Alexandra Santos and Mathabo le Roux explain how a UN initiative is encouraging business schools to prepare students for tackling poverty and other development challenges equipping managers to help the world.
The United Nations recently announced sustainable development goals (SDGs) intended to galvanise worldwide action on poverty reduction, food security, human health and education, and a range of other economic, social and environmental objectives.
The United Nations Conference on Trade and Development (UNCTAD) estimates $3.9 trillion in annual investment into developing countries is needed to meet these goals. It is therefore clear that private sector buy-in to the development agenda will be critical to advance the goals.
The good news is that the private sector does not lack the resources to contribute.
The growth of investment by multinational firms in developing countries over the last decade has been phenomenal. In search of new markets, resources and lower labour costs, investment in the developing world soared from less than 20% of the total in 2000 to more than 50% today, creating jobs and opportunities for local firms as suppliers and partners to international businesses.
However, most of this investment has gone to middle-income emerging markets. Investment in least developed countries (LDCs) remains only a fraction of the total, at less than 2%. And a significant part of that investment is in large-scale resource-based projects that create relatively few jobs and linkages with local firms.
The challenge, then, is to mobilise privatesector finance to flow to regions – and sectors – where need is greatest, and make sure adequate management skills are on the ground to ensure successful project implementation.
It would seem then that courting the private sector to support the SDGs will spring up almost as an auxiliary goal alongside the primary set of goals. In short: we have to get business to “get” the business case of the SDGs.
While some novel approaches are already steering more capital towards developmentoriented outcomes, conventional business approaches remain entrenched, particularly in markets where needs are most acute.
Most businesses systematically exclude the vast majority of the global population: their money bypasses low-income markets, their products and services are beyond the reach of poor consumers and their business models often fail to recognise the poor as potential contributors to economic activity.
Mounting social and environmental challenges require a wholesale rethink of conventional business approaches in order for “finance for development” to become the future mainstream investment.
The majority of managers in the world’s financial institutions and large multinational firms – the main sources of global investment – as well as most successful entrepreneurs tend to be strongly influenced by models of business, management and investment that are commonly taught in business schools.
While business schools are increasingly factoring these dynamics into their curriculum planning, many programmes still focus on business models that work in developed country contexts. Not enough classroom time goes to exploring the intricacies of doing business in lower-income, higher-risk contexts, which call for alternative approaches and different models.
This asymmetry has left most graduates unprepared for the particular challenges associated with underdeveloped markets and ill-equipped to invest and operate effectively in them.
Case studies are a case in point. These reallife examples have become an integral part of how the business school curriculum imparts knowledge and skills based on real-world business examples.
Yet less than 13% of these cases are based on real-life studies situated in developing countries. For LDCs that figure drops down to less than half a per cent.
The lower segments of the income pyramid are a diverse and viable market. Opportunities for graduates skilled in building and running business that cater to the Base of Pyramid are equally diverse,
ranging from locally owned social enterprises and SMEs, non-profits and development organisations to impact investment firms and multinationals seeking to expand their footprint to developing markets.
UNCTAD’s Division on Investment and Enterprise launched Business Schools for Impact (BSI) to help drive a mindset change. In partnership with key business school associations, it has built a robust network of 250 impact-oriented business schools committed to building awareness of the need to mobilise investment management resources for sustainable development.
The platform provides educational tools and resources to equip students with the skills necessary to invest and operate in low-income regions. Educational materials are complemented by opportunities for experiential learning in developing countries through fieldwork. Currently, the key platform elements include:
- Forty-eight impact-oriented teaching modules – in both elective and core courses – that can be introduced in existing curricula or used to build a new curriculum that puts sustainable development imperatives at the core of the teaching plan
- More than 50 case studies that (i) are located in relevant markets (23% per cent are in LDCs, 38% in Africa, 33% in Asia, and 10% in Latin American and the Caribbean); (ii) illustrate alternative business models and ownership structures; and (iii) focus on sustainable development sectors, including agriculture, education, energy, health, water, and women and youth entrepreneurship
- Numerous internship opportunities in developing countries, and with social enterprises and SMEs, to give students practical exposure to operating in these markets. The internships are available in 16 developing countries across Africa, Asia and Latin America
The initiative has met with unprecedented enthusiasm from the business school community, confirming the interest in impact-oriented business practice and the need for an initiative of this nature.
Since its official launch at the World Investment Forum in October 2014, the community has grown to more than 650 educators, students and practitioners, representing 250 business schools and 100 companies and related institutions worldwide.
Business schools will be instrumental in developing a new generation of business leaders who can help solve our global development challenges. With Business Schools for Impact, UNCTAD hopes to spur schools into action and help equip them to do just that.
The website can be visited at – www.businessschoolsforimpact.org
You can view the PDF or listen to the podcast.