For years NGOs, foreign donors and the Indonesian government have been developing projects to improve the lives of Indonesians living in deprived areas. Most projects fall short on sustainability and are limited in size due to many reasons, but maybe the most important one is that they are being underlooked by the private sector.
It is important that the private sector gets involved at the start of the development of these projects, as NGOs and governments often lack the entrepreneurship required in taking these ideas to market.
Tackling social problems
The socio-economic poorest layer in society is often referred to as the Base of the Pyramid (BoP). There are different income segments in the BoP. In Indonesia, in the lower BoP segment, 120 million people live on less than US$2 per day. These people usually have no access to health, education, financial services and clean drinking water.
Because of poor nutrition, 40 per cent of children below five years of age are stunted, and this puts them further below poverty line.
The Million Development Goals (MDGs) were set by the United Nations to tackle these problems. The MDG targets at the global level by 2015 are: eradicate extreme hunger and poverty; achieve universal primary education; promote gender equality and empower women; reduce child mortality; improve maternal health; combat HIV/AIDS, malaria and other diseases; ensure environmental sustainability; and develop a global partnership for development.
Indonesia will need to work hard to reach the 2015 targets.
Almost half a billion US dollars in foreign aid, through the Millennium Challenge Corporation, has been given to the Indonesian government in September last year to invest in solutions in key areas such as nutrition, green prosperity and government procurement.
If the private sector can produce affordable services and products that benefit the BoP, these aid grants can be used as seed funding for start-up initiatives and a sustainable business can be created.
Evolving to CSR 2.0
Businesses should embrace a new version of CSR - I call it CSR 2.0 - where their products and services are not only sustainable but also tackle social problems.
The government can play a role by making it easy for small entrepreneurs to get business licenses so they can sell affordable products in the market. In this way, new jobs are created and the government can review schemes like micro-loans to give this lower segment in the population a chance to grow.
NGOs like Mercycorps follow the trend by using street carts to provide services to the community. They started their own private company, Kebal, to provide nutritious food to children under five years old by renting out street carts to women who cook the food in a centralized kitchen.
The franchise concept gives businesses the opportunity to own a kitchen and street carts, which help them serve the community by selling nutritious food. Good nutrition is essential to reduce stunting rates for children under five and Kebal is offering this service. DSM and Rabobank are investing in these new social enterprises.
An increasing number of social enterprises are emerging in the private sector landscape. They are focusing on tackling social problems and empowering the BoP. But we should not forget that the key to success and the ability to attract investments is still the entrepreneur who is behind the venture. Businesses need to make profit to keep themselves sustainable. With this new approach, businesses can sell their products, services and solutions not only for profits but also to solve social problems.
Julie Adams is a sustainability expert with experience across Asia. She is currently the Managing Director of the Singapore-based Marinedream Foundation.
Thanks for reading to the end of this story!
We would be grateful if you would consider joining as a member of The EB Circle. This helps to keep our stories and resources free for all, and it also supports independent journalism dedicated to sustainable development. It only costs as little as S$5 a month, and you would be helping to make a big difference.