Over 90% of businesses in Latin America are composed of small and medium enterprises that generate between 25% and 40% of the region’s jobs and contribute approximately 15% to 25% of its GDP. Micro, small and medium enterprises that are inclusive businesses in Latin America face similar challenges: competitiveness in terms of volume, quality and prices for their products and services, access to markets and consumers, favorable procedures and regulations, and finally, access to capital. Some of the region’s capital and investment market is at an early stage of development. Some of the most experienced fund managers have been operating for fewer than ten years. Less than 20% of angel network investment has more than three years of experience.
Inclusive businesses are economically viable, environmentally and/or socially responsible initiatives that use market mechanisms to improve the quality of life for low-income people through encouraging their participation in all phases of the value chain. Inclusive businesses are a means of livelihood for those living at the base of the pyramid and a viable and efficient alternative complementing traditional government assistance, grants and philanthropy. Inclusive businesses in Latin America have a unique opportunity to provide low-income families greater access to products and services that improve their quality of life in a positive way.
Natural resources, agricultural potential and emerging industries in the region are all factors that position Latin America for the accelerated development of inclusive markets, which will contribute to reducing poverty and promoting social inclusion as well as successful mitigation and adaptation to climate change.
Opportunity identified by AVINA
and its allies
To improve the creation and expansion of businesses with a triple bottom-line approach (financial, social and environmental) in a way that makes inclusive businesses a major force in the economy of Latin America.
Shared strategy for action
For a business to be successful there must be a market and an enabling environment that is also inclusive and that can offer favorable conditions for growth and sustainability.
To promote an inclusive market in Latin America, AVINA works in three main areas:
1. Strengthening entrepreneurial initiative
2. Developing inclusive business
3. Promoting impact investing
Through inclusive markets, AVINA has collaborated with different players and promoted regional platforms; for example, the World Resources Institute, Ashoka, World Business Council for Sustainable Development, Netherlands Development Organization, Social Enterprise Knowledge Network, Aspen Network for Development Entrepreneurs, Bolivian Inclusive Business Council, Colombian National Committee for Inclusive Businesses, Inclusive Businesses Park, Latin American Venture Capital Association, Ibero-American Network for Inclusive Businesses and NextBillion, among others.
The Inclusive Markets team continually builds relationships and collaborates with a wide range of dynamic individuals and organizations from the social, public and private sectors.
The Colombian social enterprise aeioTü provides education, nutrition and quality care for infants, and has gradually increased its coverage to nine locations in three different cities during the past two years.
Bolivian Council for Inclusive Businesses leads the development of inclusive markets and businesses in Bolivia
In April 2008, AVINA, AMIGARSE, FUNDES, CARE and Swiss Contact came together to launch the Bolivian Council for Inclusive Businesses (COBONEI), a program to encourage the creation of inclusive businesses. The main objective is to carry out training and awareness programs as well as to identify, strengthen and encourage inclusive businesses in order to disseminate best practices in the country. In its third year of work, AVINA assisted COBONEI members and other organizations at the first International Forum for Inclusive Businesses “Cadena de Reciclaje” (Chain of Recycling), in Santa Cruz de la Sierra, Bolivia, and in the incubation of several companies in the field of recycled materials.
Improving revenues for small businesses in Peru
A group of more than 150 developing companies from the regions of La Libertad and Lambayeque in Peru saw their revenues increase by over 20% thanks to joining established networks that strengthened their commercial ties with the market. The alliance between Cesvi, AVINA and the IDB / MIF contributed to the consolidation of ten farmers networks, the training of professionals to form regional production initiatives, the implementation of a virtual platform that serves as a clearinghouse for experiences, lessons learned, inclusive business cases, and support for several municipalities committed to promoting inclusive businesses in northern Peru.
Colombian education company grows by 48%
Investment in early childhood is one of the most effective ways to positively impact the economy and society of a country. AVINA ally aeioTü is a social enterprise that provides comprehensive and high quality services (education, nutrition and child care) for early childhood development in Colombia. AVINA provided aeioTü with visibility at global venues and strategic and financial support. Along with contributions from other partners, AVINA enabled the number of children receiving quality education to grow to 1,570.
In addition, AVINA’s work promoting public-private partnerships for early childhood is laying the groundwork for aeioTü’s brand and services to become a social franchise with high growth potential, setting a standard at national as well as international levels. The enterprise has increased its coverage by 84% since 2009, when the alliance with AVINA began.
CDI Lan, in São Paulo, is a socially responsible portfolio company of the Vox Capital venture fund, an ally of AVINA. CDI Lan’s mission is to provide computer solutions to low-income communities across 90,000 computer centers, called “Lan Houses,” which provide Internet access to 30 million Brazilians.