ADDRESSING SOCIAL CHALLENGES IN

BELGIUM THROUGH SOCIAL & BUSINESS

CO-CREATION”

– EXECUTIVE SUMMARY

BUSINESS & IMPACT

Belgium StudySeptember 2014

2

The Challenge

EXECUTIVE SUMMARY

The Opportunity

• 15% of the Belgian Population lives in poverty and does not have access to essential products and services1.

• The needs of those populations remain unaddressed by private companies• Government and citizen sector organizations alone cannot respond to this

challenge, despite multiple innovations from Social Entrepreneurs.

The Solution

• Instead of seeing the unmet needs of the poor population as a problem, it is an opportunity for private, public and social entrepreneurs: this population segment represents an untapped market of more than €11 billion.

• This study aims to provide an overview of the main needs of poor populations when it comes to essential products and services and of the “markets” they represent in Belgium.

• Private, social entrepreneurs and governments need to co-create market innovations by sharing assets and capabilities

• Private companies will benefit from new markets, new products, new distribution channels and a pioneering corporate image

• The social sector will benefit from new funding sources and accelerated social impact

3

+

DEFINITIONS OF POVERTY

Income-poor populations

Poverty is much more complex

than material poverty. It is a

state of mind, a lack of

resources and opportunities. It is

about social exclusion**

* Definition used by Eurostat, the INSEE and throughout Europe. The US and Canada use an absolute value

** Description used by Caritas

This study focuses on

“Vulnerable populations”

which refers to populations

who are missing basic

needs in one of the

identified poverty areas,

independently of their

income.

People in households living

below the poverty line, set at

60% of the median national

household income*

Social Exclusion

Vulnerability

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1.7 MILLION INCOME-POOR PEOPLE IN BELGIUM

…OR MORE THAN 15% OF THE POPULATION

Percentage of the Total Population

%

Number of Poor People 1

10.515%

10%

19%

32%

618,000

676,000

366,000

Source: FOD Economie 2

in Flanders

in Brussels

in Wallonia

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PRIORITIZED « MOST BASIC NEEDS »

* Are included in most basic needs: Health, Energy, Housing, Nutrition

** Accenture estimates, on the basis of FOD Economie’s huishoudbudgetonderzoek 2

*** Are included in other: alcohol and tobacco, white goods, education, financial costs, clothing, leisure goods and other goods and services

which have not been mentioned.

Expenses of income-poor populations**

Income-poor people spend 75% of their budget on 5 most

basic needs*

Health & Insurance11%

Energy8%

Other***25%

Housing32%

Nutrition17%

Mobility7%

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A REALITY: LIVING ON 20€ PER DAY OR LESS

Example for a 3 person family with 1800€ per month, i.e. 20€ per

day and per household member*

6€for housing

2€

for

he

atin

g

2€for health care

and insurance

1€for clothing

2€for

transportation

3€for food

1€for

communication

1€for

entertainment

for household goods1€

1€

Oth

er e

xp

en

ses

(ed

uc

atio

n, d

eb

t, etc

.)

Source: Accenture Estimation based on Eurostat 1 and FOD Economie 2. See appendices for more details.

* 20€ per day per person corresponds to the income level at the poverty threshold for a family of 3. By definition, incomes of poor populations are below

this line: a poor person’s average income has been estimated at €16.7 per day in Belgium (cf. Appendix).

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LOW INCOME DOES NOT MEAN NO INCOME

Source: See details in appendix - Accenture analysis based on Eurostat data and the « huishoudbudgetonderzoek » from FOD Economie (2012)2

* Poor populations with mortgage loans(9% of poor adults) are on average indebted 5 times their annual gross income (source: HFCS, BNB, see chapter on

credit poverty for more details); assuming 4% interest rate on mortgage: 4% x 5 times incomes = 20% of income. Note: potential market of people with credit

constraints not included.

PRIVATE EXPENSES OF POOR POPULATIONS (Mio €)

A market of more than €11 billion

Tota

l

Oth

ers

530

Edu

cati

on

24

Leis

ure

/cu

ltu

re

355

Mo

bili

ty

1,354

Ener

gy

1,073

11,898

Inte

rest

on

Deb

t

231

Alc

oh

ol a

nd

Tob

acco

227

Leis

ure

Go

od

s

231

Clo

thin

g

305

Wh

ite

Go

od

s

306

Co

mm

un

icat

ion

353

Hea

lth

, In

sura

nce

1,421

Nu

trit

ion

1,917

Ho

usi

ng

3,572

Focus of

this study

Spending of other vulnerable populations (only estimated for 5 biggest spending domains)

Spending of income-poor populations

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HOUSING POVERTY

of the

population17%

of expenses of income-poor households32% € 3.6 BIL.

market

1.9 million

people*

500.000 people live in overcrowded homes 1

184.000 applicants waitlisted for social housing**

Our homes are in a bad shape

Our homes are more expensive

The state struggles to help us

* Including income-poor populations and other vulnerable populations defined as here-above

** 107.351households in Flanders 3 , 37.983 households in Wallonia 4, 38.928 households in Brussels 5

People spending over 40% of their expenses on housing(Eurostat definition1)

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of the

population17%

of expenses of income-

poor households17% € 1.9 BIL.market

1.9 million

people*

Poor people have 11% more chance on obesity6

0,5 million people are affected by malnutrition7

Healthy food is too costly

Nearly 1 kg per person of food is wasted every day**

NUTRITION POVERTY

We need nutritional value

* Including income-poor populations and other vulnerable populations defined as here-above.

