Who Dares, Wins

Geneva, 14 February 2007 - The Central American country of Honduras needs to build 600,000 houses to meet current demand and must construct 40,000 new houses a year to keep up with its growing population. Yet the country’s per capita GDP is US$ 2,900, and there is little credit available; so few Hondurans can afford to build or buy a home.

The Honduran firm INCONHSA recognized the challenge and turned it into a business opportunity by figuring out how to build affordable detached homes for about US$ 9,500 per unit in a development that includes paved roads, electricity, water and sanitation.

INCONHSA worked out what people could afford to pay by surveying the occupants of rented low-income homes on the outskirts of San Pedro Sula. They then reverse engineered a house to a monthly mortgage outlay that matched what the occupants were paying for low-quality rented accommodation, using novel and highly efficient construction techniques that could deliver 200 homes per month.

As usual, access to credit for potential purchasers was a significant bottleneck and resulted in an agreement between INCONHSA and the US-based Offshore Private Investment Corporation (OPIC) to act as credit guarantor. The first tranche of 800 homes has been built, and a further 1,400 are planned.

This is just one example of the business ideas being promoted through a series of Executive Dialogues in Latin America organized by the WBCSD and the Netherlands development organization SNV.

Eight events have taken place: in Ecuador, Peru, Bolivia, Colombia, Honduras, El Salvador, Nicaragua and Guatemala. They were conducted in collaboration with the WBCSD’s Regional Network partners and benefited greatly from the well-established network and outreach of these organizations.

The meetings discussed the mutual opportunities for business and society in targeting the low-income segment as part of business models, with much of the time focused on identifying more such possibilities.

So far, the dialogues have brought together some 400 business leaders and generated over 50 business ideas that fulfill the criteria of being both good business and benefiting the low-income segment — termed negocios inclusivos in Spanish, or “inclusive business”.

The SNV-WBCSD alliance and interested companies are pursuing seven ideas through feasibility studies: low-cost housing, low-cost irrigation systems, biofuels, industrial parks, agro-industrial parks, competitive alpaca wool and coffee.

Business facilitators are in place in Honduras and Ecuador, and soon in Peru, to work at national levels. There have been initial discussions with potential funding partners such as the Inter-American Development Bank (IDB) and the Andean Development Corporation.

Julio Moura, chairman and CEO of the GrupoNueva holding company, is not only a co-chair of the Development Focus Area at the WBCSD but also a leader of the alliance’s work in Latin America.

As a company with a demonstrated commitment to inclusive business for many years, GrupoNueva sets an example for other companies in the region. It has pioneered the sale of gravity-fed, drip-irrigation systems to poor farmers in Guatemala, enabling them to double or triple harvests.

The company attracted the help of the IDB to improve access to credit, and is helping farmers certify their crops for export to the US and elsewhere. The company is committed to generating 10% of its sales from the low-income segment by 2008.

“Doing such business is not an add-on or an afterthought,” Moura told the participants at the Executive Dialogue he chaired in Lima, Peru. “It must be part of the core business strategy of the company and be seen as such by all employees and all stakeholders.”

With the collaborative work in Latin America now well established, the WBCSD’s Development Focus Area decided at the Council meeting in New York City in October 2006 to look more deeply at opportunities in Africa, with an initial focus on the West African country of Ghana.

With few Regional Network partners in Africa, the WBCSD needs to approach the work differently from that in Latin America. BP’s John Manzoni, another Focus Area co-chair, explained that the work in Africa would depend much more on the collaborative efforts of individual WBCSD companies already operating there.

New York also saw the 12 Council members on the Development Focus Area Core Team commit to a “Statement of Intent for Doing Business with the World.”

The statement underlines the executives’ commitment “to play our part in building capacity and empowering people so they have the opportunity to move out of poverty and into the formal economy”.

Intending to help create new businesses, new markets, new suppliers, new employees and new customers among the world’s low-income segment, the Council members strongly believe that “if these efforts are to be substantial and sustainable, they must also be profitable. Our major contribution to society will therefore come through our core business activities.”

And it ends: “This statement is an invitation to government and civil society leaders to work with us to create an environment of mutual advantage where business success goes hand in hand with successful societies the world over.”

An ambitious objective, one the Focus Area and its Core Team members intend to achieve.

• For further information, please contact Shona Grant, Director of the WBCSD Development Focus Area

Author WBCSD Publication Date 15 Feb 2007 Document Type WBCSD news Issue/Topic Development Region Latin America Country Honduras Company BP plc. Masisa Source WBCSD Include In RSS WBCSD News & Updates