More Action Needed By Business in South Africa On Poverty

Monday, August 7, 2006

Excerpt from Interview: Futhi Mtoba, Chairman of Deloitte Southern Africa, provides a look at where the corporate responsibility movement stands in South Africa, particularly as it relates to poverty alleviation. According to Mtoba, there is general understanding, and even genuine desire on the part of business to “do something”, but for various reasons implementation is lacking. One solution for increasing momentum, says Mtoba, is to develop better methods of measuring the impact on the ground resulting from good business practices and programs. Otherwise, “it remains simply an exercise in throwing money at the problem” without leading to meaningful change in society.

At a conference last year you stated that, “we should lead by principles and acknowledge that African businesses are agents of change”. Currently, how well is this message understood by business?

If you talk to any business leader, they understand and say “we must do something”. But when it comes down to the fundamentals of integrating change in business, they start weighing up business risks and turn to traditional strategies. While many companies are doing the right things for the right reasons, the momentum is not there yet.

The reality in the South African context – and most of Africa – is that a traditional business model would not work. As in any country, you have to take into consideration specific social and economic issues. We know that we live in an area where poverty is rife and that this is one of the biggest threats to our democracy. For someone to lead effectively in this environment their business model must address the two economies – the developed portion and the “second” economy. More organizations need to begin thinking about how they could change their products or services to meet different needs and how they are contributing towards solving the broader socio-economic challenges. Not enough people at the board level are asking questions such as: How do we integrate the “second” economy?

One clear opportunity to address this problem is product innovation. It is not hard to understand that the poor are a market – they need services and products like everybody else. So, it is amazing to me in a world of such intelligence and technology, real product innovation is lacking. I think once more businesses realize the huge markets and opportunities that lie in front of them, there will be progress.

What is needed to push African business from this state of general awareness to one of action where social issues – particularly poverty – are more effectively addressed?

We need to be able to measure the impact of business on the ground, not just the impact on a company’s balance sheet. When it comes to measuring whether a company is making progress toward poverty alleviation, the right mechanisms do not exist. When interacting with business leaders, I often ask them to quantify the impact of their programs on social issues. All can quickly spell out the amount spent but not what that spent money translates to in terms of job creation, increase in family income, number of children fed or children now able to attend school – that still remains a mystery.

The mechanisms to measure the impact are not yet developed because we have not, particularly in the business community, been thinking this way for very long or really identified social issues as end-goals. If we cannot measure the impact on social issues and understand the results of our actions, it remains simply an exercise in throwing money at the problem.

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