Friday
September 18
2009

Tayo Akinyemi

BoP Business Development and the Extractives Industry

Last spring when my teammates and I were working on a renewable energy project in southern Africa, we thought carefully about how we could integrate a BoP perspective into our work. Our client planned to situate its plant in a rural community, so we knew the impact would be dramatic. We also knew that the company could influence the nature of its footprint, particularly if it treated the community as an active partner.

Consequently, we engaged the company in a dialogue about how a ’community-inclusive’ strategy could be mutually beneficial in terms of financial and social returns. To our surprise, we found rich literature that informed our insights, including the International Council on Mining and Metals’ Community Development Toolkit and The Role of the Extractives Industry in Expanding Economic Opportunity by Holly Wise and Sokol Shtylla of the Kennedy School of Government. In fact, SEAT, Anglo American’s community engagement and socioeconomic assessment toolbox has been hailed as an industry best practice.

Not surprisingly, we learned a lot about how extractive companies can incorporate communities into their supply chains, build infrastructure, invest in human capital, and support local suppliers and entrepreneurs. Clearly, there are numerous ways to cultivate local economic development that complement, but also evolve independently of, an extractives company.

However, we also recognized that an inherent contradiction existed in our work. BoP business development by definition-if you accept co-creation as a key tenet-should engage the community in the process from the outset. However, extractives projects can be scoped, planned, funded and largely executed before the community is involved in a meaningful way. That begs the question of whether BoP business development and the extractives industry are compatible.

The answer is probably ’no’ given the way that extractives projects (and most businesses generally) are structured. Investors and the management team ultimately control how the business is built while co-creation assumes that all relevant stakeholders are involved from day one. However, to the extent that companies prioritize entrepreneurship support and investment as key elements of their community engagement strategies, there’s hope.

It’s conceivable that a company could work with local entrepreneurs to co-create new businesses, or in the spirit of the BoP Protocol 2.0, engage in new market creation. After all, most responsible companies endeavor to leave the communities they inhabit as thriving, self-sustaining entities. For example, Anglo Zemele in South Africa actively supports local enterprise capacity-building and supply chain integration. However, perhaps over time companies can develop a more explicit ’blank-slate’ approach if and when it makes sense to do so.

It’s also worthwhile to consider another, potentially more compatible business model-distributed renewable energy. As you may recall, the extent to which clean technology, renewable energy, and the like should be produced at and for the BoP was explored at the Cornell Global Forum. Assuming that it should, then it’s more likely that co-creation norms would be embedded from the beginning. Okay, so maybe clean technology and renewable energy aren’t necessarily extractive (or at least they shouldn’t be).

Nonetheless, it’s important to explore the possibility of producing energy in a way that ’expands economic opportunity’ while engaging the BoP ’before the fact. Of course, one could argue that business development at the BoP need not involve co-creation from inception as long as lives improve at the conclusion. Personally, I believe there’s more than enough room for context-specific interpretation. What do you think?

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