Decent work and economic growth
Many countries struggle to achieve SDG8. That is why BIO places decent work as a central objective. We aim to support more, better and inclusive jobs. Our contribution to decent work was assessed by the 2022-2023 external Case Study Evaluation.
SDG8 calls for the promotion of inclusive and sustainable economic growth, employment and decent work for all.
Jobs and economic growth mainly rely on the dynamism of private entrepreneurs. Their role is crucial to ensure that jobs and economic growth also benefit more vulnerable groups. One of BIO’s main priorities is to support its clients to expand these economic activities, and to create formal, quality employment for the local population. This is illustrated by BIO’s recent investments in Aldea Global, NMB Bank, and the Omnivore Agritech & Climate Sustainability Fund III, all of which are expected to have a significant impact on local economic growth.
Omnivore has invested in Niqo Robotics, an India-based company applying artificial intelligence to increase the efficiency and cost-effectiveness of sprayers in agriculture.
Farming happens on a hyper local level. That’s why Niqo uses a dealer distributor model. They have leveraged relationships with local tractor dealers and pesticide shops that already have ties with the farmers. The latter lease the company’s sprayers and pay Niqo a flat fee.
Importantly, economy-wide effects also create many jobs indirectly. The JIM estimates that companies directly funded by BIO supported a total of 2.5 million jobs in 2022. Most of these were created through loans from financial institutions (2.3 million). The remaining jobs come with the local purchasing of intermediary goods and services (67,800), wages spent in the local economy (78,000) and on energy (255,000).
Indirectly, BIO supports – through the investees of the funds in which we are invested - an additional 1.9 million jobs, giving a total of 4.4 million jobs supported.
Challenges and opportunities
Labour markets in emerging and developing countries are often poorly regulated. Many jobs are informal, with a lot of casual workers. Wages are generally low and working environments unsafe. Companies’ internal policies are sometimes poorly designed and may have a bad impact on the condition of workers.
That leaves a lot of room for improvement. Consequently, BIO assesses the labour employment and management practices of its potential clients and, in line with its environmental and social policy, requires clients to promote a fair, safe, and secure working environment.
BIO’s decent work policy provides an introduction to the challenges faced in developing countries and states how BIO addresses them through investments, namely by adhering (and ensuring the client and its clients adhere) to
- IFC Performance Standard 2
- the local laws and the ILO Core Convention
- the Declaration on Fundamental Principles and Rights at Work
- the Basic Terms and Conditions of Employment
BIO’s contribution to decent work and quality jobs
BIO has some unique features that position it well to contribute to the promotion of decent work in developing countries. These include a willingness to invest smaller individual amounts in higher risk geographies (e.g., Mali and Burkina Faso) and industries like agriculture, enabling it to impact companies that are traditionally more informal. The agricultural sector in particular is known for its low wages and exposure to hazards and dangers. However, this provides ample opportunities to improve decent work in the sector. BIO also promotes decent work for low and medium risk companies, whereas these companies are usually not or less strictly required to abide by E&S requirements. For example, BIO developed environmental and social action plans for medium risk investments such as AviNiger, candi solar, Comafruits, Geuther Vietnam and Laiterie du Berger. As a result, BIO characterises itself as “one of the most demanding” DFIs regarding decent work.
The study shows that BIO’s decent work requirements are characterised by a compliance-driven, do-no-harm perspective with emphasis on job decency but also job quality aspects
It is important to outline BIO's contribution to promoting job creation, job inclusiveness and job quality:
- Job creation:
- Financial institutions and funds made up 78% of BIO’s outstanding capital and are responsible for 99% of the jobs (indirectly) supported.
- BIO has been instrumental in the creation of 5,863 new jobs in its portfolio companies, equal to a 7.4% net job growth.
- Job inclusiveness:
- 39% of the employees of BIO’s portfolio companies are women.
- BIO also directly supports rural employees through its investments in 3 companies in the agriculture sector and 3 agro-food processing companies.
- Job quality:
- In 2021, 77% of BIO’s clients were subject to an ESAP, four out of five focused on employment conditions.
- There are five technical assistance projects targeting job quality, with four of them directly impacting decent work aspects: two aim at developing or improving the HR function within the enterprise, and two aim at improving the investees’ occupational health and safety risk assessment and practices.
Gebana Burkina Faso
Gebana Burkina Faso is an enterprise that processes and exports organic and fairtrade cashews and dried mango, mainly to Europe. In 2023, BIO invested EUR 3 M in Gebana to build a new cashew and dried mango processing facility to complement Gebana's current assets, which have become too small for their current operations.
The primary development goal of BIO's investment in Gebana is to increase its scale, which will lead to additional jobs within the company and its ecosystem, both up and down the value chain.
"In Burkina Faso, we processed cashew nuts ourselves, on a small, artisanal scale, and we sourced our dried mango from partners that processed them for us. Now we have built a factory that allows us to move on from artisanal manufacturing to an industrial scale, setting an example for dried mango processing and inspiring our partners.
Through our network we are also able to leverage technical assistance from different funds. This assistance helped us to turn our cashew shells from a waste product into fuel for example. Through pyrolysis, we generate energy, which we then use for the mango drying process, instead of natural gas or firewood."
"And of course, while we act as an intermediary, we ensure that our products are transformed locally, so their value is captured there, which creates and maintains local jobs. In Burkina, for example, we are one of only two industrial scale processors."
Currently, Gebana sources from approximately 4,600 smallholder farmers and has 558 employees (85% of which are women). The project is expected to increase the number of smallholder farmers being sourced from to around 7,000 and the total employment to around 1,500 employees by 2029. Gebana also commits to higher incomes for the workers (40% above minimum wage) and farmers in its network through their system of revenue/profit sharing.
Beyond this creation of direct and indirect jobs, Gebana's expansion will add value to the local economy. By increasing the local transformation capacity, Gebana contributes to local value creation, makes the country and smallholder farmers less dependent on international traders and overseas processors (and the associated fluctuations in exchange rates and prices).