Memorandum submitted by Business
Action for Africa[154]
1. Business Action for Africa
Business Action for Africa (BAA) is
a rapidly growing network of businesses and business organisations,
active in Africa and from the continent, launched in July 2005
to build on the momentum of the Commission for Africa (CFA) and
G8. An outline of BAA is included as Annex A. A selection of participant
case studies is included in Annex B.
2. Business and Development
Business has an important and direct
contribution to the delivery of positive change for Africa and
its people. It is through the responsible and profitable operation
of core business activities that business makes the most significant
contribution to development: generating growth, creating jobs
and economic opportunities that lift people out of poverty, and
tax revenues needed to fund public spending on a sustainable basis.
Of course, the way businesses do business has a powerful impact.
It is important to keep in mind that the vast majority of poor
people derive their
livelihoods from the private sector
- in small scale enterprises, as employees or as customers of
goods and services. The domestic private sector accounts for the
major share of investment in most developing countries (some 80%
in Africa). Business also has important role in maintaining collective
pressure on international and national policy makers to pursue
policies that promote growth and ensure poor people are able to
participate in and benefit from growth.
3. Private Sector Development, Growth
and Poverty Reduction
The evidence shows that growth is necessary
(though not sufficient) for poverty reduction. In most African
countries, the central problem is that growth rates have not been
maintained at the levels needed for long enough. Yet, all too
often inadequate attention is paid to growth and to the policies
needed to ignite and sustain it. Effective policies for growth
must recognise the centrality of the private sector as its engine.
Unleashing the entrepreneurial energy (particularly for poor people
and small enterprises) in developing countries must be made a
priority, and the benchmark by which to test the effectiveness
of donor interventions.
4. Priorities for Private Sector
Development
There are six priority areas that businesses
(in Africa and across the G8) have identified for catalysing private
sector-led growth, and for deepening opportunities for poor people
to escape poverty.
A. Governance and Transparency
Good governance is the foundation of
economic growth and poverty reduction. Business Action for Africa
believes that support should be given to the African Peer Review
Mechanism as an innovative framework by which to plan, measure
and assess reforms. In other regions, a similar drive must be
given to initiatives to increase transparency and improve governance.
Corruption is a global problem, but it hits the poorest hardest.
Business must play its full part in tackling corruption: companies
must take a stance of zero tolerance to bribe giving. Under the
banner of Business Action Against Corruption, work is being taken
forward in Africa to strengthen the capacity of the public and
private sectors to tackle corruption. A number of the participating
companies in Business Action for Africa are lead members of the
Extractive Industries Transparency Initiative (EITI). Business
Action for Africa welcomes the increasing adoption of EITI within
Africa and calls upon, and will aim to actively encourage, more
countries and companies to work together to increase transparency
across other sectors.
B. Climate for Business
African governments must continue to
improve the "investment climate": tackling the barriers
to and reducing the costs of doing business. This is particularly
important for the small-scale enterprises - who are hit hardest
by a weak operating environment. As part of this, efforts have
to be made to tackle Africa's infrastructure weaknesses. Business
Action for Africa welcomes the proposed AU/NEPAD "Investment
Climate Facility" (ICF) as an important private sector-led
initiative to address these issues. Three participating companies
recently announced their financial support for the ICF.
C. Trade
Trade has the potential to be a powerful
engine for Africa's development but only if action is taken on
three areas - an end to agricultural subsidies, increased access
to developed country markets and support for improving Africa's
capacity to trade. Given the disappointing progress made at Hong
Kong at the end of 2005, a concerted effort is needed over this
year. African governments, for their part, must work to enhance
intra-African trade. Recognising the need for business to join
the debate, Business Action for Africa will continue to campaign
for a more favourable trade regime for Africa. At the same time,
a number of members are driving forward work on a specific, critical
area - improving customs administration to facilitate international
and regional trade.
D. Enterprise and Employment
A vibrant and successful private sector
is key to sustainable growth. Encouraging Africa's entrepreneurial
spirit - from its family farms and small firms to its larger companies
- is important for growth and job creation. Business can do more
to help small enterprises access capital, skills and training,
as well as opportunities to trade. There is a growing body of
good-practice in supporting enterprises through company supply
chains. Youth unemployment is a particular issue in many African
countries, and must be tackled as a priority.
