Co-creating Inclusive Development at Impoverished Rural Territories
By Maria Alejandra Pineda-Escobar
The author writes about the inspiring work done in ‘Inclusive Territorial Development´ in the Montes de Maria region in Colombia which is conceived as a business initiative that seeks to bring sustainability to the region through the implementation of inclusive business models.
“CIVETS is an acronym to refer to Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa as the six emerging economies that would present greater dynamism during the decade from 2010 to 2020.”
“Colombia continues to be one of the countries facing the largest internal displacement problem in the world, second only to the Syrian Arab Republic.”
Colombia is a country in South America with 48 million inhabitants, a per capita income above USD$7,800, a strategic location with coasts on both the Pacific and the Caribbean, and an abundance of natural resources. With an average age of 29 years, its population is young and has a slight female majority. Exhibiting, in spite of the international economic crisis, an average economic growth around 4% during the last decade, and with flourishing international investment, Colombia is now regarded as one of the most solid and dynamic economies in Latin America. Thus, the country is now considered by the World Bank Group as a medium–high income economy and is ranked among the countries with high human development according to the Human Development Report for 2014. Such figures led analysts to give Colombia a place within the group of the so-called ´CIVETS´, a term coined in late 2009 by the Economist Intelligence Unit, and reinforced in April 2010 by the chairman of HSBC Group, Michael Geoghegan. It is an acronym to refer to Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa as the six emerging economies that would present greater dynamism during the decade from 2010 to 2020.
However, despite this seemingly glowing picture, Colombia continues to have high rates of poverty and inequality. According to estimates by the National Bureau of Statistics (DANE by its acronym in Spanish), by mid-2013 more than 15 million Colombians were in poverty, that is, more than 32% of the total population. For the same period, DANE estimated that about 10%, or four and a half million people, were living in extreme poverty and survived on less than $1.25 a day. These figures confirm that with 0.539, Colombia remains a country with one of the highest Gini coefficients, not only in Latin America but also in the world. This inequality is aggravated by the unemployment rates, which in spite of been said to have decreased permanently since early 2000s, still remain one of the highest in Latin America. And, even more worrying, are the informality rates which DANE confirms to be close to 50% of total occupations in the country.
Coincident with the general trend in Latin America (which corresponds to the most urbanized region in the world), today the country is considered mainly urban, with 75% of its population living in cities and only 25% in the fields. However, rural areas in Colombia have traditionally been the scene of major social problems, concentrating the highest rates of poverty in the country. Currently, the total rural population in Colombia is close to 12 million people, of which at least 65% are living in poverty. In addition, particularly disconcerting for Colombia are the figures of internally displaced people due to the decades-long internal violent conflict. With nearly 5.4 million internally displaced persons by the end of 2013, Colombia continues to be one of the countries facing the largest internal displacement problem in the world, second only to the Syrian Arab Republic.
On the other hand, it should be mentioned that corruption is a structural problem affecting the country. In this respect, the NGO Transparency for Colombia considers that distrust in the authorities and in their ability to combat this phenomenon is generalized in the country. And the World Economic Forum (WEF) believes that corruption and inefficiency of government bureaucracy are still among the most important obstacles for business operation in Colombia.
The region of Montes de Maria at a glance
In Colombia, one of the regions mostly affected by the internal conflict has been “Montes de Maria”. Geographically, Montes de Maria is located between the departments of Sucre and Bolivar, with 8 municipalities in the first and 7 in the second, for a total of 15 municipalities. Major neighboring cities are Cartagena and Monteria (see map). During the worst years of violence in the country (particularly in the nineties), the region was hit by violent incursions by illegal armed groups, leading to high rates of homicides and making Montes de Maria one of the regions with more cases of forced displacement in Colombia.
Due to this history, the region of Montes de Maria has been constantly on the radar of the activities of reconstruction of the social fabric in Colombia, and is in fact one of the major recipients of development aid from both, international donors and national private philanthropic foundations.
Since early 2000s the region has been experiencing a process of rebirth and reconstruction, given a sense of improvement in the security and public order. Thus, people have started to return to their original territories and large companies and investors have come to the region to set up their businesses.
Map: location of Montes de Maria
Source: own construction via Google maps
Inclusive Territorial Development at Montes de Maria
Since mid-2011, the Colombian Business Council for Sustainable Development (CECODES) – The Colombian branch of the World Business Council for Sustainable Development (WBCSD) – has been carrying out in Montes de Maria, together with other actors, a novel strategy that they have labelled ‘Inclusive Territorial Development´ (ITD). ITD was conceived as a business initiative that seeks to bring sustainability to the region through the implementation of inclusive business models, with the dual purpose of improving the living conditions of the vulnerable population, while generating business profitability.
