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.

Business needs to show more dynamism if it wants customs "transformation"

In a meeting in Arusha, Tanzania from the 11-13th of September 2007, SITPRO and the World Customs Organisation (WCO) brought the Commissioners of Customs from Kenya, Rwanda, Tanzania and Uganda together with other Business Action for Improving Customs Administration in Africa (BAFICAA) taskforces, the EAC secretariat (Customs Directorate), East African Business Council, donors and others. The aim of the meeting was to develop a list of priority areas for improvements in customs with an aim to transform customs administrations in the region in the 21st century (to use the term “reform” somewhat lazily in this context is to ignore the good work and progress that has gone on). The meeting also aimed at examining ways the private sector could play a partnership role in this transformation.

In a display of dynamism, vitality and political will which seems to characterise the region these days the Commissioners over a very short timeframe produced a thematic list of priorities that acknowledged most if not all the list of business priorities identified in the BAFICAA report (see earlier blog entry). Jokingly called the “Impala Roadmap” (named after the meeting venue - the “Arusha Declaration” was a bit overused!), the list not only recognised the gaps that existed but more importantly mapped out in some considerable detail what the possible remedial steps could or should be.

However the commissioners did not restrict themselves to high-minded and well-meaning political statements but to further indicate that they meant business (pun intended) individual customs administrations were identified with the responsibility for taking this roadmap further. The commissioners were determined to get a roadmap that was workable and could be implemented. One DG remarked that he wanted a result that was anchored in concrete action and not just aspiration – he needed to go back to the Commissioner General to justify the expense and time involved in attending a meeting over three days!

In a technical trade facilitation sense the Commissioners made a huge conceptual leap in this meeting. The Commissioners reiterated that revenue maximisation is and will be for the foreseeable future the top priority for customs administrations in the region (customs revenue accounting in most cases for over half of government budget). But the conceptual leap was that they also accepted that there are better, more business friendly ways to achieve the same if not higher levels of revenue collection such as the implementation of Authorised Economic Operator schemes (where accredited business would receive simplified procedures and quicker clearance times), the better use of risk management techniques amongst other measures.

The role of business is an integral component of this roadmap and welcomed a more proactive and constructive engagement. As part of the forward work plan SITPRO and others will help fashion a role for business in more concrete terms. In addition to recognising that business should be consulted as widely and thoroughly as possible before changes happen (eg. legislation, IT systems, procedures), the BAFICAA taskforces suggested that the private sector could provide more practical contributions such as transfer of business skills to customs (how to manage change/change management; retaining institutional memory) or better communication skills (how to get your message across; PR and media skills).

The challenge now will be to operationalise the various possibilities nationally and regionally. But the agenda for change now exists with the private sector firmly at its core. In the East African region I have seen customs administrations that are ready to lead from the front and do not shrink from a challenge. If change is going to really happen, business needs to step forward (more readily than it is doing currently) to come up with the innovative solutions and ideas that are needed to make this process of transformation a success.

Customs procedures still a challenge – BAFICAA one solution?

A recent survey by the East African Business Council (EABC) has highlighted the continuing problems of cumbersome customs procedures in the region. Based on over 450 questionnaire responses the EAC Business Climate Index (BCI) 2006/07 Survey focused on six trade-related clusters namely, customs procedures, immigration and work permits, business registration and licensing, police roadblocks, weighbridge stations and quality standards and export certification. Customs procedures continue to top the list of obstacles as perceived by businesses and a serious impediment to intra-Africa trade.

This view is broadly supported by a report for Business Action for Improving Customs Administrations in Africa (BAFICAA). The report (sponsored by Unilever, BAT, SITPRO and Diageo), Customs and Business in Africa: A Better Way Forward Together was revealing. It emerged that businesses were tired of being considered “the enemy”. Customs authorities across Africa just did not appreciate the private sector and that despite reforms and improvements, generally most front-line Customs officers lacked any basic appreciation of business issues such as the impact of delays on their businesses. Respondents said that even when higher-level officials were business friendly, this rarely translated to lower management levels. The general feeling was that of frustration – those law-abiding, tax-compliant value-generating businesses were being treated with constant suspicion.

It is unfortunate though that these perceptions still linger. Customs administrations in the East African region have been putting themselves through a sometimes painful though much needed process of reform and modernisation. Much has improved as reflected in improved clearance times for most of the East African countries (see the recent Doing Business Report). Though this public sector driven reform and modernisation agenda has been driven by primarily revenue imperatives it has the potential to significantly improve the business climate.

BAFICAA is making sure that the role of the private sector as a driver of change is not overlooked. BAFICAA is working with customs administrations in the East African region to implement what the report calls “Fast Track” - or simplified procedures for compliant businesses aimed at reducing clearance times for businesses with a history of full compliance. The initiative has met with considerable success in its first phase which included the creation of private sector taskforces, meetings with national customs administrations and a regional workshop in Arusha, Tanzania with the EAC secretariat and the EABC amongst others. These meetings facilitated by Pricewaterhouse Coopers (Kenya) have set the groundwork for a dialogue with customs administrations. A meeting to agree an action plan with the Commissioners of customs is being organised by SITPRO in conjunction with the World Customs Organization (WCO) for later this year.

