Tough Talking in Lisbon: the EU-Africa Business Forum

This being the third meeting in the series (after Accra in July and Brussels in Nov last year), we knew what we wanted from this, which was just as well as it was in danger of being hijacked a few times.

In terms of politics at the event, Zimbabwe didn't really feature but there was plenty of heat over the EPAs with Senegalese delegates in particular apparently pre-armed with a "knocking brief" authorised from the top. EU Commissioner Louis Michel, having delivered a good and sincere pitch about all the things the EU was doing for Africa, would be justified in being a bit surprised by the slapping he received.

So, all things considered, it was not a bad outcome for a half-day programme - the short speech by Vincent Maphai of BHP Billiton to the Summit itself may have been a bit light of specific actions, but there are some quite solid platforms developing in the various working-groups which will carry us forward for next time, probably in Sept 08 in Paris under the French EU Presidency.

Fresh thinking at DFID

A wind of change is blowing through the UK's Department for International Development (DFID). A string of speeches over the last month have signalled a new and welcome direction: speeches by Douglas Alexander (the Secretary of State), Baroness Shriti Vadera (a DFID Minister) and Suma Chakrabarti (the top DFID civil servant) have all highlighted the importance of economic growth as the source of long-term wealth creation for poor people, and the value of engaging with the private sector.

In his speech to the United Nations on 31 July 2007, Prime Minister Gordon Brown stated that “trade, wealth creation and job creation are the only routes to long term prosperity”, and that business has a key role to play, in partnership with others, in meeting the MDGs. He argued that “for too long we have talked the language of development without defining its starting point in wealth creation – the dignity of individuals empowered to trade and be economically self sufficient.”

According to DFID, they are looking to engage more intensively with business to discuss what more can be done to advance the growth agenda. They would like to see business scaling up its activities in pursuit of a more transformative agenda, recognising that the most important contribution the private sector can make is through their core business – moving beyond traditional philanthropic Corporate Social Responsibility (CSR) or meeting minimum standards towards innovative and effective, long-term development partnerships.

Suma, in his speech, identifies two approaches that DFID would like to see taken more often in the private sector: voluntary collaborative partnerships, and pursuing profitable opportunities that transform the lives of the poor. On the former, DFID have experience and expertise in collaborative initiatives, such as the Extractive Industries Transparency Initiative (EITI), the Construction Sector Transparency Initiative (CoST), and the Medicines Transparency Alliance (MeTA), and see this as an area where they can offer support to business.

On the latter, DFID say that they recognise that core business, market opportunity and competition can drive activities which meet the needs of poor people. DFID is seeking to work with companies to develop new business models, based on their core business, that can be scaled up to have a transformative economic impact on the communities affected – in terms of jobs, investment, goods and services. There most innovative work in this area has perhaps been in their work around "challenge funds" - pools of funding over which the private sector competes to deliver specific development objectives – including, for example, the Business Linkage Challenge Fund (BLCF), the Financial Challenge Deepening Fund (FDCF) and the recently-announced Africa Enterprise Challenge Fund (AECF). DFID also recognises that creating the right climate for business is also critical to enabling the private sector to thrive, drive growth and reduce poverty, with DFID's interested reflected in their support for programmes such as the Investment Climate Facility (ICF), itself a collaboration with the private sector.

As a long-standing DFID-observer, I believe this shift of emphasis - if it is followed through in practice - is one of the most significant of recent times. Other donors should take note. And business must stand up to the challenge of engaging effectively.

Corporate leadership in global development

Poverty continues to be one of the main challenges facing the countries that will be home to 85% of the world's population in the decades to come. Today some 2.7 billion people worldwide continue to subsist on less than US$2 per day. The challenge facing the global community is to eradicate extreme poverty and to foster broad based economic development that benefits all while preserving the world’s ecosystems. Business is a core human activity, and it has a key role to play in bringing about sustainable development.

A new publication by the World Business Council for Sustainable Development (WBCSD), entitled "Doing Business with the World - The new role of corporate leadership in global development", shows how companies can contribute to sustainable development through their core business activities in a way that is profitable for the companies and good for development. It offers a business perspective on key challenges and opportunities for the development of low-income countries, as well as key messages for companies and governments on how to promote sustainable business solutions that benefit the poor and the societies and environments in which they live.

The issues selected are Ecosystems, Education and Training, Energy, Enterprise Development, Financial Flows, Governance, Health, Mobility, Trade, and Water. This is not an exhaustive list, but these issues reflect both traditional areas for development actors as well as business.

What are the key messages emerging from this piece of work?

Firstly, that given the right conditions, the private sector can improve the lives of people in the low-income segment through direct employment, procurement from local suppliers and service providers, and delivery of affordable products and services. Companies can contribute to vocational training and capacity building, they invest and operate key infrastructure services, they support healthcare initiatives and education, reduce dependence on scarce raw materials, create new businesses to preserve ecosystems and help governments embed good governance, thereby increasing regulatory transparency for business itself.

For their part, governments need to establish the necessary framework conditions through policies and legislation, including financial and taxation legislation, business regulation, and clearly defined ownership and property rights. Governments are also urged to demonstrate their commitment through investment in core infrastructure, and they can encourage investment and engagement on the part of large corporations by creating a favorable investment climate be establishing stable and transparent regulatory regimes.

Besides the core publication, the WBCSD provides online material to complement the issues discussed in the report, most notably one-page facts & trends sheets highlighting key facts for each topic. These pages will be supplemented with further topics not included in the core publication: Accountability, Agriculture, Consumption, Income and Wealth, ICT, Labor and Employment, and Population.

Is agriculture making a comeback on the international development agenda?

Twenty-five years on from the last World Development Report on agriculture in 1982, the 2008 WDR, launched on 19th October, provides a long overdue focus on ‘Agriculture and Development’.

Agriculture is crucial to the sustained growth of Africa’s economies and improving the lives of millions of poor people – over 70% of the population in sub-Saharan Africa works in this sector. The question of how to raise productivity in a continent where population growth still outstrips food production is key.

