Memorandum submitted by Business Action
for Africa
A. THE IMPORTANCE
OF FAIR
TRADE
1. As members of Business Action for Africa,[63]
we strongly welcome this inquiry on fair trade and development.
From our own first-hand experience of Africa, we recognise the
important contribution that fair trade can make in giving people
the opportunity to lift themselves out of poverty.
2. Most importantly, fair trade centres
on an enterprise-led solution to poverty reduction: wealth creation
for poor people, not charity. It is the diverse private sector,
large and small, that will deliver the growth, jobs and tax revenues
needed to meet the UN's Millennium Development Goals. Building
trade links with small enterprises can be a particularly powerful
way to drive down poverty.
3. The "Fairtrade" mark and other
initiatives such as Rainforest Alliance certification have done
much to raise public awareness and engagement in trade and fair
trade issues. Customers increasingly expect large companies to
have responsible supply chain practices, and there has been a
dramatic growth in the fair trade market. According to Mintel,
sales of Fairtrade goods in the UK are expected to rise to £547
million by the end of the decade, up from £195 million in
2005.
B. THE CHALLENGE
OF MAINSTREAMING
4. A key challenge is achieving greater
scale and impact. The Fairtrade mark and other initiatives, while
growing very successfully, cover a relatively a limited number
of suppliers. The solution lies in mainstreaming the principles
of fair trade across companies' core business operations, in the
form of ethical and transparent sourcing and procurement approaches
across the full length of the value chain: supply, distribution
and retail.
5. We, and the large majority of our peers,
recognise the strong business, as well as moral, case for treating
all of our suppliers fairly. A successful and sustainable supplier
base underpins our own ability to deliver quality products to
our customers efficiently and cost-effectively and therefore to
deliver shareholder value and business growth.
6. A number of us have conducted research
that shows a strong demand among our customers to have the option
to buy ethically sourced products. Recent moves by a number of
major retailers to offer more fair trade products will help bring
new consumer groups to the fair trade category.
7. In this context, the evidence on the
environmental impact of sourcing products from developing countries
needs to be more clearly communicated. In practice, the less capital
intensive production methods in developing countries is likely
to more than offset the impact of transporting products to developed
country markets.
C. THE BIGGER
PICTURE: TRADE
8. The fair trade discussion has usefully
raised awareness about trade, but it is in no way a substitute
for real trade reform. By far the greatest development impact
can be achieved though enabling all African producers to trade—in
the context of a fairer, rules-based, multilateral world trading
system.
9. While precise estimates vary, a successful
outcome of the currently stalled Doha Development Round of world
trade talks will have dramatic benefits for developing countries.
In 2006, the World Bank estimated potential overall welfare gains
of US$287 billion, with around a third (US$90 billion) going to
developing countries.
10. World leaders in the US, EU and larger
emerging economies have an historic opportunity to deliver the
trade conditions for growth and poverty reduction. Action is needed
on market access to developed country markets, agricultural subsidies,
rules of origin and tariff escalation. The lost opportunity that
a failed trade round would represent could never be offset by
the growth in "fair trade".
D. THE ROLE
OF BUSINESS
11. The greatest contribution that business
can make to poverty reduction is by operating successful, profitable
and responsible operations—generating trading opportunities
for small enterprises and employment opportunities for individuals.
12. This includes building long-term, stable
relationships with suppliers and distributors. And in the context
of such partnerships, promoting responsible sourcing and procurement,
as well as the growth of small and medium enterprises. Most businesses
recognise the importance of promoting fair prices, fair wages
and decent working conditions.
13. The "Fairtrade" mark has proven
a very powerful way for engaging customers, and it works particularly
well where farmers are already well organised with adequate basic
infrastructure. A number of companies have very successfully introduced
Fairtrade-certified products. There are very many others who share
the basic objectives of Fairtrade but who are delivering these
through other approaches.
14. Crucially, any initiatives must be embedded
in the core business of a company, with a strong business case.
This is far more sustainable than philanthropy. Increasingly,
businesses are seeing the value of working collectively—with
each other, with governments and with NGOs—to scale up their
own impacts. Business-led collective action can take many forms—collective
advocacy, joint projects and the exchange of ideas and good practice.
We are involved in all three areas.
15. Examples of business action on fair
and ethical trade are set out in the Annex.
E. THE ROLE
OF GOVERNMENTS
AND DONORS
16. African governments must do more to
facilitate intra-African and South-South trade. This means enhancing
customs administration, improving infrastructure and, more broadly,
improving the climate for business. A central issue—which
the fair trade discussion risks missing—is that fundamentally
the challenge for Africa is to improve its trade capacity and
competitiveness.
17. African producers—particularly
those in the agriculture sector, the sector where the majority
of poor people are located—need targeted support in at least
three areas. First they need help to improve their efficiency
and the quality of their products—so that they can take
advantage of supply chain opportunities, and compete effectively.
