakistan. None of the cases originated in Sri Lanka The most common replication format were partnerships and Nepal, indicating the nascent state of the inclusive or joint ventures, given the nascent state of most markets business space in these countries (refer to annex 2 for and need for local relationships to tackle regulatory details). In terms of target destinations, nearly 45 percent complexities. Only two of nine cases pertained to expanded to more than one country (Figure 8). These knowledge or technology transfer. Beej Sheetal presents a included Beej Sheetal (which expanded to four), Envirofit rare case of replication through a wholly-owned subsidiary, (three), Solaric (two), and IHS Informatics (two). which expanded from India to Bangladesh. Envirofit and Solaric’s strong product portfolio and Figure 8 SNAPSHOT OF REPLICATION CASES India Bangladesh Nepal Pakistan Sri Lanka Knowledge / Technology Transfer Wholly owned subsidiary Partnership / Joint Venture 17 AGRICULTURAL SECTOR ■■ Agriculture contributes ~19 percent of GDP across ■■ New opportunities are arising on account of change South Asia, providing jobs and livelihoods to over 60 in demand patterns, revolution in information and percent of the labor force communication technology, and globalization. ■■ Agriculture farming in South Asia is dominated The cases of replication discussed in this section are: by small landholdings, with holdings below one ■■ Beej Sheetal hectare accounting for more than 60 percent of total ■■ eKutir farm holdings ■■ AquAgri Figure 9 SNAPSHOT OF INCLUSIVE BUSINESS CASE STUDIES IN AGRICULTURAL SECTOR AGRICULTURE Beej Sheetal eKutir AquAgri ■■ Beej Sheetal develops and distributes ■■ eKutir takes a holistic approach ■■ AquAgri is engaged in high quality transgenic vegetable to improving the income processing seaweed and seeds in India, South Asia, and Africa. and quality of life of small marketing value-added It has developed several hybrid farmers by providing them products. Its products have varieties of vegetables through with farming advice, inputs, applications in a variety in-house R&D, and has its own seed financing, and market linkages. of industries such as food production facilities spread over These services are provided processing, agriculture, and 6 hectares in Jalna, Maharashtra through kiosks managed by animal husbandry micro-entrepreneurs ■■ The company chose trade ■■ The company preferred to partnerships in Sri Lanka, Nepal ■■ The company had limited enter into a strategic alliance and Pakistan. It set up a subsidiary financial capacities and with a local partner who could in Bangladesh because market was risk appetite, and hence help with outreach to coastal larger, with presence of several preferred to replicate through farmers, and also add brand players from different countries. It knowledge transfer value to products in Sri Lanka set up a seed production facility in Bhutan for temperate seeds 18 Corridors for shared prosperity HEALTHCARE SECTOR ■■ One in every two persons in South Asia cannot The cases of replication discussed in this section are: afford expensive private healthcare, and public health ■■ IHS services are inadequate ■■ MAMA ■■ Private sector provides close to 80 percent of all ■■ VisionSpring healthcare services ■■ Two poorest quintiles of the population access healthcare at home instead of a medical facility in 84.4 percent of instances. Figure 10 SNAPSHOT OF INCLUSIVE BUSINESS CASE STUDIES -HEALTHCARE SECTOR HEALTHCARE IHS Informatics MAMA VisionSpring ■■ IHS is a healthcare-focused ■■ Mobile Alliance for Maternal ■■ VisionSpring aims to provide technology development firm that Action (MAMA) is a global access to affordable eyewear creates and adapts technologies for alliance for improving maternal products and services. It use among low-income consumers. and child health through mobile focuses on serving the eye It specializes in solutions that technology. MAMA Bangladesh care needs of low income involve mobile-based interfaces for leverages its partnership with populations in developing frontline healthcare workers and government agencies, private countries through innovative low-income patients sector and NGOs for reaching eyewear distribution models out to families in rural areas ■■ The company preferred strategic ■■ The company preferred and urban slums with maternal alliance with a single partner in to work in partnership care information each country; adapting XpertSMS to (strategic alliance) with unique needs of its partner, building ■■ The company referred to enter others so as to scale rapidly their capacities for implementation, new markets through strategic to multiple countries without and then exiting the partnership alliance with strong partners a drain on its own resources who could provide local context for adapting the MAMA model 19 RENEWABLE ENERGY SECTOR ■■ More than 500 million people do not have access to ■■ Lack of consumer awareness, political and governmental grid electricity in South Asia and nearly 70 percent of all policies, high installation costs, and low efficiency are household energy needs are met through biomass the main obstacles in developing renewable energy in South ■■ Solar power is the most suitable among all renewable Asia. energy for Asian countries with the region receiving an The cases of replication discussed in this section are: average of more than eight hour bright sunlight per day for ■■ Solaric more than 300 days a year ■■ Envirofit India ■■ Atom Solar Figure 11 SNAPSHOT OF INCLUSIVE BUSINESS CASE STUDIES IN RENEWABLE ENERGY SECTOR RENEWABLE ENERGY Solaric Envirofit Atom Solar ■■ Solaric develops and manufactures ■■ Envirofit India manufactures ■■ Atom Solar provides affordable solar energy home systems, backup and distributes clean and portable solar powered systems, and nano-grid systems for technology solutions that water pumping solutions off-grid populations in rural areas. improve health, livelihoods, for use in rural and urban Solaric’s proprietary micro-inverter and the environment while areas. Atom Solar’s SunTrolley technology optimizes energy enhancing energy efficiency caters to farmers with less efficiency and improves the life of across Asia. Its primary product than a hectare of land; and solar technology is a range of cookstoves that no recurring costs such as have been designed using purchase of diesel or power ■■ The company preferred partnership natural draft technology models for easier access to markets. ■■ The company opted to work to decrease smoke, toxic It explored three models based with partners because it emissions, fuel consumption, on geographies – trade in Nepal, relies on local operational and and time taken to cook strategic alliance in India, and joint financial assistance; choosing venture in Tanzania ■■ The company preferred trade a strategic alliance in Nepal to partnerships because it did not explore a deeper engagement have enough capital reserves and a trade partnership in to invest in a wholly-owned Afghanistan because of security subsidiary and did not want to concerns risk investing in a new market 20 Corridors for shared prosperity COMPARISON OF MARKETS A comparative snapshot of the state of inclusive business markets across different South Asian countries is shown in Figure 12. Figure 12 COMPARATIVE ASSESSMENT OF MARKETS AS REPLICATION DESTINATIONS Bangladesh Nepal Pakistan Sri Lanka • Concept of inclusive business is well established • Concept of inclusive • Inclusive business is a with increasing activity, business is well developed relatively new concept though primarily under the • Inclusive business is a and recognized under the framework of “social relatively new concept • For-profit focus, especially in “social entrepreneurship or enterprise” based approaches • Inclusive businesses are Inclusive social business framework the agriculture and renew- able energy sectors • Both for-profit and gradually moving from business • BRAC and Grameen key • Health sector has few not-for-profit inclusive traditional not-for-profits context players and enablers to sustainable models as successful cases of businesses are emerging • Many inclusive businesses across impact sectors donor/grant aid is not-for-profit models of dwindling. operate as not-for-profits. inclusive businesses. • High presence of NGOs in healthcare discourages market-based activity. • Best environment for • Ease of doing business is • Ease of doing business is • Ease of doing business is low doing business among low and is declining due to low, but has shown some and is declining due to South Asian countries. Key challenges in getting improvement in 2015. Key challenges in corporate tax challenges are in enforcing access to electricity, challenges are in trading structure, enforcing contracts, corporate tax registering property, and across borders, enforcing contracts, and getting access structure, and registering enforcing contracts contracts, and getting to electricity Business access to commercial credit. property. and • Limited activity in • One of the more vibrant • Underdeveloped inclusive investment dedicated funding for • Donor and grant funding inclusive business business ecosystem, but limate c inclusive businesses, but dominated market with ecosystems outside of India; considerable activity in high activity of donors and 50-60 development banks in 11 institutional equity mainstream funding (25 mainstream banking operation. Two investors, three angel banks, 20 PE/VC funds), sector, could potentially newly-launched impact groups, and 11 donors which could potentially fund inclusive business. funds focus on inclusive support inclusive businesses serve inclusive businesses. businesses. (non-exclusively). • Provision of tax holidays in • 100 percent FDI allowed in • Has sector-specific policies agro-processing, pharma, healthcare and R.E. FDI to encourage participation • Government aims to reduce poverty by Regulatory fertilizer and insecticide restrictions in poultry, of small businesses in promoting agriculture and support for sector • fisheries. impact sectors developing SMEs; also inclusive • Small enterprises are Promotion of export-oriented • Inhibitive tax policies such declared SME sector as a business required to pay turnover agribusinesses through as 5 percent customs duty priority sector for lending. tax at the rate of 2.5 reduced tax of 20 percent and 17 percent GST on percent instead of the compared to 25 percent for imports of solar products standard 15 percent. other business. inhibits growth of SE. • Lack of real and ICT • Delays in policy formulation, • Low quality of ICT • Limited access to capital infrastructure and time consuming infrastructure • Difficulty in doing business bureaucratic processes • Limited size of the • Low customer willingness domestic market and raising capital • Lack of last-mile distribution to pay • Low willingness to pay and customer financing • Lack of last-mile Challenges • Time-consuming processes • Difficulty in hiring and • Rural low-income consumers infrastructure for have limited awareness of and complex tax policies. distribution and retaining talent inclusive business products financing. • Inadequate availability of and services, and hence sales market data. conversion rates are low. Source: World Bank Doing Business Report 2015; The landscape for impact investing in South Asia, GIIN, 2014; invest2innovate, 2014, Pakistan Entrepreneurship Ecosystem Report 21 There is increasing cross-border replication across South countries. Most countries suffer from unreliable electricity Asian countries. During this research study, close to 20 supply, lack of adequate road networks—especially in rural such replication instances were tracked, of which nine were areas, and low internet and technology penetration. Further, analyzed in detail. Analysis shows that most replication market support services that can help inclusive businesses activity originated in India and is focused on other reach the last mile (such as aggregators of door-to-door sales developing countries. Most cross-border replication cases agents and formal retail networks; and financing institutions were noted in the India-Bangladesh corridor, followed by such as microfinance institutions) are still nascent. replication to Sri Lanka and Nepal.[25] In terms of suitability of markets as replication destinations, all countries have To tackle the problem of inadequate infrastructure, inclusive strengths and weaknesses, but in general, India and businesses have selectively chosen to work in areas where Bangladesh offer more a supportive local ecosystem as there is a minimum level of infrastructure development shown in Figure 12 (page 21). including roads, and internet and telecom penetration. Where possible, they have adapted their models to cater In terms of sectoral diversity, significant healthcare and to the state of infrastructure in target countries. Inclusive agriculture inclusive business replication took place in businesses have also identified partner organizations (public Bangladesh and Nepal over the past five years. While the and private sector) with existing operations in difficult- ecosystem for business support is less developed, common to-serve regions to provide cost-effective alternatives to cultural contexts with India, and the high incidence of investing in own infrastructure. medical tourism from these countries to India helped validate the market for healthcare products. Most Difficulty in accessing in-country sources of capital replication traction is in technology-based healthcare Small and medium inclusive businesses, particularly service delivery (IHS and MAMA), and in healthcare those at the early stages of growth, have limited access to products (VisionSpring). Likewise, in the agriculture sector, institutional capital in many South Asian countries (such similarities in cropping patterns and farming practices have as Nepal and Pakistan), and hence rely on funds raised from validated market potential for replication. Most replication friends and family, or even international funders. This poses cases in the agricultural sector have focused on improving a challenge to inclusive businesses seeking to replicate in the agricultural productivity through farmer education and country, especially those who have higher working capital market linkages (for example, through models such as requirements, and hence need frequent capital infusion. e-Kutir and Digital Green), and supplying high quality inputs (Beej Sheetal).[26] On the other hand, traction in Inclusive businesses have overcome this challenge by the renewable energy segment is poor. This can probably securing funds ahead of replication to support scale-up, with be attributed to the fact that no South Asian country has the expectation that domestic capital will be easier to source significant strengths in R&D or large-scale manufacturing from banks or mainstream PE/VC funds once they reach a of such products. All countries in the region tend to rely on certain size. Chinese manufacturers for this. Low customer willingness to pay COMMON CHALLENGES OF REPLICATION Low-income customers are unwilling to pay for products ACROSS SOUTH ASIA and services in some countries, especially in the healthcare sector, as a majority of the services are provided by NGOs While each market in South Asia presents its own set or the government free or at highly subsidized costs. of unique challenges for inclusive business replication, Bangladesh and Pakistan are examples of these countries. A the following section briefly describes some common similar pattern is observed in the renewable energy sector challenges seen across several South Asian countries. in Nepal and Bangladesh where the government provides subsidies to businesses that can then provide low-cost Lack of sufficient infrastructure products. This tends to distort the market in the long run Lack of infrastructure poses a challenge for inclusive and poses problems for businesses that intend to replicate businesses intending to replicate across South Asian through a for-profit, sustainable model. Inclusive businesses have mitigated this challenge by 25 IFC Blog, Strengthening the Ecosystem to Mainstream Inclusive selectively working in regions where such market distortions Businesses, 2015 26 Please see annexure for summaries of replication experiences of these inclusive businesses. 22 Corridors for shared prosperity are absent. They rely on local partners and talent to out awareness building through cost-efficient and high- help them select these areas. impact community mobilization. Rural low-income consumers have limited OPPORTUNITIES IN SOUTH ASIAN MARKETS awareness of inclusive business products and The growing regional cooperation between South services, and hence sales conversion rates are low Asian countries in sectors such as renewable energy and agriculture creates a fertile bed for exchange of innovative Given that most rural areas are cut off from solutions to developmental challenges. The shared mainstream markets, low-income communities challenges and similar regional context, in conjunction rely on traditional alternatives to mainstream with the fact that very few inclusive business models products. The use of these alternatives has established have evolved to a stage wherein they can work in such behavioral patterns that are difficult to break. There is challenging contexts and still thrive point towards the need limited awareness about inclusive business products for replication across countries. and services and a hesitation to pay seemingly higher upfront costs. This challenge calls for investments in Growing government and private sector interest in customer education and behavior change campaigns, bi-lateral trade and cooperation amongst South Asian which adds to the cost of replication. countries is also creating a supporting environment for replication. There is growing trade and technology transfer Inclusive businesses have taken innovative approaches between mainstream corporations, as well as exchange of to overcoming these challenges. Some have aligned inclusive business models across the region. The rest of this their replication with large donor-led awareness section presents an overview of current replication activity, building programs for specific products (for example, and also identifies key opportunities for replication across clean cook stoves) and ride on the impact created by agriculture, healthcare, and renewable energy sectors. these programs. Others train local partners to carry 23 Opportunities for cross-border replication in South bilateral relations between some countries, strong Asia exist across agriculture, healthcare, and renewable partnerships with local entities emerged as the most energy sectors critical driver of success. In fact, six of nine cases that were analyzed for this study preferred strategic alliances with A snapshot of key replication opportunities in South other inclusive businesses, NGOs, and donor programs for Asia is shown in Figure 13. These opportunities have replication. This is in sharp contrast to replication cases in been identified based on primary interviews with in- the India-Africa corridor where 50 percent were wholly country experts, and have been validated using secondary owned subsidiaries.