The WDR is right in stating that agriculture is a private sector activity. But to talk about agriculture in Africa in any broad-brush way is dangerous, and the WDR’s recognition of this is welcome. Agriculture an extremely heterogeneous sector; from subsistence and smallholder farmers, to cooperatives and large-scale plantations. In this regard, broad-brush policies to stimulate the agricultural sector will also be dangerous. Policies need enough flexibility to enable the diverse business of agriculture to flourish at every level of the supply chain.

The challenges to agriculture presented by the changing geography in many African countries must not be underestimated. Urbanisation is happening at an unprecedented scale in many contexts, creating new urban market opportunities for agricultural products. Linking farmers to these markets through efficient value chains and enhanced competitiveness is crucial.

If agriculture is seriously back on the international development agenda, there is an important window of opportunity not to be missed. Many African governments have made agriculture a national priority, the African Union’s Comprehensive Africa Agriculture Development Programme (CAADP) is finalising its strategic framework, and the private sector is recognising the huge potential of investing in African agriculture (with Business Action for Africa, for example, recently setting out its position on the issue).

Growth in Africa: good news again

The positive sentiment about Africa expressed by Stephen Lussier in his recent blog was reflected this weekend by the IMF and World Bank. At their Annual Meeting, they announced that they expect Africa's growth rate - so critical to lifting people out of poverty - to reach 6 per cent this year and 7 per cent by next.

This is big news for two reasons. First, 7 per cent is the rate at which many have estimated Africa must grow to meet the Millennium Development Goals (though this was an estimate made 7 years ago, and considerably more is probably now needed to catch up). If it can maintain growth at this rate, Africa's economy will double in size in 10 years.

Second, it comes on the back of the little-noticed fact that Africa's growth has outperformed the world economy for the last 7 years. Africa's problem has not been one of achieving growth, but of sustaining it for long enough. The fact that the good news has kept coming is hugely significant.

The sort of policies being pursued by many African governments - to improve governance and enhance the climate for business - is starting to pay off - in terms of rising business sentiment and economic growth. Donors are also putting greater emphasis on boosting growth. The Annual Meetings also saw the launch of a new partnership to support stronger financial systems in Africa by Germany, the World Bank and the African Development Bank. While growth is not sufficient for poverty reduction, it is nevertheless absolutely critical.

Doing business in Africa: the path to Africa’s prosperity

Every economy around the world has been lifted through the energy of its entrepreneurs. Every family around the world sees getting a job or growing their business as the single most important route to a better life. This is no different in Africa.

That is why I was delighted to be involved with last week’s European launch of the Doing Business Report 2008 - an annual survey of life for enterprises around the world, produced by the International Finance Corporation and the World Bank.

And there is good news from Africa. Ghana and Kenya both rank among the top 10 reformers worldwide, and Mauritius tops the rankings in Africa on the ease of doing business. The Finance Ministers from Ghana and Kenya, and the Finance Secretary from Mauritius, received World Bank awards at the London event that was hosted by Unilever, Business Action for Africa, the World Bank, the International Finance Corporation, and the UK's Department for International Development.


According to the report, Mauritius ranks eighth globally for ease of starting a business, South Africa is in the top ten for strength of investor protections, and Botswana ranks 14th on ease of paying taxes. If a country were to copy the best practices from across the Sub-Saharan region, it would rank eighth on the ease of doing business - ahead of Japan, Germany and France.

Helping entrepreneurs grow is dramatically more powerful and sustainable as a route to ending poverty, than aid alone. That is why the speech by DFID Minister, Baroness Shriti Vadera, was so refreshing:

“I am concerned that sometimes we lose sight of the simple fact that, without growth, sustainable human development is a largely theoretical proposition. We also sometimes lose sight of the fact that the purpose of aid is to no longer require it.”

This signals an important and welcome shift of emphasis, and better reflects what is needed to tackle the scourge of poverty across the African continent.

Business needs to show more dynamism if it wants customs "transformation"

In a meeting in Arusha, Tanzania from the 11-13th of September 2007, SITPRO and the World Customs Organisation (WCO) brought the Commissioners of Customs from Kenya, Rwanda, Tanzania and Uganda together with other Business Action for Improving Customs Administration in Africa (BAFICAA) taskforces, the EAC secretariat (Customs Directorate), East African Business Council, donors and others. The aim of the meeting was to develop a list of priority areas for improvements in customs with an aim to transform customs administrations in the region in the 21st century (to use the term “reform” somewhat lazily in this context is to ignore the good work and progress that has gone on). The meeting also aimed at examining ways the private sector could play a partnership role in this transformation.

In a display of dynamism, vitality and political will which seems to characterise the region these days the Commissioners over a very short timeframe produced a thematic list of priorities that acknowledged most if not all the list of business priorities identified in the BAFICAA report (see earlier blog entry). Jokingly called the “Impala Roadmap” (named after the meeting venue - the “Arusha Declaration” was a bit overused!), the list not only recognised the gaps that existed but more importantly mapped out in some considerable detail what the possible remedial steps could or should be.

However the commissioners did not restrict themselves to high-minded and well-meaning political statements but to further indicate that they meant business (pun intended) individual customs administrations were identified with the responsibility for taking this roadmap further. The commissioners were determined to get a roadmap that was workable and could be implemented. One DG remarked that he wanted a result that was anchored in concrete action and not just aspiration – he needed to go back to the Commissioner General to justify the expense and time involved in attending a meeting over three days!

In a technical trade facilitation sense the Commissioners made a huge conceptual leap in this meeting. The Commissioners reiterated that revenue maximisation is and will be for the foreseeable future the top priority for customs administrations in the region (customs revenue accounting in most cases for over half of government budget). But the conceptual leap was that they also accepted that there are better, more business friendly ways to achieve the same if not higher levels of revenue collection such as the implementation of Authorised Economic Operator schemes (where accredited business would receive simplified procedures and quicker clearance times), the better use of risk management techniques amongst other measures.

The role of business is an integral component of this roadmap and welcomed a more proactive and constructive engagement. As part of the forward work plan SITPRO and others will help fashion a role for business in more concrete terms. In addition to recognising that business should be consulted as widely and thoroughly as possible before changes happen (eg. legislation, IT systems, procedures), the BAFICAA taskforces suggested that the private sector could provide more practical contributions such as transfer of business skills to customs (how to manage change/change management; retaining institutional memory) or better communication skills (how to get your message across; PR and media skills).