In agriculture this could mean enhanced access to fertilisers,
irrigation and infrastructure. Second, producers need support
to diversify, with an emphasis on finding new sources of competitive
advantage. And third, they need support in moving up the value-chain—so
that more value-adding processing, such as manufacturing and packaging,
can take place domestically. Again, these areas can be missed
in the fair trade discussion.
18. The priority for donors should be support
for African-led efforts to improve intra-African trade and trade
capacity in these markets. We therefore welcome DFID's support
for the Investment Climate Facility,[64]
Infrastructure Consortium for Africa[65]
and the proposed Africa Enterprise Challenge Fund. Where DFID
engages in enterprise development, this should be demand-led—with
a clear understanding of what enterprises need and what customers
want.
19. Beyond that, we welcome DFID's support
for fair trade initiatives, including for the Fairtrade Foundation
to help it promote the Fairtrade mark. Further support should
include capacity building for producers on the ground to help
meet growing demand, and assistance to help fair trade systems
become more efficient as fair trade moves from niche to mainstream.
20. In developing policies it is important
to avoid any unintentional consequences that harm Africa's small
scale producers or that overly distort international or national
markets. The cost of meeting CSR codes, for example, must not
be allowed to exclude small scale farmers.
21. We encourage DFID to work in partnership
with businesses and business organisations, such as ours, to share
good practice. A partnership with an emphasis on continuous learning
and progress will ultimately be far more effective than regulation
or a box-ticking, compliance-based approach.
| Edward Bickham | Executive Vice President, External Affairs
| Anglo American/Board of Business Action for Africa
|
| Norah Odwesso | Corporate Relations Director
| Diageo Africa/Board of Business Action for Africa
|
| Brenda D Colatrella | Executive Director, HIV Policy & External Affairs, EMEAC
| Merck & Co., Inc./Chair of Business Action for Africa
|
| Richard Morgan | Corporate Relations Adviser
| Unilever/Board of Business Action for Africa
|
| Albert Smith | Director |
A Brighter Future |
| Baroness Chalker | Chairman
| Africa Matters Limited |
| Tony Colman | Associate Director
| Africa Practice |
| Dr Titi Banjoko | Director |
Africa Recruit |
| Catherine Cameron | Director
| Agulhas Applied Knowledge |
| Sipho Mseleku | Chief Executive Officer
| Association of SADC Chambers of Commerce and Industry
|
| Trevor Simumba | Managing Director
| ATRADE Partners Ltd |
| Charles Chudi Chukwuani | Director
| Bendu Peter Services Nigeria Limited |
| Martin Summers | International Social Accountability Manager Corporate and Regulatory Affairs
| British American Tobacco |
| Alison Ward | Communications Director
| Biscuit Cake Chocolate & Confectionery Association
|
| Charles Cullimore | Chairman
| British African Business Association |
| Sandra van Lingen | Chief Executive Officer
| British Chamber of Business in Southern Africa
|
| D Neil Makin | External Affairs Director
| Cadbury Schweppes plc |
| Richard Laing | Chief Executive
| CDC |
| Dr Mohan Kaul | Chief Executive Officer
| Commonwealth Business Council |
| Sunil Sinha | Technical Director
| Emerging Market Economics |
| Matar Tall | Chief Executive Officer
| Etoile 2000 |
| Stephen Twigg | Director |
The Foreign Policy Centre |
| Simon Wakely | Executive Director
| Friends of Africa Foundation |
| Dr Emmanuel Argo | President
| Global African Diaspora Coalition |
| Katie Stafford | Sustainable Development Manager
| Marks & Spencer |
| Robert Davies | Chief Executive Officer
| The Prince of Wales International Business Leaders Forum
|
| Trevor Stoner | Strategic Business Development Manager
| RDC Ltd |
| Shaun Stewart | Government and Corporate Relations Adviser
| Rio Tinto |
| Steve Chandler | Director |
Rodborough Radio Technology Ltd |
| Kurt Hoffman | Director |
Shell Foundation |
| Bruce McNamer | President & CEO
| TechnoServe, Inc. |
| Chris Saunders | Chief Executive
| Transaid |
| Shona Grant | Director, Development Focus Area
| World Business Council for Sustainable Development
|
| February 2007 |
63
Business Action for Africa, set up at the time of the 2005 G8,
is a business-led network of around 150 businesses, business organisations
and non-business partners from Africa and around the world. The
board of BAA includes Anglo American, De Beers, Diageo, Merck
& Co., SABMiller, Shell, Unilever, Visa, DFID, DfES, UKTI
and the Prince of Wales International Business Leaders Forum,
which provides the administrative framework for BAA. BAA promotes
collective action on advocacy, projects and knowledge sharing.
It has six areas of focus: governance, trade, the climate for
business, enterprise & employment, human development and perceptions
of Africa. For more information, visit www.businessactionforafrica.org Back
64
www.investmentclimatefacility.org Back
65
www.icafrica.org Back
|