[27] Other drivers of success included sources such as industry reports and development finance creating a talent strategy for the target market context, institution databases. This list is not comprehensive, and adapting the business model to work in a new market, is only meant to provide a starting point for evaluation of creating customer awareness through lean approaches, replication opportunities in each of the focus countries. and creating a fund-raising strategy in the light of limited domestic funding in most South Asian countries. Figure 13 SNAPSHOT OF REPLICATION OPPORTUNITIES IN SOUTH ASIAN COUNTRIES Bangladesh Nepal Pakistan Sri Lanka • Enhancement of downstream • Fruits and vegetable • Improving the post-harvest value-chain activity in spices processing • High-yielding seed production stage for crops and fresh • Cultivation of herbal • Value -added dairy products • Fruit processing produce medicinal plants • Crop insurance • Value-added dairy products • Fruit processing • Livestock development and • High yield Vegetable seeds dairy processing • Affordable specialized tertiary • Micro-nutritional products • Affordable preventive and • Preventive care for healthcare • Maternal and Child Health curative care for NCDs communicable diseases • Tele-medicine intervention • Psychotherapy care • Micro-nutrition products • Active pharmaceutical • Use of technology to identify • Micro insurance • Micro-insurance ingredients production genuine drugs • Consumer financing and • Solar irrigation pumps • Micro/mini hydro and solar after-sales support for solar • Pico-solar lighting products • Consumer financing and • Consumer financing and PV • Solar irrigation pumps aftersales support for solar after-sales support for solar • Micro/Nano grid solar • Improved cook stoves PV PV solutions • Improved cook stoves • Improved cook stoves • Improved cook stoves Source: Intellecap research, 2015 Strategic alliances and partnerships with local organizations emerged as the most critical driver of KEY LEARNINGS successful replication Inclusive businesses face similar challenges that mainstream The importance of having strong local partners (e.g. other (non-impact-focused) businesses face, but their challenges inclusive businesses, NGOs, donor programs etc.) in South are greater because they work in underserved and difficult Asian markets was clear to most inclusive businesses that geographies with limited infrastructure and nascent were analyzed for this study. In fact, three of them, namely supporting ecosystems. They often do not have the financial VisionSpring, Solaric, and Envirofit chose replication wherewithal to bridge these gaps using in-house resources. destinations based on the availability of either one key As a result, whatever capital they do invest is expected coordinating partner or a variety of supporting partners to generate results and returns quickly. Because of these that could together play the role of a coordinating financial constraints, their strategies are aimed at gaining a foothold in the target markets, building local context through hiring and partnerships, and carrying out low-cost 27 The Corridors for Shared Prosperity publication has a detailed pilots to understand what works. section on ‘what works’ in replication. It highlights seven key lessons from pages 26 to 31 of the publication (weblink). Those learnings hold true for replication in the South Asia region as Given the nascent state of markets in South Asia, well. In addition, new learnings and more nuanced insights on ‘what works’ for South Asia are discussed in more detail in this challenging terrain across most countries, and strained report. 24 Corridors for shared prosperity partner. There are four key benefits that strong partnerships cross-subsidizes the marketing costs of lower-priced basic have brought: access to valuable market data, support to products). Beej Sheetal taps into its seed science expertise understand and navigate complex regulatory environments, and large R&D facilities in India to manufacture hybrid access to field staff and human resources, and assistance vegetable seeds that cater to local tastes of customers in with last-mile distribution and financing. Because of the countries such as Bangladesh. importance of partners to long-term success, some inclusive businesses such as IHS and Envirofit invest time in training Inclusive businesses are taking lean approaches to partner resources so they can operate more independently. building customer awareness such as working with local partners and plugging into existing donor programs There is a shortage of skilled talent in many South Asian countries, and talent management approaches must be Low-income communities in many South Asian markets framed in this context have limited access to markets, and hence their awareness about products and services is often low. Inclusive businesses Most South Asian countries have a shortage of skilled talent supplying affordable products and services to low-income due to high rates of migration of trained professionals and communities in underdeveloped markets find that their high competition with mainstream organizations for limited customers have to be educated about a product or service talent pools. At the same time, local talent is a must to grow category first, and only then can they put out marketing and scale a business in the long-term. Inclusive businesses messages about specific brands. For instance, products such have tackled this challenge by hiring experienced country as solar power-based irrigation systems are often little known leads and managing costs of other resources by hiring categories in far flung villages in hilly districts of Nepal. and training talent with relatively less experience. MAMA Atom Solar is plugging into an on-going program by the and Solaric have institutionalized systems and processes International Centre for Integrated Mountain Development that focus on continuous improvement of team skill-sets. (ICIMOD) to build awareness about the product category Others have set clear guidelines for career progression and among small farmers. Others such as e-Kutir and Envirofit job diversification, which help to retain talent once the run awareness building programs with partners. Eventually, induction and early training period is complete. these partners can carry out awareness building without relying on on-field presence of staff members from the While South Asian countries share some common e-Kutir and Envirofit teams. development contexts, inclusive business models still need to be adapted to specific country contexts Given limited domestic funding in most South Asian countries, inclusive businesses are more successful when Some key elements of the market context for inclusive they raise funds ahead of replication businesses in South Asia are: varying quality of information, communications, and technology infrastructure, varying Inclusive business ecosystems are nascent in many South purchasing power of customers, nuances in culture and Asian countries such as Nepal and Sri Lanka —particularly aspirations that shape demand, uneven manufacturing in the context of raising funds to initiate replication and activity, and varying costs of doing business. Each of these working capital for scaling up replication. Such funding is can challenge the fundamental viability of an inclusive not easily available, and can often be a roadblock for success. business in a new market and, therefore, must be addressed Early market research clearly identified this challenge for carefully. Analysis of the case study sample set shows that most inclusive businesses, and hence they either raised businesses that have an inherent competitive edge or capital in home markets or from international markets technical prowess are well positioned to adapt their models. ahead of expansion. MAMA, for instance, has had some success in raising domestic funding in the country of For instance, IHS has in-house research and development expansion by investing time in understanding potential that can adapt its mobile solutions to work in countries donors and building relationships with them. Businesses with limited telecom infrastructure, while Solaric has the with headquarters registered in some countries such as capacity to seed and support local manufacture of photo- Pakistan can face challenges in transferring funds to and voltaic panels in countries where the manufacturing sector from national bank accounts. In light of this challenge, IHS is underdeveloped. VisionSpring and Envirofit overcome the Informatics is considering corporate restructuring by setting hurdle of limited customer purchasing power by cross- up a parent entity in Dubai to make fund raising as well as subsidizing costs across a large portfolio of products (where fund transfers less cumbersome. a higher priced product for more aspirational customers 25 Section E Conclusion and Recommendations There is a significant opportunity for inclusive business Inclusive businesses exploring replication: replication in the South Asian region. However, the speed ■■ Take a systematic approach to replication by diagnosing of replication is slow and opportunistic. While inclusive internal readiness to expand (for instance, by using the businesses are interested in international expansion and replication framework and Microsoft Excel tool developed replication, they have limited resources to deploy towards as part of this study), identifying the right countries or understanding market opportunities and often have limited regions for replication, and selecting an appropriate format experience with expansion. Hence, they can benefit greatly for replication from structured advisory and financial support to explore ■■ Validate need for product or service in target markets replication. This support includes firm-level “replication- ■■ Work in close collaboration with ecosystem stakeholders as readiness” and market-entry support, as well as sectoral and well as potential partners in target countries. ecosystem-level changes to create an enabling environment for replication. The report is an attempt towards building a Government agencies: knowledge base and tools that inclusive businesses can use ■■ Enable more policy-driven support for inclusive businesses to assess and understand replication opportunities. It is also by officially defining “inclusive businesses” and thereby a knowledge base that their funders and advisors can tap paving the path for easier access to funding (via ‘priority into to understand how to structure replication support. lending schemes’ for instance) and incubation (via government-funded institutions) While a knowledge base has been created, the idea of ■■ Mandate investment promotion centers to proactively inclusive business replication in the region can accelerate encourage, source, and assist inclusive business replication and gain further momentum with the involvement of ■■ Support private sector programs that provide funding and stakeholders such as donors, investors, incubators, advisors, capacity-building services for inclusive business replication academia, and policy makers. Once there is significant with single-window clearances for foreign investment, momentum, and a few success stories of replication emerge, business registration, work permits, etc. the market forces can drive further replication. However, given the inherent challenges in replication and nascent Multilaterals and donors: state of inclusive business ecosystems in most countries, ■■ Set up multi-stakeholder initiatives to provide technical their early catalytic involvement can be very helpful. and financial assistance to inclusive businesses that are exploring replication Fortunately, there are early pioneers who are already ■■ Build knowledge around opportunities in replication and supporting intra-South Asia replication, including public approaches to successful replication entities such as EXIM Bank, DFIs, Multilateral and Bilateral ■■ Assist in match-making of demand and supply sides of organizations such as the IFC, World Bank Group, USAID inclusive business replication. and UKaid, and private sector industry associations such as FICCI (Federation of Indian Chambers of Commerce Industry bodies: & Industry) and CII (Confederation of Indian Industry) ■■ Encourage greater dissemination of information about in India. Their work can serve as inspiration for the inclusive businesses roles that different types of organizations can play in ■■ Focus existing knowledge creation and foreign expansion replication. Some of these are outlined here for each type services on opportunities in critical needs sectors of organization, but from past evidence of ‘what works’ in ■■ Offer network building and market education services to building supporting ecosystems for inclusive businesses, inclusive businesses seeking to replicate in new markets. these organizations will be most effective when they work ■■ Use platforms such as conferences and media such as together to draw out opportunities for replication and newsletters to promote greater dialogue around intra- address the key hurdles of doing business in developing regional business expansion. countries. Key recommendations for different replication stakeholders are: 26 Corridors for shared prosperity Development finance, risk capital and debt providing validation in a new market, as well as operational support institutions: such as setting up a new legal entity, support with talent ■■ Use their existing networks and market know-how to acquisition, and on-ground assistance during pilot testing drive inclusive business replication. Funding institutions and market roll-out pilot testing, and creation of market with teams and/or focus areas across multiple developing roll-out plans countries are especially well-positioned to do this ■■ Create forward linkages to subject matter experts such as ■■ Guide portfolio companies in replicating to new markets, corporate lawyers, accountants, and executive hiring firms. thereby increasing both financial and impact returns on their capital ■■ Consider investing in high potential business models that While there are early signs of replication of inclusive are seeking to replicate, and in doing so help to address the business models among South Asian countries, much challenge of limited domestic funding for inclusive business more multi-stakeholder engagement is required to models in most South Asian countries scale this early traction. IFC hopes that this report will ■■ Provide insights about new markets and open up networks encourage more dialogue and ideation around replication, of potential suppliers, distributors, and other partners. and invites others to partner with it in this endeavor. Further knowledge building in South-South replication is Incubators, capacity-building organizations, also encouraged—specifically in expanding understanding advisers, and intermediaries: of replication opportunities to new sectors and markets, ■■ Provide expert advisory support on systematic replication and in analyzing more instances of replication failure to inclusive businesses. This could include strategic to build a more nuanced understanding of what drives support such as diagnosis of replication readiness, need successful replication. Photo credit: Yosef Hadar/World Bank 27 Section F Country Notes Country 1 BANGLADESH MACROECONOMIC, SOCIAL, AND POLITICAL a coastline of 580 km make Bangladesh very suitable SNAPSHOT for agriculture and aquaculture. However, agriculture accounts for only 15 percent of the country’s gross domestic Bangladesh is bordered by India to its west, north, and product (GDP), whereas services and industry account for east, Myanmar to its south-east, and Bay of Bengal to its 27 percent and 58 percent of the GDP respectively[28]. A south. With nearly 159 million people on a landmass of macroeconomic and demographic snapshot of Bangladesh 147,570 sq. km., it is among the most densely populated is shown in Figure 14. countries in the world. The fertile alluvial plains and Figure 14 SNAPSHOT OF MACROECONOMIC INDICATORS AND DEMOGRAPHICS IN BANGLADESH QUALITATIVE INDICATORS EASE OF DOING GDP GROWTH RATE: GROSS SAVINGS: INFLATION: GINI INDEX: BUSINESS RANK: 6.1 percent 2 percent 7 percent 32.1 173 / 189 • Agriculture accounts for 15 percent of GDP, services accounts for 27 percent and industry accounts for 58 percent • Inflation decreased from 8.1 percent in 2010 to 7 percent in 2014 • Gross domestic savings rose from 20.5 percent of GDP in 2010 to 23.2 percent in 2014 • The ease of doing business ranking fell from 170 in 2014 to 173 in 2015 DEMOGRAPHICS POPULATION POPULATION EARNING POPULATION LESS THAN $2 GROWTH RATE 159 million 76.5 percent 1.2 percent ENGLISH-SPEAKING WOMEN POPULATION HUMAN DEVELOPMENT POPULATION 49.5 percent INDEX 1 percent GENDER EQUALITY RATING 0.558 3.5 FOLLOW OTHER FOLLOW ISLAM FOLLOW HINDUISM FAITHS 89.5 percent 9.6 percent 0.9 percent Source: World Bank Development Indicators, World Bank Country Profile, Euromonitor International 28 World Bank Country Profile 28 Corridors for shared prosperity Figure 15 GLOBAL RATINGS THAT OFFER A MEASURE OF THE POLITICAL AND LEGAL SYSTEM IN BANGLADESH JUDICIAL CPIA S&P 2.5 132/144 INDEPENDENCE BB- RATING