August 17, 2020
By Dr. Peter Brimble, Senior Technical Adviser, The DaNa Facility
With its disproportionate impact on workers in the informal sector, the COVID-19 crisis has underlined the necessity for greater economic inclusion in Myanmar. The Inclusive Business model offers an innovative solution; one that has the potential to transform the business ecosystem and to strengthen resilience to future shocks, particularly for groups that face economic disadvantages, such as the poor, women, people with disabilities, and people living in conflict-affected areas.
The COVID-19 crisis has inflicted multiple shocks on the Myanmar economy. Growth approaching zero is projected for 2020. Measures taken to prevent widespread infection, such as lockdowns and travel restrictions, have brought the tourism and hospitality sectors to a standstill. The interruption of regional and international trade has severely affected the manufacturing sector. While the economic impacts have been felt across society, the poor have been hit hardest.
Inclusive businesses are commercially viable enterprises whose core business provides innovative products and services for people from poor and disadvantaged communities by including them in their value chains: as suppliers, workers, distributors, and consumers. Inclusive businesses innovate in and address markets that support poor communities.
This innovative business approach represents a triple win for Myanmar: it supports government efforts to reduce poverty and achieve inclusive growth; people from poor and disadvantaged communities receive a fairer share of economic benefits; and the business community benefits from a vibrant economy where everyone can participate.
During the COVID-19 relief period, inclusive businesses are already playing a critical role through leveraging their low-income consumer base, supplier relationships, and ‘last mile’ distribution networks to directly reduce the impacts of the pandemic on vulnerable populations. Inclusive businesses have been providing access to essential goods and services to support relief efforts and have undertaken campaigns to reduce the spread of the virus; through their handwashing campaign, Unilever has been one of the leaders in driving behaviour change.
As the easing of restrictions ushers in a cautious return to economic activity, inclusive businesses have a key role to play as the country strives to recover from COVID-19. Inclusive businesses have the potential to extend their supply chains to include products and services from affected micro, small and medium enterprises (MSMEs). To illustrate, Grab Food aims to partner with small restaurants during the crisis, protecting jobs in an industry that has been decimated by COVID-19. Initiatives that are focussed on protecting and creating jobs at MSMEs can ensure that economic recovery positively impacts people from communities most affected by the crisis.
Expanding distribution into rural areas by leveraging existing ‘last mile’ distribution networks is another way inclusive businesses can contribute to recovery. Inclusive businesses often employ local micro-entrepreneurs as distributers to expand into rural areas. In Myanmar, this includes enterprises such as Maha Agriculture, which provides financial services to the poor and unbanked, and also companies like SolarHome and Greenlight Planet, which provide solar energy systems to remote areas using local sales agents. These networks have a vital role to play in creating jobs in poor, remote and conflict-affected areas, as well as in providing people with access to disinfectants, masks, and other medical supplies.
Larger inclusive businesses also have a crucial part to play in the recovery process by providing access to finance for MSMEs affected by the crisis. They can provide more flexibility to MSME creditors, providing a degree of protection for businesses and jobs in their supply chains. Unilever has set a good example by offering EUR 500 million in cash flow relief to support livelihoods across its global value chains.
As Myanmar transitions its COVID-19 response from relief to recovery, the business community can and must play a critical role in driving inclusive and sustainable economic growth through transformational inclusive business activities. And the Government can play an important role in facilitating businesses to apply inclusive business models in three integrated ways.
Firstly, raising awareness about inclusive businesses already operating in Myanmar can help build understanding for the business community. Capacity building programmes, like the UK aid-funded DaNa Facility’s Online Inclusive Business Boot Camp (see www.danafacility.com), can show businesses how to develop and implement inclusive business models, and provide the tools they need to do so, and grow the impact investing ecosystem to finance inclusive businesses.
Secondly, providing financial support and policy incentives for inclusive businesses responding to COVID-19, including access to working capital loans and tax incentives, would encourage the wider business community to explore possibilities for applying appropriate inclusive models supporting economic recovery.
Finally, the Government is in a unique position to forge partnerships between the private sector, government agencies and development actors. Working together, existing inclusive business value chains could be identified and leveraged for relief efforts, and new models to support economic recovery and longer-term resilience could be co-created.
As Myanmar strives to recover from the COVID-19 crisis, inclusive business models offer the means to ensure that those hardest hit are not left behind. The Government and the business community can collectively make this happen.
You can find a Myanmar version of the Opinion Piece here.