Select Committee on International Development Memoranda

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


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.


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.


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.


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

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

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

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

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

February 2006

154   This paper is submitted on behalf of the business members of the BAA Oversight Group. Back

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Prepared 17 March 2006