The challenge now will be to operationalise the various possibilities nationally and regionally. But the agenda for change now exists with the private sector firmly at its core. In the East African region I have seen customs administrations that are ready to lead from the front and do not shrink from a challenge. If change is going to really happen, business needs to step forward (more readily than it is doing currently) to come up with the innovative solutions and ideas that are needed to make this process of transformation a success.

Invest Don’t Give?

We here at the Shell Foundation have long argued that we need to be putting Africa’s entrepreneurs at the heart of the poverty equation - not more aid and debt-relief; the subjects that dominate the mainstream development agenda. You could sum this message up as: ‘Invest Don’t Give.’

That is crudely what we do. By acting like an investor, we identify financially sustainable solutions to poverty and environmental challenges - rather than ones reliant on the next aid cheque (that so often doesn’t come).

Of course the reality is we need to ‘Invest AND Give’. While some aid is poorly spent, other aid is spent well and much needed.

The trouble is that most mainstream NGOs consistently pedal negative images of Africa - of fly-covered children with extended bellies. The media, with its eye for dramatic stories and pictures does the same. The result: the ‘give more aid to save Africa’ message dominates, while attempts to show how we could really help African entrepreneurs fulfill their potential - and in turn create much-needed jobs and economic growth - get drowned out.

This is a real shame because it could be so different. Imagine a world where people ‘invest’ £1 in an African entrepreneur rather than give. They could get £1.05 back as the entrepreneur repays the loan (which they could then re-invest in another entrepreneur) - and the entrepreneur would be free to build a business, rather than being treated as an aid victim.

We have just published a new report Down to Business: New Solutions to Old Problems that outlines how we are ‘investing not giving’. It also explains how we deploy ‘Business DNA’ - business thinking, disciplines and models - to create sustainable enterprise-based solutions to poverty and environmental challenges. We hope that by publishing reports like this we will begin to turn the tide away from talk about ‘aid’ and towards talk about ‘investing’ in Africa.

The problem with food aid: one charity tells it as it is

Our latest news round up profiles one on the most inconsistent development policies currently out there - the long-running practice by the US government of providing aid relief in the form of subsidized grain bought from its own farmers. As reported in the New York Times, CARE, one of the world's largest charities, has just announced its decision to phase out its involvement, arguing that:

American food aid is not only plagued with inefficiencies, but also may hurt some of the very poor people it aims to help...[by competing] with the crops of struggling local farmers.

In taking this stand, CARE is breaking not only from its own past, but also from the general practice among similar agencies.

As we argued in a recently-issued statement, the real solution is far more complex: better access for farmers to markets and capital, appropriate technologies, farm inputs, diversified crop and animal portfolios, secure land tenure, adequate irrigation, the infrastructure and capacity building they need to connect to local, regional and international markets and supply chains, and better information on the current and future levels of demand for their crops.

We have also argued for a fairer world trading system. This includes ending market-distorting subsidies by the US (and EU) on the products that matter most to African farmers. Supporting farmers in a way that fundamentally damages their long term prospects, and is rooted in a problematic trade arrangement, is flawed. By standing up to its peers, CARE has brought this practice out into the open. And for that it should be congratulated.

Mobilising for Emergencies: Progress in Partnership

Real progress is being made in mobilizing African expertise to prepare for, and respond to, African crises. That was the focus of a recent conference (“Mobilising Human Resources and Skills in Emergencies: the Role of Non-Governmental, Private and Public sector in Africa”) held in Nairobi by the Commonwealth Secretariat, People In Aid and AfricaRecruit. The event brought together representatives from the public, private and non-governmental organisation sectors to identify what is needed and what can be offered in emergency situations.

John V. Rogers, Disaster Management Department, Office of National Security, Sierra Leone, shared the challenge of rebuilding after disasters, and harnessing limited resources of government and other stakeholders. He stressed that “disasters are unforeseen but their impact can, in a second, completely destroy the whole country - hence, governments, donors and other partners should ensure that disaster management is integrated into development programmes”.

In his speech, Hon. Musa Echweru (MP) Minister of State for Relief, Disaster Preparedness and Refugees, Uganda, highlighted the need for strong collaboration and networking between NGOs, public and the private sectors in Disaster Risk Reduction. According to him, “each of these actors has a critical role to play, which can only be improved on through policies, adequate flow of information and proper coordination mechanisms”.

What will be the role of each sector to ensure that the two recommendations are achieved? Would outsourcing to a third party be an option as a model to strategic disaster preparedness and response, as James Du Plooy, Business Development Manager of Capital Outsourcing Group suggests? What is clear is that the progress made to date, and the only way further progress can be made in future, is through a new spirit of partnership.

Spoil Association? Time to fight back on food miles

As was reported in an excellent article in The Times last week, the Soil Association – the UK’s leading organic organization – is seriously considering removing its organic certification from African farms because their produce is imported into the UK by air.

On the back of flimsy data and spurious logic (see my last blog on this subject), the Soil Association could single handedly ruin the livelihoods of tens of thousands of poor people in Kenya alone. And for millions of farmers across Africa, exporting their produce to markets like the UK offers one of the best prospects for escaping poverty.

If the Soil Association goes ahead, it would be appalling. And it’s about time we said so.

Bottom-up approaches to the business enabling environment

Many traditional development actors, including the World Bank, IFC, and a range of bilateral donors (such as, USAID) in developed countries, are actively involved in improving enabling environments for business. But this doesn’t mean we should equate “enabling environment” with “single Western blueprint imposed in an imperialistic manner on developing countries.” The connotation is logically incorrect and practically unhelpful.

Institutional, structural, and systemic changes are required to expand the scope of economic opportunity available to the poor – economic opportunity that enables individuals to create their own paths forward in life. Westerners, business people, rich elites, and other people in positions of power will need to be involved and invested in these changes if they are to occur. Rather than scare them away, or drive them into secretive discussions in smoke-filled rooms, we need to encourage them to engage openly and explicitly in inclusive, experience-based dialogue.

