Wednesday, 24 October 2007

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.

Monday, 22 October 2007

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).

Sunday, 21 October 2007

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.

Friday, 19 October 2007

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.