E. Human Development
Strengthening education and health systems
is central to enabling people to participate fully in the economy,
and is vital to long-term business growth. Specific attention
must be paid to tackling HIV and AIDS and its devastating impact
on people's lives, on business and on the economy. Business has
an important role to play to complement the efforts of African
governments and donors.
F. Perceptions of Africa
The language of intergovernmental debate
- of debt, aid, poverty and conflict - dominates the way Africa
is discussed externally, reinforcing perceptions of a continent
of problems. Africa often appears to be seen as one large risky
country, with little understanding of its diversity. But Africa
deserves increasingly to be seen as a continent of opportunity.
Africa's new business leaders, and most investors in Africa, feel
this growing sense of confidence.
5. Concluding Remarks
There is now greater acceptance that
the private sector is the key to prosperity and poverty reduction
- to more jobs, wealth and income - with government's essential
role to secure public safety, to provide core public services
in education, health and infrastructure, and to regulate the economy
in a way that does not create obstacles to enterprise. Thus creating
a good working partnership between business and government is
fundamentally important - to create a good business environment,
to free up the energy and ideas of entrepreneurs, whether they
be farmers, traders or in companies. We know what works, what
matters most is to ensure that no time is lost in delivering results
to the hundreds of millions of citizens still marginalised from
the global economy.
Annex A: Overview of Business Action
for Africa
History
Business Action for Africa (BAA) is
a rapidly growing network of businesses and business organisations,
from Africa and elsewhere, launched in July 2005 to build on the
momentum of the Commission for Africa (CFA) and G8.
The founders of the network were closely
involved with the work of the CFA, starting with a business breakfast
hosted by the Chancellor of Exchequer, the Rt.Hon. Gordon Brown,
MP, and Niall Fitzgerald (then Chair of Unilever) in July 2004.
The member companies also made a significant
input to the work of the Commission and held a major business
conference shortly before the Gleneagles Summit to urge the G8
to respond generously to Africa's development needs but also to
work for improvements in governance and in the investment climate
in many parts of Africa.
Objectives
Participants of BAA will showcase existing
actions, and develop new ones, in support of three objectives:
o To
influence positively policies needed for growth and poverty
reduction;
o To
promote a more balanced view of Africa; and
o To
develop and showcase good business practice.
Themes
Participants have decided to focus on
6 themes - these are the basis of building partnerships,
knowledge networking, advocacy and bringing in new participants:
o Governance
and Transparency;
o Climate
for Business;
o Trade;
o Enterprise
and Employment;
o Human
Development; and
o Perceptions
of Africa.
Participants
Currently, BAA has around 80 participants
including:
Around 50 businesses;
Around 20 business organisations;
and
Around 10 external partners (including
DFID as a sponsor).
An Oversight Group is made of BAA's
sponsers: Anglo American, De Beers, Diageo, GlaxoSmithKline, Merck
Sharpe & Dohme, SABMiller, Shell, Unilever, International
Business Leaders Forum, DFID, DWP/DfES, UKTI.
Annex B: Case Studies
Business Action Against Corruption
o Business
Action Against Corruption (BAAC), one of the flagship governance
programmes for Business Action for Africa, was established by
the Southern African Forum Against Corruption. This includes the
region's anti-corruption commissions, Crown Agents, the African
Corporate Sustainability Forum, the Human Rights Trust of Southern
African and the Commonwealth Business Council. Corporate partners
include Shell, Anglo American and Unilever.
o BAAC,
which has already secured a high level of political interest within
Africa, has set up joint working groups of business and the anti-corruption
commissions in Botswana, Malawi and Zambia, and activities on
codes of conduct, capacity building and business leadership. The
programme will be expanded over the coming months. For more information
visit www.hokoyo.org
The Investment Climate Facility
o The
AU-NEPAD Investment Climate Facility (ICF) is a major initiative
to support investment climate reform in Africa - tackling the
issues highlighted by the APRM and other processes. Support for
the ICF was recommended by the Commission for Africa and by business
leaders at the 2005 G8 Business Action for Africa Summit.
o Two
unique features of the facility are its strong high-level African
political backing (including from President Mkapa as one its co-chairs);
and its emphasis on private sector leadership in the running of
the facility.
o Shell
and Anglo-American, both Business Action for Africa participants,
have announced US$2.5 million support each over five years. Unilever
have confirmed that they will be committing US$1 million for an
initial two-year period. The UK government has also committed
US$30 million over the next three years. For more information
visit www.investmentclimatefacility.org.