“Enabling environment” efforts can certainly fall into the reviled “top-down” category of development approaches. When conducted by corporations, they can fall into the equally reviled “lobbying” category. But bottom-up enabling environment efforts are critical, possible, and more common than one might think.

Companies such as Vodafone and Nokia, Reliance and Bharti, SABMiller, and others are innovating and experimenting with inclusive business models that work to expand the scope of economic opportunity available to the poor. These companies inevitably identify policy, regulatory, infrastructural, and other “enabling environment” bottlenecks along the way. This is invaluable learning about actual – as opposed to theoretical – constraints on the sustainable creation of what Michael Porter and Mark Kramer have called “shared value.” It suggests specific changes to unlock specific benefits for business and society simultaneously. It allows companies to approach governments as public leaders, not just lobbyists.

This is a big departure from “enabling environment” strategies based on lobbying – or simply waiting – for the right enabling environment to be established before letting the innovation and experimentation begin. Back in 1961, at the International Industrial Conference in San Francisco, A. Romeo Horton, then President of the Bank of Liberia, delivered a speech I liked a lot – “Plain Talk from an African.” In the context of the Cold War and newfound independence in many countries, he says (and I’m paraphrasing a bit here) that he couldn't care less about ideology. He isn’t worried about communism or anything associated with communism. “What frightens me most,” he declares, “is the timidity and fear that is displayed by 20th century capitalism. It seems, from my point of view, that free enterprisers have a kind of fear that was not present during the days of ‘Go West, young man,’ of the westward movement from Europe to this continent and from the eastern part of this continent to the western part.” If the likes of Vodafone, Nokia, Reliance, Bharti, Microsoft, and SABMiller are any indication, perhaps 21st century capitalists will prove a bit more spirited.

Harnessing the potential of social entrepreneurs

Many leading companies are starting to understand that profitable business lines can be developed out of the need to tackle pressing social issues, and that when done successfully, this is far more effective than philanthropy. But individuals have been doing this for years. As the International Business Leaders Forum reports in its recent eBulletin newsletter, social entrepreneurs have been behind many of the most innovative and scalable solutions to challenges in international development – from the provision of school meals or waste management in urban areas, to the development and installation of low-cost solar energy systems. Social entrepreneurs come in all shapes and sizes, but what makes them stand out is that they use entrepreneurial principles to tackle a particular social problem. Like Martin Kalungu-Banda, founder of Zambia's The Forum for Business Leaders and Social Partners, who forged a partnership between the country’s largest supermarket, local communities and government, which became a profitable model that business could replicate nationwide. The solution was good for business, and good for the local communities.

Many organisations have worked with social entrepreneurs for years, such as Ashoka or the Schwab Foundation for Social Entrepreneurship. But there is a gap in the understanding of how large multinationals can work with social entrepreneurs.

Picking up on work conducted by the CSR Initiative at Harvard University, IBLF recently produced a short report entitled, Harnessing Potential: why it makes sense for your business to work with social entrepreneurs. Companies can work with social entrepreneurs to help develop into underserved markets, while social entrepreneurs can help companies both design products and services that create value for low-income people and distribute those products and services more efficiently.

So far, so good – in theory. But as usual the challenge is in the implementation. To help, IBLF has compiled a list of social entrepreneurs that we think could make suitable partners for businesses. We’d also be interested to know of case studies where multinational companies have forged effective partnerships with social entrepreneurs.

Where does development come from?

In a speech at the United Nations, which Zahid (from Business Action for Africa) blogged about yesterday, new British Prime Minister Gordon Brown called for a renewed, collective drive to achieve the Millennium Development Goals laid out in 2000. He declared, “For too long we have talked in the language of development without defining its starting point in wealth creation – the dignity of individuals empowered to trade and be economically self-sufficient.” Alone here in my office, I said “YESSS!!!” and pumped my fist and highlighted the sentence in agreement. It sounded like Gordon Brown might dig our Economic Opportunity Program.

But what is the role of private sector firms in creating and expanding economic opportunity? The Prime Minister is right that it goes way beyond generosity. Instead, it is the private sector’s aptitude for “wealth and job creation that, if fully mobilized for global purpose, will help meet our goals.” Stated another way, the comparative advantage of business in development is rooted in core, profit-making business activity and the natural multiplier effects it engenders.

It’s time to break down the association between altruism and social value creation. Companies can create social value without altruistic motives, and altruistic motives don’t guarantee that social value will be created. For a long time companies seemed to fear mixing motives, and used one set of tools for shareholder value creation and another, distinct set for social value creation. Today we find leading companies combining these tools to leverage core business interests, assets, and activities for enhanced development impact. And if these companies manage to enhance their own long-term business prospects in the process? All the better.

A new partnership for meeting the MDGs

Today, UK Prime Minister Gordon Brown, in a speech at the UN, called for a new global partnership to tackle what he described as a "development emergency" – the shortfall in progress against the internationally agreed UN Millennium Development Goals. The speech was accompanied by two statements, one by Heads of State and the other by business. The UN Secretary General endorsed the Prime Minister's proposal for a UN Summit next year to review progress and accelerate action.

There were two refreshing aspects to his speech. One was a clear recognition of the role that business has to play, in partnership with others, in meeting the development goals. The other was the recognition, so often underplayed in these discussions, that “trade, wealth creation and job creation are the only routes to long term prosperity”:

And it is time to agree a new partnership for prosperity:
in each country, the government undertaking a rigorous examination of the obstacles to business formation…
in each country, development agencies helping to create the infrastructure necessary for growth…
in each country, the power of entrepreneurship unleashed…
in each country, a focus on agricultural productivity…
in each country, government and businesses being long term partners in a joint mission on economic development.

…perhaps for too long we have talked the language of development without defining its starting point in wealth creation – the dignity of individuals empowered to trade and be economically self sufficient.

To turn passionate words into practical action, we all have to step up to the challenge. As I argued in a speech today, Business Action for Africa is one example of the business community’s vision, big-thinking and readiness to support such an effort.

Customs procedures still a challenge – BAFICAA one solution?

