Global business finds out that new markets and responsibility go hand in hand in Africa

Wednesday, July 13, 2005

GIVEN the focus of the Group of Eight (G-8) summit of world leaders and the Africa Commission, it may come as no surprise that among the Business in the Community awards being handed out this year, a new accolade ? the Oracle International Award ? recognises efforts to promote development in Africa.

?The award will highlight company practice on the continent,? says Peter Davis, deputy CE of Business in the Community.

?We felt it was important to engage business alongside the Commission for Africa work.?

Granted in association with the Prince of Wales International Business Leaders Forum and the Commission for Africa, the first winner is Anglo American, the mining and natural resources group whose programmes in Africa include community development, education initiatives and policies to prevent the spread of HIV/AIDS.

In recent years, however, Anglo American has not been alone among private sector organisations in using commercial activities as a channel through which to offer assistance to poor African regions.

To address iodine deficiency, which can cause conditions such as goitre, stillbirths and congenital abnormalities, Unilever, the Anglo-Dutch consumer goods group, market products in Africa such as Annapurna, a low-cost iodised salt that has been endorsed by the International Council for Control of Iodine Deficiency Disorders.

Many believe this sort of model holds great potential and argue that, if private sector energy and know-how is to be harnessed in the reduction of poverty, the profit- making element of corporate activities must be part of the equation.

?This cannot be tackled simply as a philanthropic or donor issue,? says Robert Davies, CE of the International Business Leaders Forum.

?In Africa, it is perfectly possible to be competitive and build a market ? but you have to ensure that you have a proactive strategy to engage in human resources development and entrepreneurial development on the ground.?

The business model for such schemes differs greatly from commercial operations in developed markets. In addition to partnerships with local manufacturers, Unilever has worked with the United Nations (UN) children?s fund and nonprofit organisations to raise awareness that iodised products contribute to health.

Such alliances are being fostered by the UN Development Programme through a scheme called Growing Sustainable Business, which brokers partnerships between companies and nongovernmental organisations or local government bodies.

Ericsson, the telecommunications company, is providing communications technology to poor rural communities by establishing communications centres that will be owned and operated by local entrepreneurs as franchisees.

Another means through which companies can promote economic development is the fostering of local businesses that can act as suppliers to their operations.

The Anglo Zimele initiative ? a small business incubator unit established by Anglo American in SA ? provides loans to small businesses.

But the obstacles to encouraging widespread investment on the continent remain daunting. As well as hunger and health issues, internal conflict is widespread and corruption is rampant.

But in spite of its problems, Davis believes Africa holds great opportunities for companies.

?The philanthropic case is important, but Africa represents a huge potential market.?

Source: Financial Times (link opens in a new window)