Monday, 6 August 2007

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.

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