RATING RANK Source: World Bank Development Indicators, World Economic Forum, Global Competitiveness Report 2014 - 2015 LEGAL AND POLITICAL SNAPSHOT Capital Requirements Registration fees of $47 and filing fees of $15. Foreign ■■ The legal system in Bangladesh is based on the English investors require prior approval from the Bangladesh Bank Common Law to acquire a stake in local companies where control of the ■■ The Bangladesh Competition Commission (BCC) was business is transferred from local to foreign shareholders. created under the provisions of the Competition Act 2012 Work permit OVERVIEW OF INVESTMENT CLIMATE ■■ Employment of expatriate personnel is only permitted Foreign Direct Investment in industrial/commercial establishments sanctioned/ Net inflows of $1.58 billion in 2014, growing at a registered by the government compounded annual growth rate (CAGR) of 16.4 percent ■■ The number of foreign employees should not exceed since 2010[29] 5 percent in the industrial sector and 20 percent in commercial sector (as a percentage of total workforce) Key Investment Sectors including top management personnel. Agribusiness, ceramics, electronics, frozen foods, garments and textiles, ICT and business services, leather, light engineering, power, life-sciences OVERVIEW OF THE LOCAL INCLUSIVE BUSINESS INDUSTRY Key Government Bodies In Bangladesh, inclusive business as an approach, is Registrar of Joint Stock Companies and Firms, Board of primarily driven by large domestic non-profits such as Investment, Bangladesh Export Processing Zones Authority Grameen and BRAC. While Grameen supports businesses (mostly through advisory and financing services) that Policies to aid foreign investment are non-profits—which mainly attract funds from donor ■■ Foreign investor rights are protected under the Foreign organizations, BRAC focuses on inclusive businesses Private Investment (Promotion and Protection) Act 1980 that are financially sustainable. Majority of the inclusive ■■ Easy remittance of royalty and technical assistance fee business activity in Bangladesh is in microfinance, ■■ Repatriation facilities of dividend and capital at the healthcare, agriculture, and renewable energy sectors. time of exit ■■ Resident permits and citizenship on making sizable Key supporters of the inclusive business space in investments Bangladesh, which can also potentially support replication, ■■ Tax holidays on investing in economically important include: centres such as Dhaka and less developed districts such as Chittagong Hilly Districts Funders ■■ Accelerated depreciation on the cost of land and machinery Bangladesh has a robust banking system, with 60 ■■ Other financial and non-financial incentives for export- commercial banks, 31 non-banking financial institutions, oriented businesses. and 600 microfinance institutions. It has well established primary and secondary investment markets. While these are primarily focused on the mainstream sectors, investments in the inclusive business landscape are largely dominated by development finance institutions (DFIs). The risk capital market comprises of more than ten donors (providing 29 World Bank Development Indicators, accessed in October 2015. 29 returnable grants and soft loans), three equity investors ■■ Impact funders: SEAF Bangladesh Ventures, Incluvest and one angel group. Laws and regulations are largely Bangladesh supportive of foreign investment across various impact sectors to promote inclusive businesses. Enablers A diverse set of support providers are found in Bangladesh. Some of the notable funders include: While the Grameen Group and BRAC have in-house incubators/accelerators that provide seed financing as well as ■■ Commercial banks: AB Bank Limited, Islami Bank technical assistance to inclusive businesses as a whole, some Bangladesh Limited, City Bank, The International Finance players target a specific market. For example, the Bangladesh Investment and Commerce Bank Limited (IFIC Bank), Enterprise Institute (BEI) provides training and capacity National Bank Limited, Grameen Bank building to young social entrepreneurs, while institutions ■■ Mainstream PE/VC funds: BD Ventures Limited, Asian like Open Accelerator run a year-long, low-cost accelerator Tiger Capital Partners, The Frontier Fund, Tindercapital, program that focuses on rural entrepreneurs in Bangladesh. Incluvest Bangladesh In addition, events such as Social Business Design Lab by ■■ Angel network: International Angel Association Yunus Centre, and international competitions such as Global Bangladesh Social Entrepreneurship Competition (GSEC) encourage ■■ Donors and DFIs: Aga Khan Foundation, BRAC, Grameen growth and scale of inclusive businesses. Bank, International Finance Corporation (IFC), United States Development Agency (USAID), Asian Development Bank (ADB), UKaid 30 Corridors for shared prosperity SECTORAL LANDSCAPE AND REPLICATION OPPORTUNITIES There is growing inclusive business activity across the three focus sectors of agriculture, healthcare, and renewable energy. A summary of the landscape as well as replication opportunities is presented in Figure 16. Figure 16 SNAPSHOT OF SECTORAL LANDSCAPES AND KEY REPLICATION OPPORTUNITIES HEALTHCARE AGRICULTURE RENEWABLE ENERGY Healthcare expenditure GDP share Access to electricity ■ Government - 35 percent ■ 15 percent ■ 40 percent of the population is ■ Private sector/donors - 65 percent off-grid Doctor / Population ratio Employment Installed capacity ■ Solar = 140 MW; Hydro = 230 MW; ■ 2,500 people - 1 physician ■ 66 percent of the workforce Wind = 2 MW Enabling ecosystem Enabling ecosystem Enabling ecosystem ■ 100 percent FDI allowed ■ Government entities such as ■ IDCOL provides provision for ■ International donors include BSCIC, SMEF, and private subsidies and soft loans. entities such as BEI and NASCIB ■ There is considerable DFI USAID, ADB, and local DFIs such as Grameen and BRAC promote small business and funding in the sector private sector activity ■ Government has created SEDA to improve market opportunities Challenges Challenges Challenges ■ Limited access to funding from ■ Loss of arable land due to ■ Low awareness related to the banks and private equity investors population growth benefits of using improved ■ Widespread communicable ■ Natural calamities such as floods cookstoves diseases and drought affect crop production ■ Difficulty in last-mile ■ ■ distribution of solar products, Affordable diagnosis and Limited access to institutional treatment of NCDs credit especially in rural areas Replication opportunities Replication opportunities Replication opportunities ■ Short-to-medium term: ■ Short-to-medium term: Fruits and Preventive care for communicable vegetable processing, value-added ■ Short-to-medium term: Pico-solar diseases, affordable dairy products, crop insurance lighting products, solar irrigation pumps ■ micro-nutrition, micro-insurance Long-term: Biodegradable / ■ Long-term: Clean cookstoves ■ Long-term: Data digitization, use environment friendly pesticides for of ICT and telemedicine promoting safe and organic food Source: Smallholder Farming in Transforming Economies of Asia and the Pacific: Challenges and Opportunities, 2011; Ministry of Agriculture; Central Bank; Primaries, Country Profiles by WHO, 2014; Mark Tran 2013, Healthcare in Bangladesh soars despite widespread poverty, Energy Country Profile by Reegle, 2012; Solar Home System Program by IDCOL, Primary research 31 KEY CHALLENGES AND INSIGHTS BASED ON partners have with government bodies to navigate complex REPLICATION EXPERIENCES OF INCLUSIVE regulations. Finally, some inclusive businesses have chosen BUSINESSES to replicate in Bangladesh in formats with more liability, such as wholly-owned subsidiaries. This is because they have financial capacities to sustain capital investments in Lack of Sufficient Infrastructure the business in the hope of eventually gaining significant Lack of infrastructure poses a key challenge for inclusive market share. businesses intending to replicate in Bangladesh. The country suffers from unreliable electricity supply, lack Low willingness among consumers to pay of adequate road networks, especially in rural areas, and Low-income customers are unwilling to pay for products low internet and technology penetration. Further, market and services, especially in the healthcare sector, as a support services that can help inclusive businesses reach the majority of the services are provided by NGOs or the last mile (such as aggregators of door-to-door sales agents government free or at highly subsidized costs. A similar and formal retail networks) are still nascent. pattern is observed in the renewable energy sector where the government provides subsidies to businesses that can To tackle the problem of inadequate infrastructure, then provide low-cost products. This tends to distort the inclusive businesses replicating in Bangladesh have market in the long run and poses problems for businesses selectively chosen to work in areas where there is a certain that intend to replicate through for-profit, sustainable minimum level of infrastructure development, including models. roads, and internet and telecom penetration. They have also chosen to work in partnership with existing inclusive To address market distortion, some product-based businesses and non-governmental organizations (NGOs), businesses consider safer options such as selling directly including the likes of BRAC and Grameen, to reach to businesses in a B2B model, effectively turning their populations in far-flung rural areas. competition into clientele. While such arrangements are effective, the inclusive business may not have a high degree Difficulty in doing business and raising capital of control over the quality of services offered to end- Inclusive businesses face challenges in registering consumers. their business and subsequently scaling up operations. Bangladesh also imposes significant restrictions on income Difficulty in hiring and retaining talent repatriation. It scores 20 on a scale of 0-100 (a score of 0 Inclusive businesses also face challenges in hiring and means extreme restrictions and a score of 100 means no retaining skilled talent as well as field force (such as local restrictions) on the World Bank Investing Across Borders micro-entrepreneurs). metric of “repatriating investments and incomes” . While the country has improved to some extent in creation of To overcome these challenges, inclusive businesses have transparent tax structures, it still struggles in areas of tended to keep their own teams lean in Bangladesh and rely enforcing contracts and government red tape on land on manpower from partners to do business, even as they registration is high. Political instability combined with continued to find local talent and build local teams. large scale labor strikes also poses problems for inclusive businesses. Inadequate availability of market data Although inclusive business activity is well-established in Businesses typically find it difficult to raise capital Bangladesh, businesses intending to replicate there often from foreign investors due to the lack of clarity on PE/ find it difficult to gather reliable and adequate market VC regulations, minimum capital requirements, and data. For example, Beej Sheetal, which expanded from compliance and reporting norms. The legal and policy India to Bangladesh had to plan its market entry strategy system in the country has challenges such as slow based only on primary research due to lack of availability resolution of conflicts. of credible industry data. It relied on information from representatives and members of seed industry associations, Inclusive businesses that manage to successfully replicate which were overly optimistic in their estimation of market in Bangladesh have taken one of three approaches. Some opportunities. By relying on these estimates, Beej Sheetal have chosen to replicate in formats that have limited projected growth rates for its expansion in Bangladesh legal liabilities—such as trade, knowledge sharing, and that were not achievable in the short-to-medium term, and technology transfer. Others look to relationships that their hence had to revise its business plans for the country. 32 Corridors for shared prosperity Country 2 which concluded with the signing of the Comprehensive Peace Agreement in 2006. More than 90 percent of Nepal’s NEPAL economically active population is engaged in agriculture. MACROECONOMIC SNAPSHOT Other important sectors include tourism and hydro-power. Because of a large percentage of population migrating Nepal is located in South Asia, and is landlocked by India to countries such as India and Malaysia in search of jobs, and China. With a population of 28 million on a landmass Nepal receives the highest amount of remittances in of 147,181 sq. km., it is the 41st most densely populated the South Asian region. Personal remittances in Nepal country in the world. It is a member of the South Asian amount to as high as 29 percent of the country’s GDP. A Association of Regional Cooperation (SAARC). Nepal macroeconomic and demographic snapshot of Nepal is has recently emerged from a decade-long armed conflict, shown in Figure 17. Figure 17 SNAPSHOT OF MACROECONOMIC INDICATORS AND DEMOGRAPHICS IN NEPAL QUALITATIVE INDICATORS EASE OF DOING GDP GROWTH RATE: GROSS SAVINGS: INFLATION: GINI INDEX: BUSINESS RANK: 5.5 percent 8.9 percent 8.4 percent 32.8 108 / 189 • Agriculture accounts for 36.8 percent of GDP, services accounts for 48.7 percent and industry accounts for 14.5 percent • Inflation decreased from 9.3 percent in 2010 to 8.4 percent in 2014 • Gross domestic savings decreased from 11.5 percent of GDP in 2010 to 8.9 percent in 2014 • The ease of doing business ranking improved from 109 in 2014 to 108 in 2015 DEMOGRAPHICS POPULATION POPULATION EARNING POPULATION LESS THAN $2 GROWTH RATE 28 million 56 percent 1.2 percent ENGLISH-SPEAKING WOMEN POPULATION HUMAN DEVELOPMENT POPULATION 51.5 percent INDEX 46.5 percent GENDER EQUALITY RATING 0.540 4 FOLLOW OTHER FOLLOW HINDUISM FOLLOW BUDDHISM FAITHS 81.3 percent 9 percent 9.7 percent Source: World Bank Development Indicators, World Bank Country notes, Euromonitor International 33 Figure 18 GLOBAL RATINGS THAT OFFER A MEASURE OF THE POLITICAL AND LEGAL SYSTEM IN NEPAL JUDICIAL SHADOW CPIA 3 92/144 INDEPENDENCE CCC+ SOVEREIGN RATING RANK RATING Source: World Bank Development Indicators, World Economic Forum, Global Competitiveness Report 2014 – 2015 LEGAL AND POLITICAL SNAPSHOT Key Government Bodies Department of Industry, Board of Investment, Ministry of ■■ The legal system is based on English Common Law and Finance, National Planning Commission Hindu legal concepts ■■ The Foreign Investment and Technology Transfer Policies to Aid Foreign Investment Act (FITTA),[30] 1992 was formulated to promote ■■ The Climate Change Policy, 2011 was formulated to address effective mobilization of limited capital to increase climate change and achieve climate-friendly physical, the competitiveness of Nepal’s human capital and social, and economic development. natural resources. The act was amended and enacted ■■ The Foreign Investment and One-Window Policy, was in August 2000 formulated in 1992 to increase private sector participation ■■ FITTA allows foreigners to invest only in private limited and generate additional opportunities for income and companies and in public limited companies registered with employment, particularly in the area of industrial the Company Register Office (CRO). They are not allowed to production. invest in proprietorship or partnership firms. ■■ The Industrial Policy 2010 was created to bring positive ■■ The governments of Nepal and India have entered a Double changes in the overall economic and social sectors of Nepal Taxation Avoidance Agreement (DTAA),[31] a Prevention of through acceleration of industrial development. Fiscal Evasion agreement, and the Bilateral Investment ■■ The Foreign Investment Policy 2071 was approved in 2015 to Promotion and Protection Agreement (BIPPA).[32] expedite foreign investment processes. ■■ Nepal is a member of the South Asian Free Trade Area Capital Requirements (SAFTA) agreement. ■■ Registration fees of $91 for incorporating a business. OVERVIEW OF INVESTMENT CLIMATE Work permit ■■ The law requires any foreigner coming to Nepal for work to Foreign Direct Investment obtain a work permit. Net inflows of $74 million in 2013, decreasing at a CAGR of ■■ A majority of expats coming to Nepal for work are engaged 5.42 percent since 2010.[33] in the construction sector, followed by service sector. ■■ A foreigner wishing to work in Nepal can get a permit valid Key Investment Sectors for up to five years. Agriculture, aviation, health, hydropower, information technology, mining and minerals, road and transport, OVERVIEW OF LOCAL INCLUSIVE BUSINESS and tourism INDUSTRY Broadly speaking, the inclusive business industry in Nepal is nascent, compared to countries like India, Bangladesh, 30 http://www.nepembseoul.gov.np/uploads/files/document/ Foreign_Investment_and_Technology_Transfer_for_the_ and Pakistan. It is dominated by NGOs and charity-based Industrial_Development_In_Nepal_23.pdf organizations. These are primarily dependent on grants 31 http://articles.economictimes.indiatimes.com/2011-11-27/ news/30447030_1_nepal-sign-india-and-nepal-today-double- from international donors and DFIs, and do not have a taxation-avoidance-agreement proven financial model. The few sustainable inclusive 32 http://www.fncci.org/downloads/nepal_india_bipa_agreement. businesses that do work in the country are based out pdf of Kathmandu valley. These are often founded by local 33 World Bank Development Indicators. Accessed in October 2015. 34 Corridors for shared prosperity entrepreneurs who have studied or worked abroad, or Biogas Project to promote private sector and small business by expatriates. The reach in other areas is limited by the in the country. The Government of Nepal is trying to mountainous topography. foster a culture of entrepreneurship in the country by planning a start-up fund.