BAFICAA is still in its infancy but has broken free of its start in the UK and is now the purely African initiative it was always envisaged to be.

Trading insults: Doha disappoints again

There was a depressing sense of déjà vu to Thursday’s collapse in the Doha trade talks. The meeting of the so-called G4 – the US, EU, India and Brazil – was widely seen as a last chance to achieve the target of getting a deal by the end of the year.

Insults and recriminations quickly followed. The US and EU pointed the finger at Brazil and India for not moving far enough on opening up access to their manufacturing markets. Meanwhile Brazil and India argued that the US and EU were demanding too high a price for what were unacceptably unambitious reforms to their trade-distorting farm policies.

It is easy nowadays to become numb to bad news on trade talks. Last July's suspension of the trade talks was a particular low. The early optimism after the trade round was subsequently resumed seems to have been replaced with a tangible negativity about the prospect of the Doha talks living up to their much-hyped objective of being the first-ever “development round”.

But perhaps the greatest danger right now is fatalism. The fact is that a deal is tantalisingly close, and still possible. For the World Trade Organisation’s Director General Pascal Lamy, while a convergence of views among the G4 would have been “helpful”, it was not “indispensable”, and ultimately some, including Oxfam, are happy the process will now revert to a broader discussion among the WTO’s 150 members.

Staying focused and optimistic is vital, if only because failure would be disastrous. Trade is a far more powerful lever for poverty reduction than aid could ever be.

Above all, as negotiators try and find a way forward in the corridors of Geneva, they should remember that business (despite what a vocal minority may say) is overwhelmingly supportive of a deal for Africa. The US and EU should also bear in mind that the vast majority of businesses in their countries recognise the importance of a sound deal for more developed economies as well.

Africa Day: looking to tomorrow

London has been having a week-long party to celebrate Africa Day (25 May). In many respects, there is real cause for celebration. Much has been achieved by African governments and the international community. As a group of businesses with a deep understanding of the content, we in Business Action for Africa are optimistic about the prospects for many countries in Africa.

The latest edition of the Africa Economic Outlook, launched last week, paints a rosy economic picture: Africa grew by 5.5 per cent in 2006 – well above the long-term trend and for the fourth consecutive year, and this year it is expected to reach a healthy 5.9 per cent. To at least some extent, this reflects improved governance, investment climates and economic policies in many countries.

At a presentation at a Chatham House / CAPPS event last Friday, a senior representative of the NEPAD African Peer Review Mechanism (APRM), pointed to the leadership that has been shown by African Government’s to enhance governance. To date, twenty-six countries have signed up to the APRM and the country review process is underway in twelve. Ghana, Rwanda and Kenya have completed their reviews and have agreed to recommended plans of action.

And a third reason to be positive was set out in the most recent Doing Business Report of the World Bank. Africa is now one of the fastest reforming regions in the world, with two-thirds of African countries making at least one noteworthy reform in 2006 – helping create a better environment for businesses, small and large, to thrive and hence lay the basis for long-term growth and poverty reduction.

Fourthly, at a time when one of the engines of economic growth is high commodity prices, there is seemingly increasing uptake of the Extractive Industries Transparency Initiative (EITI) on the part of many mineral-dependant African economies. It may be that the embezzlement and misuse of revenues which characterised past commodity booms in some African countries, will not be repeated – or at least not to the same extent.

But amidst the celebrations, it is important to take a sober look at what more needs to be done. Although it has improved, growth is still some way short of the annual 7 per cent needed to meet the Millennium Development Goals. It remains to be seen what the follow-through will be from the APRM process; and how many of the countries who claim to be implementing EITI pass muster when the validation process is activated later this year. Moreover, while it is certainly getting easier to do business, Africa as a whole remains the region with the highest regulatory obstacles for would-be entrepreneurs and corruption remains widespread.

As for the international community, G8 Governments meeting shortly in Heiligendamm (June 6-8) must get back on track to deliver on past aid commitments and they must do more to stimulate growth and investment. Above all, the world’s governments – particularly the in the EU and the US – must reach a deal on the Doha international trade negotiations. Failure – driven by pressure from a narrow set of vested interests – would be a real blow for African countries and their people and for the world economy. Business should be active in pushing our political leaders to make the small compromises that now are needed to achieve a deal.

A breath of fresh air: a business solution to Indoor Air Pollution

This weekend the United Nations’ main environmental body hit the headlines when Zimbabwe was controversially elected to its chairmanship.

Zimbabwe’s leadership of the Commission on Sustainable Development (UNCSD) has outraged most western countries but was backed by many developing world countries.

Wrangling and bizarre (to say the least) outcomes of UN votes are nothing new. In fact, they are almost to be expected. That these organisations exist to help the world’s poor and the environment is sadly forgotten amongst the infighting and point scoring of international diplomacy.

One positive outcome, however, from the 15th session of the UNCSD was the publication of the first-ever country-by-country estimates of the impact of Indoor Air Pollution (IAP).

