Creating business and market opportunities for Africa’s poor is key to advancing sustainable development in the region.” UNDP Report

May 24, 2013

Involving low-income communities in markets and businesses across Africa is essential for economic growth to translate into sustainable development, according to a United Nations Development Programme (UNDP) report released today alongside the celebrations of the 50th Anniversary of the Organisation of African Unity / African Union.

“Realizing Africa's Wealth - Building Inclusive Businesses for Shared Prosperity” draws upon 43 in-depth case studies and a database of 600 institutions to portray the state of inclusive business in Africa, looking at a wide spectrum of sectors from banking to agribusiness.

Prepared by UNDP’s African Facility for Inclusive Markets, the report examines the approaches and conditions required to bring economic growth closer to low-income communities in Africa, focusing on how businesses can more readily include them as consumers, entrepreneurs and employees. It describes the status of inclusive business in sub-Saharan Africa and the environment needed to support the enterprises and entrepreneurs. It identifies promising opportunities in enabling enterprises and entrepreneurs to build more – and stronger – inclusive businesses for mutual benefit. The report calls for more efforts to support inclusive businesses with incentives and investment schemes as well as knowledge sharing about market information and implementation.

By working together to increase information, incentives, implementation support and investments required to make businesses more inclusive, the report makes the case that policy-makers, business owners and development practitioners in Africa will be in a position to make dramatic advances across the Millennium Development Goals (MDGs).

“Africa’s progress on economic growth has started to level social differences. For instance the Human Development Index increased by more than 15% in Africa between 2000 and 2010. However this remarkable growth at the economic front has not fully been translated into commensurate improvements in various conditions.” said Mr. Tegegnework Gettu, Under Secretary General and the Director of the Regional Bureau for Africa. “African countries need to ensure that economic growth is inclusive and sustainable.”

Making sure all African citizens can become entrepreneurs, consumers, employees or producers, requires business environments that provide opportunities for all. Market information, policies and legal frameworks that reduce transaction costs, financing and logistical assistance are key to ensuring businesses that are inclusive of the poor can succeed. Facilitating business and market creation not only generates income, but also basic goods, services and choices, with important implications for each of the MDGs, the eight internationally-agreed targets which aim to reduce poverty by 2015.

The report illustrates the impact that businesses and markets have had on the lives of the poor. For instance, South African company Aspen Pharmacare is producing affordable medicines for treating life-threatening diseases like HIV, tuberculosis and malaria. The success of the company was enabled through government offered tax incentives and a national anti-retroviral purchasing programme that guaranteed a market. Now Aspen is the largest producer of tablets and capsules in Africa and it has created thousands of jobs.

In Kenya, where less than 7% of the population has a formal bank account, Safaricom very successfully introduced an electronic mobile-phone-based money transfer system called M-Pesa. It quickly captured a significant share of the country’s financial services market, reaching 17 million subscribers in 2013 in Kenya. This allowed low-income customers access financial services with a minimal cost.

The Global Agri-Development Company is an agro-food company that aims to integrate smallholder farmers in Ghana into the agri-processing value chains in order to provide local reliable food products at competitive prices. Commercial nucleus farms provide small producers with training, equipment and high-quality production inputs.

“After having been called a hopeless continent, all of a sudden Africa is being recognized as the market of the future. We are at crossroads where we have to identify how we best engage together to be able to secure our African renaissance” said the Foreign Minister of Ghana, Hannah Tetteh, in her introductory remarks.

The report calls for the development of new inclusive business ecosystem-building initiatives, at national and regional levels, with the support of finance mechanisms to provide resources for coordination, information and funding. It also calls for the creation of centres of excellence to undertake research, document successful approached, share knowledge and build capacity at the continental, regional and national levels.

The report was presented by Tomas Sales, Manager of the UNDP African Facility for Inclusive Markets in Addis Ababa alongside the Pan Africa Business Conference celebrating the 50th Anniversary of the Organisation of African Unity / African Union entitled “Securing Africa’s Renaissance - Role of Africa’s Private Sector over the next 50 years”.

Contact informationLucky Musonda
lucky.musonda@undp.org

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