[35] Incubators and accelerators Even though ‘self-identifying’ inclusive businesses are that assist inclusive businesses in connecting with potential rare, many small and medium enterprises (SMEs) engage investors or customers are also emerging. Some notable with the low-income population as end-consumers or support organizations include Biruwa Ventures, Change key suppliers of raw materials, especially in agriculture. Fusion Nepal (Surya Nepal), Business Incubation Program, Agriculture and renewable energy sectors see the majority Rockstart Impact Nepal, NepalStartup Cup, Beed, and of inclusive business activity in the country. Entrepreneurs for Nepal (E4N). However, a majority of these incubators/accelerators are based in and around Key supporters of the inclusive business industry space Kathmandu. There is little or no support for inclusive in Nepal, which can also potentially support replication businesses focused on serving rural areas. include: Funders As the concept of inclusive business is nascent, it is difficult to distill the financial sources exclusively available to these businesses. Although commercial banking activity is very robust in Nepal with 80 commercial banks, 50 to 60 development banks, and 115 microfinance banks; the inclusive business landscape is dominated by NGOs that primarily raise funds from international donor agencies. Foreign NGOs and charities are restricted from raising funds from domestic sources.[34] While there are no specific policies to support inclusive businesses in the country, some lending policies for small and medium enterprises (SMEs) can be considered relevant for inclusive businesses active in impact sectors. Some of the notable funders include:– ■■ Commercial banks: Nepal Bank Ltd., Rashtriya Banijya Bank Ltd., Nabil Bank Ltd., Standard Chartered Bank Nepal Ltd. ■■ Donors and DFIs: Department for International Development (DFID), World Bank Group, Asian Development Bank (ADB), GIZ, FMO, Triodos Bank ■■ Impact funders: Dolma Impact Fund, Tara Management Pvt. Ltd., One to Watch. Enablers DFIs and donors play a significant role in the development of inclusive businesses in Nepal. For example, ADB has developed a technical assistance facility to promote private sector participation in sectors such as agriculture and healthcare. The World Bank Group has initiated several programs such as Project for Agriculture Photo credit: Curt Carnemark/World Bank Commercialization and Trade, and supported the Extended 35 http://kathmandupost.ekantipur.com/news/2014-07-16/govt-to- 34 http://www.icnl.org/research/monitor/nepal.html establish-rs-500m-fund-to-bankroll-start-ups.html 35 SECTORAL LANDSCAPE AND REPLICATION OPPORTUNITIES A summary of the sectoral landscape as well as key replication opportunities is presented in Figure 19. Figure 19 SNAPSHOT FOR SECTORAL LANDSCAPE AND KEY REPLICATION OPPORTUNITIES HEALTHCARE AGRICULTURE RENEWABLE ENERGY Healthcare expenditure GDP share Access to electricity ■ Government - 43 percent ■ 39 percent ■ 24 percent of the population is ■ Private sector/donors - 57 percent off-grid Doctor / Population ratio Employment Installed capacity ■ Solar = 145 MW; Hydro = 723 MW; ■ 4,762 people - 1 physician ■ 90 percent of economically active population Enabling ecosystem Enabling ecosystem Enabling ecosystem ■ 100 percent FDI is allowed ■ Nepal Rastra Bank (central bank) ■ Government agencies such as ■ Institutions such as World Bank gives agriculture loans AEPC provide grants / subsidies and ADB have developed SME ■ ■ Key funders that focus on Institutions such as World Bank focused technical assistance and ADB have developed SME renewable energy include the programs focused technical assistance IFC, ADB and WB, and newly programs setup Dolma Impact Fund Challenges Challenges Challenges ■ Limited access to funding from ■ Loss of arable land due to ■ Low awareness related to the banks and private equity investors population growth benefits of using improved ■ Widespread communicable ■ Natural calamities such as floods cookstoves diseases and drought affect crop production ■ Difficulty in last-mile ■ ■ distribution of solar products, Affordable diagnosis and Limited access to institutional treatment of NCDs credit especially in rural areas Replication opportunities Replication opportunities Replication opportunities ■ Short-to-medium term: : ■ Short-to-medium term: Fruits ■ Short-to-medium term: Clean Affordable specialized healthcare processing, high-yielding seed cookstoves, community biomass (tertiary care) and diagnostics production, value plants, solar water pumps, solar ■ services Long-term: Honey, coffee lighting products ■ ■ Long-term: Medical consumables Long-term: Community-level and equipment, use of ICT and mini/micro hydropower/solar grids telemedicine Source: Country Profiles by WHO, 2014; Nepal Board of Investment, Smallholder Farming in Transforming Economies of Asia and the Pacific: Challenges and Opportunities, 2011; Ministry of Agriculture; NRB Bank Supervision Reports, Energy Country Profile by Reegle, 2012; Primary research. 36 Corridors for shared prosperity KEY CHALLENGES AND INSIGHTS BASED ON REPLICATION EXPERIENCES OF INCLUSIVE BUSINESSES Delays in policy formulation, and time consuming inclusive business products and services, and hesitation bureaucratic processes to pay seemingly higher upfront costs. This challenge While there are government efforts to promote calls for investing in customer education and behavior entrepreneurship in Nepal, delays in policy formulation, change campaigns, which adds to the cost of replication. and corruption[36] have limited on-ground benefits that Consequently, there is a scenario where the markets accrue to inclusive businesses. present a ‘first-mover disadvantage’ rather than an advantage. Pioneers in product and service categories To tackle this issue, inclusive businesses have primarily having to bear additional costs towards building banked on relationships with well-established local customer awareness and a competitive edge cannot partners and even international donor organizations to often be defended in the long run. hasten compliance processes. To overcome this challenge, some inclusive businesses Lack of last-mile distribution and customer such as Envirofit have shifted to a “train the trainer” financing model to build capacities of local partners such as Nepal has a predominantly mountainous terrain, and NGOs to implement customer awareness programs. its rural population is highly fragmented and dispersed. While the costs still persist, they tend to be lower when This can make the unit economics of typical rural-focused local talent is deployed. models from countries such as India and Bangladesh untenable, as they rely on higher population density and road access to end-consumers. There is limited or no last-mile distribution infrastructure, which makes it more difficult for inclusive businesses. Finally, with a microfinance penetration that only extends to 31 percent of the potential market,[37] there are limited consumer financing models to help low-income households to purchase essential products and services. Nepal has a robust commercial banking system and a large presence of international donors that can distribute and provide consumer finance. Inclusive businesses have partnered with these institutions in the place of more traditional last-mile outreach partners. Rural low-income consumers have limited awareness of inclusive business products and services, and hence sales conversion rates are low Most rural areas are cut off from mainstream markets, so low-income communities rely on traditional alternatives to mainstream products. The use of these alternatives has turned into established behavioral patterns that are difficult to break. There is limited awareness about 36 Transparency International has awarded Nepal a score of 29/100 on the Corruption Perception Index 2014 (with 0 indicating ‘highly corrupt’ and 100 ‘very clean’), and ranks it 126 out of 175 countries in terms of degree of corruption (with 175 being most corrupt) 37 Nepal Microfinance Review, MCRIL, 2012. 37 Country 3 LEGAL AND POLITICAL SNAPSHOT PAKISTAN ■■ The legal system is based on the English Common Law, with an overlay of Islamic legal precepts. MACROECONOMIC SNAPSHOT ■■ The 1976 Foreign Private Investment Promotion and Pakistan shares its borders with India in the east, Protection Act specifically provides that foreign investment Afghanistan in the west, Iran to the south-west, and will not be subject to higher income tax levels than those China in the far north-east. With 185 million people assessed on similar investments made by Pakistani citizens. on a landmass of 796,095 sq. km., it is the sixth most ■■ The 1976 Foreign Private Investment Promotion and densely populated country in the world. It is a member Protection Act guarantees remittance of profits earned of the South Asian Association of Regional Cooperation through sale and appreciation in value of property. (SAARC).[38] Figure 20 presents a macroeconomic and ■■ Pakistan is a member of the South Asian Free Trade Area demographic snapshot of Pakistan. (SAFTA) agreement. Figure 20 SNAPSHOT OF MACROECONOMIC INDICATORS AND DEMOGRAPHICS IN PAKISTAN QUALITATIVE INDICATORS EASE OF DOING GDP GROWTH RATE: GROSS SAVINGS: INFLATION: GINI INDEX: BUSINESS RANK: 5.4 percent 7.5 percent 7.2 percent 29.6 128/189 • Agriculture accounts for 25.3 percent of GDP, services accounts for 53.1 percent and industry accounts for 21.6 percent • Inflation decreased from 13.9 percent in 2010 to 7.2 percent in 2014 • Gross domestic savings decreased from 10 percent of GDP in 2010 to 7.5 percent in 2014 • The ease of doing business ranking fell from 127 in 2014 to 128 in 2015 DEMOGRAPHICS POPULATION POPULATION EARNING POPULATION GROWTH RATE LESS THAN $2 185 million 1.6 percent 50.7 percent WOMEN POPULATION ENGLISH-SPEAKING HUMAN DEVELOPMENT 48.6 percent POPULATION INDEX GENDER EQUALITY RATING 49 percent 0.537 2.5 FOLLOW ISLAM FOLLOW OTHER FAITHS 96.4 percent 3.6 percent Source: World Bank Development Indicators, World Bank Country notes, Euromonitor International 38 World Bank Country Profile 38 Corridors for shared prosperity Figure 21 SNAPSHOT OF LEGAL AND POLITICAL SYSTEMS JUDICIAL CPIA S&P 2.5 129/144 INDEPENDENCE B- RATING RATING RANK Source: World Bank Development Indicators, World Economic Forum,Global Competitiveness Report 2014 - 2015 OVERVIEW OF INVESTMENT CLIMATE ■■ Work visas can be granted to foreign expatriates after recommendation from Board of Investment, Pakistan, Foreign Direct Investment valid for one year and extendable annually. Net inflows of $1.78 billion in 2014, decreasing at a CAGR of 3.12 percent since 2010.[39] OVERVIEW OF THE LOCAL INCLUSIVE BUSINESS INDUSTRY Key Investment Sectors Agriculture and allied activities, power and energy, Most inclusive business activity is in the financial mining and gems, construction, information inclusion sector, but it is slowly gaining a foothold technology and telecom, textile, retail, automotive, in sectors such as healthcare and technology for financial services, tourism, and pharmaceuticals. development. Some models that leverage ICT for development include use of mobile-based interfaces Key Government Bodies in simplifying health data collection and analysis and Small and Medium Enterprises Development Authority connecting patients to doctors and healthcare providers. (SMEDA), Board of Investment, Securities and Until a few years back, most of the inclusive business Exchange Commission. models tended to be non-profit in nature, but with the growth in number of impact investors in the country, Policies to Aid Foreign Investment there is increasing traction in for-profit models as well. ■■ Remittance of capital, profits and dividends are allowed in all sectors. Key supporters of the inclusive business industry space in ■■ The government has taken steps to reduce the cost of Pakistan, which can also potentially support replication doing business by removing equity caps on banking include: and non-banking financial services To facilitate market entry of SMEs. Funders ■■ Investment opportunities and information vital to start Pakistan shows higher PE/VC and impact funds activity business in Pakistan and online visa registration have than most countries in South Asia, with the exception of been introduced. India. Overall, there are 11 institutional equity investors, ■■ Special Economic Zones (SEZs) are being created and three angel groups, and 11 donors that actively support one-window clearance was introduced to streamline small and medium businesses. Commercial banking processes, activity is also fairly established with 37 commercial banks, 27 non-banking financial institutions, and six Capital requirements microfinance banks. The government also provides Registration fees of $81, and filing fees of $23. financial support to small and medium businesses (SMEs) through the Small and Medium enterprise Development Work permit Authority (SMEDA) and has framed sector-specific ■■ Expats opting for extended stays in the country need a policies to promote private sector investments. work visa 39 World Bank Development Indicators, Accessed in October 2015. 39 Some notable funders include: Enablers Pakistan has a growing ecosystem of enablers ■■ Commercial banks: Askari Bank, United Bank Limited, that offers non-financial support. Incubators/ National Bank of Pakistan, Sindh Bank Limited, Habib accelerators such as Invest2Innovate offer services Bank Limited exclusively to inclusive businesses. Organizations ■■ Mainstream PE/VC funds: Cyan Capital, JS Private such as Higher Education Commission provide Equity, Abraaj Capital, Catalyst Fund, Abu Dhabi Group co-working spaces. Business competitions such as ■■ Angel networks and seed funders: Plan9, i2i Angels, Civic Hackathons by Code for Pakistan, StartUp LUMS Centre for Entrepreneurship (LCE), Angel Dosti, and Youth Social Enterprise on Peace run Investment Network Pakistan by Youth and Gender Development Network and ■■ Donors and DFIs: Aga Khan Foundation, USAID, GIZ, YES-Network Pakistan also promote growth of DFID, ADB inclusive businesses in Pakistan. ■■ Impact funders: Invest2Innovate, DYL Ventures, Mini Ventures, SEED Ventures, Impakt Capital, Acumen Fund, Insitor Management Fund Photo credit: Curt Carnemark/World Bank 40 Corridors for shared prosperity SECTORAL LANDSCAPE AND REPLICATION OPPORTUNITIES A summary of sectoral overviews as well as key replication opportunities are depicted in Figure 22. Figure 22 SNAPSHOT OF SECTORAL LANDSCAPE AND KEY REPLICATION OPPORTUNITIES HEALTHCARE AGRICULTURE RENEWABLE ENERGY Healthcare expenditure GDP share Access to electricity ■ Government - 37 percent ■ 25 percent ■ 7 percent of the population is ■ Private sector/donors - 63 percent off-grid Doctor / Population ratio Employment Installed capacity ■ Solar = 30 MW; Hydro = 6919 MW, ■ 1,250 people - 1 physician ■ 37 percent of the workforce Bio-energy = 252.19 MW Enabling ecosystem Enabling ecosystem Enabling ecosystem ■ 100 percent FDI is allowed ■ State Bank of Pakistan offers a ■ AEDB promotes creation of solar ■ Key donors active in the corporate guarantee that enables homes and installation of wind healthcare sector are USAID, banks to provide unsecured turbines ADB, AusAID, DFATD, DFID, financing ■ 100 percent FDI is allowed in all GDC, and JICA ■ World Bank is promoting drip sub-sectors irrigation projects; other active ■ Active donors include Aga Khan donors are USAID, ADB, and JICA Foundation, USAID, ADB, and German Development Cooperation Challenges Challenges Challenges ■ High child and maternal ■ Water shortage, absence of high ■ Grid supply is unreliable with mortality rates yield varieties of seeds, and lack of power cuts of ~8-10 hours per ■ Lack of adequate child nutrition research and development are the day Widespread lifestyle diseases basic causes of low per hectare ■ Low awareness around clean (NCDs) yield of crops in Pakistan cookstoves ■ Urban-rural disparities in healthcare delivery and an imbalance in the health workforce Replication opportunities Replication opportunities Replication opportunities ■ Short-to-medium term: ■ Short-to-medium term: ■ Short-to-medium term: Affordable nutritional products, Improving post-harvest value Last-mile distribution of solar PV, improved MCH services, genuine chain, integrated cold chain technical assistance for drug identification logistics, meat processing micro/mini hydro ■ ■ ■ Long-term: Precision diagnosis Long-term: Technology transfer Long-term: Improved cooking and special care for NCDs to improve water use efficiency stoves in irrigation Source: Smallholder Farming in Transforming Economies of Asia and the Pacific: Challenges and Opportunities, 2011; Ministry of Agriculture; Central Bank; Pakistan Donor Profile and Mapping – UN, 2014, Country Profiles by WHO, 2014, Energy Country Profile by Reegle, Primary research. 41 KEY CHALLENGES AND INSIGHTS BASED ON by domestic and foreign NGOs. As a result, products and REPLICATION EXPERIENCES OF INCLUSIVE services in categories such as inputs, irrigation, and primary BUSINESSES healthcare may have to compete with highly subsidized or free services. For instance, NGOs such as Medical Care and Low Quality of ICT Infrastructure HOPE in Karachi provide free and subsidized healthcare. Inclusive businesses that rely on mobile-based solutions cannot function efficiently without reliable access to Inclusive businesses have mitigated this challenge telecom networks and electricity (for mobile charging). by selectively working in regions where such market While the ICT infrastructure is well developed in urban distortions are absent. They rely on local partners and talent Pakistan, rural areas are poorly served and this creates to help select these areas. a challenge for businesses that want to work with rural communities. Time Consuming Processes and Complex Tax Policies Significant time is consumed in enforcing legal contracts, In response to this challenge, inclusive businesses such filing taxes, and meeting other compliance norms. For as IHS Informatics have adapted technology solutions to instance, 47 separate tax payments need to be made each work at the lowest level of infrastructural availability in the year, requiring a total time investment of 594 hours—close country and often removed real-time updates and shifted to to double the average time taken to file taxes in South manual data entry. Asia.