Has Africa reached a ‘tipping point’?

This was a phrase coined at the Africa Investment and Finance Conference on 22nd February 2008. The consensus of the optimistic audience was that Africa has moved on from being the destination of only high-risk investments, to a burgeoning market where the investment rewards are waiting to be reaped. The African Development Bank proudly asserted that now only 3% of their investments in Africa are unsuccessful. And in a time of extreme volatility in the markets of the developed western world, Africa offers a promising alternative destination for new capital.

Companies who ten years ago took a long-term view of investing in Africa are now reaping the benefits. Celtel for example has experienced extraordinary growth in the mobile telephony market, and has recently been involved in setting up Satya Capital to invest in other business opportunities on the continent.

And it is not just one sector that is showing high potential, but expectations of growth are predicted in the hotel industry, the power sector, infrastructure and construction, mining and financial services. It is not just big business either – SMEs growth is also ready to explode.

Amidst all this possibility, what about the bouts of political instability that we cannot deny occur? Kenya being the most recent example which is currently experiencing an economic downturn as a consequence of the violence. The delegates I enquired of at the conference all concurred – it was anticipated to only be a short-term fall (with today's news a sign of real hope).

The future for Africa is considered bright and it is the long-term view that the conference delegates considered all important for the continent.

An Ethical Valentine’s Day

Passions are rising again this Valentine’s Day. But this time the UK’s Department for International Development (DFID) is also getting emotional – with the launch of its shopping for development campaign. In a press statement today, the International Development Secretary Douglas Alexander encouraged “romantics in the UK to buy Kenyan flowers this Valentine’s Day”.

While it is unusual for Her Majesty’s Government to issue Valentine’s Day messages, this one is particularly heart warming as it debunks a whole set of myths that environmental campaign organisations have been peddling to the British public.

As I’ve argued before, there is a lot of nonsense spoken about “food miles”, with campaign groups arguing against buying Kenyan flowers because of the impact that flying them into the UK has on the environment. As the DFID statement says, “It’s important to remember that flowers flown in from Kenya aren’t grown in heated greenhouses so they use less energy than most of those produced in Europe."

Aside from exposing the environmental claims, DFID’s research also highlights the huge importance of the flower trade to Kenya and its workers:

“Kenya is the lead exporter into the European Union of cut flowers, and the world's largest producer of roses. International demand for Kenyan flowers accounts for almost 10% of the total income it receives from exports. By meeting demand for roses used on 14 February, exporters earn more than from the rest of the year's sales combined. Between 40,000 and 70,000, about 75% of them women, are employed on Kenyan flower farms, and indirectly 1.5 million are employed.”

Buying products from Africa is a way in which everyone can make a direct and sustainable contribution to poverty reduction in Africa. In a statement last year, Business Action for Africa, welcomed the boom in fair trade, but called for the world trading arrangements to be made fair too. African’s don’t want charity, they want a fair opportunity to grow their business and trade their way out of poverty. By highlighting that, the DFID Valentine’s message is a welcome one.

Story-time’s over: CSR grows up

There’s nothing like a good story to engage and excite an audience. The human story behind the numbers is what communications experts always look for as they try to transform dry facts into something that will capture the imagination of a message-overloaded public.

But in the world of corporate social responsibility (CSR), it is precisely this reliance on the simple story that is now holding back progress. CSR has tended to be dominated by stories. Polished case studies from corporate affairs departments on the one side, and half-baked horror stories from campaigners on the other.

The problem with this confrontational approach – this briefing and counter-briefing, descriptions and counter-descriptions of reality – is that we actually miss the real story: that business can have a hugely beneficial impact on international development.

The answer lies in dry facts. What’s been missing is an evidence-based dialogue. For too long CSR has been led by hearsay and anecdote. Thankfully, things are changing.

Unilever set the pace with the publication in 2005 of a groundbreaking study, done in partnership with Oxfam, about the actual impact of its Indonesian subsidiary in the country ("Exploring the Links Between International Business and Poverty Reduction: A Case Study of Unilever in Indonesia"). The report looked at everything from the impact on employment to the impact on the wider economy. Unilever have now published the sequel – a study of their impact in South Africa, done in collaboration with INSEAD ("Measuring Unilever's Economic Footprint: The Case of South Africa").

Commenting on the INSEAD study, Gail Klintworth, Chairman of Unilever South Africa says:

"until now, although we had an opinion of our impact, we did not have the empirical evidence to understand our broader economic impact, and exactly what “making a difference” should be and the path we would need to follow to get there."

Others are following Unilever's lead, including the World Business Council on Sustainable Development, the International Business Leaders Forum, the Harvard CSR initiative and Business Action for Africa.

Finally, we can get excited: hard facts are bound to reveal more about how we can really make a difference. Time to get beyond the stories.

The Africa Enterprise Challenge Fund: a better way to make poverty history

Behind the headlines and campaigns, the key to making poverty history in Africa actually lies with its indigenous entrepreneurs. Not only an engine for economic growth, small businesses are also the source of most jobs and opportunities for poor people.

That’s why the Africa Enterprise Challenge Fund (AECF), launched last year, and with the search for its Fund Managers about to get under way, is so important.

The Fund will offer grants, matched by private sector contributions, to innovative business ideas which encourage greater participation of poor people in markets – as consumers, workers or entrepreneurs.

The Fund is backed by an array of donor agencies, including the African Development Bank, the Consultative Group for Assist the Poor, the International Fund for Agricultural Development, the Dutch Ministry of Foreign Affairs and the UK's Department for International Development.

Interestingly, the Fund will be hosted by the Alliance for a Green Revolution in Africa (AGRA) (which former UN Secretary General, Kofi Annan, chairs), hinting at one of the Funds likely and welcome areas of focus: agriculture - the sector on which most poor people depend for their livelihoods. Finance is the other initial focus, reflecting the difficulty small entrepreneurs often report having in accessing credit and other financial services.

As Business Action for Africa – the network of businesses, business organisation and development partners – this is just the sort of innovative partnership we have been calling for, and we stand ready to engage with the successful Fund Manager to make the AECF the success it needs to be.