A recent survey by the East African Business Council (EABC) has highlighted the continuing problems of cumbersome customs procedures in the region. Based on over 450 questionnaire responses the EAC Business Climate Index (BCI) 2006/07 Survey focused on six trade-related clusters namely, customs procedures, immigration and work permits, business registration and licensing, police roadblocks, weighbridge stations and quality standards and export certification. Customs procedures continue to top the list of obstacles as perceived by businesses and a serious impediment to intra-Africa trade.

This view is broadly supported by a report for Business Action for Improving Customs Administrations in Africa (BAFICAA). The report (sponsored by Unilever, BAT, SITPRO and Diageo), Customs and Business in Africa: A Better Way Forward Together was revealing. It emerged that businesses were tired of being considered “the enemy”. Customs authorities across Africa just did not appreciate the private sector and that despite reforms and improvements, generally most front-line Customs officers lacked any basic appreciation of business issues such as the impact of delays on their businesses. Respondents said that even when higher-level officials were business friendly, this rarely translated to lower management levels. The general feeling was that of frustration – those law-abiding, tax-compliant value-generating businesses were being treated with constant suspicion.

It is unfortunate though that these perceptions still linger. Customs administrations in the East African region have been putting themselves through a sometimes painful though much needed process of reform and modernisation. Much has improved as reflected in improved clearance times for most of the East African countries (see the recent Doing Business Report). Though this public sector driven reform and modernisation agenda has been driven by primarily revenue imperatives it has the potential to significantly improve the business climate.

BAFICAA is making sure that the role of the private sector as a driver of change is not overlooked. BAFICAA is working with customs administrations in the East African region to implement what the report calls “Fast Track” - or simplified procedures for compliant businesses aimed at reducing clearance times for businesses with a history of full compliance. The initiative has met with considerable success in its first phase which included the creation of private sector taskforces, meetings with national customs administrations and a regional workshop in Arusha, Tanzania with the EAC secretariat and the EABC amongst others. These meetings facilitated by Pricewaterhouse Coopers (Kenya) have set the groundwork for a dialogue with customs administrations. A meeting to agree an action plan with the Commissioners of customs is being organised by SITPRO in conjunction with the World Customs Organization (WCO) for later this year.

BAFICAA is still in its infancy but has broken free of its start in the UK and is now the purely African initiative it was always envisaged to be.

Collaboration: The secret to building effective business linkages?

Shona (from the World Business Council for Sustainable Development) recently blogged about the Statement of Intent for Doing Business with the World, recently signed by twelve chairmen, CEOs, and other senior executives of major global corporations. The signatories declare their commitment to playing their part in “empowering people so they have the opportunity to move out of poverty.” Their proposed modus operandi? “Inclusive business solutions” that turn the world’s poor into new markets, new suppliers, new employees, and new customers.

One “inclusive business solution,” the focus of Shona’s Issue Brief on Promoting SMEs for Sustainable Development, is for large firms operating in developing countries to include local SMEs in their value chains. Sounds like a no-brainer: local communities enjoy new opportunities for employment and income generation; large firms reduce costs, increase flexibility, tap new markets and sources of innovation. The Issue Brief acknowledges that, in practice, it’s not so easy. A wide range of challenges face even the most advanced value chain linkage initiatives.

These challenges, along with innovative new solutions currently being explored, are mapped out in a recent report by the CSR Initiative here at Harvard, IFC, and IBLF, drawing on the experience of IFC clients and Business Action for Africa Enterprise Development Group members.

One of the findings I thought was most striking about this report (and, in the name of full disclosure, I’m one of the authors) was the role of collaborative action and intermediary organizations – what Michael Porter might call “institutions for collaboration” – in the landscape of emerging solutions. As I tried to make sense of the range of challenges and solutions these companies faced, I sliced and diced them a number of ways, trying to find some patterns (I should also disclose that I was once a consultant). For example, lots of the challenges were really external to the companies involved – things like regulatory constraints and lack of access to commercial finance by SMEs. It seemed natural that collaboration would help reduce the cost to any given company of addressing these external challenges, and at the same time increase their chances of having any luck at it.

But collaboration is also being used to address things I would’ve considered internal challenges – including identifying and assessing potential SME partners, establishing targets and commitments for local content, and in some cases, even ensuring corporate accountability that those targets and commitments being met.

As companies move toward more of “core business case” for forging value chain linkages with SMEs, it will be interesting to see whether competitive concerns crowd out the tendency toward collaboration, or whether a company’s capacity for collaboration in this space – the quality and extent of a company’s networks, and its ability to initiate, manage, and dynamically evolve relationships within them – actually becomes part of its strategic and competitive edge.

What can business and governments do to promote SMEs?

Poverty remains a major challenge to sustainable development, environmental security, global stability and a truly global market. The key to poverty alleviation is economic growth that is inclusive and reaches the majority of people. Improving the performance and sustainability of local entrepreneurs and small and medium enterprises (SMEs), which represent the backbone of global economic activity, can help achieve this type of growth.

The World Business Council for Sustainable Development (WBCSD) has published an Issue Brief on SMEs in collaboration with SNV Netherlands Development Organisation. The brief explains how governments can help alleviate poverty by focusing on SMEs and how larger corporations can help themselves by including SMEs in their value chains. It describes some of the comparative advantages of SMEs and the challenges they face in developing countries. The Brief also includes a set of key messages to both business and governments on promoting the growth of SMEs.

The publication follows the recent "Statement of Intent for Doing Business with the World", in which the leaders of twelve WBCSD member companies commit to looking beyond corporate philanthropy to search for responsible, sustainable and inclusive business models that are good for business and good for development.

Meanwhile, the WBCSD is working with its members members, Regional Network partners and other stakeholders to broker new business ventures that are both good business and good for development.

Talking business in Ghana

I co-chaired the EU-Africa Business Forum in Ghana recently (21-22 June), an honour I was less than sure about after the largely declaratory inaugural meeting in Brussels last November. But we tasked the four working-groups (trade, entrepreneurship, infrastructure and ICT) to come up with deadlined deliverables and the results (fed into the AU Summit) were not bad.