Business Action for Improving Customs
Administration in Africa
o Africa
cannot take full advantage of trading opportunities until its
customs organisations work efficiently, fairly and effectively.
o Established
under the umbrella of Business Action for Africa, Business Action
for Improving
o Customs
Administration in Africa (BAFICAA) aims to:
- Build the case for trade facilitation
and customs reform; and
- Promote the role of the private
sector to devise and implement practical proposals in partnership
with governments and donors.
o A
questionnaire has been developed to build a picture of Africa's
needs and priorities. On
o the
basis of this, participants will engage in specific capacity building
projects.
o Current
participants include British American Tobacco, Unilever, HM Customs
& Excise and
o SITPRO
(the UK's trade facilitation agency).
SABMiller - Nile Breweries, Uganda:
Eagle Lager Project
o The
Eagle Lager project, undertaken by SABMiller's Ugandan operation
- Nile Breweries Ltd - was developed to provide Ugandans with
an affordable and healthy quality beer made from the locally-produced
sorghum. The objectives were to stimulate agricultural research
and development into the use of sorghum for brewing and create
a permanent and stable market for local sorghum farmers.
o Just
over four years later, the beer is now Nile Brewery's top brand
with a market share of around 20%. 8,000 local Ugandan farmers
are benefiting from contracts to grow the sorghum at guaranteed
prices. The project has also resulted in knowledge and skills
transfer in agronomic aspects of farming and crop husbandry. For
more information visit www.sabmiller.com/SABMiller/Our+responsibility/
Diamond Development Initiative
o The
Diamond Development Initiative (DDI) aims to tackle the underlying
problems of Africa's alluvial diamond operations and its estimated
one million artisanal miners. It will aim to bring about change
that could bring artisanal alluvial diamond mining into the formal
sector, with major benefits for miners, governments and the diamond
industry at large.
o DDI
began life at a meeting in January 2005 co-hosted in London by
De Beers, Global Witness and Partnership Africa Canada. DDI will
have an important role in convening, designing, facilitating,
coordinating and disseminating information, best practices and
lessons.
o Potential
areas of action include: enhanced education and information for
diggers; advocacy (including for measures to promote human development
of mining communities); sourcing of technical assistance; and
research.
Anglo American - HIV / AIDS
o Anglo
American has played a leadership role in the private sector response
to HIV/AIDS in Africa including implementing the largest directly
delivered, private sector ART programme in the world. Their Chairman
holds the Chair of the Global Business Coalition on HIV/AIDS.
o Some
23% of Anglo American's workforce in Southern Africa is HIV+.
As a result of the Group's HIV/AIDS policy, nearly 2,200 Anglo
American employees are receiving antiretroviral therapy. A further
4,000 in the earlier stages of infection are on 'wellness' programmes
involving health monitoring and lifestyle and nutritional support.
94% of those on treatment are completely well and are able to
carry out their normal work and to continue to support their family.
For more information visit www.angloamerican.co.uk/corporateresponsibilty/hivaids
Diageo Business Reporting Awards
o Diageo
Africa is the second largest Diageo market by volume, providing
the third highest profit delivery. Nigeria is the third largest
Guinness market in the world.
o Other
potential investors, who are unaware of the opportunities and
discouraged by perceived risk, may be overlooking Africa as an
investment destination. The Diageo Africa Business Reporting Awards
are a practical contribution towards addressing negative perceptions
of Africa and stimulating more African business reporting in international
media.
o The
Awards, launched in 2004, recognise and reward journalists and
editors providing high
o quality
coverage of the business environment in Africa.
o A
related initiative - Newsdesk: Business Africa, an interactive,
capability-building tool for aspiring journalists - will be launched
this year.
o For
more information visit www.diageoafricabusinessreportingawards.com
February 2006
154 This paper is submitted on behalf of the business
members of the BAA Oversight Group. Back
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