Shijie (SJ) Lu is a volunteer for Acumen Fund based out of Singapore. He recently attended a talk entitled “The Business of Poverty?” by Mr. Ashvin Dayal, Managing Director for the Rockefeller Foundation in Asia. The talk was jointly organized by UBS and the Centre on Asia & Globalization at the Lee Kuan Yew School of Public Policy.
This past Wednesday, I had the good fortune of attending a speech entitled “The Business of Poverty?” by Mr. Ashvin Dayal, Managing Director for the Rockfeller Foundation in Asia. As a volunteer for Acumen Fund and Impact Investment Exchange Asia, I was interested to hear Mr. Dayal’s perspectives, and pleasantly surprised by his thorough knowledge and intellectual honesty on the matter.
Mr. Dayal opened by framing the history of development work in Asia. While organizations such as Rockfeller Foundation have made large social gains through philanthropic efforts in the region, urgent problems in health, climate change, water safety and energy still exist. He then outlined the tension in his subject, “The Business of Poverty?”, by comparing the opportunity and caution which characterize private-sector approaches to development in Asia. On one hand, prudent voices in the sector recognize the potential moral pitfalls and constraints of “making a profit off the poor”. On the other hand, Mr. Dayal drew upon some compelling statistics to illustrate the opportunity for the private sector to effect change in Asia’s low-income communities. Foreign direct investment (FDI) far outstrips overseas development aid (ODA) inflows to Asia in absolute amounts and growth rates, while demographic changes such as urbanization, ageing populations and rising sea-levels mean that there are pressing social problems that the public sector alone is unable to address. Given these trends, Mr. Dayal argued that the private sector has the opportunity to improve the standard of living of communities at the base of the pyramid (BoP) while reaping financial rewards.
1298 is a financially sustainable social enterprise providing emergency medical services to Mumbai's low-income population.
He then discussed examples of Rockefeller Foundation’s commitments to the sector. First up was their creation of the Global Impact Investing Network (GIIN) and Impact Reporting and Investment Standards (IRIS) to foster the dialogue and standards necessary to grow the Impact Investing sector. He then elaborated on Acumen Fund’s investments and work in demonstrating the value of Patient Capital. Mr. Dayal cited Dial 1298’s story and unique cross-subsidization model of emergency healthcare services in Mumbai as an example of how social enterprises can serve low-income populations. Finally, he discussed Rockfeller Foundation’s investment in Impact Investment Exchange Asia (IIX), a Singapore-based start-up that is building a stock exchange for social enterprises across Asia to raise capital.
While Mr. Dayal’s knowledge on the sector became apparent in his talk, I was even more impressed by his reactions in the ensuing Q&A Session. He was quizzed by the audience on a variety of subjects, ranging from climate change and women’s empowerment to the state of Singapore’s social enterprise sector. On top of demonstrating depth of knowledge across various sectors of development work, he was honest on areas he lacked clarity on, and realistic regarding the potential impact of his work. When asked about his thoughts regarding the potential of social enterprises to address the “poorest of the poor”, he responded that trying to forcibly meet their needs through commercial means might indeed be unfeasible. However, he argued that continual experimentation with business models in low-income markets is precisely what is needed to expand access to the BoP.
Thoughts on engaging Asia’s business minds
As a Singaporean working in the patient capital sector, I was thankful for Mr. Dayal’s talk. In wealthy Asian cities like Singapore and Hong Kong, business and finance are the de-facto career choices of the best and brightest in society. The modus operandi, is that “doing good” is largely constrained to the realm of charity, which is something which one should only approach after amassing significant personal wealth at the end of one’s career.
In my opinion, this is built on 2 factors: inaccurate assumptions, and a lack of exposure concerning businesses serving low-income communities. Inaccurate assumptions include the belief that it is simply immoral, or unfeasible, to sell to low-income communities because they have little income. A lack of exposure to the social sector simply means individuals in the region are relatively uninformed about social enterprises serving low-income communities compared to their peers in other regions of the world.
Talks like these are crucial, because exposure to successful BoP businesses corrects these assumptions about the sector. For example, when we witness how financially sustainable social enterprises allow us to leverage philanthropic capital more effectively than existing charity methods, “The Business of Poverty” suddenly becomes morally desirable, not reprehensible. Regarding feasibility, the business models Mr. Dayal discussed suggest that while low-income populations do possess considerable purchasing power in some instances, the problem is often the lack of innovation by private sector players in addressing the market effectively.
In order to unlock the potential that social enterprise has in addressing poverty in Asia, it is essential to engage the region’s tops minds in informed dialogue regarding opportunities and achievements in the sector. Exposure to intelligent, realistic social sector leaders like Mr. Dayal is precisely what we need to encourage progress of thought and action in the Asian social enterprise space.
i was a former employee and now i am making my best effort to start up a small business.`~’