[40] Meeting such compliance norms is expensive and time consuming for small and medium businesses, and Low Customer Willingness to Pay more so for inclusive businesses which tend to work with Agricultural and healthcare sectors in Pakistan are lean teams and have limited financial resources to hire dominated by government subsidy programs and activity taxation vendors. 40 Pakistan Country Profile – Ease of Doing Business, World Bank, 2015. 42 Corridors for shared prosperity Country 4 LEGAL AND POLITICAL SNAPSHOT SRI LANKA ■■ The legal system is based on elements drawn from three different legal systems – the English Common Law, Roman- MACROECONOMIC SNAPSHOT Dutch Civil Law, and Customary Law. Sri Lanka shares its maritime borders with India and the ■■ Sri Lanka is a Democratic Socialist Republic with a Maldives. The economy has been robust, growing at an presidential system of government. annual average of 7.4 percent since the civil war ended ■■ Legal reforms are underway to replace the existing system in May 2009. It is a member of South Asian Association with a parliamentary system of government, limit the for Regional Cooperation (SAARC). A macroeconomic number of terms the president can serve in office, and and demographic snapshot of Sri Lanka is presented in devolve authority to Sri Lanka’s provinces.[42] Figure 23.[41] ■■ Foreign investors need to register under Section 16 of the Board of Investment Law for approval to facilitate capital entry to Sri Lanka, set up a new company with foreign shareholding, and transfer shares from a locally-owned firm to a foreign investor.[43] Figure 23 SNAPSHOT OF MACROECONOMIC INDICATORS AND DEMOGRAPHICS IN SRI LANKA QUALITATIVE INDICATORS EASE OF DOING GDP GROWTH RATE: GROSS SAVINGS: INFLATION: GINI INDEX: BUSINESS RANK: 7.4 percent 20 percent 3.3 percent 36.4 99 / 189 • Agriculture accounts for 11 percent of GDP, services account for 57 percent and industry accounts for 32 percent • Inflation decreased from 6.2 percent in 2010 to 3.3 percent in 2014 • Gross domestic savings increased from 19.3 percent of GDP in 2010 to 20 percent in 2013 • The ease of doing business ranking improved from 105 in 2014 to 99 in 2015 DEMOGRAPHICS POPULATION POPULATION EARNING POPULATION GROWTH RATE LESS THAN $2 20.64 million 0.8 percent 23.9 percent WOMEN POPULATION ENGLISH-SPEAKING HUMAN DEVELOPMENT 51.8 percent POPULATION INDEX GENDER EQUALITY RATING 9.9 percent 0.750 4 FOLLOW OTHER FOLLOW BUDDHISM FOLLOW HINDUISM FAITHS 70.2 percent 12.6 percent 17.2 percent Source: World Bank Development Indicators, World Bank Country notes, Euromonitor International 42 http://www.iconnectblog.com/2015/02/three-key-constitutional- reforms-for-sri-lanka/ 41 World Bank Development Indicators. Accessed in October 2015. 43 http://www.investsrilanka.com/setting_up_in 43 Figure 24: GLOBAL RATINGS THAT OFFER A MEASURE OF THE POLITICAL AND LEGAL SYSTEM IN SRI LANKA JUDICIAL CPIA S&P 3 72/144 INDEPENDENCE B+ RATING RATING RANK Source: World Bank Development Indicators, World Economic Forum,Global Competitiveness Report 2014 - 2015 OVERVIEW OF INVESTMENT CLIMATE ■■ Work permits can be obtained from the Department of Immigration and Emigration using a recommendation letter Foreign Direct Investment from the Board of Investment. Net inflows of $944 million in 2014, growing at a CAGR of ■■ Work permit renewal is subject to project reviews and 18.6 percent since 2010 approvals by the Appraisal Department. Key Investment Sectors OVERVIEW OF THE LOCAL INCLUSIVE BUSINESS Tourism, renewable energy, manufacturing, information INDUSTRY technology, port and ICT infrastructure, education, and The concept of inclusive business is relatively new in Sri agriculture Lanka as compared to other countries in South Asia. There is however a very well-established NGO sector that works Key Government Bodies across sectors such as agriculture and healthcare and across Ministry of Industry and Commerce, Department of thematic areas such as rehabilitation of communities Immigration and Emigration, Inland Revenue Department, displaced by the civil war. For-profit inclusive business Sri Lanka Customs Authority, Board of Investment, Central activity is seen across sectors such as financial inclusion, Environmental Authority handicrafts, and agriculture. The renewable energy and healthcare sectors have very limited private sector activity, Policies to Aid Foreign Investment as a majority of the population is grid-connected, and the ■■ Waiver of customs duty on capital goods and raw materials government is a major player in healthcare, which provides for companies that export more than 90 percent of goods services at subsidized rates. produced or services. ■■ Non-export oriented projects get waivers of custom duties A handful of inclusive businesses have come up in the on import of project-related capital goods for the duration country in the recent past that seek to use sustainable of the project. models to improve quality of life for rural poor. For ■■ Exchange control exemptions are awarded to export- instance, CBL Natural Foods is an inclusive business that oriented companies. directly sources raw materials from farmers and processes ■■ Foreign-owned businesses can apply for BOI approval to list these into food products, thus ensuring better income to on the Colombo Stock Exchange. farmers. Others such as Wisdom Solar and Access Solar Capital Requirements provide affordable solar energy products in rural areas. Registration fees of $140 Key supporters of the inclusive business industry in Sri Work Permit [44] Lanka, which can also potentially support replication ■■ Investors researching the Sri Lanka market or looking to include: register a foreign investment are required to apply for an entry visa instead of a business or tourist visa. Funders The capital market consists of PE/VC funds, DFIs, HNIs and commercial banks. The country has 25 commercial banks, 48 non-banking financial institutions, over 20 PE/VC funds (of which 13 have an impact focus by virtue of focusing on high-impact sectors), and 12 development finance 44 http://www.investsrilanka.com/setting_up_in Institutions (DFIs). Most inclusive businesses depend on 44 Corridors for shared prosperity personal networks to raise capital during the first few years ■■ Angel Network: Lankan Angel Network of operations. DFIs directly invest in businesses, only a few ■■ Donors and DFIs: DFID, FMO, DEG, USAID, AusAid, ADB channelize capital through commercial banks. Although ■■ Impact funders: Creation Investments there are no policies to specifically promote inclusive businesses, the government does promote investments in Enablers SMEs by assigning it high-priority sector status.[45] The non-financial support ecosystem is less developed in Sri Lanka. There are very few dedicated enablers for inclusive Some of the notable funders include:– businesses. These include Lanka Social Ventures by Oxfam and incentiWise, which provides incubation services to ■■ Commercial banks: Bank of Ceylon (BOC), People’s Bank inclusive businesses. Mainstream support providers such (PB), Commercial Bank of Ceylon Plc (CB), Hatton National as HSBC Youth Enterprise Awards, Nawabima Business Bank Plc. (HNB), Sampath Bank Plc. (SAMB) and Seylan Incubator, Sarvodaya Economic Enterprises Development Bank Plc. (SEYB) Services, Start and Improve Your Business Association of ■■ Mainstream PE/VC funds: Lanka Ventures Plc., LR Global Sri Lanka, and National Enterprise Development Authority Lanka Private Equity Fund, Jupiter Capital, Steradian support small businesses and could potentially extend Capital, Apache Capital, Actis support to inclusive businesses. Photo credit: Dominic Sansoni/World Bank 45 Government Policy and Strategy for SME Development, J.P.D.R Jayasekara and Anuradha Thilakarathna Ministry of Finance and Planning, Sri Lanka, 2013. 45 SECTORAL LANDSCAPE AND REPLICATION OPPORTUNITIES A summary of the landscape as well as replication opportunities is presented in Figure 25. Figure 25 SNAPSHOT OF SECTORAL LANDSCAPE AND KEY REPLICATION OPPORTUNITIES HEALTHCARE AGRICULTURE RENEWABLE ENERGY Healthcare expenditure GDP share Access to electricity ■ Government - 44 percent ■ 11 percent ■ 12 percent of the population is ■ Private sector/donors - 56 percent off-grid Doctor / Population ratio Employment Installed capacity ■ 1,250 people - 1 physician ■ 33 percent of the workforce ■ Hydro = 1590 MW, Wind = 76 MW Enabling ecosystem Enabling ecosystem Enabling ecosystem ■ 100 percent FDI is allowed ■ Government provides tax incentives to ■ Government allows for trading ■ Key donors active in the healthcare SMEs in agro-processing, poultry, renewable energy produced within sector are International fishing, seeds and dairy households through ‘net metering’ Development Association, WHO, ■ 100 percent FDI is allowed in all USAID and World Bank provide aid and JICA, WDF sub-sectors technical assistance to agro-processing ■ Active donors include World Bank and businesses in conflict areas ADB Challenges Challenges Challenges ■ Non-communicable deseases are on ■ Low use of high quality inputs and farm ■ Poor access in Central and southern the rise, particularly cardio-vascular, mechanization provinces -60-70 percent of rural cancers, diabetes and chronic ■ High post-harvest spoilage (-40 percent) population does not have electricity respiratory deseases-universal leads to reduced farmer incomes access healthcare system does not cover these ■ Threat of climate change and flooding ■ Solar home systems are unaffordable ■ Rural communities are underserved Enabling ecosystem Replication opportunities ■ Government: Good government ■ Government: Supports through tax ■ Government: Supports the sector support through universal healthcare incentives to SMEs in agro-processing, through 'net-metering': Sri Lanka to Citizens. and tax holidays to private poultry. fishing, seeds and dairy: 100% Sustainable Energy Authority (SLSEA) sector; 100% FDI allowed FDI is allowed with limited restrictions is building a grid-connected solar ■ Domestic funders; Very limited for Small scale processing units energy park, slated to be the first of its support: Actis and Lanka Ventures are ■ Domestic funders: Poor availability of kind in Asia; 100% FDI is allowed two funds that provide risk capital to long-term credit (burdened with high ■ Domestic funders: DFCC Bank and the Sector interest rates); Limited PE/VC activity - Commercial Rank of Ceylon provide Donors and DFIs: International Steradian Capital and Apache Capital renewable energy project financing; ■ Development Association (IDA), WHO, provide capital focused on large ticket Lanka Ventures and Creation JICA, Singapore International sized investments Investments are the active PE funds Foundation, and WDF are some of the ■ Donors and DFIs: IFAD. Oxfam, USAID, ■ Donors and DFIs: Active donors include active donors and World Bank are some of the active Asian Development Bank, Pathfinder donors Foundation and International Foundation of Science. Replication opportunities ■ Short-to-medium term: Affordable ■ Short-to-medium term: Spices. ■ Short-to-medium term: Solar home care for psychotherapy, medical floriculture, herbal plants, high-value system products, Community-level devices. micro-insurance fruits and vegetables, Meat and milk mini and rnicro grids, improved ■ ■ cookstoves Long-term: Disease surveillance Long-term: modernization of deep Sea systems and digitization of health data fishing and aquaculture practices ■ Long-term: Solar water pumps, local manufacture of solar PV pumps Source: The Landscape for Impact Investing in South Asia, 2014, BOI Sri Lanka, Department of Agriculture, Sri Lanka, CIC Agribusinesses, Sri Lanka Fruit and Vegetables Producers, Processors and Exporters Association, Department of Export Agriculture, Sri Lanka, World Bank, Country Cooperation Strategy - WHO, The Economist Intelligence Unit, Work In Sri Lanka, Sri Lanka Sustainable Energy Authority (SLSEA) Reports, Sri Lanka Renewable Energy Forum, Ministry of Power and Energy, Public Utilities Commission of Sri Lanka, Primary research. 46 Corridors for shared prosperity KEY CHALLENGES AND INSIGHTS BASED ON businesses that build Sri Lanka’s export competitiveness REPLICATION EXPERIENCES OF INCLUSIVE or sell products and services that require repeat purchases. BUSINESSES Most instances of inclusive business replication to Sri Lanka have been in agriculture-related sectors that are Limited Access to Capital export-focused and serve international markets while Small and medium inclusive businesses, particularly involving Sri Lankan low-income communities in their those at the early stages of growth, have limited access supply chains. to institutional capital in Sri Lanka. They, hence, rely on funds raised from friends and family, or even international Lack of Last-Mile Infrastructure for Distribution and funders. This poses a challenge to inclusive businesses Financing seeking to replicate in the country, especially those who There is a significant dearth of last-mile infrastructure for have higher working capital requirements and need distribution and financing such as MFIs and aggregators frequent capital infusion. of door-to-door sales agents. This can create hurdles in business expansion. For instance, AquAgri, an aquaculture Inclusive businesses have overcome this challenge by focused inclusive business that expanded from India to Sri securing funds ahead of replication to support scale up, Lanka, found it challenging to connect farmers to last-mile with the expectation that domestic capital will be easier to financing facilities. In the absence of these micro-loans, the source once they reach a certain size. pace of farmer onboarding began to slow down. Limited Domestic Market It overcame these challenges by collaborating with a Sri With a population of only 20.48 million,[46] the domestic Lankan partner to tap into farmer networks that could market in Sri Lanka offers limited potential for scale for collectivize farmers and afford the initial set-up cost. It also products and services exclusively focused on local customer financed some of the initial set-up costs using funds raised segments. Despite this, the market is still strategic for in India. Photo credit: Dominic Sansoni/World Bank 46 World Bank Development Indicators. Accessed in October 2015. 47 Special spotlight Country 5 AFGHANISTAN MACROECONOMIC SNAPSHOT LEGAL AND POLITICAL SNAPSHOT Afghanistan is a landlocked country located in South and ■■ Legal system consists of Islamic, statutory, and customary Central Asia. It shares its borders with Pakistan in the rules. It has developed over centuries and is currently south and east, Iran in the west, Turkmenistan, Uzbekistan, changing in the context of the rebuilding of the Afghan Tajikistan in the north, and China in the far north-east. state. With a population of 31.6 million on a landmass of 652,000 ■■ Afghanistan is a member of a number of regional sq. km., it is the 42nd most densely populated country in cooperation agreements, such as SAARC, ECO, CAREC, the world.[47] It is a member of the South Asian Association APTTA and SAFTA. Under SAFTA, Afghanistan enjoys of Regional Cooperation (SAARC), Economic Cooperation duty-free access to India and 5 percent to Pakistan on non- Organization (ECO), and Economy of the Organization sensitive goods. of Islamic Cooperation (OIC). A macroeconomic and ■■ Afghanistan has also signed bilateral trade and economic demographic snapshot of Afghanistan is presented in cooperation agreements with Russia and Turkey. Figure 26. Figure 26 SNAPSHOT OF MACROECONOMIC INDICATORS AND DEMOGRAPHICS IN AFGHANISTAN QUALITATIVE INDICATORS EASE OF DOING GROSS SAVINGS: GINI INDEX: GDP GROWTH RATE: INFLATION: BUSINESS RANK: -21.5 percent 27.8 1.9 percent 4.6 percent 183 / 189 • Agriculture accounts for 20 percent of GDP, services account for 54 percent and industry accounts for 26 percent • Inflation increased from 0.9 percent in 2010 to 4.6 percent in 2014 • Gross domestic savings decreased from -17.1 percent of GDP in 2010 to -21.5 percent in 2014 • The ease of doing business ranking fell from 182 in 2014 to 183 in 2015 DEMOGRAPHICS POPULATION LIVING POPULATION POPULATION BELOW NATIONAL 31.63 million GROWTH RATE 3 percent POVERTY LINE 36 percent WOMEN POPULATION ENGLISH-SPEAKING 48.5 percent HUMAN DEVELOPMENT POPULATION INDEX 8 percent GENDER EQUALITY RATING 0.468 3 FOLLOW ISLAM FOLLOW OTHER FAITHS 99 percent 1 percent Source: World Bank Development Indicators, World Bank Country notes, Euromonitor International Report 47 World Bank Country Profile 48 Corridors for shared prosperity Figure 27 LEGAL AND POLITICAL SNAPSHOT OF AFGHANISTAN JUDICIAL CPIA Not Not S&P 2 INDEPENDENCE RATING Available Available RATING RANK Source: World Bank Development Indicators, World Economic Forum,Global Competitiveness Report 2014 - 2015 OVERVIEW OF INVESTMENT CLIMATE the Investment Incentive Policy focused on development of industry, construction, export promotion, agriculture, Foreign Direct Investment and mining. Net inflows of $59.6 million in 2013, growing at a CAGR of ■■ Foreign ownership to the extent of 100 percent is allowed in -7.7 percent since 2010.[48] most of the economic sectors with full repatriation of profit. ■■ There is no restriction on capital flows and currency Key Investment Sectors conversion. Minerals and hydrocarbon, high-value fruits, financial ■■ Afghanistan Investment Support Agency (AISA) acts as one- services, information technology, construction, stop shop for investors and business license is issued within marble, carpets. 2 to 3 days at AISA. Key Government Bodies Capital Requirements Ministry of Commerce and Industry, Afghanistan There is no minimum paid-up capital required to Investment Support Agency (AISA), Export Promotion start a business. Agency of Afghanistan (EPAA). Work Permits Policies to Aid Foreign Investment ■■ A registered enterprise can directly or indirectly employ ■■ Corporate income tax rate of 20 percent, which is lower foreign managerial and expert personnel of any nationality, than its South Asian neighbors. provided the expats comply with the laws applicable in ■■ In July 2013, the Government of Afghanistan announced Afghanistan while present in Afghanistan. Photo credit: Michael Foley/World Bank 48 World Bank Development Indicators. Accessed in October 2015. 