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

Monday, January 30, 2006

Leading figures in the development debate, speaking at the meeting of the World Economic Forum in the Swiss resort of Davos, have pledged to build on the “mountain of good will” generated last year, and follow through towards the goal of eradicating poverty in Africa.

According to a press release from the Forum, they agreed that top priorities for 2006 should include: getting global trade talks back on track, exposing corruption both by givers and recipients, and investing heavily in long-term primary education in Africa.

Several of the speakers were in no doubt that success in trade talks depended on dealing with European, Japanese and American farm subsidies that make it impossible for African farmers to compete.

“We (in affluent countries) used to talk for centuries about what we could do for Africa,” said Gordon Brown, the British Chancellor of the Exchequer (Finance Minister), on Friday. “But the real question is about empowerment, and what Africa can do for itself.” One of the things Africa is showing it can do for itself is to govern accountably, declared Nigerian President Olusegun Obasanjo. “Not all our problems have disappeared, but last year elections took place in Liberia successfully, a change in government in Tanzania successfully, in Burundi successfully, and in Guinea Bissau successfully. Wow. Twenty years ago that was unthinkable.” Yet good governance alone cannot eliminate poverty without strategic investments and fair trade, panelists agreed. And the three most vital investments, they said, must come “in capital infrastructure, physical infrastructure and human infrastructure.” Nigeria won praise from the British musician and debt campaigner Bono for strengthening its financial infrastructure by spending its oil revenue windfall on “buying back debt service from the world”. But he put a new spin on an old expression, warning, “They say it is better to teach a man to fish than to give him a fish, but it is even better to teach a man how to sell fish. Africans are very entrepreneurial people and want to grow their businesses. Let’s get out of the way.” Getting out of the way, panelists agreed, meant removing the European Union’s “illiterate” Common Agricultural Policy subsidies, under which each European cow receives a subsidy of two US dollars a day. In this area, the Japanese are even worse than the Europeans – the subsidy for each Japanese cow is seven US dollars a day.

“Africa is poor because Africa hasn’t grown,” said Niall FitzGerald, the Chairman of Reuters news agency. “And it can only grow when it is allowed to trade freely and openly and fairly.

That means these trade distorting subsidies must be removed by 2010, but we are nowhere near that.” Meanwhile, business leaders have called for a greater role in the fight to reduce poverty and speed progress towards the Millennium Development Goals (MDGs). A report from the World Economic Forum released in Davos on Saturday called for business expertise and skills to be more broadly applied in partnerships to tackle world problems.

This report, entitled “Harnessing Private Sector Capabilities to Meet Public Needs,” outlines what the Forum calls “high-leverage ways in which companies can apply their skills to the problems of hunger, malaria and basic education”, including examples of over 40 companies engaged on these three issues.

“Companies have skills and capabilities that can be applied to development,” said Richard Samans, Managing Director of the Forum. “Often these capabilities turn out to be more valuable than simply writing a cheque. This report takes a first step towards mapping out the ways in which core capabilities of specific industries can help meet development needs.” Several business leaders met on Thursday in Davos with UN Secretary-General Kofi Annan to discuss private-sector strategies for reducing hunger in Africa. “Business is joining the fight against hunger, through a wider strategic action plan,” claimed Antony Burgmans, Chairman of Unilever, who co-chaired the meeting. Participants discussed applying business skills and innovation to help small-scale farmers grow and sell more food, through supply chain improvements, the training of entrepreneurs and investments in higher education. The Forum report points to promising efforts by agribusinesses to get improved seeds and fertilizer into hungry regions; by food retailers to provide training and guaranteed markets to farmers; and by food manufacturers to fortify staple foods with key micronutrients. At the Forum’s Global Health Initiative meeting, over 50 CEOs met to discuss business strategies for addressing malaria and other diseases. These include not only expanding the market reach of anti-malarial drugs, mosquito nets and diagnostic tests by their manufacturers, but also innovative efforts by companies in malaria-endemic areas to reduce the impact of the disease on a community scale. One of the examples cited was the partnership of BHP Billiton, largest shareholder in the MOZAL aluminium smelter, with the governments of Mozambique, South Africa and Swaziland to reduce the malaria burden.

According to John Clarkeson, Chairman of the Boston Consulting Group, companies are increasingly perceiving the value of engaging in such efforts. “In the case of malaria, the business case for companies to get involved in malaria prevention, diagnosis and treatment can include business considerations like saving on employee health costs or developing new markets. But it can also include less-tangible factors such as enhancing reputation or strengthening community relations.”