Building a Strong and Prosperous Africa the Role of Business MYLES WICKSTEAD

ON CURRENT TRENDS, sub-Saharan Africa will not meet any of the Millennium Development Goals by 2015. That is why the UK Government has made Africa one of its two priorities for its G8 and EU presidencies this year, along with climate change. The Commission for Africa, established by the Prime Minister in February last year to inform this agenda, published its Report, Our Common Interest, on 11 March. The Commission’s Report sets out a coherent set of policies to accelerate progress towards a strong and prosperous Africa. It will inform the agenda for several meetings taking place this year, starting with the G8 Summit in July, but “I have said on many occasions that I believe including also the UN Millennium Review Summit in September and the tremendously important Africa is the scar on the conscience of the world, WTO Ministerial in Hong Kong in December. Its and I think it is right to treat this as an absolute findings are likely to remain influential in terms of the international agenda for African development priority over the coming years.” for years to come. UK Prime Minister Tony Blair in launching the Commission for Africa in The Commission consists of 17 Commissioners, February 2004 the majority of whom are African, including three Building a strong and prosperous Africa The role of business MYLES WICKSTEAD 4 OPTIMA JUNE 2005 individuals actively engaged in business; and a as Mozambique in the south, Benin in the west small Secretariat based in London. Over the and Uganda in the east. However, the Commission course of the past year, the Commission has argues that Africa needs to significantly accelerate consulted across a wide spectrum of stakeholders, and sustain growth across the continent to make including several events targeting the private serious inroads into poverty. sector. Around 30 international businesses have been actively involved in a Business Contact The value of partnerships Group set up by Chancellor Gordon Brown and To achieve this requires a partnership between Niall Fitzgerald, the then chairman of Unilever, Africa and the developed world, which takes full to inform the work of the Commission; over account of Africa’s diversity and particular 100 small and large businesses participated in circumstances. This partnership involves Africa a Chatham House conference; and a series of accelerating reform while, for its part, the regional business roundtables were held in developed world increases and improves its aid South Africa, Algeria, Cameroon, Tanzania and and refrains from doing those things that hinder Ghana, involving 120 business leaders from Africa’s progress. It also involves a central role 19 countries. for the private sector in driving growth, but with In its Report, the Commission recognises the governments having a key role in creating the improvements seen in Africa in recent years, right environment. It is not a question of the both in governance and in economic growth. For state versus the private sector, but how they example, two-thirds of African countries have work together. The Report makes a strong case held multi-party elections in the last five years. that a real opportunity exists at this moment for Over the last decade, 16 sub-Saharan Africa greater external support for Africa’s efforts from countries have seen average growth rates above the international community to have a real and 4%, including 10 with rates above 5% and three lasting impact. with rates above 7%. There are examples of In their analysis, Commissioners highlight strong performers from across the region – such the way in which the various causes for Africa’s underdevelopment (political, structural, human and environmental) interact, often in complex Growth in sub-Saharan Africa interlocking cycles: for example, there can be no Real GDP growth average development without peace and security; at the (1993-2002) same time, development which reduces poverty and inequality is a prerequisite for maintaining peace and security. Equally, a weak and poorly educated workforce cannot contribute to strong economic growth, but strong growth is needed to generate the funds to invest in health and education. To address these often vicious circles requires a comprehensive ‘big push’ on many 7.0% or higher 6.0% to 6.9% fronts at once. 5.0% to 5.9% Based on this analysis, the Commission 4.0% to 4.9% suggests a package of measures, structured 3.0% to 3.9% around a number of key themes. Governance 2.0% to 2.9% 1.0% to 1.9% and peace and security are at the heart of the Less than 1.0% proposals – without good governance and without No data peace and stability, other measures have little scope for success. Source: World Bank OPTIMA JUNE 2005 5 There is a strong raft of measures for investing It is important to ensure that Africa’s in people, and generating growth and poverty development not only generates benefits for poor reduction. This will require a major increase in people, but that it is sustainable – broadly meeting resources – the Commission proposes that aid to the needs of the present without compromising Africa should increase immediately by $25 billion the ability of future generations to meet their own per annum, followed by a further $25 billion per needs. To achieve this, it is necessary to address annum increase in five years after a review of all three pillars of sustainable development: progress – and up to 100% debt cancellation for economic, social and environmental. all low-income African countries. The Report highlights the generation of economic People, planet, prosperity growth as the private sector’s primary contribution The Commission recognises that sustainable to poverty reduction: growth creates jobs and economic growth requires prudent use of natural economic opportunities that lift people out of resources and effective protection of the environ- poverty, as well as tax revenues needed to fund ment. A key challenge is to ensure this is public spending on a long-term basis. However, addressed in the face of rapid urbanisation: well- MEN BEHIND THE it is increasingly recognised that the way larger planned cities offer much-enhanced opportunities COMMISSION: British foreign and domestic businesses do business can for environmental sustainability. Sustainable Prime Minister Tony Blair and Chancellor of the also have a powerful impact on the extent to environmental management requires a holistic Exchequer Gordon which poor people are able to participate in and assessment of what resources a country has and Brown, who is one of the Commissioners benefit from growth. how these natural resources could contribute to © GETTY IMAGES/TOUCHLINE PHOTO poverty reduction. It also requires improved The challenge now is environmental governance, through transparent and participatory institutions and processes that implementation. And this will genuinely involve those affected by change. This require partnerships between is required at local, national and regional levels. The impact of business on the societies in businesses and government, which they operate is often discussed in the between businesses and civil context of ‘Corporate Social Responsibility’ (CSR). society and between However, the Commission argues that the vagueness of the term and its overly narrow businesses themselves interpretation as ‘corporate philanthropy’ means that some of the most important business-poverty linkages are often missed. While philanthropy does of jobs, businesses’ commitment to core have very real benefits, still more important is the labour standards can contribute to poverty impact businesses have on development outcomes reduction by promoting broad-based economic through their core business activities. The Report and social development; highlights four areas of particular importance: Enterprise Developing long-term business Employment Job creation is clearly a central relationships with micro, small and medium way in which businesses can be of direct enterprises is one of the most important ways benefit to society. In addition to the quantity in which larger companies can promote the © GETTY IMAGES/TOUCHLINE PHOTO participation of poor people in growth. This is other show. Among many recommendations a focus of the Africa Enterprise Challenge Fund aimed at improving governance, the Commission proposed by the Commission; encourages all resource-rich African countries to Goods Goods and services for poor people are implement the Extractive Industries Transparency often relatively expensive and of poor quality. Initiative (EITI), and to expand transparency and A greater choice of lower-cost goods can accountability principles to other sectors, including benefit poor people, particularly if they are forestry and fisheries. tailored to their needs. Better management The Report lists a number of factors that can of the environmental impact of goods and limit the potential of business activities to services is also important; and, provide opportunities and benefits for poor Social services Paying taxes and refraining people. These include, firstly, a proliferation of from demands for special tax treatment codes and guidelines for corporate responsibility, strengthens the government revenues needed which can obscure comparability and accountability for sustainable, long-term provision of public and encourage a ‘boxticking’, process-driven, services. Businesses can also directly benefit rather than outcome-driven, approach. Secondly, employees (and their families), through the a lack of co-ordination and alignment with provision

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