Often business strategies and positive social impact are seen as tradeoffs. Many argue that businesses are harmful: they can use limited resources, create unsafe working conditions, and destroy the environment all of which take rather than give back to the social good. Despite this narrative, more companies want to play an active role in solving social challenges through business strategies. Movement in business around creating shared value has sprung up. This model can produce both economic and social gains. For companies investing in Africa, incorporating a shared value model into their current business can help solve unique challenges while also addressing needs of local communities.
ALIGNING BUSINESS AND SOCIAL INTERESTS
A shared value model encourages businesses to identify social problems that intersect with their business strategy. Addressing these problems creates cooperative networks that everyone benefits from including businesses. Companies gain customer loyalty and new markets, while communities benefit from the innovative products and improved livelihoods. There are various ways to implement a shared value strategy. Business can develop products that respond to customer needs, redefine productivity, or support related industries to improve social development.
The results of shared value have been exemplified across various industries. In Africa’s financial sector, institutions are creating shared value by utilizing mobile technology platforms. Mobile use in Africa has grown exponentially– by 2025 there are expected to be 360 million smartphones on the continent. Businesses have harnessed the power of mobile devices to provide broader access to their services. In Kenya M-PESA, launched in 2007 by Safaricom, is a money transfer network that also offers loan and saving services through mobile phones. Visa launched a similar mobile banking service with the Rwandan government to meet the needs of low income consumers. IGD worked with Visa to study the impact of their mobile platform on financial inclusion, Rwanda’s economy, and Visa’s business model in emerging markets. Access to mobile banking services not only opens new markets and consumers for companies but also fosters financial inclusion. People who for generations had been keeping their money at home now life the economy with infusions of cash that otherwise would not be in circulation.
SHARED VALUE IN AGRICULTURE: THE LAST MILE ALLIANCE
SeedCo copyIn Tanzania, IGD has identified market-led solutions to improve distribution, aggregation and storage networks in the agribusiness sector with the goal to leverage the private sector to help reduce post-harvest loss. The Last Mile Alliance (LMA), a collaboration of Seed Co, Bayer, Yara and Syngenta, established a cost-effective agro dealer distribution network. This network increases access to company products, makes the products more affordable, and increases product uptake.
By expanding the role of the agro dealers, the model reduces the amount of layers in the distribution chain. Doing so adds value at each step, ultimately creating a shared value ecosystem. Farmers are introduced to the new products and are more likely to buy due to the stronger ties between the agro-dealer and farmers. Companies now have reduced costs and access to new consumers, which helps increase profits, and the ability to further expand in the market.
Additionally, smallholder farmers gain positive benefits. By reducing the amount steps in the value chain, input products are now more affordable. Farmers, especially those with limited access to quality products can now use this network to prevent postharvest loss. Farmers gain knowledge on input products along with information on innovative farming techniques, all of which provide higher yields. Every person involved benefits from this cooperative network.
BUSINESS DRIVING SOCIAL CHANGE
Opportunities and strategies for incorporating a shared value model are among many discussions topics at IGD’s Frontier 100 Forum. From May 31- June 2, IGD will be in Cape Town exploring how companies from key industries are tackling social issues with their business strategies, the significance of shared value, and the lessons they have learned. Through shared value model companies can be drivers of social change.
Learn more about the Frontier 100 Forum at: www.forum.igdleaders.org Follow the hashtag #Frontier100 on Twitter and Facebook for more updates.
