These are really important points - this is where political will is critical. The recent "Power Africa" initiative by the Obama administration is a valuable example of using the convening power of the US and six African governments to force all the relevant actors to the table to overcome some of these hurdles. Early days but we have found it hugely helpful in helping nascent projects get off the drawing board.
How can business tap into opportunities in Africa, while maximising its contribution to development?
Exactly what we are trying to achieve. This type of initiative by individual companies must be rewarded, to encourage adoption by other market participants. Whether it is via sustainability labels (i.e. commercial value) and rankings (i.e. share premium), there remains a lot of potential in getting end-users engaged towards the improvement of their supply chain.
Let's move on to our third question. Quite a lot of talk here, on the one hand, of investing for the long-term and having an impact through the core business, and on the other hand, of the barriers to investment. In the Shared Value panel (livestreamed just now from New York), Tony Elumelu described government as the biggest barrier to shared value (he argued that governments need to recognise that when the private sector succeeds, it's good for society). Our third question is about the role of government, and others. So is one key role for government to more effectively enable private sector growth? What other roles can they play? And what about civil society?
That is a massive number of informal businesses in Nigeria. Is anyone aware of case studies of how government has incentivised SMEs to move into the formal sector? I can imagine that registration in itself might be a barrier to move from informal to formal as business will then be on the radar screen of the authorities.
This cassava problem is huge in Nigeria and has been the major concern for brewers and food processors. Hence, we have a lot of waste by our small holders. I real would like to learn more about the SABMiller work in this area and other related areas.
There's an aspect of governance we haven't touched on much in the conversation so far: governance of natural resources in a way that ensures growth does not undermine future social and economic opportunities. For example, we need both government and business strategies to be designed in ways that take account of the connections between food, water and energy systems. This approach emphasises building resilience of those systems, recognising their inter-dependence, and challenging single-sector approaches that can have unintended consequences for a country’s future development options.
The important thing is not to be ideological about the role of government. Debate on this point is often polarized into "good" or "bad" camps - and that has done a lot of damage.
The reality is that governments have to be part of the equation. No economy with a dynamic and thriving private sector has achieved this without, at times very heavy, government involvement.
In sub-Saharan Africa governments have most definitely been a huge barrier to meaningful growth and development. Success has often been despite their best efforts.
It is tempting to call for the removal of the state, but there is simply no alternative entity that can create the environment and conditions necessary for development to take place. I am not aware of any exceptions to this.
The issue is governance.
The government need to develop private sector policies that are relevant. In Nigeria for instance, the National Policy for MSME (Micro, Small and Medium Enterprises) seem to only cater for Micro enterprises and some Small enterprises. The policies should be stratified to meet the needs of each stage of business for it to be effective. The civil society, private sector, business membership organisations, etc should continually engage in public-private dialogue with the government to ensure that they deliver and to also help in shaping appropriate policies and interventions that will work.
As with Lanre, the govt vs private debate is as barren in Africa as it is in the rest of the world. You need both. I think Tony is being very unfair: again it varies a great deal from country to country, but governance in a range of African countries has improved, in some cases dramatically. A simple example is the massive decline in violent conflict across the region - situations like South Sudan are now very much the exception. Angola and Mozambique are now two of the most attractive investment destinations etc. Macroeconomic governance - fiscal management, monetary policy has also improved and played an important role in the recent stellar growth rates of many African countries. And some of the African regulators completely outperformed their Western counterparts in the recent financial crisis, just look out how well Nigeria's central bank handled the challenges in their banking sector.
At IGD we bring together a network of leading companies with significant investments in Africa, committed to creating shared value. What is unique is that around half our companies are African, the remainder being US, European or Asian companies but most agree that better engagement between the private sector and government is critical. There is much talk, and efforts to engage are there, but it is slow - companies would like government to be more proactive in making things happen, particularly where there is a win-win situation.For example one of our companies has been waiting over a year for a permit needed to establish a much needed hybrid seed production unit. If the government can see the value in such investments - surely their role is to unlock the potential of that investment - which is direct and indirect jobs, but also the availability of better quality seed which can improve productivity, yields and food security.
I agree with you in principle, but isn't this a little too idealistic? Surely there has to be a financial imperative / profit justification for a business to create a social good that you are describing, otherwise why would they do it?
Partnership involving business, government and civil society is essential in areas where we face shared risks and contribute to shared opportunities. For example, no one company can solve the problems of increasing pressure on water resources - which SABMiller depends on for our business, and of course so do communities, farmers and other industry users of water. The only solution is collaboration to ensure water resources are available into the future for everyone who needs them; a discrete set of projects isn't going to deal with the scale of the challenge, or come up with equitable solutions.
That brings us to the end of the live segment of this written discussion, but please do continue to post your comments. Thank you for joining us, and thanks to our panel.
If you'd like to explore these issues further, in the specific context of Nigeria, take a look at these blogs from the New Africa Report, from Business Action for Africa and the Initiative for Global Development:
- Zahid Torres-Rahman, Business Action for Arica, and Helen Mant, IGD: New Africa 2014 - Nigeria
- New Africa: From Growth to Opportunity
- Wired Nigeria: Technology - Powerful New Opportunities for Nigeria
- Green Nigeria: Building an Agribusiness Powerhouse
- Bola Adesola, Standard Chartered Nigeria: Strength from Necessity
- Mark Bowman, SABMiller Africa: Focus Locally for National Growth
- Yaw Nsarkoh, Unilever: A Hopeful Future
- Mutiu Sunmonu, Shell: Turning Resources into Jobs
- Andy Hinsley, DFID: Northern Promise
- Michael Lalor, Ernst & Young: The Perception Gap
- Sesan Sobowale, Diageo: Skills and SMEs
Thank you!
Just as you said "imperative/profit". The imperative is the opportunity to contribute to sustainable and inclusive economic growth and development of their country while also making that decision in a way that is profitable for them. We need to create Innovations against Poverty and businesses should champion this. I may be too idealistic but we should at least try....
Most of these informal businesses are Micro businesses. The SMEs are largely in the formal sector. Registration is indeed one of the issues and multiple taxation in the formal sector also deters informal businesses from wanting to change status.
Thank you!
Good points, David. The last report from Business Action for Africa (with the Harvard Kennedy School's CSR Initiative and The Partnering Initiative), explored some specific examples of these sorts of partnerships (in the context of the Post-2015 discussion), and can be downloaded via this link.
Neha, you have rightly said that energy is fundamental to development. Taking this cue further, I want to invite you to explore the opportunities in healthcare sector in Africa which are immense in my opinion, as I have spent 3 years in west Africa watching this sector closely. I found that falling sick often critical is akin to falling in poverty trap, is more true for Africa than any other developing region of the world as many countries out there especially in west Africa are woefully short of Medicare facilities! This necessitates the investment in preventive healthcare for which my private company is working in India offering solutions through traditional knowledge like herbs, natural and Ayurvedic recipes. A self motivated and a strong network like solar sisters’ can do wonders in joining hands with us both in terms of offering affordable healthcare to its community and in generating tremendous livelihood opportunities for the micro- entrepreneurs in turn. Pls write to me if interested to know more about how we can do it together. Raj Jani (rkjani@gmail.com)
As some of you have said, in my opinion, this depends on which country, including which political system it has and the social conditions existent.