** 345 kg food per capita per year is wasted in Belgium. Of this,, 89kg is wasted by households, 210kg by the food industry and 46kg by retail & Horeca 8

People not able to afford a quality meal every other day(Eurostat definition1)

10

of thepopulation18%

of expenses of income-

poor households11% € 5.8 BIL.Market

2.0 million

people*

Vulnerable social groups live 5.5 years shorter with 17.8 healthy life

years less12

7.4% of the Belgian population needs to delay medical treatment

due to financial constraints**13

HEALTHCARE POVERTY

We prefer avoiding medication

Chronic diseases strongly affect us

30% of expenses not reimbursed

from which 4.3 BIL € is invested by the state

* Including income-poor populations and other vulnerable populations defined as here-above

** Calculation: 19% of Belgians delay treatment13 x 39% of those do this for financial reasons13 = 7.4% (see appendix for details)

People who need to delay medical treatment due to

financial constraints, or who are at risk to do so.

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of the

population16%

of expenses of income-

poor households8% € 1.1 BIL.market

80,000 families have outstanding energy bills 9

63,000 families have limited energy use through a budget

meter or power limiter 11

ENERGY POVERTY

1.8 million

people*

We cannot renovate our homes

Energy prices skyrocketHow can we save energy?

* Including income-poor populations and other vulnerable populations defined as here-above

(Eurostat definition1)

People who are not able to keep their homes at an

adequate temperature

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MOBILITY POVERTY

of the

population19%

of expenses of income-poor households7% € 1.4 BIL.

market

2.1 million

people*

67% of poor people see mobility as a barrier to find a job14

170.000 disabled and 125.000 elderly need special transport means15

Not all work locations can be reached via public transport

Mobility is key in social integration

Existing solutions of car-sharing

are still too expensive

* Including income-poor populations and other vulnerable populations defined as here-above

People for whom mobility is a key barrier in daily life (e.g.,

to find a job)

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CO-CREATION : VALUE FOR PARTNERS

Expand social impact by leveraging the assets of corporations

Generate new sources of income to reinvest in social projects

Develop new skills and

knowledge

New markets including vulnerable populations

Innovation labs for business models

Stronger CSR positioning and social footprint

Employee engagement

ROI of social programs

Savings on public spending

Reinforcing “a positive

economy”

CORPORATIONS

GOVERNMENT

SOCIAL

ENTREPRENEURS

Corporations and social entrepreneurs closely complementing their core businesses, skills and resources

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- Reduced energy costs- Improved living conditions- Employment of do-it-yourselvers

Housing Idea #1: DIY House Refurbishing

Do It Yourself (DiY) Home Refurbishing at low

cost

Private

The central partners:

- Negotiate volume rebates with DiY

store, and refurbishing contract with

home owner.

- Guarantee minimum quality

- Provide alternative living space during

works if needed

Quality housing at a low price Provide building

material

Get their property in better state

Rentees or owners living in precarious housing conditions

- Provide building material at commercial rates (with volume rebates)

- Provide DiY advise & project support- Advertise program within stores

- Pay for the materials- Are allowed to decide on the type of

refurbishment

- Organized Community of rentees- Mutual help between rentees for

restauration, hence avoiding expensive labor costs

- Pool of (professional) specialists for most technical jobs

Closing the skill gap and making people employable

Rentees do the work & learn skills in DiY/construction

Owners

- Organize trainings for DiY community to ensure quality work

- Liase with employment opportunities in the construction sector.

Community

Rentee

(Measurable) Impact

Public

Social

I rented a house in a poor state and had no money/skills to maintain it. Now my home has become a place I am proud of and in which my

children can grow up decently.

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HOUSING IDEA #2: Quality Home Ownership

Social Private

- Design low-cost (but quality) houses for the poor

- Spread the cost over time with adequate financial products

Reinforce house ownership and management capabilities of poor

Pro-poor financial product innovation

Provide energy to the poor with less defaults

- Design financial product that allows poor to be owner of house while spreading cost over time

- Add energy to the package (can be as a service provider?)

- Social partner selects poor households with biggest probability of success

- Social partner helps manage house over time and pay for the leasing

- Helpdesk service for juridical questions

Contract with clear juridical language

Rentees not able to buy a home

Provide home ownership over modular, quality

houses with cost spread over time

I have been paying for rent and energy whole my life. Now I own a passive modular house, which can easily be adapted to my needs in 20 years from

now.

