Companies can open new markets through rural development

MANILA, Philippines - Addressing the needs of the poor and promoting rural development can open up new markets for companies, while addressing the problem of poverty in society. This was the message delivered by Gawad Kalinga (GK) chairman and founder Antonio Meloto at the Creating Shared Value (CSV) Forum held at the New World Hotel. Meloto shared his insights on how corporations and NGOs can work together to alleviate poverty, before an audience of representatives from the business, government, NGOs and other sectors.

Meloto was invited to speak in the CSV Forum to share how Gawad Kalinga is able to create shared value between businesses, government, non-government organizations and residents of GK villages, through the development of rural communities.

Shared Value is created, according to the Forum’s main speaker, Harvard professor and social responsibility expert Mark Kramer, when corporations and society’s various sectors realize how their needs and objectives overlap, that they are interdependent, and need each other in order to survive and thrive.

For example, no society can last without having a source of wealth, jobs and income for its citizens. Such are provided best by businesses. On the other hand, when a society is plagued with ignorance, criminality, poverty and ill health, a business will be unable to find skilled, productive and healthy workers. The business will also suffer from the effects of criminality and environmental damage. The success of a business is tied up with the health of the society in which it operates.

The GK model

In his talk, Meloto said that GK helps create shared value among businesses and their consumers; the rich and the poor; government and its citizens; the landed and the landless; the educated and the unschooled. He cited as an illustration the effects of decreasing criminality in GK communities.

“In many areas we chose to build a GK village, there were criminal gangs in control of the area. We had to work with the local government in securing the community. But the reason for criminality in these areas is really poverty. Once you eliminate poverty, the criminal gangs lose their hold on the people and move somewhere else.

“When the criminal gangs go away, then people are more peaceful and secure. You can build homes, set up schools, start businesses, grow food, all the things you need for a thriving rural community. This also benefits the rich who live in gated communities in the area. If poverty and criminality are rampant, and the rich do nothing to solve it, it’s like the rich themselves are raising the criminals that will one day be their problem,” Meloto explains.

Meloto recounted how Gawad Kalinga was able to provide, since it was founded in 2003, homes for 1,700 rural communities in the Philippines. He pointed out that giving the poor a chance to have their own homes and their own land had these immediate effects: it restored their dignity, alleviated their hopelessness, and rescued them from feelings of helplessness.

Being part of a GK community gives the poor a sense of empowerment. They realize that they have the capability to improve their lives and secure the future of their children. Consequently, they become more motivated to: 1) generate income by getting jobs or setting up businesses; 2) take care of their health and food supply; 3) pursue an education; 4) take care of their environment; and 5) nurture their communities—the very seeds of social progress.

GK and big business

During the CSV Forum, Meloto shared the message he delivered at the APEC CEO Summit held in Singapore last November 2009. “I told the CEOs at the Summit that it is wise for them to invest in poverty alleviation and rural development. It expands their market base in the long-term. If they invest in solving the problem of poverty in the Philippines and the rest of Asia, then they would have peaceful, prosperous nations to whom they can sell their products and services,” said Meloto.

Meloto said that the key to success of the Gawad Kalinga program is partnership with business corporations. He said that through these partnerships, some 2,000 GK communities were built.

“Nestlé Philippines is one of the partners of Gawad Kalinga thru the GK communities we have in Baseco and Lipa,” says Edith de Leon, SVP and Head of Nestlé Philippines Corporate Affairs, adding that Nestlé has always done business by finding shared value in societies where it operates.