The Mystery of Tradition: why Tradition and Capital May Work Well in Africa and Not in the West

Two similar, and parallel, private agricultural initiatives in Ghana illustrate the potential for working with existing traditional hierarchies and community structures in Africa that big multinational companies often ignore / do not understand.

A local entrepreneur of rural origin and with limited previous business experience (second hand cloth imports), has used collaboration with the traditional leaders and bigger farmers as a solution to common problems, such as: technological innovation being undermined by superstitions, lack of cash and access to agricultural inputs among rural dwellers, insecurity of loan repayments and cash transfers, speculative competition. The company has rapidly increased its turnover, profit and is now borrowing commercially to expand its production into new regions.

At the same time, a similarly structured agricultural scheme led by highly trained financial experts and a multinational food company failed to ensure small holders’ productivity increases and loyalty. The company moved to commercial block farming where, while still struggling to make good commercial returns, the impact on the community and poverty is much lower and more limited.

I highlight these and other examples from Malawi and elsewhere in a recent essay. My argument, informed also by my work at Emerging Markets Group, is that big multinational companies and many donors / foundations, have been too focused on working through formal systems that may not work well in Africa. There has been a consistent attempt to try to make African ‘capitalism’ more like in the West rather than adapt to the potential of the indigenous traditional systems. This has led to lowered ability to solve inherent problems and has led to a resistance to invest in commercially fertile grounds.

Web 2.0 - African style

Give us a bit of water and some sand and we will build the Empire State building. It amazes me how innovative people in Africa can be. Natural born entrepreneurs. I know we have loads of issues and problems - and our own baggage to carry as well. But some of the things we do when we get our hands on something new is just “awesome”. (I have been in the US for too long! Picked that one up from my daughter…) The way people in Africa use mobile phones and the Internet in Africa is way beyond what any of us (or foreigners) predicted or dreamed of.

I know. I said that we in Africa are staying disconnected from the world. But that is just part of the story. Yes, we struggle to stay connected but don’t give us half a chance or we will rule the world. Once we get off World of Warcraft or Facebook. Boy are you lucky we don’t use that too often. Imagine people who like being connected to each other having the opportunity to do social networking while in different places! World here we come! I wonder if we will ever get off the Internet and still live and interact with each other if we were given that opportunity? Thank god for staying disconnected - it allows us to stay connected.

But I have two other stories about us and our version of web 2.0 to tell you about. The first one starts in Zimbabwe…

Yes. Zimbabwe. The country that is going through hell at the moment. And it has been going on for the last few years. But give someone a mobile phone and see us fly. OneWord Africa (one of my favourite sites - hidden agenda, I worked with them for a while a few years back. Hi Patricia!) reported on how people are using mobile phones to go hi-tech in campaigning for the upcoming election. It is not that easy to campaign in Zimbabwe at the moment. Crazy Uncle Bob isn’t what he used to be. Democracy isn’t what it used to be in Zimbabwe. He isn’t allowing much freedom for people to campaign for anyone other than him. And he instigates violence and riots against the opposition. So what are people to do?

Well. He made the mistake of allowing people to have mobile phone. And when you have some water and sand… We campaign. The people in Zimbabwe text each other left, right and centre to get the message across. But not just personal messages. No way. They do it African style. In a way to make sure people know where it comes from and who they all support. A group with no place to meet - but a group none the less. They text a message that identifies them as a supporter of a specific party or person. A simple “Vote for Simba” to highlight support for Makoni and a longer “Have you not suffered enough? Morgan is the solution” for Tsvangirai’s faithful. Simple, but beautiful and genius. Bob - you control the radio, television and newspapers, but you can’t control the keypads.

But they don’t stop there. No way. They go further. Ring-tones. Here it is more about opposition to Crazy Uncle Bob than support for an individual. The opposition play a local song, which asks in Shona: “How long will you vote for ZANU-PF?“. Pure genius. People phone you and others hear. One snag. Run when the phone rings and you are close to the police! Pure genius for keeping democracy alive though. I almost gave up hope on Zimbabwe, but the people proved me wrong again. And I like being wrong in cases like this.

My other story comes from one that was told to me by Martin Feinstein a few years back. He used to run Proudly South African, but now runs Enablis that tries to help entrepreneurs use the Internet to enhance their business - and support them financially and with management support. (I can’t vouch for them. They have good methodology, but I don’t know how effective they are. Just haven’t been keeping an eye on them. So this is not a plug for them.) He was telling me about this guy in Soweto who found a brilliant business idea - a pure win-win (almost). And all he needed was a computer and a shipping container for an office and storage. His plan? So simple. He used to go to one of the markets every single day to buy his stuff. And there were hundred, if not thousands, of women selling their goods. But they closed every single Monday to go to the wholesaler to buy their stuff they sell. They all got into the taxi’s and travelled into the city to buy their goods.

And what a loss for their business. No discount because they bought little amounts at a time. Loss of business for the day they were closed. And money for their travels. And the wholesale had to deal with so many people at the same time. His idea? Why not get them to place their order with him and he logs it into the computer and sends one order (with separate packaging) to the wholesaler. The wholesaler then delivers because it is a huge order and gives him 15% discount for the large order. That is his cut - the 15%. The women didn’t pay anything more than the usual and actually saved because they didn’t have to pay the taxi. And they were open on Monday’s for an extra day of business. Genius isn’t it? Everyone won. Okay - the taxi guys lost out, but less sympathy there with their driving skills… The plan was not rocket science, but still genius by the guy to see the opportunity. (Sorry - never got his name.) And what did he want from Martin and them? Just help to get a container and a computer. Less than $2,000 and bam you have a highly profitable business. I love that story - it tells us so much about the entrepreneurs hiding away all over Africa.

Okay, so it is not the typical web 2.0. But we are not “typical” in Africa either. We take technology and turn it into something that helps us make our society better - and ourselves better. The fastest growing mobile phone users in the world? USA? UK? Maybe India or China? Try Africa. We have few landlines. No problem - we’ll go wireless. Yes, we are disconnected from the world. But we are so connected between the ears.

from Angry African on the Loose

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.

Davos 2008: The business of tackling poverty

The latest World Economic Forum in Davos has added further momentum to the UK Prime Minister's Call to Action on the Millennium Development Goals (MDGs) - the set of 8 goals to be met by 2015, adopted by world leaders in 2000 to drive action on poverty, health, education and the environment.

In his original speech last July, Gordon Brown called for a new global partnership to deal with what he sees as a development emergency: the shortfall in progress in meeting the MDGs, particularly in sub-Saharan Africa. The Prime Minister stressed that business has a key role to play in meeting the MDGs.

The 21 business leaders who originally signed a statement in support of this “Call to Action”, have now been joined by other stars of the business and development world, including Bono, Bill Gates and Queen Rania of Jordan. In a joint statement , they have commited to "work to make 2008 a turning point in the fight against poverty...And...to work together to help the world get back on track to meet the MDGs".

This reflects an important trend: the recognition by progressive donors (including the UK's Department for International Development), businesses and non-government organisations that business has a central role to play in meeting the MDGs. In fact, unless the private sector is put right at the heart of the approach of making poverty history, we will never make the lasting progress at the scale and speed that is needed.

In May, the British Government will host an event in London that will bring together government and business leaders to highlight a number of business initiatives that are both transformational and contribute to growth. The agenda will be picked up in September, at broader meeting at the UN of governments, businesses, civil society organisations, NGOs and faith groups to mark the halfway point to the MDGs and to accelerate action.

These events in Davos, London and New York are great news - raising the profile of the MDGs and strategies needed to meet them. But ultimately the test will come when we are able to track real progress on the ground.