Given the political profile - lots of AU and EU people there, led by their respective Commissioners Maxwell Mkwezalamba and Louis Michel - the Forum has the potential to be quite a good way of getting across business concerns (I was for example able to make various interventions in support of more efficient intra-regional trade flows)... though, having now done three big meetings across Africa in three weeks, I am also mindful of the danger of over-stretch/overlap/dilution.

Trading insults: Doha disappoints again

There was a depressing sense of déjà vu to Thursday’s collapse in the Doha trade talks. The meeting of the so-called G4 – the US, EU, India and Brazil – was widely seen as a last chance to achieve the target of getting a deal by the end of the year.

Insults and recriminations quickly followed. The US and EU pointed the finger at Brazil and India for not moving far enough on opening up access to their manufacturing markets. Meanwhile Brazil and India argued that the US and EU were demanding too high a price for what were unacceptably unambitious reforms to their trade-distorting farm policies.

It is easy nowadays to become numb to bad news on trade talks. Last July's suspension of the trade talks was a particular low. The early optimism after the trade round was subsequently resumed seems to have been replaced with a tangible negativity about the prospect of the Doha talks living up to their much-hyped objective of being the first-ever “development round”.

But perhaps the greatest danger right now is fatalism. The fact is that a deal is tantalisingly close, and still possible. For the World Trade Organisation’s Director General Pascal Lamy, while a convergence of views among the G4 would have been “helpful”, it was not “indispensable”, and ultimately some, including Oxfam, are happy the process will now revert to a broader discussion among the WTO’s 150 members.

Staying focused and optimistic is vital, if only because failure would be disastrous. Trade is a far more powerful lever for poverty reduction than aid could ever be.

Above all, as negotiators try and find a way forward in the corridors of Geneva, they should remember that business (despite what a vocal minority may say) is overwhelmingly supportive of a deal for Africa. The US and EU should also bear in mind that the vast majority of businesses in their countries recognise the importance of a sound deal for more developed economies as well.

Straight talking at the WEF

The 17th African World Economic Forum kicked off on Wednesday with an opening plenary styled a “conversation” between two Presidents, an aspiring President, a Vice President and a lonely CEO.

Our hopes were raised by Tokyo Sexwale, the moderator, who assured us that this would not be another talk shop, but quickly dashed by President Mbeki who told us that there was nothing new to say about the challenge of Africa.

But this didn’t deter the energetic octogenarian President of Senegal, Abdoulaye Wade, who described the success that had been achieved by his country without the benefits of oil, minerals and other resources. The secret of success being “good friends with lots of money”!

This contrasted with the underlying message from President Mbeki who described the capacity challenges of the continent and posed the question – who will pay? Certainly not the World Bank if Obiageli K. Ezekwesili’s speech was anything to go by. Instead of providing solutions Ms Ezekwesili posed a long series of questions. One of these was how to get the private sector to come to the party and how to get business to recognise Africa was not one country. Cynthia Carroll, the new CEO at Anglo American, was left to answer on behalf of business and showed how hard it is for a business person to compete on a stage with politicians. She stressed the need for partnerships, best practices, good governance and flexibility of approach.

Tokyo Sexwale moderated the event with great charm, energy and humour. However it was clear his thoughts were on other things when instead of referring to the African continent he referred to the African National Congress.

Outside the plenary the tone of the meeting was very much one of quiet determination. Growth of 5-6% showed that Africa was doing the right things and that the right policy choices were being made. Governance was improving and individuals such as Mo Ibrahim vigorously enforced the point that Africa must achieve the same standards as the rest of the world in this respect. There was an attempt to tackle the difficult issues with a BBC debate on Zimbabwe which failed to really penetrate how the current problems could be resolved.

The conference followed the lead of Davos with sessions on climate change, thankfully without the hysteria that accompanied this topic in Switzerland and there was a particular focus on agriculture.

All in all while this year’s Africa WEF seemed to lack the energy and excitement of previous year (I’m sure there were less people in the bars at the Arabella Sheraton), it was more than replaced by a realism and steely determination to ensure that progress on the continent continues.

G8 Summit: a total farce?

For Oxfam it was a failure to deliver, and for Bob Geldof “a total farce”. But was last week’s G8 outcome for Africa really that bad? For sure, little of the money announced for Africa was new, and the restated resolve by G8 leaders to meet their 2005 commitments comes against a backdrop of painfully slow progress on delivery.

But the NGO reaction – by focusing on money - misses one of the most significant achievements of this G8. That is, to a far greater extent than previous G8 Summits, the world leaders have recognised that – as in every economy – it is growth and private enterprise that offers the best long-term opportunity for making poverty history.

The most striking finding of a World Bank survey of 60,000 poor people was that the vast majority see self-employment, starting a business or getting a job as offering the best prospects for escaping poverty. African’s, themselves, are sick of hearing their continent being talked about in the language of charity, poverty and despair, urging instead for the focus to be shifted towards creating the conditions for enterprise, trade and employment.

The business community made this point clearly in advance of the Summit (in a letter to Chancellor Merkel, at the Africa Business Forum 2007 and in the publication “A Path to a Prosperous Africa”). It is therefore refreshing, though clearly less headline-grabbing, that the G8 framed its discussion on Africa within the topic of “Growth and Responsibility”.

The emphasis, though lacking many detailed commitments, was on the elements needed to stimulate growth, enterprise and investment: good governance, with a clear statement that the Africa Peer Review Mechanism “can serve as an effective tool only if its results are recognized and implemented” (a swipe at South Africa’s recent rejection of APRM’s recommendations?); support for the Extractive Industries Transparency Initiative (EITI) and an extension of its transparency principles to other sectors “where appropriate”; a reaffirmation of support for the Infrastructure Consortium for Africa; support for African countries’ efforts to improve the business climate, including through initiatives such as the Investment Climate Facility; and activities to strengthen financial markets and enhance the effectiveness of remittances. Special mention is also made of agriculture, with the G8 urged to increase support for the Comprehensive Africa Agriculture Development Programme (CAADP). Interestingly, the statement also mentions that the G8 Presidency is “planning a business leaders' campaign, including an investment conference aimed at improving Africa's image as a ‘continent of opportunity’”.

