PH firms have poor ‘Inclusive Business’ awareness

Filipino companies have very low level of awareness about Inclusive Business (IB) even as they noted of bureaucracy and regulatory environment as impediments to engaging business models that incorporate the poor in their value chain, a study said.

The study Business+ The Philippines, jointly conducted by the Board of Investments (BOI) and the United Nations Development Program (UNDP) Istanbul International Center for Private Sector in Development (IICPSD), seeks to determine the private sector’s engagement in with and awareness of IB, knowledge and experience of IB across the regions. The Philippines, the second country after Turkey that an IB study was conducted, was considered an ideal case especially with its economy having performed remarkably well in recent years.

“Regardless of their level of inclusiveness, they still had very low levels of awareness of the ‘Inclusive Business’ concept with a mean score of 1.51 out of 7 where 1 indicated ‘not aware at all’,” according to the study which generated 223 responses out of 2,818 companies from more than 17 sectors.

Notably, the IB terminology is not very common in the business world although some companies had already adopted IB models but did not consider themselves inclusive business.

IB has been recognized as one of the most remarkable ways business can contribute to the United Nations Sustainable Development Goals (SDGs). The G20 has defined Inclusive Business as “a private sector approach to providing goods, services, and livelihoods on a commercially viable basis, either at scale or scalable, to people living at the base of the economic pyramid making them part of the value chain of companies’ core business as suppliers, distributors, retailers or customers.”

Inclusive Business models provide a sound basis for building a resilient economy that gives due importance to human and economic development while providing an alternative model to businesses to be profitable and responsible.

This lack of awareness on their practices in inclusivity can easily result in their not being able to go further with it and benefits not being maximized in terms of reaching the poor, the study said.

But respondents also believe these business models were applicable in their industry (4.64 out of 7). Yet this attitude did not necessarily lead to engaging IB and the successful applications of these models might have been playing a role in the hesitation to adopt IB.

Survey respondents also said that bureaucracy and regulatory environment impeded IB engagement in the Philippines while internal factors support it.

The in-depth interviews, involving 19 companies operating in the Philippines, showed that bureaucracy, the lengthy application processes, and registration times were among the factors impeding the adoption of IB practices.