CECODES understands ITD as a development alternative in rural areas that can address a territory in harmony with the communities and their environment. It is based upon the inclusion of organized farmers into more dynamic and value added markets, by developing activities that are economically viable, and socially and environmentally responsible. Under this scheme, building social capital, co-creating networks and interacting with different stakeholders becomes essential.
The ITD strategy was conceived around the cultivation and marketing of teak, because of the relevance that this wood has for the business operations of one of the major corporate partners involved in the strategy, which in fact has important teak plantations in the region. Taking into consideration the long-term span for teak growth, ITD aims to give financial viability for small producers, and is based on the combination of teak planting with short and medium term productive crops, working directly and in coordination with nearly 200 farming families belonging to different communities in the region.
One of the most distinct features of the ITD strategy is that since the beginning it was designed as a 4 to 5 years work-plan. A time frame that is rare in development-oriented efforts which tend to be of much shorter time spans. Multiple experiences of productive projects aimed at working with people in the BoP have shown that one of the factors of failure is that the support provided is sporadic or too short, which hinders the empowerment of the population and the transfer of project management from the operator to the communities involved. On the contrary, with ITD this longer conception has actually allowed for the project to evolve in a more solid and consolidated way.
The initial stage was purposely dedicated to determining the feasibility of the project. Feasibility studies are a stage that sometimes is overlooked due to implementation pressures, but which has proven to be key for project success. Feasibility studies were used to map and analyze the different stakeholders in the area, and to identify products that were more suited for sustainable commercial exploitation with local people. The characterization of the population also permitted the identification of unmet basic needs of low-income communities in the territory.
As a result, the feasibility study made visible the need to combine short and medium term activities, to complement teak harvesting as a long-term plantation. This is due to the poor socio-economic situation of local communities, which makes implausible their participation in long term crops without parallel activities that can guarantee an income flow in the short term. After analyzing the agricultural potential in the region and the commercial viability of the products, the ITD strategy was formulated proposing the following combination of activities:
Short term: tobacco and sesame crops and beekeeping
Medium term: mango crops, and livestock breeding
Long-term: cultivation of teak wood
The scheme was designed so that the participating small farmers can freely choose the component(s) in which they want to join, on the assumption that every producer must have a minimum area of half hectare planted with teak.
Another distinctive feature of the ITD strategy is that it combines the participation of several companies to enhance its market viability. Thus, besides the central participation of the leader or “anchor” company for the business of teak wood, other major private companies were invited to join the strategy, as a link for each one of the products, so that the market salience for mangoes, tobacco, sesame and honey is also feasible. It is also important to note that the participation of these anchor companies goes beyond their role as buyers of the products obtained by farmers. Their involvement goes in line with the ideals behind an inclusive business model, including also the provision of technical and entrepreneurial assistance to improve the plating techniques of farmers and guarantee the necessary quality standards.
In addition, to improve cohesion between farmers on the one hand, and facilitate their interaction with the companies on the other, small producers were advised to become a single association. In this way, they are now organized in a formal Growers Association, with an established structure, a Board of Directors and a unified trading scheme.
Participants of the Inclusive Territorial Development at Montes de Maria
Source: CECODES, 2014
While the focus of the project is to generate income through the various production components, psychosocial support is also needed to facilitate the consolidation of the process, given the socio-cultural characteristics of the local communities. In this regard, in addition to providing technical and business advisory services, the ITD strategy has included a component of psychosocial support for producers and their families.
For the continuation and consolidation of inclusive territorial development in Montes de Maria, CECODES and its partner companies contemplate forward a period of about one to two years, during which management will gradually be transferred into the hands of producers led by their Growers Association. In this way the project will move from co-management, as it has been until today, towards sustainable self-management of their inclusive business models.
In this respect, a word of advice shall be raised concerning project escalation. So far, the number of participating families has been growing, increasing fourfold from the initial group of about 50 families, to the current number that surpasses 200. Aspects such as the capacity of the Growers Association, the existence of market demand, and the creation of social bonding, among others, should be given careful consideration before continuing raising the number of participants. Otherwise, the sustainability of the ITD strategy may be at risk.
Looking ahead, one of the major challenges faced will continue to be climatic events, and the need for mitigation and adaptation to climate change. Due to the severe droughts experienced by the region of Montes de Maria for the past two years, the lack of rain has become a critical factor for the survival of crops, affecting productivity and hampering the implementation of the project.
In a similar vein, the current process that is taking place in Colombia for land tenure restitution to formerly displaced population, lays at the core of the future continuity of this project. Future operation will be greatly dependent upon the clarity, uprightness and efficiency with which land restitution effectively takes place.