The big outstanding issue is trade, and on this the G8 made some positive noises about their commitment to pushing for a deal by the end of the year, alongside a boost for Africa’s capacity to trade – which was as much as could be expected at this forum. But of course unless this is followed through, no amount of aid will be enough to offset the damage that a collapse in trade talks would cause.

Clearly, accelerating delivery on their Gleneagles aid promises is critical. But recognising that these aid commitments are only part of the story is as important – and it is one clear success that the G8 has recognised this fact.

Africa Day: looking to tomorrow

London has been having a week-long party to celebrate Africa Day (25 May). In many respects, there is real cause for celebration. Much has been achieved by African governments and the international community. As a group of businesses with a deep understanding of the content, we in Business Action for Africa are optimistic about the prospects for many countries in Africa.

The latest edition of the Africa Economic Outlook, launched last week, paints a rosy economic picture: Africa grew by 5.5 per cent in 2006 – well above the long-term trend and for the fourth consecutive year, and this year it is expected to reach a healthy 5.9 per cent. To at least some extent, this reflects improved governance, investment climates and economic policies in many countries.

At a presentation at a Chatham House / CAPPS event last Friday, a senior representative of the NEPAD African Peer Review Mechanism (APRM), pointed to the leadership that has been shown by African Government’s to enhance governance. To date, twenty-six countries have signed up to the APRM and the country review process is underway in twelve. Ghana, Rwanda and Kenya have completed their reviews and have agreed to recommended plans of action.

And a third reason to be positive was set out in the most recent Doing Business Report of the World Bank. Africa is now one of the fastest reforming regions in the world, with two-thirds of African countries making at least one noteworthy reform in 2006 – helping create a better environment for businesses, small and large, to thrive and hence lay the basis for long-term growth and poverty reduction.

Fourthly, at a time when one of the engines of economic growth is high commodity prices, there is seemingly increasing uptake of the Extractive Industries Transparency Initiative (EITI) on the part of many mineral-dependant African economies. It may be that the embezzlement and misuse of revenues which characterised past commodity booms in some African countries, will not be repeated – or at least not to the same extent.

But amidst the celebrations, it is important to take a sober look at what more needs to be done. Although it has improved, growth is still some way short of the annual 7 per cent needed to meet the Millennium Development Goals. It remains to be seen what the follow-through will be from the APRM process; and how many of the countries who claim to be implementing EITI pass muster when the validation process is activated later this year. Moreover, while it is certainly getting easier to do business, Africa as a whole remains the region with the highest regulatory obstacles for would-be entrepreneurs and corruption remains widespread.

As for the international community, G8 Governments meeting shortly in Heiligendamm (June 6-8) must get back on track to deliver on past aid commitments and they must do more to stimulate growth and investment. Above all, the world’s governments – particularly the in the EU and the US – must reach a deal on the Doha international trade negotiations. Failure – driven by pressure from a narrow set of vested interests – would be a real blow for African countries and their people and for the world economy. Business should be active in pushing our political leaders to make the small compromises that now are needed to achieve a deal.

A breath of fresh air: a business solution to Indoor Air Pollution

This weekend the United Nations’ main environmental body hit the headlines when Zimbabwe was controversially elected to its chairmanship.

Zimbabwe’s leadership of the Commission on Sustainable Development (UNCSD) has outraged most western countries but was backed by many developing world countries.

Wrangling and bizarre (to say the least) outcomes of UN votes are nothing new. In fact, they are almost to be expected. That these organisations exist to help the world’s poor and the environment is sadly forgotten amongst the infighting and point scoring of international diplomacy.

One positive outcome, however, from the 15th session of the UNCSD was the publication of the first-ever country-by-country estimates of the impact of Indoor Air Pollution (IAP).

More than three billion people depend on solid fuels including biomass (wood, dung and residues) and coal for cooking and heating. The smoke from these stoves causes the premature deaths of more than 1.5 million people a year, according to the World Health Organisation (WHO).

This makes IAP one of the 10 most important global threats to public health – yet its profile compared to TB, AIDS, Malaria and other killers is extremely low. This is partly because of a lack of data. These new figures are the first time individual country estimates have been published. They are therefore to be warmly welcomed.

They reveal 80% of worldwide deaths from indoor air pollution occur in just 11 countries -- Afghanistan, Angola, Bangladesh, Burkina Faso, China, Congo, Ethiopia, India, Nigeria, Pakistan and Tanzania.

China and India lead the incidence of IAP with an estimated 400,000 people dying prematurely each year in each country. That's equivalent to two superjumbo jets a day crashing in each country and killing every passenger.

The problem is just as bad across African countries taken together with 79,000 dying in Nigeria, 56,000 in Ethiopia and 47,000 in the Democratic Republic of Congo alone. And for every death, dozens more will suffer from illnesses caused or exacerbated by IAP such as TB. That raises the number of women and children silently enduring serious health problems every day from IAP to the tens of millions and takes this into the realms of biblical plagues.

The world should pay more attention. Women should not be dying as a result of preparing meals for their families.

Most similar health scare stories from the South are accompanied by calls for massive cash donations from the North. In the case of IAP, the Shell Foundation believes instead that the best way to tackle this deadly problem is through the application of business thinking. Through our “Breathing Space” programme, we’re promoting the use of commercial product development techniques to help design stoves that get dangerous smoke and emissions out of the homes of poor people. And we’re setting up sustainable supply chains to cost effectively manufacture affordable, attractive stoves and distribute them to people’s homes in the remotest rural areas. We have a vision to sell 20 million clean stoves in five countries over the next five years and take a hundred million people out of harm’s way as far as Indoor Air Pollution is concerned. Now that will be something to make a fuss about on the global stage.

Fresh thinking on Africa: "A homecoming for jobs in Africa"

There are two things that I have come to believe very strongly. First, it is time to change the language used to talk about Africa - away from "charity", "aid" and "poverty", and towards "enterprise", "trade" and "job creation". In short, towards the language that African's themselves use to talk about Africa.

And second, it is time to recognise the enormous contribution that the Diaspora is making, and can make, through their remittances and skills. Governments and business should focus on how this can be facilitated.