49 SECTORAL LANDSCAPE AND REPLICATION OPPORTUNITIES A summary of the landscape as well as replication opportunities is presented in Figure 28. Figure 28 A SUMMARY OF SECTORAL LANDSCAPE AND KEY REPLICATION OPPORTUNITIES Short-to-medium term opportunities (trade, knowledge transfer, technology transfer) ■■Technology and knowledge ■■Trade of agriculture inputs such as ■■Technical support for transfer for affordable primary high quality seeds and technical installation and after sales and secondary healthcare in rural advisory extension services for services in solar products areas, and emergency medical improving farm and livestock and solar home systems in care services outside of Kabul productivity rural areas ■■Know-how on leveraging ■■Technology transfer for improving ■■Knowledge transfer for traditional midwives and processing infrastructure for fresh installing and setting up community health workers, for fruit concentrates„juices, jams mini/micro solar grids and better maternal and child care and jellies for both domestic and hydropower grids in the before during. and post-delivery; international exporl markets country medically-assisted child-birth Long term opportunities (strategic alliances, JVs and wholly-owned subsidiaries) ■■High-quality low-cost diagnostic ■■Irrigation equipment such as solar ■■Last-mile consumer financing telemedicine services in both pumps, drip irrigation kits,. bubbler, models that can work in urban and rural areas. Diagnostics sprinkler systems absence of MFIs and banking services identifying water borne penetration disease and malaria incidences ■■Mobile technology to inform and train farmers ■■Installation and sales support ■■Developing the health information for promoting improved system (including surveillance) ■■Post-harvest infrastructure and cookstoves and data digitization handling facilities such as cold storages for fresh fruits and ■■Setting up local manufacturing ■■Manufacture and distribution of vegetables of Solar PV panels to reduce the micro-nutritional supplements cost of products and make the services more affordable Source: USAID, World Bank, Ministry of Agriculture, Irrigation and Livestock of Afghanistan, The landscape for Impact Investing in South Asia, 2014, Doctors Without Borders, International Medical Corps, GIZ, Clean Technical, Digital Green, Ministry Energy and Water of Afghanistan. 50 Corridors for shared prosperity Annex 1: Case Study Summaries BEEJ SHEETAL Home country: India. Replication Format: Wholly-owned subsidiaries, trade partnerships. Replication markets: Sri Lanka, Bangladesh, Nepal, Pakistan, Maldives, and Bhutan. Beej Sheetal is a JV between Bejo Zaden of the Netherlands and Sheetal Hybrid Seeds of India. It develops and distributes high quality hybrid vegetable seeds in India, South Asia, and Africa. It has developed several hybrid varieties of vegetables through in-house R&D facilities spread over 100 hectares in Jalna, Maharashtra and 40 hectares in other parts of India. Snapshot of Replication Drivers INTENT CAPACITY DEPENDENCIES Objectives and preferences Building replication-readiness Organizational dependencies of replication that led to replication choices Imperative: Beej Sheetal saw market Management readiness: Beej Sheetal’s Consumer demand for vegetables seeds demand for its seeds in SAARC countries. Director and a few senior managers produced by Beej Sheetal: Most of Beej travelled to target countries initially and Sheetal seeds are primarily suited for a Preparation: It visited target markets to later hired local talent to run operations. South Asian diet, and hence it is more conduct research on food preferences viable in markets with food habits and cropping patterns, and to identify Financial readiness: It relied on profits that are similar to Indians. trade partners. and capital reserves from India to fund replication; operations in target markets Similarities in agro-climatic conditions: Format preference: It chose trade started to generate revenues and became Its seed production facilities in India partnerships in Sri Lanka, Nepal, and self-reliant in less than a year. Trade in and Bhutan can produce seeds Pakistan. It set up a subsidiary in Bangladesh was particularly helpful as for sub-tropical and temperate Bangladesh because the market was regulations do not permit credit sales and conditions, and is hence more relevant larger with the presence of several payments are made upfront. in regions that have these conditions. players from different countries. It set up a seed production facility in Bhutan for Operational readiness: It had in-house Demand from small farmers for high- temperate seeds. R&D to create seed varieties specific to yielding varieties of seeds: Its seeds consumption patterns in target markets. tend to be more expensive as they Country preference: It selected Sri Lanka, are genetically engineered for high Nepal, Pakistan, and Bangladesh based Validating need: It validated need through productivity and resilience; hence on demand for vegetable seeds; it its network of distributors in target it relies on farmer willingness to pay selected Bhutan based on climate for markets, and through the Asia and Pacific these higher prices. production of temperate seeds. Seed Association. Key challenges in replication Ecosystem: Inadequate market data in emerging and frontier economies could lead to wrong estimations of market potential. Sector: Competition from well-entrenched Japanese companies and informal players such as cross-seed purchasers has slowed down growth. Business: Distributors in Bangladesh prefer to deal with Beej Sheetal India rather than the Bangladeshi entity for higher quality assurance owing to rampant black market trade in seeds; this has resulted in a slower growth rate for Beej Sheetal. Key replication insights ■■ Beej Sheetal now relies on a local country head with experience in the seed industry to estimate the demand potential more accurately. ■■ It relies on its R&D infrastructure to create hybrid vegetables that have untapped market potential. ■■ It has built a local team in Bangladesh and, over time, expects to develop customer trust to a degree where there is willingness to do more business with the local team rather than the India team. 51 E-KUTIR Home country: India. Replication Format: Knowledge transfer. Replication markets: India, Bangladesh, Nepal, Cambodia, Mexico. eKutir is a social business that works towards improving the income and quality of lives of small farmers by providing them with farming advice, inputs, financing, and market linkages. It also manages a rural distribution network that helps corporates and inclusive businesses reach the last-mile. Snapshot of Replication Drivers INTENT CAPACITY DEPENDENCIES Objectives and preferences of Building readiness for Organizational dependencies replication transfer that led to transfer choices Imperative: eKutir was keen to scale the Management readiness: eKutir’s Skilled rural talent: The eKutir model impact of its model to other countries. replication format did not need requires access to skilled rural talent management bandwidth; the CEO that can be trained as kiosk operators. Preparation: It built a robust blueprint focused on replication part-time. of its approaches to improve farmer Internet connectivity at kiosk level: incomes and quality of life, and created Financial readiness: It did not need to The model relies on internet-based ICT tools for ease of implementation and invest heavily in replication except for technology to empower kiosk scale up. some travel to other countries; partners operators and hence requires internet paid for knowledge transfer directly or connectivity (dial-up connections are Format preference: It had limited financial were sponsored by donors. also viable). capacities and risk appetite, and hence preferred to replicate through knowledge Operational readiness: It had deep and Access to loans for micro- entrepreneurs: transfer. unique insights on working with small Kiosk operators need to make upfront farmers and also built proprietary investments in infrastructure and Country preference: It selected countries technology for advising and managing inventory and hence need access to based on availability of partners; other farmer groups. loans. aspects such as macro-environment and access to skilled talent and funding also Validating need: It validated need through Availability of licenses to sell fertilizers: played a role. partners supporting knowledge transfer; The model relies on ease of access to the CEO also undertook some field travel any government approvals required to to understand context of target markets. sell inputs such as fertilizers. Key challenges in replication Ecosystem: Poor internet access limits the ability of eKutir kiosks to synchronize the data with its central database. Sector: Poor awareness restricts eKutir’s reach, as its value proposition of easily-accessible farming advice and sale of certified inputs is more attractive to farmers who are aware of the benefits of better farming practices. Business: Difficulty in hiring and retaining micro-entrepreneurs makes last-mile access difficult. Low customer willingness to pay for services impact sustainability of the model. Key replication insights ■■ eKutir selectively replicated in countries where partners were able to validate penetration of internet and technology in rural areas. ■■ It relied on roadshows and demonstrations organized in partnership with credible organizations and individuals. ■■ It also built relationships with local government agencies to win farmer trust. ■■ It developed a training curriculum for micro-entrepreneurs and preferred to work with partners with rural networks. ■■ It built customer awareness and avoided markets distorted by free farmer services. 52 Corridors for shared prosperity AQUAAGRI Home country: India. Replication Format: Strategic alliances. Replication markets: Sri Lanka. AquAgri is engaged in processing seaweed and marketing value-added products. Its products have applications in a variety of industries such as food processing, agriculture, and animal husbandry. To procure raw seaweed, AquAgri builds backward linkages and enters into fixed-price buyback arrangements with self-help groups (SHGs) of farmers who cultivate and harvest sea plants. Snapshot of Replication Drivers INTENT CAPACITY DEPENDENCIES Objectives and preferences of Building readiness for Organizational dependencies replication transfer that led to transfer choices Imperative: AquAgri sought to grow Management readiness: AquAgri’s senior Availability of local partners with supply of seaweed by expanding to management team initially invested time technical expertise and farmer networks: areas with high potential for seaweed in Sri Lanka to introduce the idea and to AquAgri relies on the presence of local cultivation. create interest in the partner’s team. organizations with some technical Later, the local team stabilized and scaled expertise in agriculture/mariculture Preparation: It conducted detailed in- expansion efforts. and the ability to access networks house due diligence to identify possible of fishermen or coastal farmers for areas and a partner that could assist Financial readiness: It won a grant from contract farming. in cultivation as well as export the IUSSTF and USAID to expand the market products to international customers. and also accessed a concessional loan from Permission to access sea/ocean tracts a technology development organization to for seaweed cultivation: It depends Format preference: It preferred to enter build the processing infrastructure. It also on favorable government policies into a strategic alliance by way of JV used its own reserves for funding. and requisite environmental agency with a local partner who could help with approvals for agri-cultivation in the outreach to coastal farmers and also Operational readiness: It had built in-depth ocean or sea. add brand value to products in Sri Lanka. knowledge and expertise in seaweed cultivation in India, and transferred these Availability of local fishermen or coastal Country preference: It selected Sri Lanka skills to its Sri Lankan partner. farmers: It relies on the presence of as it has a long coastline, which is large communities of local fishermen or favorable for seaweed cultivation. Sri Validating need: It validated market need coastal farmers who can be trained to Lanka’s government policies are also through internal research and visits to Sri become contract farmers for AquAgri favorable for international businesses. Lanka; it also relied on market insights and are looking to generate extra income from its local partner. by taking up additional occupation. Key challenges in replication Ecosystem: Regulatory regime for mariculture and aquaculture in Sri Lanka is nascent but with high levels of interest in alternative livelihood opportunities. In future, both grants from government and donors, coupled with funding from financial institutions, could rapidly grow the cultivation activity. Sector: There is low level of customer awareness about the relative merits of using seaweed-based products as fertilizers and animal feed, and hence AquAgri has to invest in building market awareness for its product, pushing up costs of operation. Business: AquAgri has found it challenging to connect farmers to last-mile financing facilities; in the absence of these micro- loans, the pace of farmer onboarding can slow down. Key replication insights ■■ AquAgri works closely with a local partner who tracks the evolving regulatory scenario and, if needed, can also help it engage with relevant government authorities. Currently, however, its contract farmers use the sea free of cost. ■■ It has existing corporate tie-ups to source one of its three products, carrageenan, which helped cross-subsidize the costs of building market awareness of the fertilizer and animal feed product. ■■ It overcame challenges of onboarding farmers by working in collaboration with a Sri Lankan partner who could tap into farmer networks. It also financed some of the initial set-up costs using funds raised in India with a matching contribution from the local partner. 53 IHS INFORMATICS Home country: Pakistan. Replication Format: Strategic alliances. Replication markets: 15 countries in Asia, Africa, and Latin America. IHS is a healthcare-focused technology development firm that creates and adapts technologies for use among low-income consumers. It specializes in solutions that involve mobile-based interfaces for frontline healthcare workers and low-income patients. It has in-house domain expertise in building open-source products for TB screening, diagnosis, and compliance. Snapshot of Replication Drivers INTENT CAPACITY DEPENDENCIES Objectives and preferences of Organizational dependencies Building replication-readiness replication that led to replication choices Imperative: IHS was invited to replicate Management readiness: IHS senior Availability of funding partners: its mobile TB screening app to other team members were involved in IHS’s replication efforts are driven countries by TB REACH projects, designing the approach to product by partner funding. among others. replication; they worked in project mode with partners paying for their State of ICT infrastructure and Preparation: IHS prepared detailed time. mobile phone penetration: It requires documentation and technical functional ICT infrastructure with manuals for ease of adaptability. Financial readiness: It replicated with availability of telecom networks funding from partners who paid for and electricity, and widespread use Format preference: It preferred the personnel time and expenses of mobile phones. strategic alliances with single partners of IHS team-members for travel to in each country; adapting the app to target markets and to implement Networks of community health unique needs of its partners, building technologies. workers: Data entry and patient their capacities for implementation, tracking in mobile-based solutions and then exiting the partnership. Operational readiness: It built the app relies on facilitation by community as a scalable product, which could be health workers since low-income Country preference: It did not actively adapted in any country across a diverse communities are often less aware. select countries; instead, it responded range of phones and user contexts. to donor requests for replication. Skilled technical talent: It needs Validating need: It validated need low-cost software developers through partners who invited it to for day-to-day maintenance and replicate. trouble-shooting. Key challenges in replication Ecosystem: IHS solutions are primarily mobile-based and hence cannot function efficiently without reliable access to telecom networks and electricity (for mobile charging). Sector: Clients are often unable to articulate the problem, which in turn can impact quality of the solution developed. Also, clients face challenges in using the technology solution and routine troubleshooting, which impacts scalability. Business: In some cases, technology solutions have failed because of lack of sustainability. It is challenging to accept payments from clients and pay staff in foreign countries. Data cannot be hosted on cloud servers in some geographies. Key replication insights ■■ IHS builds or adapts each technology solution to work at the lowest level of infrastructural availability in a certain country, and often removes real-time updates and shifts to manual uploads in countries with very poor ICT infrastructure. ■■ It has created a structured approach that includes double checking partner-submitted problem definitions against its past experience to identify gaps and training partner resources to maintain technology and train field staff. ■■ It is exploring the possibility of adding revenue models for future projects. It is planning to incorporate a parent entity in Dubai for easier international operations. 