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This article demonstrates how, just as large multinational enterprises (Franz et al., 2014; Halme et al., 2012; Hall et al., 2012), SMEs can also develop inclusive businesses models that are capable of facilitating the inclusion of BoP communities in value chains in African countries. By providing a qualitative analysis of the business model of three agribusinesses the article makes three contributions to the literature on SMEs and social exclusion in BoP communities. First, it complement previous claims (Allen et al., 2012; Blackburn and Ram, 2006; Cho et al., 2008) by providing empirical evidence on how the commercial objectives of the entrepreneurs are translated into

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inclusive business models that prioritise the inclusion of small farmers in the agribusiness value chain. Evidence of inclusion include cost-effective engagement with individual fruit growers as producers and suppliers of Fairtrade certified fruits for the manufacture of juice (Africa Felix Juice), the provision of affordable and accessible finance to dairy farmers who are otherwise unable to access capital from traditional banks (UMATI Capital) and connecting rural farmers of fresh food crops to urban buyers enabling them to sell their products closest to points of harvest at prices that are higher than they previously sold (AGRO-HUB and Africa Felix Juice).

Second, it applies the theoretical lens of a business model (Baden-Fuller and Morgan, 2010; Zott et al., 2011) to uncover the nature of inclusive business models by SMEs that target BoP communities. While the importance of inclusive business models on poverty alleviation is widely recognised (Ngoasong et al., 2015) very little research has been conducted to understand the business model infrastructure that links value creating activities and stakeholder interactions to enhance value creation. The business model of Africa Felix Juice is built on a multi-stakeholder partnership involving a combination of contractual relationships with global, national and local stakeholders all of which share a common objective of raising social inclusion in poor communities. The business models of both UMATI CAPITAL and AGRO-HUB are built on digital technology and are different from traditional business models because all stakeholders’ products, marketing and distribution activities linked using a digital platform (Hair et al., 2012). Analysis of the operations of the three business models demonstrates that the challenges associated with social inclusion represent attractive market opportunities. What emerges is a story entrepreneurs who are able to spot such opportunities as well as mobilise the resources and stakeholder support needed to pursue them

Third, contrasting the three case studies reveals major challenges facing SMEs attempting to develop inclusive business models. One major challenge is the management of logistics, transport and local distribution channels to ensure value chain benefits for key stakeholders. As a result of in-house management logistics and local distribution AGRO-HUB faces serious additional challenges, such as high costs, long delays and insurance costs, all which are well documented as barriers to business performance (Christ & Ferrantino, 2011; Porter, 2014). On the other hand Africa Felix Juice outsources this to third party logistics provider and local agents (as middlemen). A recent study reports how the firm was unable to deliver a pre-signed export order to Brazil and thereby incurring huge losses ‘because of a lack of urgency by local agents to work with farmers overcome the logistics challenges associated with producing and supplying cashew nuts for juice production’ (FAO, 2013). Entrepreneurs and/or owner-managers of SMEs need to develop logistics capabilities and logistics outsourcing/in-sourcing (Cho et al., 2008) for delivery of physical products to end consumers if they are to effectively address the local needs of customers within their value chain (Theyel, 2013).

Another challenge is the role the technology infrastructure that enables inclusive business models to effectively address social inclusion for the poor, while remaining competitive. All three SMEs are taking advantage of developments in digital technology to achieve integration of different component parts of their business model to varying degrees. This is unsurprising as developments in the ICT infrastructure in Africa has created opportunities for SMEs to develop competitive digital solutions to combating poverty (Ngoasong, 2015; Nwagwu & Ibitola, 2010). By relying on digital technology that is accessible via mobile and computers, UMATIC Capital is able to create a fully integrated value chain of activities. However, this is costly. A store manager of AGRO HUB explained that ‘text messages and SMS in Cameroon is still very expensive. At 50 francs per message, sending a message to 1000 farmers will cost 50,000francs and that is very expensive for a company of our size’. More research is needed to understand the specific opportunities and challenges associated with inclusive business models that rely on digital technology to promote social inclusion BoP markets in Africa.

A third challenge is the role of government policies in encouraging SMEs to create inclusive business models. The awarding of a license to create of a special economic zone to a private firm in Sierra Leone for Africa Felix Juice, the developments in ICT infrastructure in Kenya and Cameroon (e.g. Ngoasong, 2015) for creating digital platforms are examples of how SMEs can take advantage of government policies to develop inclusive business models. Thus, we see successful inclusive business development in countries that are otherwise seen as risky and ever-changing for business. There are calls for similarly more specific government policies to target inclusive businesses as a way of addressing social exclusion, such as incentives for businesses that prioritise social inclusion

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(Ngoasong et al., 2015) and for attracting investors that explicitly target social and environmentally focused SMEs (Dalberg, 2012). Söderbaum and Teal (2000) suggest that even with the right government policies, it is entrepreneurs and owner-managers of SMEs that will ultimately create inclusive business models. The three case studies developed provide important lessons for inclusive business development in BoP communities.

Finally, more in-depth research is needed to complement the findings from this research and improve our understanding of how inclusive businesses in BoP markets are created and operated in developing countries. A starting point could be a repeat of the same three case studies through a more detailed engagement with all representative stakeholders. For example, the views of stakeholders such as individual farmers, who represent the group most in need of inclusion in the agribusiness value chain are as important as those of entrepreneurs and owner-managers. Barki and Parente (2010: 12) suggests that there is an expectation for companies ‘embedded in BoP communities’. Although the findings from this study demonstrates how inclusive business models are structured to achieve embeddedness (e.g. using cooperatives to give farmers ownership of their own activities) more is needed to understand the opportunities and challenges associated with such embeddedness. In addition, the effects of raising social inclusion on the performance of inclusive business models require further research – e.g. examining their financial performance against the drive to create social impact.

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KRISTINA HENRICSON BRIGGS