More than three billion people depend on solid fuels including biomass (wood, dung and residues) and coal for cooking and heating. The smoke from these stoves causes the premature deaths of more than 1.5 million people a year, according to the World Health Organisation (WHO).

This makes IAP one of the 10 most important global threats to public health – yet its profile compared to TB, AIDS, Malaria and other killers is extremely low. This is partly because of a lack of data. These new figures are the first time individual country estimates have been published. They are therefore to be warmly welcomed.

They reveal 80% of worldwide deaths from indoor air pollution occur in just 11 countries -- Afghanistan, Angola, Bangladesh, Burkina Faso, China, Congo, Ethiopia, India, Nigeria, Pakistan and Tanzania.

China and India lead the incidence of IAP with an estimated 400,000 people dying prematurely each year in each country. That's equivalent to two superjumbo jets a day crashing in each country and killing every passenger.

The problem is just as bad across African countries taken together with 79,000 dying in Nigeria, 56,000 in Ethiopia and 47,000 in the Democratic Republic of Congo alone. And for every death, dozens more will suffer from illnesses caused or exacerbated by IAP such as TB. That raises the number of women and children silently enduring serious health problems every day from IAP to the tens of millions and takes this into the realms of biblical plagues.

The world should pay more attention. Women should not be dying as a result of preparing meals for their families.

Most similar health scare stories from the South are accompanied by calls for massive cash donations from the North. In the case of IAP, the Shell Foundation believes instead that the best way to tackle this deadly problem is through the application of business thinking. Through our “Breathing Space” programme, we’re promoting the use of commercial product development techniques to help design stoves that get dangerous smoke and emissions out of the homes of poor people. And we’re setting up sustainable supply chains to cost effectively manufacture affordable, attractive stoves and distribute them to people’s homes in the remotest rural areas. We have a vision to sell 20 million clean stoves in five countries over the next five years and take a hundred million people out of harm’s way as far as Indoor Air Pollution is concerned. Now that will be something to make a fuss about on the global stage.

Saying it with flowers just got complicated

Today – Mother’s Day in the UK – is one of the most lucrative days of the year for the country’s flower industry. Yet behind the expressions of love for mothers, and of joy by florists, other decidedly more negative emotions are stirring. And environmentalists are to blame.

Pressure groups – and more recently supermarkets – are urging customers to take into account the environmental cost of importing flowers – from say Kenya, the largest source of imported flowers into the UK after Holland – and instead buy local.

Not only is this message simplistic, it is also irresponsible. And it is about time we had a balanced, evidence-based, debate about it. Trade after all is one of the most important ways poor people around the world will be able to lift themselves out of poverty.

The fact is that the environmental costs of growing flowers in heated greenhouses in Northern Europe far outweigh those in sunny Kenya, even taking into account transport. According to research quoted by the Fairtrade Foundation, a flower grown in Kenya and flown to the UK emits 5 times less carbon than one that has been industrially hot-housed in the Netherlands. And according to a report by the UK's Department for Environment, Food and Rural Affairs, most of the enviromental damage is caused by us driving to the supermarket to buy them. More generally, the carbon emissions associated with flying fruit and vegetables from Africa to the UK is less than one tenth of one per cent of all the UK’s carbon emissions.

Thankfully, a more sensible debate is beginning. Hilary Benn's speech to the Fairtrade Foundation provided a fresh and balanced perspective. The BBC and The Scotsman newspaper also both published last month good articles on the issues.

For now, next time you buy flowers from Kenya, be assured that on balance you are doing a good thing – for your mother and for the developing world.

What is the point of Fairtrade?

This morning the UK Parliament’s International Development Committee held its first public session on “Fair Trade and Development”, the focus of its latest inquiry. Like most consumers in this country, I have developed a particular fondness for the Fairtrade brand, and am impressed by its apparently endless spread into new products and sectors – highlighted during the current Fairtrade Fortnight (26 Feb - 11 March 2007). But as an international development professional, the IDC inquiry has forced me to ask the difficult question: what difference can Fairtrade really make? Despite rapid growth, it remains tiny – stubbornly stuck outside the mainstream. For the vast majority of small scale producers, the cost and complexity of qualifying means that it remains far out of reach. It unfairly deflects attention away from the wide range of good business practices out there (not Fairtrade = unFairtrade?). And it could never substitute for real progress on world trade reform – making trade fair for all developing country producers.

But this should not obscure the important ways in which Fairtrade is already making a difference. Beyond the obvious direct benefits to the producers it works with, it has been enormously powerful in highlighting the importance of an enterprise-driven approach to poverty reduction – so often absent in discussions by donors and NGOs. Poor people don’t want charity – they want the opportunity to get jobs and grow their businesses. Fairtrade has also done a great job of raising public awareness – both about the broader inequities in international trade and the need for businesses to operate responsible supply chains – applying the principles of fair trade to their mainstream business. Fairtrade is not the panacea it is sometimes made out to be. But it has very real value in getting the right things on the agenda.