NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, June 26, 2008

It’s already launched in Kenya, Afghanistan and Tanzania. And now a mobile money-transfer service from Vodafone is to reach 40 million customers in India. Meanwhile, Microsoft Innovation Centres in Rwanda, Nigeria, Uganda and Morocco are set to provide aspiring business people with the technology to launch new products. And in India, personalised commercial information is being texted to the mobile phones of thousands of farmers in their own language.

These three groundbreaking initiatives were among those revealed at the Business Call To Action conference in May, when CEOs from some of the world’s biggest companies unveiled plans designed to both fight poverty and boost business. Hosted by DFID and UNDP, the event also featured President Paul Kagame of Rwanda and President John Kufuor of Ghana. It is the start of a co-ordinated initiative designed to engage the business community with the Millennium Development Goals (MDGs) by enabling poor people to access up-to-the-minute information, money and business expertise, as well as creating new commercial and employment opportunities. Big name companies who have already signed up to the Call for Action include Citi Group, Coca-Cola, Diageo, Microsoft, Thomson Reuters and Sumitomo Chemical. Within five years it is estimated that initiatives from these and other companies will save almost half a million lives, create thousands of jobs, and benefit millions of poor people across Africa and Asia.

“In the race to achieve the MDGs, one of the greatest untapped resources is the private sector,” says Kemal Dervi, UNDP Administrator. “Businesses are engines of growth and ustainable development. Innovative business leaders are changing the way that many businesses operate. They are expanding beyond traditional business practices to also focus on the needs of those locked out of the global market, bringing them in as partners in growth and wealth creation.”

While big business has a history of supporting international development through the charitable sector, the Business Call to Action is not about philanthropy, nor is it about Corporate Social Responsibility (CSR). Instead, it challenges companies to recognise that business done well is inevitably good for development, and that developing country markets are primed for business success – from manufacturing and finance to telecommunications. The argument is, that by helping to build a safer and more prosperous world, businesses are also securing future commercial success.

Michael Klein, Chairman of the Institutional Clients Group at Citi, showcased Remit As You Earn, a remittance service providing a secure and cost-effective means for employees in corporate and public sector organisations to send money to developing countries. “Remittances, worth about ?122 billion to developing countries each year, are a crucial source of money to poor communities,” he explained. “Once the remittance is received, the money can provide income for families or start-up investment for small businesses – that all help to create the next steps towards a better life.”

Coca-Cola Africa announced a big expansion of its “manual distribution centre” network across the continent. It’s a business model which allows independent local entrepreneurs to set up distribution centres on behalf of the company, and many are owned by women. “It’s created new small businesses, jobs and increased skills,” said Nathan Kalumbu, Coca-Cola Africa Business Unit president for East and Central Africa. “And it provides a platform from which we offer entrepreneurial opportunities that open the door to job and wealth creation.” The company aims to create up to 2,000 more of these independent distribution businesses and 8,000 jobs within three years. Neville Isdell, CEO of Coca Cola, said harnessing business would prove a boost in achieving the Millennium Development Goals.

Prime Minister Gordon Brown,who launched the Call to Action to ignite progress on the MDGs last year, told delegates that for too long development has been talked about without reference to its “starting point in wealth creation – the dignity of individuals empowered to trade and to be economically selfsufficient.” Growth and prosperity is the objective, not aid, he said, “The purpose of aid is to no longer require it. Not only do you as businesses have the technology, the skills and the expertise that will generate wealth and jobs throughout the developing world. It is also in your best interests as businesses to bring the poorest countries into the global economy and to create a globalisation that is inclusive for all.”

Contrary to the view that the presence of big international corporations “is the cause of the problems in developing countries”, the reverse is often true, he maintained. “It is the absence of business – and not the presence of business – that blights the lives of poor people, leaving them dependent on aid and denying them the opportunity to work, denying them the chance to support their families and denying them the means to ensure their children get the chance to succeed.”

