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Jan-Willem Scheijgrond
Global Head of Government Affairs B2G, Global Government and Public Affairs Department, Philips
The Netherlands, 02-03-2015

Inclusive development – the role of the private sector

Recipient countries should own and finance their development ambitions, supported by new innovative financing instrument from donors and other financiers. The private sector should innovate for inclusive development and partner with NGOs to deliver impact at scale in communities that need it most.

Why does a company like Philips care about inclusive development, and what does it have to offer? After all, the poor and underserved are difficult to reach and hardly have any money to spend. There are a number of reasons why we care, both morally and economically!

Philips has a mission to improve the lives of 3 Billion people per year by 2025 through meaningful innovations that make the world healthier and more sustainable. We are increasingly focusing on the disadvantaged and underserved population in the world, in particular in Africa and Asia. We have innovation and venturing centers in Kenya and India dedicated to the Base of the Pyramid to support inclusive growth.

With our healthcare innovations we are reaching mothers & children in rural areas and poor urban areas.  Africa has 80,000 clinics of which 50% have no electricity. The WHO estimates Africa needs 200,000 electrified clinics to offer the most basic care. That’s an opportunity! With our solar LED innovations we are lighting up rural villages and slums thus fighting light poverty that affects 1.3 Billion people. With clean cook stoves we are reducing the estimated 1.5 million people that die annually of fires and lung disease due to indoor pollution.

Can this be profitable?  Yes it can. We just need to figure out how to make it work at scale. I will illustrate this with a few examples. An average family in Africa spends 50 US$ per year on kerosene to light up their homes. An LED solar lantern costs 20 US$. However, people cannot afford that in one purchase. So we need to develop business models that enable people to pay for the lantern differently, preferably for 1.3 billion customers! Another example is on healthcare, where families can spend up to 30% of their (potential) household budget on caring for a chronically ill patient (e.g. heart patient, diabetes, mentally handicapped). Annually, 100 million people fall back into poverty because they need to care for a chronically ill member of the family. Universal Health Coverage makes healthcare accessible, prevents disease, and makes people healthy again and grows the economy. Using technologies, like digital IT platforms or handheld ultrasounds, can make healthcare more accessible, also for the poor.

So what needs to be done to transform the markets and reach those mothers, children, rural communities, chronically ill, and underserved community suffering from light poverty or poor access to healthcare?

Recipient governments need to recognize access to healthcare and electricity/light as a basic human right and a source or economic growth. That will make the case to allocate more domestic resources to invest in the policies their citizens deserve. We are seeing that many recipients’ countries are now willing to do so.  Donors need to move away from grants and encourage blending of financial sources, including private sector participation, to reach scale. Money is increasingly available, looking for investable projects. The time of pilot as an end in itself is over. Implement at massive scale, and replicate for impact! Private sector will need to innovate with and for underserved communities, team up with NGOs to reach communities, and develop supply chains and business models which ensure sustainable business and service can be delivered. If we combine the renewed willingness of recipient countries, the encouraging transformation of the financial/donor community and the partnerships between private sector and NGOs, we can deliver impact at scale for those who need it most!

TOPICS: Private sector

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Promoting inclusiveness in the Dutch policy agenda on trade and international cooperation

This contribution is part of a consultation for the Dutch Ministry of Foreign Affairs on how to promote inclusiveness in the Dutch policy agenda on trade and international cooperation.
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Ministery of Foreign Affairs


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