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.

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).

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.

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.

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.