2018 will mark the ten year milestone of when the World Business Council for Sustainable Development coined the phrase inclusive business. For much of the past ten years, the inclusive business discourse has focused on challenging the private sector to commit to taking up inclusive business models. And rightly so – inclusive business is about business after all.

As we look forward to the next ten years, now is a good time to ask who else needs to be included in this discourse and what can they do to drive transformational change so that the market at large commits to inclusive business.

I am convinced that one of the key actors that can drive change is government agencies – like DFAT, USAID, DFID and GIZ – who invest in overseas development on behalf of their national governments.  Going beyond the traditional approach of challenge funds, here are four additional things that Government Donor Agencies can do to bring about transformational change to the inclusive business landscape:

  1. Work with developing country governments to create an enabling environment for companies to undertake inclusive business. Government Donor Agencies are often tasked to use their financial and political capital to support developing countries in their policy framework and rule of law. There is enormous potential to positively impact the way business is conducted in developing countries if they become more inclusive. Utilising their capital, Government Donor Agencies can engage developing countries to emulate policy positions like that of Indonesia and the Philippines, which reward and incentivise companies to commit to inclusive business.
  2. Focus on key sectors. Some sectors are more naturally orientated towards undertaking inclusive business than others. Information Communication & Technology (ICT), health, education, water and sanitation, tourism, food and agribusiness are where the lowest fruit lie for inclusive business activity. Government Donor Agencies can prioritise their effort and investment in catalysing inclusive business in these sectors.
  3. Support the development of brokers and intermediaries that can foster the development of inclusive business. Both the Australian and US governments (as do many others) provide business advisory services to companies wishing to expand their global footprint. In a similar way Government Donor Agencies can provide and/or invest in inclusive brokers that help companies take the next step in accessing the “bottom of the pyramid” as a new market. In doing so, these brokers can assist companies in navigating local markets, identifying appropriate partners and providing advice, while also pitching new opportunities to companies that are not yet undertaking inclusive business activities.
  4. Support the development of service providers who can help companies undertake inclusive business. The old adage ‘you don’t know what you don’t know’ is especially true of inclusive business. This is not business as usual. Government Donor Agencies can invest in service partners that can build the capacity of businesses to work with the poor. By doing so, inclusive business initiatives will be best positioned to create impact and scale-up by drawing on the knowledge and experience of practitioners.

Government Donor Agencies that can channel their influence, capability and investment flows in this direction can forge a pathway for a new generation of businesses to commit to taking up inclusive business models at large. Through this type of investment, businesses would be interested in more than just risk and profit, potentially extending their value chains to include the poor as producers, employees, consumers and suppliers in ways that contribute to sustainability.