54 Corridors for shared prosperity MAMA Initial launch country: Bangladesh (founded in the U.S.). Replication Format: Knowledge transfer, strategic alliances. Replication markets: India, Nigeria, and South Africa. Mobile Alliance for Maternal Action (MAMA) is a global alliance to improve maternal and child health through mobile technology. MAMA Bangladesh leverages its partnership with government agencies, private sector, and NGOs to reach out to families in rural areas and urban slums with maternal care information. The program is branded as Aponjon and is run in collaboration with Dnet, a social enterprise, and the Government of Bangladesh. Snapshot of Replication Drivers INTENT CAPACITY DEPENDENCIES Objectives and preferences of Building readiness for Organizational dependencies replication transfer that led to transfer choices Imperative: MAMA wanted to expand its Management readiness: MAMA Availability of local partners: impact to other developing countries. identified a senior leader to landscape MAMA looks for partners who the opportunity, and relied on its share its vision of improved Preparation: It researched the South partner for managerial and field staff. maternal and child care and have Africa and India markets and scouted good outreach in rural areas. for partners. In Nigeria. It also started Financial readiness: It received sufficient a small-scale pilot to understand the grant funding from donors such as High mobile-phone penetration: local market. USAID as well as corporate foundations It is dependent on mobile-phone such as Johnson & Johnson. penetration among low-income Format preference: It preferred to enter communities in rural and urban new markets through strategic alliance Operational readiness: It tweaked areas with good coverage by with strong partners who could provide its operational model based on its telecom networks. local context to adapt the MAMA experience in Bangladesh. It worked model. with local partners in replication Insights on local culture: It needs countries to develop the technology to contextualize its content Country preference: It selected India, solution and manuals for field staff and customize its service and South Africa, and Nigeria because these recruitment and training. product offerings to meet local countries have poor maternal and child requirements and preferences. health indicators among low-income Validating need: It validated market populations, while having significant need through its own due diligence mobile penetration. Availability of and insights gathered from its partner funding also impacted this decision. networks and field visits. Key challenges in replication Ecosystem: Integrating MAMA’s offering with the existing healthcare ecosystem and working with multiple different governmental and non-governmental partners were key challenges faced. Sector: Philanthropic funding for healthcare interventions are largely focused in rural areas, whereas awareness around need for urban affordable healthcare is poor. In most rural low-income households, men own the mobile phones, creating challenges in reaching women. Business: MAMA had to invest in technology and content translation in replication countries, which drove up cost of set-up and increased time-to-market. Key replication insights ■■ MAMA initially funded replication through international donors, and later raised funds from Indian healthcare corporates. MAMA focused on urban slums where more women are likely to own and use mobiles phones. ■■ It added a six-month gestation period into its replication plans to build the case for maternal and child care in urban slums, and then sold the concept to potential funding and implementation partners. ■■ It utilized its local partners and field staff to understand the local cultural context and language requirements so that investments were channeled wisely. It created customized training manuals/programs for continuous improvement in skillsets of its field and managerial staff. 55 VISIONSPRING Home country: Headquarters is in the U.S. Indian operations are its largest.. Replication Format: Strategic partnerships across different formats. Replication markets: Bangladesh, Rwanda, and other developing nations across the world. VisionSpring provides access to affordable eyewear products and services. It focuses on serving the eyecare needs of low-income populations in developing countries through innovative eyewear distribution models. Snapshot of Replication Drivers INTENT CAPACITY DEPENDENCIES Objectives and preferences of Building readiness for Organizational dependencies replication transfer that led to transfer choices Imperative: VisionSpring was interested Management readiness: VisionSpring Skilled talent: VisionSpring’s models in expanding the impact of its models allocated full-time staff for replication need Vision Entrepreneurs (VEs), and improving economic productivity efforts. optometrists, vision technicians, of vision-impaired low-income health volunteers, and managers. populations in developing countries. Financial readiness: It didn’t need to invest heavily in replication as Innovative distribution channels: It Preparation: It created a structured distribution and logistics costs were relies on both its own distribution approach to replication, including a shared with/by the partners. channels and leverages other’ detailed process to select partners and distribution channels to reach rural target markets. Operational readiness: It had a proven and urban low-income population. operational model that had worked Format preference: It preferred to work well in India for several years Leveraging global economies of scale: in partnerships (strategic alliances) It imports low-cost, high-quality with others to scale rapidly to multiple Validating need: It worked with local eyeglasses manufactured in China. countries without a drain on its own organizations to comprehensively resources. understand customer needs (for example, BRAC in Bangladesh). The Country preference: It identified senior management team travelled emerging markets with high incidence to target countries to gather primary of vision impairment preventable by insights to select the right partners. eyeglasses; from these it shortlisted countries with availability of local partners for marketing and distribution. Key challenges in replication Ecosystem: The traditional optical industry ecosystem in replication countries was nascent with limited efficacy in reaching the last mile. Sector: Awareness about eyeglasses is low in developing countries; it is time-consuming and expensive to create awareness. Business: It plans expansion to other developing markets across the world. The key challenge is to find skilled talent to fuel the growth. Key replication insights ■■ VisionSpring replicated in countries where partners had similar mission focus and good distribution channels. It also leverages BRAC’s extensive network and distributes glasses across Bangladesh. ■■ In addition to cross-subsidizing the cost of eyeglasses to make them affordable, the income generated from the higher margin products is used to fund operations in remote areas. ■■ It has set clear guidelines and HR processes for career progression and job satisfaction for employees. 56 Corridors for shared prosperity SOLARIC Home country: Bangladesh. Replication Format: Trade partnerships, strategic alliances, and joint ventures. Replication markets: Nepal, India, Tanzania, and Zambia. Solaric develops and manufactures solar home systems, backup systems, and nano-grid systems for off-grid populations in rural areas. Solaric’s proprietary utility-level DC technology, known as Optimizer, improves energy efficiency and the lives of solar systems. This enables the use of smaller batteries and solar panels, significantly reducing installation and maintenance costs. It also allows the use standard appliances. Snapshot of Replication Drivers INTENT CAPACITY DEPENDENCIES Objectives and preferences of Building replication-readiness Organizational dependencies replication that led to replication choices Imperative: Solaric was interested in growing Management readiness: Solaric’s Availability of local partners: its global footprint to increase revenues and replication activities were led by the Solaric looks for partners that scale the impact of its innovative products. CEO and senior management staff. A share its vision of improving lives dedicated country head or established in off-grid areas by providing Preparation: Its CEO and senior management solar company was identified in each utility-level clean energy. team travelled to potential target markets target market to manage operations. for technical and business due diligence. High mobile-phone penetration: Financial readiness: It had access to Format preference: It preferred partnership It is dependent on mobile-phone external private equity (PE) investors models for easier access to markets. It penetration among low-income and raised the equity necessary to explored three models based on geographies communities in rural and urban replicate the operation. But it needs – trade, strategic alliances, and joint areas, with good coverage by debt support at reasonable cost to sell ventures. telecom networks . systems on credit. Country preference: It chose Nepal, India, Operational readiness: It had a proven Insights on local culture: It needs Tanzania, and Zambia for replication operational model and product portfolio to contextualize its content based on the availability of distribution in Bangladesh ahead of replication. and customize its service and and financing partners and the degree of competition from private sector and Validating need: It validated market product offerings to meet local government subsidies for alternates (for need through partner networks and requirements and preferences. example, kerosene). field visits by its internal research team. Senior management was closely involved in the process. Key challenges in replication Ecosystem: Solaric relies on imported solar PV panels in most target countries due to less developed domestic manufacturing sectors. This increases cost and requires more stringent quality control. Sector: Subsidies to local players, especially not-for-profits and solar substitutes (for example, kerosene), may make it difficult for Solaric to charge fair market prices for its products and services. Cheaper power from rapidly expanding public grids in more developed countries such as India can make Solaric expensive for the market. Business: The absence of relevant partners will impact the viability of Solaric’s replication model since it cannot take on distribution and financing in-house. It needs to invest in hiring and retaining staff, which increases cost of operations. Key replication insights ■■ Solaric prefers to source PV panels from local manufacturers as far as possible and supports suppliers with capacity building and advance orders to encourage them to invest in in-country manufacturing. ■■ It undertakes policy advocacy to encourage greater customer awareness of solar products. In more developed countries such as India, Solaric positions itself as a back-up solution to grid power and competes with its efficient DC system against traditional inverters and diesel generators. ■■ It only works in countries where it can identify partners with relevant experience and networks for rural outreach. Solaric improves its HR systems and processes on a continuous basis to reflect local requirements. 57 ENVIROFIT Home country: India. Replication Format: Trade partnerships. Replication markets: Nepal, Bangladesh. Envirofit India manufactures and distributes clean technology solutions that improve health, livelihoods, and the environment while enhancing energy efficiency across Asia. Its primary product is a range of cookstoves that have been designed using natural draft technology to decrease smoke, toxic emissions, fuel consumption, and time taken to cook. It partners with MFIs and NGOs, as well as large donor programs for distribution and customer financing to reach the last-mile. It also relies on traditional retail trade channels for distribution. Snapshot of Replication Drivers INTENT CAPACITY DEPENDENCIES Objectives and preferences of Building readiness for Organizational dependencies replication transfer that led to transfer choices Imperative: Envirofit was seeking Management readiness: Envirofit’s Skilled talent: Envirofit requires to grow revenues by expanding to replication was led by an India-based the presence of local partners markets that are similar to India. business development manager. such as NGOs or MFIs for last-mile He was able to take on this added distribution and financing. It prefers Preparation: It conducted a market responsibility because he was already to work with partners that can survey to understand the competitive focused on acquiring distribution buy its inventory and then sell it to scenario in Nepal and Bangladesh. partners in India and this experience target customers. was relevant for replication. The Format preference: It preferred trade manager was also supported by other Availability of distribution and partnerships because it did not have team members in market scoping and logistics channel: It relies on the enough capital reserves to invest in a adaptation of workflows. sizable off-grid and low-income wholly-owned subsidiary and did not consumer segment with purchasing Financial readiness: It ensured want to risk investing in a new market. power as well as willingness to pay profitability in the India market ahead for clean cook stoves. of replication and counted on upfront Country preference: It chose Nepal payments from partners in replication because of strong demand and existing Supportive import policies for glasses markets for better cash flows. cook stove activity. It chose Bangladesh from China: It relies on favorable because the presence of large cook Operational readiness: It had in-house import policies (import from India) stove programs by USAID and IDCOL manufacturing and R&D capacities, as to deliver cookstoves to partners created a good entry point for Envirofit. well as a methodology to onboard and at a reasonable cost, so that they train new partners at a rapid pace. can add margins and still retail at Validating need: It validated market an affordable price for the end- need through partner networks and consumer. field visits. Key challenges in replication Ecosystem: High import duties increase cost of operations for Envirofit as well as its partners; in turn increasing cost of product for consumers. Delay in procurement of licenses slows down operations and adds to the cost of doing business. Sector: Its target customer base is mostly rural, and it cannot reach them in the absence of distribution and financing partners. It was challenging to estimate market potential and partner with the right organizations due to paucity of credible market data. Business: Envirofit has to invest in customer-awareness programs. This is challenging because it seeks to run lean operations with low upfront investments for business viability. Poor brand recognition in new markets impacts sales as customers are more aware of local brands. Key replication insights ■■ Envirofit selectively works with partners that can finance or subsidize the product for consumers to defray import costs. Envirofit relies on relationships with local partners to hasten compliance processes. ■■ It has only replicated to countries with significant penetration of MFIs, NBFCs ,or large donor programs that can distribute and provide consumer finance. It relies on partners and on field visits by its team to build in-house data on markets. ■■ It has shifted to a “train the trainer” model to build the capacities of local partners to implement customer-awareness programs. It leverages the brands of well-known local partners for credibility. 58 Corridors for shared prosperity ATOM SOLAR Home country: India. Replication Format: Strategic alliances and trade partnerships. Replication markets: Nepal, Afghanistan, and the Philippines. Atom Solar provides affordable and portable solar-powered water-pumping solutions for use in rural and urban areas. It caters to farmers with less than a hectare of land and is sold to farmers through dealers operating in traditional trade channels. Atom Solar won the Greenpeace Innovation Award in 2013. Snapshot of Replication Drivers INTENT CAPACITY DEPENDENCIES Objectives and preferences of Building readiness for Organizational dependencies replication transfer that led to transfer choices Imperative: Atom Solar was invited to Management readiness: Atom Solar’s Availability of distribution partners: export its products and expertise by replication was initiated by senior Atom Solar relies on third-party partners in Nepal and Afghanistan. leaders. Two managers were relocated distribution platforms or partners to to Nepal to manage local installations. retail irrigation pumps. Preparation: The team visited Nepal and got in touch with on-ground Financial readiness: It replicated to Farmer willingness to invest in experts in Afghanistan to collect Nepal with financial support from product:Since SunTrolley represents technical data to evaluate product-fit. International Centre for Integrated an investment of $1,500, it relies Mountain Development (ICIMOD) on farmer willingness to invest in Format preference: It opted to work which subsidized the purchase of mechanized irrigation. with partners because it relies on local pumps and covered Atom Solar’s costs. operational and financial assistance; Availability of water: It is more suitable choosing a strategic alliance in Nepal Operational readiness: Its in-house for sites that have adequate ground- to explore a deeper engagement and R&D team modified the pump to work water levels. a trade partnership in Afghanistan efficiently at varying levels of solar because of security concerns. irradiation. Availability of farm animals: It needs animals because while the pump Country preference: It did not actively Validating need: It validated need system is mobile, it cannot be hauled select countries. Expansion to Nepal through partners who invited it to by humans. and Afghanistan were in response to replicate; it also undertook technical partner requests. site studies to assess product Locally available/easily importable market-fit. water pumps: It purchases off-the-shelf water pumps to assemble SunTrolley, hence local availability is preferable. Key challenges in replication Ecosystem: High import duties increase cost of operations for Envirofit as well as its partners; in turn increasing cost of product for consumers. Delay in procurement of licenses slows down operations and adds to cost of doing business. Sector: Its target customer-base is mostly rural, and it cannot reach them in the absence of distribution and financing partners. It was challenging to estimate market potential and partner with the right organizations due to paucity of credible market data. Business: Envirofit has to invest in customer awareness programs. This is challenging because it seeks to run lean operations with low upfront investments for business viability. Poor brand recognition in new markets impacts sales as customers are more aware of local brands. Key replication insights ■■ Atom Solar currently relies on funding from ICIMOD to cover its replication expenses, but plans to set up a wholly-owned subsidiary. Given Nepal’s fast-changing regulatory landscape for the off-grid sector, it may face some challenges in doing so. ■■ Small farmers in Nepal are either unable to afford the cost or are too accustomed to subsidies to be willing to pay market prices. Hence, Atom Solar cannot compete in Nepal without subsidizing its products. ■■ Lack of local talent has a negative impact on post-sales experience for customers and also hampers growth plans in Nepal. Farmers are unwilling to risk investing a significant amount in an unknown brand. 