Friday, 2 March 2007

Doing good by doing good business

SABMiller – the world’s second largest brewer, and one of the first African-originated companies to emerge as a global business – announced today plans to invest $7.5m (£3.8m) to scale up its Eagle Lager project in Uganda. Eagle has emerged as the second largest pan-African brand, while benefiting over 10,000 small scale farmers in Uganda and Zambia that supply the sorghum from which it is brewed.

When I visited the farmers last June, their enthusiasm was infectious. Yet what struck me most was that they, unknowingly, have found themselves at the heart of a distracting, yet heated, international debate about the role of business in international development: about whether the private sector is part of the solution to poverty reduction, or part of the problem.

The debate is distracting for two reasons. First, for the large part, the private sector is actually made up of small-scale entrepreneurs and family farms – much like those that supply Eagle. While the public emphasis is often on big business, it is in fact the poor who are the private sector: nine out of ten jobs in developing countries are in the private sector. So eliminating poverty is inextricably linked to boosting local private sector development and entrepreneurship.

Second, in the midst of the noise of NGO campaigning and defensive corporate communications, the most important linkages between larger businesses and poverty reduction are seldom studied and often missed. The focus – within the framework of “corporate social responsibility” – is often either on large companies doing good (in the form of philanthropy) or avoiding doing bad (in the form of signing up to one or another of the myriad of international codes).

The Eagle story is a powerful demonstration of one way in which – by engaging small enterprises in their value chains – businesses can do good by doing good business.


Michael Jarvis said...

Great piece - you rightly highlight some of the blind spots in the current debates on CSR. Business is crucial to poverty alleviation. As you point out, the vast majority of businesses are micro/small/medium enterprises. Enabling these firms to prosper sustainably is key and if the big name firms can help the process by fostering local supply chains then they deserve the credit.

Richard Laing said...

Yes, a good piece. Nobody can deny the vital role that smaller enterprises play in poverty alleviation, as Michael Jarvis points out. But larger companies have a role too. A job is a job, and one with a larger company, which applies good business principles, will often provide better rates of pay and working conditions than that with a smaller one. And, of course, many of those essential smaller companies can only survive by providing goods and service to the larger operations.