The Sundanese-born entrepreneur Mo Ibrahim invited the audience to raise their hands if they knew the name of the President of Botswana. Five hands went up. Then he asked who knew the name of the President of Zimbabwe. No problems there. But there is a problem in the popular perception of Africa, he explained – a problem of “ignorance” which news organisations needed to think about. Nor were popular ideas about corruption true. His own company had transparent procedures and rigorous financial mechanisms which meant “We built up a great business without paying a dollar”.

Therefore, he said, “if any businessman comes to me and says that he cannot do business in Africa because of corruption, I tell him that he should not be in business anyway.”

People in business have to stop thinking of Africa in terms of charity and start thinking about in terms of investment. “The highest returns on investment last year and the year before and the year before that came from Africa. I have built up mobile phone companies in 16 African countries and my shareholders made an average of 8.5 times their investment over an average period of three years. People who invested for seven years made 25 times their investment. These are the kinds of profit margins that we managed in Africa. Can you do that in your business here in Europe and America? You cannot, otherwise I would have invested in your businesses. Think about that.” And Africa, said President Kufuor of Ghana, is open for business.

“We have the raw materials and I believe that we also have the human resources in Africa, and it is high time that the world of business really shed some of its doubts about Africa and moved in. I believe that it is much easier to make your next million dollars in Africa than in the United States or Britain. We are waiting for you – come. Our governments are opening up.” Africa has freely accepted the African peer review mechanism which “ensures good and democratic governance and respect for private property and private enterprise.” And countries like his own Ghana, he added, are “beacons to show people how to develop in the current world.” He told his audience of CEOs. “If you come, the Millennium Development Goals will truly be achieved. However, if you stay away, we will continue to depend on the ODAs, which are inelastic and cannot help us enough to generate the resources for us to be able to take our people out of the binds of poverty and general handicaps.”

The Business Call to Action is part of a major campaign which seeks to accelerate progress towards meeting the MDGs by 2015. During 2008 the campaign and its supporters aim to build momentum and galvanise initiatives from businesses, governments, NGOs, faith groups and civil society. A pivotal moment will be the UN Secretary General’s high-level event on the MDGs in New York on 25 September bringing together world leaders, civil society and the private sector to help translate existing commitments into action, and bolster the global partnership for development.

MORE INFORMATION

http://www.business-call-to-action.com/

everybody’s business

MAKING MARKETS WORK FOR THE POOR

The Business Call for Action is part of DFID’s new strategy to support private sector development. It focuses on making markets work better – and in a way that involves and benefi ts the poor. This type of market development helps to make growth an inclusive process. Vibrant, broad-based markets encourage the private sector to invest more, create more jobs, and increase poor people’s access to affordable goods and services. By improving the operation of markets, DFID’s private sector development work will have a positive impact on the overall economic performance and growth of its partner countries.

The strategy focuses on three themes – Access, Competition, and Engagement: ACCESS to increased market participation by the poor.

COMPETITION

creating incentives for innovation and improved productivity, as well as providing more affordable goods and services to the poor.

ENGAGEMENT

with the private sector to increase their capacity to invest in ways that benefit the poor.

By building markets and harnessing the resources of the private sector, it is possible to reduce poverty more effectively – on a larger scale and more sustainably. In practical terms, the market development approach consists of two main stages. First, analysis to identify obstacles to growth and market failures, especially in the economic sectors that are important to poor people. Second, the design and implementation of short-term actions that will act as catalysts for growth and sustained large-scale change, beyond the scope of a single firm or entity

it’s already working…

STREAMLINING THE BUSINESS ENVIRONMENT
?In Ghana the number of days for registering a business has been reduced from 81 to 42. In Mozambique the reform of customs procedures allowed goods to clear customs 40 times faster and customs revenues increased from 2.9% of GDP in 1996 to 5.8% in 2005.

BUILDING INCLUSIVE MARKETS
In South Africa, the development of the ?Mzansi’ Basic Bank Account led to an increase in the number of people with bank accounts from 11.8 million to 19 million. In Bangladesh, the Katalyst programme built improved agriculture extension services through a retailer network that reaches over 1 million farmers..