It is for these reasons that I have been particularly impressed by the recent video produced by Afford - the UK Diaspora organisation. It documents the visit by a group of Diaspora to Sierra Leone to work as business advisers and mentors to Sierra Leonean entrepreneurs. We need more programmes like this.

Water: Everyone’s Business

Today – World Water Day – should be an important day in everyone’s diaries. The Human Development Report 2006 and today’s press release by the African Development Bank explain why. One African out of three lacks access to safe drinking water supply, while one out of two lacks access to sanitation.

Water is increasingly seen by business as a core business issue, and rightly so. The business angle is profiled in today’s Financial Times Special Report, "Business and Water" and in a consultation report launched today by the International Business Leaders Forum. It was also the focus of a recent Diageo-supported event organised by the Foreign Policy Centre. Speaking at the event, the UK International Development Minister Gareth Thomas outlined the UK's own commitments in this area, while Norah Odwesso of Diageo Africa gave an example of what business is doing.

Companies such as SABMiller, Diageo and Nestlé are leading the way in what business should and can practically do. It’s about time others followed their example.

International Business Forum (IBF) Turns to Africa

It is widely recognized that Africa needs more business investment for its development. Yet many companies regard investment in Africa as too risky an affair. In order to scale up investments that are not only profitable but that also contribute to Africa’s development, InWEnt together with the World Bank Institute recently held a conference on “The Business Challenge Africa”, looking at this issue. The conference report is out now and stresses the good opportunities that forward looking companies can seize by being part of a thriving African economy. The report is to be commended for the concrete examples it provides as case studies on how business has actually found ways to reach to the vast market at the bottom of the pyramid, as most recently discussed in World Bank’s The Next 4 Billion. The report also recognizes the significant role of the financial and knowledge bridges that can be built by the Diaspora and south-south economic relations (see the Silk Road).

What’s next? The 12th International Business Forum "Business Engagement for Governance" will take place 8-10 October in Washington D.C., and look at how business, together with its stakeholders, can shape a sound and stable business framework to scale up more investments and more business contributions to development. Participants will look at innovative ways for business engagement in reducing fraud and fighting corruption. Not an easy issue to tackle, but certainly one that needs the attention it will get from big players. Look for updates on the upcoming conference at BusinessAndMDGs.net.

Saying it with flowers just got complicated

Today – Mother’s Day in the UK – is one of the most lucrative days of the year for the country’s flower industry. Yet behind the expressions of love for mothers, and of joy by florists, other decidedly more negative emotions are stirring. And environmentalists are to blame.

Pressure groups – and more recently supermarkets – are urging customers to take into account the environmental cost of importing flowers – from say Kenya, the largest source of imported flowers into the UK after Holland – and instead buy local.

Not only is this message simplistic, it is also irresponsible. And it is about time we had a balanced, evidence-based, debate about it. Trade after all is one of the most important ways poor people around the world will be able to lift themselves out of poverty.

The fact is that the environmental costs of growing flowers in heated greenhouses in Northern Europe far outweigh those in sunny Kenya, even taking into account transport. According to research quoted by the Fairtrade Foundation, a flower grown in Kenya and flown to the UK emits 5 times less carbon than one that has been industrially hot-housed in the Netherlands. And according to a report by the UK's Department for Environment, Food and Rural Affairs, most of the enviromental damage is caused by us driving to the supermarket to buy them. More generally, the carbon emissions associated with flying fruit and vegetables from Africa to the UK is less than one tenth of one per cent of all the UK’s carbon emissions.

Thankfully, a more sensible debate is beginning. Hilary Benn's speech to the Fairtrade Foundation provided a fresh and balanced perspective. The BBC and The Scotsman newspaper also both published last month good articles on the issues.

For now, next time you buy flowers from Kenya, be assured that on balance you are doing a good thing – for your mother and for the developing world.

Commission for Africa: Broken Promises?

Today is the two year anniversary of the Commission for Africa Report and Bob Geldof, the man who inspired it, is angry. Speaking to the BBC’s Radio 4 Programme, he has criticised European leaders for losing interest in Africa since the 2005 G8 agreement that drew on the Commission's work. Broken promises over Africa would "kill the poor" on that continent, he says.

The good news is that there are at least some reasons to be optimistic. Germany has placed Africa on the agenda for its 2007 G8 Presidency with a clear opportunity to encourage governments to deliver on previous promises. The Africa Progress Panel – the follow-up mechanism recommended by the Commission for Africa and long-argued for by the UK Government – is finally up and running, under the leadership of Kofi Annan, and is due to publish its first progress report imminently.

And perhaps most importantly, there has actually been some tangible progress in implementing the Commission’s key recommendations – including on those measures, such as infrastructure and investment climates, needed to stimulate growth and enterprise, the only long-term option for poverty reduction in Africa (see, for example, the latest update from the UK’s Department for International Development, and the reports from the Africa Partnership Forum).

Ultimately, it is up to each of us, individually and collectively, to ensure that the bold promises made two years ago are translated into lasting change for Africa and its people. If promises are broken, we’ll all be partly to blame.

An investment to last generations: gender balance

Today is International Women’s Day and is a good occasion to remind ourselves of poverty’s feminine face as noted in a recent article by the Economist. It is estimated that 70% of the world's poor are women. According to the UNFPA, worldwide, women on average earn slightly more than 50 per cent of what men are earning. Gender has been an important component in many development efforts, so much so that it is one of the 8 Millennium Development Goals (MDGs).

According to the 2006 MDG report, women represent an increasing share of the world’s labour force – over a third in all regions except Southern and Western Asia and Northern Africa. What makes gender particularly important is that gender inequality is one of the key issues that contribute to intergenerational poverty.

The issue is not one that is specific to poorer countries or for that matter to the poor. According to the UK Equal Opportunities Commission women are woefully underrepresented in the both private and public sectors—with only 117 among the 1130 directors in FTSE 100 boardrooms. US Census Bureau estimates that 14.1% of women in America live in poverty, compared with 11.1% of men.

Socio-cultural attitudes, employment policies, balancing work and family responsibilities are some of the many issues that impact gender inequality and areas in which the private sector can make a difference—one workplace at a time—impacting generations.

For more information on country specific progress on gender issues you can get data from World Bank’s gender database.