Investor

- Invest in a social construction project with return

- Number of ownerships provided- Long-term stay of poor populations

(Measurable) Impact

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MOBILITY IDEA: Share Empty Cars

Platform matching supply & demand for

empty cars

Demand for Empty Cars Supply for Empty cars

- legal advice - insurance - calendar management - reservation tooling

Poor populations get a shared car solution

Companies and individuals get value out of empty cars

- Populations going to work- One-shot uses (doctor, etc.)- People with disabilities?

(Measurable) Impact

Leasing companies

School busses

Bus companies

Individuals

Design shared car-insurance, only working for trips when car is shared

Pool of certified drivers (or volunteers) get a job

- Driver is optional (for busses, etc.)- If no driver: there is a role for poor

populations to exchange keys

- Increased mobility for poor populations- Jobs created

Employers

Car rental companies

Garages

Thanks to the new matching platform for empty cars, I can use previously unused cars for my mobility.

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MAIN SOURCES OF STUDY

1 Eurostat, SILC (2011-2013), Income and living conditions, select relevant data-base. E.g., > Material

Deprivation> Economic Strain> select relevant data-base> change INCGRP> select relevant income

group, e.g., « below 60% of equivalized income »,

http://epp.eurostat.ec.europa.eu/portal/page/portal/income_social_inclusion_living_conditions/data/dat

abase

2 Federale Overheidsdienst Economie (2014). Huishoudbudgetonderzoek 2012,

http://statbel.fgov.be/nl/modules/publications/statistiques/arbeidsmarkt_levensomstandigheden/huishou

dbudgetonderzoek_2012.jsp

3 Studiedienst van de Vlaamse Regering (2013), VRIND 2013,

http://www4.vlaanderen.be/dar/svr/afbeeldingennieuwtjes/algemeen/bijlagen/vrind2013/2013-10-14-

vrind2013-4-stedengewest.pdf

4 Société wallonne du logement (2013), Rapport d'activités 2012, p.15 & p.68,

http://www.swl.be/images/swl/RA_comptes/ra2012-web.pdf

5 Observatoire de la Santé et du Social de Bruxelles-Capitale (2013), Baromètre social 2013, p. 65-66,

http://www.observatbru.be/documents/graphics/rapport-pauvrete/barometre-social-2013.pdf

6 Robertson, Lobstein and Knei, European Commission (2007)

7 Index Mundi (2005), Mundi Malnutrition Index 2005

8 Roels K., Van Gijseghem D., Vlaamse Overheid, Departement landbouw en visserij (2011) Verlies en

verspilling in de voedselketen.

9 Senat de Belgique (2010), Annales,

http://www.senate.be/www/?MIval=/consulteren/publicatie2&BLOKNR=16&COLL=H&LEG=4&NR=115&SUF

=&VOLGNR=&LANG=fr

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MAIN SOURCES OF STUDY

10 VREG (2011), aantal actieve budgetmeters (electriciteit)

http://www.vreg.be/sites/default/files/uploads/20120201_-_actieve_budgetmeters_e.pdf

11 CREG (2011), Etude relative à l’imputation par les gestionnaires de réseau de distribution des frais

résultant des obligations de service public sociales dans le marché de l'électricité , p. 33,

http://www.creg.info/pdf/Etudes/F1131FR.pdf

12 Bossuyt N., Gadeyneb S., Deboosereb P., Van Oyen H. (2004), Socio-economic inequalities in health

expectancy in Belgium, Public Health (2004) 118, 3–10,

http://www.eurohex.eu/bibliography/pdf/0309921234/Bossuyt_2004_PH.pdf

13 Deloitte (2011), 2011 Survey of Health Care Consumers,

http://www.deloitte.com/view/en_US/us/Industries/health-care-providers/center-for-health-

solutions/health-care-consumerism/97492e3712571310VgnVCM1000001a56f00aRCRD.htm

14 Mobiel 21 en het Netwerk tegen Armoede (2013), MOBIKANSEN – Duurzame mobiliteit voor mensen

in armoede. http://www.mobiel21.be/nl/content/bijna-zeven-op-tien-mensen-armoede-vindt-moeilijk-

werk-door-mobiliteitsbeperkingen

15 EnterVZW (2012), Businessplan voor een gebiedsdekkend, complementair en geïntegreerd Vlaams

toegankelijk vervoersysteem in Vlaanderen en het Brussels Hoofdstedelijk Gewest

16 National Bank of Belgium (2014), Centrale des crédits aux Particuliers, rapport statistique 2013,

http://www.nbb.be/DOC/CR/CCP/Publications/BRO_CKPSTAT2013F_31122013.pdf

17 Zimmer H. (2012), Labour Market Mismatches,

www.nbb.be/doc/ts/publications/EconomicReview/2012/ecorevII2012_H4.pdf

18 OECD (2013), Incidence of unemployment by duration

http://stats.oecd.org/index.aspx?queryid=38907