Women, business innovation, and sustainable development

Economic activities in developing countries where women’s involvement is dominant tend to be in the informal sector and therefore prone to higher risks. This column draws on evidence from Kenya and elsewhere to explore innovations that can be effective in enhancing women’s productivity and promoting greater economic inclusion – in energy use, access to water, healthcare, and entrepreneurship.

One of the Sustainable Development Goals (SDGs) is to ensure decent and productive work for all, particularly women, youth, and people with disabilities – all of whom tend to be ‘economically disadvantaged’ or ‘excluded’.

In Kenya, for example, where the informal sector accounts for 85% of total employment, women are more likely than men to operate smaller informal enterprises. A 2016 survey of micro, small and medium enterprises shows that women own nearly two thirds of unlicensed establishments but under a third of licensed establishments. In fact, only 17% of licensed companies owned by women are registered.

Informality typically translates into low and inconsistent wages, poor working conditions, low productivity, insecurity, and limited access to credit and other economic resources. Informal enterprises are also faced with high levels of risk as a consequence of limited social and investor protection.

These challenges contribute to business closures. For women entrepreneurs in Kenya, limited social protection is a particularly important contributor. According to the Kenyan survey, pre- and post-natal obligations of women owners are among the key reasons for closure. Women-led businesses also face constraints that are intertwined with their other family obligations.

Women are at the heart of food production – literally from the farm as part of the agricultural labor force to the plate as cooks. Those from low-income households often experience additional vulnerabilities due to the choice of cooking fuel. It is estimated that 60% of cooking energy in Kenya is from biomass, and women-headed households are more likely to use these energy sources, which are associated with risks from pollutants.

How can women’s livelihoods be enhanced?

The private sector seems to be responding. For example, there are some successful approaches in the energy sector. A number of companies are now offering energy-efficient cooking stoves across Africa. There is evidence that such technology contributes to efficiency and safety, reduces household time spent in preparing food, and addresses environmental, health, and safety concerns. The stoves have also been associated with increased household savings.

Ensuring access to basic goods and services – particularly water, sanitation, education, and healthcare – is a key mandate of any government. Here again, there are private and other non-government organizations playing significant roles in addressing the challenges, where the government fails to meet its commitments fully.

One example is the Hippo Water Roller, which by targeting women as consumers, aims to enhance access to water. This innovation was developed in 1991 by South Africans who, though male, appreciated the challenges facing communities, particularly women, in transporting water. The technology is a 90-litre barrel container with a steel handle, which is used to push or pull the barrel hygienically and with ease over the ground from the water source to the household.

Other innovations in this sector include water purifiers – such as ceramic, UV, and solar water filters – which eliminate bacteria found in water, rendering it safe to drink. In Japan, for example, a water purifier has been designed for bicycle users whereby the rider can purify water through the action of pedaling.

Developments in healthcare by the private sector have enhanced accessed to health services across Africa. In Uganda, for example, the Living Good organization was launched to distribute healthcare by delivering drugs, fortified foods, consumer goods, and health education. This is achieved through a micro-franchising model, in which health entrepreneurs, who tend to be women, go door-to-door selling items to other women. Strikingly, the founder of this organization is male.

In Kenya, a number of private healthcare providers – including Access Afya, Jacaranda Health, Miliki Afya, Viva Afya, and City Eye Hospital – provide low-cost healthcare services in densely populated low-income areas, building on high volume and economies of scale.

These organizations, though non-governmental, are responsive to social needs. They fall into three broad categories:

  • Social Entrepreneurship – innovative, social value-creating activities undertaken by the non-profit, business or government sectors.
  • ‘For-Benefit Organizations’ – those that generate an income through the sale of goods and services that improve consumers’ quality of life.
  • Inclusive Business – a private sector approach that engages the ‘the base of the pyramid’ through the provision of commercially viable goods and services for low-income people as consumers or as suppliers, distributors, or employees.

According to the World Resources Institute and the International Finance Corporation, globally, the base of the pyramid accounts for four billion people, 486 million of them in Africa, roughly 40% of the continent’s population. They are typically categorized as rural, often women, with low earnings, engaged in low-skill semi-regular, temporary jobs. They are dominated by the informal economy, which in itself presents challenges that introduce inefficiencies.

Inclusive businesses that incorporate the base of the pyramid into their value chain are in many sectors of the economy:

  • Agriculture, where inputs are sourced from farmers at the base of the pyramid, who often receive support aimed at improving quality and production.
  • Telecommunications, where service delivery is channeled through a distribution network that includes consumers at the base of the pyramid.
  • The manufacturing sector, which is largely producing household consumer goods aimed at the base of the pyramid. Business interest in the base of the pyramid is said to have led to the market expansion of multinational corporations into developing or emerging markets, all offering affordable products targeted at low-income consumers in terms of design, packaging and/or distribution.

In summary, people at the base of the pyramid face challenges that limit their access to decent housing, water, sanitation, healthcare, and education. Inclusive businesses, social entrepreneurs, and ‘for-benefit-organizations’ target and/or support the base of the pyramid, thereby addressing some key social and environmental challenges.

The role of the private sector has been recognized globally, as established in the UN Global Compact, which calls on companies to take actions within their business operations to advance social goals: the Business Call to Action, which supports companies in developing inclusive business models that engage the base of the pyramid, and the SDGs, which acknowledge the role played by all stakeholders in achieving the goals.

Other institutions that are playing an increasingly important role in promoting inclusive businesses include investors who seek to support initiatives with a ‘social impact’, and global movements, such as B Lab, which promote ‘using business as a force for good’.

Going forward, key policy questions that governments should start asking include how they can support entrepreneurs to enhance their economic inclusion to improve livelihoods while contributing to the economy. Policies, research, and innovation that can nurture the inclusion of people at the base of the pyramid, especially women, should also be made a priority.

 

Author:

Anne Gitonga-Karuoro is a Senior Policy Analyst at the Kenya Institute for Public Policy Research and Analysis in the Private Sector Development Department.