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.

Invest Don’t Give?

We here at the Shell Foundation have long argued that we need to be putting Africa’s entrepreneurs at the heart of the poverty equation - not more aid and debt-relief; the subjects that dominate the mainstream development agenda. You could sum this message up as: ‘Invest Don’t Give.’

That is crudely what we do. By acting like an investor, we identify financially sustainable solutions to poverty and environmental challenges - rather than ones reliant on the next aid cheque (that so often doesn’t come).

Of course the reality is we need to ‘Invest AND Give’. While some aid is poorly spent, other aid is spent well and much needed.

The trouble is that most mainstream NGOs consistently pedal negative images of Africa - of fly-covered children with extended bellies. The media, with its eye for dramatic stories and pictures does the same. The result: the ‘give more aid to save Africa’ message dominates, while attempts to show how we could really help African entrepreneurs fulfill their potential - and in turn create much-needed jobs and economic growth - get drowned out.

This is a real shame because it could be so different. Imagine a world where people ‘invest’ £1 in an African entrepreneur rather than give. They could get £1.05 back as the entrepreneur repays the loan (which they could then re-invest in another entrepreneur) - and the entrepreneur would be free to build a business, rather than being treated as an aid victim.

We have just published a new report Down to Business: New Solutions to Old Problems that outlines how we are ‘investing not giving’. It also explains how we deploy ‘Business DNA’ - business thinking, disciplines and models - to create sustainable enterprise-based solutions to poverty and environmental challenges. We hope that by publishing reports like this we will begin to turn the tide away from talk about ‘aid’ and towards talk about ‘investing’ in Africa.

The problem with food aid: one charity tells it as it is

Our latest news round up profiles one on the most inconsistent development policies currently out there - the long-running practice by the US government of providing aid relief in the form of subsidized grain bought from its own farmers. As reported in the New York Times, CARE, one of the world's largest charities, has just announced its decision to phase out its involvement, arguing that:

American food aid is not only plagued with inefficiencies, but also may hurt some of the very poor people it aims to help...[by competing] with the crops of struggling local farmers.

In taking this stand, CARE is breaking not only from its own past, but also from the general practice among similar agencies.

As we argued in a recently-issued statement, the real solution is far more complex: better access for farmers to markets and capital, appropriate technologies, farm inputs, diversified crop and animal portfolios, secure land tenure, adequate irrigation, the infrastructure and capacity building they need to connect to local, regional and international markets and supply chains, and better information on the current and future levels of demand for their crops.

We have also argued for a fairer world trading system. This includes ending market-distorting subsidies by the US (and EU) on the products that matter most to African farmers. Supporting farmers in a way that fundamentally damages their long term prospects, and is rooted in a problematic trade arrangement, is flawed. By standing up to its peers, CARE has brought this practice out into the open. And for that it should be congratulated.

Mobilising for Emergencies: Progress in Partnership

Real progress is being made in mobilizing African expertise to prepare for, and respond to, African crises. That was the focus of a recent conference (“Mobilising Human Resources and Skills in Emergencies: the Role of Non-Governmental, Private and Public sector in Africa”) held in Nairobi by the Commonwealth Secretariat, People In Aid and AfricaRecruit. The event brought together representatives from the public, private and non-governmental organisation sectors to identify what is needed and what can be offered in emergency situations.

John V. Rogers, Disaster Management Department, Office of National Security, Sierra Leone, shared the challenge of rebuilding after disasters, and harnessing limited resources of government and other stakeholders. He stressed that “disasters are unforeseen but their impact can, in a second, completely destroy the whole country - hence, governments, donors and other partners should ensure that disaster management is integrated into development programmes”.

In his speech, Hon. Musa Echweru (MP) Minister of State for Relief, Disaster Preparedness and Refugees, Uganda, highlighted the need for strong collaboration and networking between NGOs, public and the private sectors in Disaster Risk Reduction. According to him, “each of these actors has a critical role to play, which can only be improved on through policies, adequate flow of information and proper coordination mechanisms”.

What will be the role of each sector to ensure that the two recommendations are achieved? Would outsourcing to a third party be an option as a model to strategic disaster preparedness and response, as James Du Plooy, Business Development Manager of Capital Outsourcing Group suggests? What is clear is that the progress made to date, and the only way further progress can be made in future, is through a new spirit of partnership.

Spoil Association? Time to fight back on food miles

As was reported in an excellent article in The Times last week, the Soil Association – the UK’s leading organic organization – is seriously considering removing its organic certification from African farms because their produce is imported into the UK by air.

On the back of flimsy data and spurious logic (see my last blog on this subject), the Soil Association could single handedly ruin the livelihoods of tens of thousands of poor people in Kenya alone. And for millions of farmers across Africa, exporting their produce to markets like the UK offers one of the best prospects for escaping poverty.

If the Soil Association goes ahead, it would be appalling. And it’s about time we said so.

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.

Harnessing the potential of social entrepreneurs

Many leading companies are starting to understand that profitable business lines can be developed out of the need to tackle pressing social issues, and that when done successfully, this is far more effective than philanthropy. But individuals have been doing this for years. As the International Business Leaders Forum reports in its recent eBulletin newsletter, social entrepreneurs have been behind many of the most innovative and scalable solutions to challenges in international development – from the provision of school meals or waste management in urban areas, to the development and installation of low-cost solar energy systems. Social entrepreneurs come in all shapes and sizes, but what makes them stand out is that they use entrepreneurial principles to tackle a particular social problem. Like Martin Kalungu-Banda, founder of Zambia's The Forum for Business Leaders and Social Partners, who forged a partnership between the country’s largest supermarket, local communities and government, which became a profitable model that business could replicate nationwide. The solution was good for business, and good for the local communities.

Many organisations have worked with social entrepreneurs for years, such as Ashoka or the Schwab Foundation for Social Entrepreneurship. But there is a gap in the understanding of how large multinationals can work with social entrepreneurs.

Picking up on work conducted by the CSR Initiative at Harvard University, IBLF recently produced a short report entitled, Harnessing Potential: why it makes sense for your business to work with social entrepreneurs. Companies can work with social entrepreneurs to help develop into underserved markets, while social entrepreneurs can help companies both design products and services that create value for low-income people and distribute those products and services more efficiently.

So far, so good – in theory. But as usual the challenge is in the implementation. To help, IBLF has compiled a list of social entrepreneurs that we think could make suitable partners for businesses. We’d also be interested to know of case studies where multinational companies have forged effective partnerships with social entrepreneurs.