59 Annex2: List of interviewees Organization Person Aavishkaar Fund E N Venkat Acumen Fund Noor Ullah Aponjon at Dnet Scion M. Anjir Hossain AquAgri Processing Private Limited Abhiram Seth Armman Geetanjali Jha Chakraborty Atom Solar Vivek Mundkur Bangladesh Enterprise Institute Parvez Abbasi BD Ventures Shawkat Hossain Beej Sheetal Seeds Private Limited Suresh O. Agrawal Bimputh Finance PLC Chamindra Gamage BRAC Social Innovation Lab Herasuddin Mehedi Sajjad British Council Tristan Ace Department For International Development Balasubramanian M Digital Green Rikin Gandhi Dimagi India Stella Luk Dolma Impact Fund Shabda Gyawali eKutir Social Business K C Mishra Envirofit Ravi Kumar EZ Turbo Stoves Riyad Ismail Forus Health Chandrasekhar K Good Market Amanda Kiessel Grameen Intel Social Business Ltd. Fakhrul Arefeen Khan Health at Home Private Limited Dr Bishal Dhakal HealthOne Fahad Hasan ICRA Nepal Deepak Kafle IHS Informatics Ali Habib 60 Corridors for shared prosperity Organization Person Indus Basin Holding Ali Saigol Insitor Management Humza Khan International Centre for Integrated Mountain Aditi Mukherji Development (ICIMOD) Invest2Innovate Kalsoom Lakhani Lal Teer Seeds Dr Kamal Humayun Kabir Lili Dairy Sunil Rodrigo Mobile Alliance for Maternal Action (MAMA) Dr Aakash Ganju mPower Social Enterprises Mridul Chowdhury Nabil Invest Manish Joshi One to Watch Willem Grimminck Open Accelerator Jerry Nicholson Organic Village Samir Newa Practical Action Consulting Moushumi Shrestha Procheck Saim Siddiqui Selyn Sandra Wanduragala Social Enterprise Lanka Eranda Ginige  SOLARIC Didar Islam VisionSpring Shivi Singh 61 Annex 3: Abbreviations ADB Asian Development Bank AEDB Alternative Energy Development Board AEPC Alternative Energy Promotion Centre AISA Afghanistan Investment Support Agency AMUL Anand Milk Federation Union Limited API Active Pharmaceutical Ingredients APTTA Afghan Pakistan Transit and Trade Agreement ASEAN Association of Southeast Asian Nations AusAID Australian Agency for International Development B2B Business to business B2C Business to customer BCC Bangladesh Competition Commission BEI Bangladesh Enterprise Institute BIO Belgian Investment Company BIPPA Bilateral Investment Promotion and Protection Agreement BOC Bank of Ceylon BOI Board of Investment BoP Bottom of pyramid BRAC Bangladesh Rural Advancement Committee BSCIC Bangladesh Small and Cottage Industries Corporation CAGR Compound annual growth rate CAREC Central Asia Regional Economic Cooperation CB Commercial Bank of Ceylon Plc CEDB Clean Energy Development Bank CEO Chief executive officer CII Confederation of Indian Industries CPIA Country Policy and Institutional Assessment DC Direct current DEG German Investment and Development Corporation DFATD Department of Foreign Affairs, Trade and Development DFCC Bank Development Finance Corporation of Ceylon Bank DFI Development Finance Institution DFID Department for International Development DIF Dolma Impact Fund DTAA Double Taxation Avoidance Agreement ECO Economic Cooperation Organization EPAA Export Promotion Agency of Afghanistan EU European Union EXIM Bank Export Import Bank FDI Foreign direct investment 62 Corridors for shared prosperity FICCI Federation of Indian Chambers of Commerce and Industry FITTA Foreign Investment and Technology Transfer Act FMO Netherlands Development Finance Company GDC German Development Cooperation GDP Gross domestic product GIZ Gesellschaft für Internationale Zusammenarbeit GSEC Global Social Entrepreneurship Competition GST Goods and services tax HNB Hatton National Bank Plc HNI High net worth individual HOPE Health Oriented and Preventative Education HR Human resource HSBC Hong Kong and Shanghai Banking Corporation IB Inclusive business ICIMOD International Centre for Integrated Mountain Development ICT Information and communication technology IDA International Development Association IDCOL Infrastructure Development Company Limited IFAD International Fund for Agricultural Development IFC International Finance Corporation IFIC Bank International Finance Investment and Commerce Bank IPC Investment Promotion Centre IT Information technology JICA Japan International Cooperation Agency JV Joint venture KFW Kreditanstalt für Wiederaufbau LoC Line of credit MAMA Mobile Alliance for Maternal Action MAP Medicinal and aromatic plant MCH Maternal and child health MFB Micro finance bank MFI Micro finance institution MIS Management information dystem MW Mega Watt NASCIB National Association of Small and Cottage Industries of Bangladesh NBFC Non-banking financial company NBFI Non-banking finance institution NCD Non-communicable disease NGO Non-governmental organization OIC Organization of Islamic Cooperation PB People’s Bank PE Private equity PV Photo voltaic R&D Research and development 63 RE Renewable energy S&P Standard & Poor SAARC South Asian Association for Regional Cooperation SAFTA South Asian Free Trade Area SAMB Sampath Bank Plc SARTI South Asia Regional Trade and Investment Project SEDA Sustainable Energy Development Authority SEYB Seylan Bank Plc SEZ Special economic zone SHG Self-help group SHS Solar home system SLSEA Sri Lanka Sustainable Energy Authority SME Small and medium enterprise SMEDA Small and Medium Enterprises Development Authority SMEF SME Foundation SMS Short message service TB Tuberculosis UNFPA United Nations Population Fund UNICEF United Nations Children’s Fund USA United States of America USAID United States Agency for International Development VC Venture capital VE Vision entrepreneur WB World Bank WBG World Bank Group WDF Women’s Development Foundation WHO World Health Organization 64 Corridors for shared prosperity Annex 4: Inclusive Business Ecosystem Stakeholders REGIONAL S. No. Organization Category Website 1. Aavishkaar Frontier Fund Impact Fund http://www.aavishkaar.in/ 2. Aga Khan Foundation Donors and DFIs http://www.akdn.org/akf 3. Asian Development Bank Donors and DFIs http://www.adb.org/about/main 4. CDC Group Mainstream PE/VC fund http://www.cdcgroup.com/ https://www.gov.uk/government/ Department for International 5. Donors and DFIs organisations/department-for- Development international-development 6. FMO Donors and DFIs https://www.fmo.nl/ German Investment and Development https://www.deginvest.de/ 7. Donors and DFIs Corporation International-financing/DEG/ https://www.giz.de/en/html/ 8. GIZ Donors and DFIs index.html http://www.ifc.org/wps/wcm/ 9. International Finance Corporation Donors and DFIs connect/corp_ext_content/ ifc_external_corporate_site/home International Fund for Agricultural 10. Donors and DFIs http://www.ifad.org/ Development 11. Japan International Cooperation Agency Donors and DFIs http://www.jica.go.jp/english/ https://www.deginvest.de/ 12. KFW - DEG Donors and DFIs International-financing/DEG/ https://www.gov.uk/government/ 13. UKaid Donors and DFIs organisations/department-for- international-development 14. USAID Donors and DFIs https://www.usaid.gov/ 15. World Bank Donors and DFIs http://www.worldbank.org/ 16. World Health Organization Donors and DFIs http://www.who.int/en/ 65 BANGLADESH S. No. Organization Category Website 1. AB Bank Limited Commercial bank http://abbl.com/ 2. Asian Tiger Capital Partners Mainstream PE/VC fund http://www.at-capital.com/ 3. Bangladesh Enterprise Institute Enabler http://bei-bd.org/ Bangladesh Export Processing Zones 4. Government body http://www.epzbangladesh.org.bd/ Authority 5. BD Venture Limited Mainstream PE/VC fund http://www.bdventure.com/ 6. Board of Investment Government body http://www.boi.gov.bd/ 7. BRAC Donors and DFIs/Enabler http://www.brac.net/ 8. City Bank Commercial bank https://www.thecitybank.com/ Global Social Entrepreneurship https://www.facebook.com/ 9. Enabler Competition GSECUW 10. Grameen Bank Donors and DFIs http://www.grameen-info.org/ http://www.grameenfoundation. 11. Grameen Group Enabler org/ http://www.incluvest.com/ 12. Incluvest Bangladesh Impact funder investments/bangladesh 13. Islami Bank Bangladesh Limited Commercial bank http://www.islamibankbd.com/ 14. National Bank Limited Commercial bank http://www.nblbd.com/ 15. Open Accelerator Enabler http://www.open-accelerator.org/ Registrar of Joint Stock Companies 16. Government body http://www.roc.gov.bd/ and Firms 17. SEAF Bangladesh Ventures Impact funder http://www.seafbv.com/ http://www.frontierbangladesh. 18. The Frontier Fund Mainstream PE/VC fund com/index.php The International Finance 19. Investment and Commerce Bank Commercial bank http://www.ificbank.com.bd/ Limited 20. Tindercapital Mainstream PE/VC fund http://www.tindercapital.com/ http://www.muhammadyunus.org/ Yunus Centre Social Business 21. Enabler index.php/social-business/yunus- Design Lab centre-social-business-design-lab 66 Corridors for shared prosperity NEPAL S. No. Organization Category Website Alternative Energy Promotion 1. Government body http://www.aepc.gov.np/ Centre 2. Beed Enabler http://www.beed.com.np/ Belgian Investment Company for 3. Donors and DFIs http://www.bio-invest.be/ Developing Countries (BIO) 4. Biruwa Ventures Enabler http://biruwa.net/ 5. Business Incubation Program Government body/Enabler http://www.incubation.gov.np/ 6. CECI Donors and DFIs http://www.ceci.ca/en/ 7. Change Fusion Nepal (Surya Nepal) Enabler http://changefusionnepal.org/ https://www.facebook.com/clean. 8. Clean Energy Development Bank Government body energy.bank https://www.gov.uk/government/ Department for International 9. Donors and DFIs organisations/department-for- Development international-development 10. Department of Industry Government body http://www.doind.gov.np/ http://www.dolmafoundation. 11. Dolma Impact Fund Impact funder org/dif/ 12. Entrepreneurs for Nepal (E4N) Enabler http://e4nepal.com/ 13. Ministry of Finance Government body http://www.mof.gov.np/en/ 14. Nabil Bank Ltd Commercial bank http://www.nabilbank.com/ 15. Nepal Bank Ltd Commercial bank http://www.nepalbank.com.np/ http://startupcup.com/startup- 16. NepalStartup Cup Enabler cups-growing-global-network-2/ 17. Office of the Investment Board Government body http://ibn.gov.np/ 18. One to Watch Impact funder http://www.onetowatch.nl/ 19. Rashtriya Banijya Bank Ltd Commercial bank http://www.rbb.com.np/ http://www.rockstart.com/ 20. Rockstart Impact Nepal Enabler impact/ 21. Standard Chartered Bank Nepal Ltd Commercial bank https://www.sc.com/np/ http://www.taramanagement. 22. Tara Management Pvt. Ltd Impact funder com.np/ https://www.triodos.com/en/ 23. Triodos Bank Donors and DFIs about-triodos-bank/ 24. United Nations Children's Fund Donors and DFIs http://www.unicef.org/ 25. United Nations Population Fund Donors and DFIs http://www.unfpa.org/ 67 PAKISTAN S. No. Category Website 1. Abraaj Capital Mainstream PE/VC fund http://www.abraaj.com/about-us 2. Abu Dhabi Group Mainstream PE/VC fund http://abudhabiigroup.com/ 3. Acumen Fund Impact funder http://acumen.org/regions/pakistan/ Angel Investment Network 4. Angels/Seed funders https://www.angelinvestmentnetwork.com.pk/ Pakistan 5. Arc Finance Mainstream PE/VC fund http://arcfinance.org/ 6. Askari Bank Commercial bank http://akbl.com.pk/ 7. Board of Investment Government body http://boi.gov.pk/ 8. Buksh Foundation Donors and DFIs http://bukshfoundation.org/bf/ 9. CapAsia Mainstream PE/VC fund https://www.capasia.com/ 10. Catalyst Fund Mainstream PE/VC fund http://cvcatalyst.com/ 11. Cyan Capital Mainstream PE/VC fund http://www.cyanlimited.com/ Department of Foreign http://www.international.gc.ca/international/ 12. Affairs, Trade and Donors and DFIs index.aspx?lang=eng Development 13. DYL Ventures Impact funder http://dyl-ventures.com/ 14. Habib Bank Limited Commercial bank http://www.hbl.com/ 15. i2i Angels Angels/Seed funders http://invest2innovate.com/ 16. Impakt Capital Impact funder http://www.impaktcapital.com/ 17. Indus Basin Holding Mainstream PE/VC fund http://www.indusbasin.com/ 18. Insitor Management Fund Impact funder http://www.insitormanagement.com/about 19. Invest2Innovate Enabler http://invest2innovate.com/ http://www.thenews.com.pk/Todays-News-6- Islamabad Energy 20. Donors and DFIs 116148-Energy-Foundation-Pakistan-to-solve- Foundation PIMS-energy-problems http://www.adb.org/projects/documents/ 21. Islamic Infrastructure Fund Mainstream PE/VC fund islamic-infrastructure-fund Japan International 22. Donors and DFIs http://www.jica.go.jp/english/ Cooperation Agency http://www.sifem.ch/portfolio/portfolio- 23. JS Private Equity Mainstream PE/VC fund composition/35-js-private-equity-fund 24. Lok Sanjh Foundation Donors and DFIs http://loksanjh.org/project-3/ LUMS Centre for 25. Angels/Seed funders https://lce.lums.edu.pk/ Entrepreneurship 68 Corridors for shared prosperity 26. Mini Ventures Impact funder http://miniventures.com/ 27. National Bank of Pakistan Commercial bank https://www.nbp.com.pk/ 28. Plan9 Angels/Seed funders http://plan9.pitb.gov.pk/ Securities and Exchange 29. Government body http://www.secp.gov.pk/ Commission 30. SEED Ventures Impact funder http://www.seedventures.org/ 31. Sindh Bank Limited Commercial bank https://www.sindhbankltd.com/ Small and Medium 32. Enterprises Development Government body http://www.smeda.org/ Authority http://articles.economictimes.indiatimes. 33. StartUp Dosti Enabler com/2014-05-25/news/50083562_1_venture- capitalists-seed-funding-entrepreneurs http://www.ubldirect.com/corporate/Default. 34. United Bank Limited Commercial bank aspx 35. YES-Network Pakistan Enabler http://yesnetworkpakistan.org/ https://www.changemakers.com/discussions/ Youth Social Enterprise on 36. Enabler entries/youth-social-enterprise-competition- Peace peace SRI LANKA S. No. Organization Category Website 1. Actis Mainstream PE/VC fund http://www.act.is/content/Home.aspx 2. Apache Capital Mainstream PE/VC fund http://www.apachecapital.co.uk/ http://dfat.gov.au/geo/sri-lanka/development- 3. AusAID Donors and DFIs assistance/Pages/development-assistance-in-sri- lanka.aspx 4. Bank of Ceylon Commercial bank http://web.boc.lk/ 5. Board of Investment Government body http://www.investsrilanka.com/ Central Environmental 6. Government body http://www.cea.lk/ Authority Commercial Bank of 7. Commercial bank http://www.combank.net/ Ceylon Plc 8. Creation Investments Impact funder http://creationinvestments.com/ Department of 9. Immigration and Government body http://www.immigration.gov.lk/ Emigration 69 Development Finance http://www.adfiap.org/members/DFCC/ 10. Corporation of Ceylon Donors and DFIs DFCC.htm Bank 11. Hatton National Bank Plc Commercial bank https://www.hnb.lk/ http://www.britishcouncil.lk/programmes/ HSBC Youth Enterprise 12. Enabler education/internationalising-higher- Awards education/hsbc-youth-enterprise-awards 13. incentiWise Enabler http://www.incentiwisechange.com/ Inland Revenue 14. Government body http://www.ird.gov.lk/SitePages/Default.aspx Department 15. Jupiter Capital Mainstream PE/VC fund http://jupitercapitalpartners.com/db/ 16. Lanka Ventures PLC Mainstream PE/VC fund http://www.acuity.lk/venture-capital/ Lanka Social Ventures by http://growsellthrive.org/profiles/blogs/social- 17. Enabler Oxfam incubator-in-sri-lanka-a-big-step-for-change 18. Lankan Angel Network Angel network LR Global Lanka Private 19. Mainstream PE/VC fund http://www.lrglobal.com/ Equity Fund Ministry of Industry and 20. Government body http://www.industry.gov.lk/ Commerce National Enterprise Government body/ 21. http://www.neda.lk/ Development Authority Enabler http://docplayer.net/578607-Small-and- Nawabima Business Government body/ medium-scale-enterprises-development- 22. incubator Enabler through-business-incubators-a-case-of-sri- lanka.html 23. People's Bank Commercial bank http://www.peoplesbank.lk/ 24. Sampath Bank Plc Commercial bank https://www.sampath.lk/en/ Sarvodaya Economic 25. Enterprises Development Enabler http://www.seeds.lk/ Services 26. Seylan Bank Plc Commercial bank https://www.seylan.lk/ Singapore International 27. Donors and DFIs http://www.sif.org.sg/ Foundation Sri Lanka Customs 28. Government body http://www.customs.gov.lk/ Authority Start and Improve Your 29 Business Association of Sri Enabler http://siybsrilanka.org/ Lanka 30. Steradian Capital Mainstream PE/VC fund http://steradiancapital.com/ Women's Development 31. Donors and DFIs http://www.wdfsrilanka.org/ Foundation 70 Corridors for shared prosperity WORLD BANK GROUP The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development. INTERNATIONAL FINANCE CORPORATION IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. Established in 1956, IFC is owned by 184 member countries, a group that collectively determines our policies. Our work allows companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities. IFC’s vision is that people should have the opportunity to escape poverty and improve their lives. International Finance Corporation Maruti Suzuki Building, 3rd Floor, Nelson Mandela Road, New Delhi - 110070, India Phone: +91 11 4111 1000 Website: www.ifc.org