"Building a better understanding of business impacts in developing countries to improve the quality of collective action" by Graham Mackay
There is now a broad consensus across the development community that business has an essential role in generating growth and reducing poverty in developing countries, through the jobs and wealth we create, the opportunities we provide for suppliers, the investment capital we contribute, the taxes we pay, the infrastructure improvements we make and the workers we train and develop.
Moving forward, business needs to find ways of enhancing these positive impacts and strengthening the links between large multinationals and small businesses. In this way, we can reinforce the contribution we make to growth and development, continue to manage negative impacts, where they may exist, and improve the multipliers flowing from our core businesses.
An important first step is to properly measure the economic, social and environmental impact of our business activities. By making robust data on business impacts publicly available, it is easier for business to work more effectively with policy makers on poverty alleviation strategies.
For an African-originated multinational such as SABMiller, the correlative relationship between national development and business growth is increasingly well understood. However, we have also learned through our extensive footprint in developing countries that foreign direct investment does not automatically lead to an improvement in economic performance. What really counts is the quality of that investment and, in particular, the economic value that is generated through local supply chains.
In South Africa, SABMiller’s birthplace, we recently put this proposition to the test by commissioning an independent audit with the Bureau for Economic Research, which analysed the contribution that the South African Breweries Limited makes to the South African economy. In the financial year to March 2007, their findings showed that 378,000 full-time jobs can be directly or indirectly traced back to the production and sale of SAB’s products. That represents 3 per cent of total employment in South Africa.
Taxes based directly on the production and sale of our products and from the indirect and induced impacts of our operations on other businesses amounted to 5 per cent of total government tax revenue in 2006. SAB’s contribution to economic value added amounted to 3.3 per cent of South Africa’s GDP in 2006.
Deeper analysis and understanding of business impacts in developing countries will improve the power and potential of public-private partnerships. By contributing new insights for our development partners, we can enhance the quality of our on-going dialogue and identify ways to achieve more effective collective action in pursuit of growth and development goals.
Better measurement of business impact will also support the private sector’s licence to operate, help business to better manage risk and develop strategies that deliver even greater positive outcomes for our businesses, shareholders and the societies in which we operate.
Graham Mackay is Chief Executive of SABMiller
Moving forward, business needs to find ways of enhancing these positive impacts and strengthening the links between large multinationals and small businesses. In this way, we can reinforce the contribution we make to growth and development, continue to manage negative impacts, where they may exist, and improve the multipliers flowing from our core businesses.
An important first step is to properly measure the economic, social and environmental impact of our business activities. By making robust data on business impacts publicly available, it is easier for business to work more effectively with policy makers on poverty alleviation strategies.
For an African-originated multinational such as SABMiller, the correlative relationship between national development and business growth is increasingly well understood. However, we have also learned through our extensive footprint in developing countries that foreign direct investment does not automatically lead to an improvement in economic performance. What really counts is the quality of that investment and, in particular, the economic value that is generated through local supply chains.
In South Africa, SABMiller’s birthplace, we recently put this proposition to the test by commissioning an independent audit with the Bureau for Economic Research, which analysed the contribution that the South African Breweries Limited makes to the South African economy. In the financial year to March 2007, their findings showed that 378,000 full-time jobs can be directly or indirectly traced back to the production and sale of SAB’s products. That represents 3 per cent of total employment in South Africa.
Taxes based directly on the production and sale of our products and from the indirect and induced impacts of our operations on other businesses amounted to 5 per cent of total government tax revenue in 2006. SAB’s contribution to economic value added amounted to 3.3 per cent of South Africa’s GDP in 2006.
Deeper analysis and understanding of business impacts in developing countries will improve the power and potential of public-private partnerships. By contributing new insights for our development partners, we can enhance the quality of our on-going dialogue and identify ways to achieve more effective collective action in pursuit of growth and development goals.
Better measurement of business impact will also support the private sector’s licence to operate, help business to better manage risk and develop strategies that deliver even greater positive outcomes for our businesses, shareholders and the societies in which we operate.
Graham Mackay is Chief Executive of SABMiller
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