"Finding new ways to help business manage risk is key to driving growth and tackling poverty" by Kurt Hoffman
The UK Government’s Business “Call to Action” event on 6th May provided powerful evidence of the extent to which private sector-led economic growth has moved to the centre of developing country policy making. This significant, albeit belated, shift in emphasis is to be welcomed, but also serves to underline the missed opportunity of not properly integrating the private sector with the MDGs from the beginning.
Unilever’s recent study of its economic impact in Indonesia helps to explain why harnessing core business activities is probably the most significant contribution that business can make to the MDGs. The study showed that although the company directly employs 5,000 people in Indonesia, a further 300,000 people are estimated to make their livelihoods from Unilever’s value chain.
We should not though leave unexplored other equally valuable ways that business can contribute to development and poverty reduction. Multinational companies especially have a hugely important and as yet largely untapped potential to apply business-thinking, models and disciplines to poverty challenges traditionally tackled by NGOs, governments and international institutions. I call this “business DNA”.
“Business DNA” has a wide range of potential applications in the development context, from bringing much needed accountability to the delivery of the MDGs, to contributing expertise in the area of supply chain and logistics, for so long an Achilles heal for the development sector. Experienced business-minded people are likely to be much better placed to spot business-based poverty solutions. Also, international business, working with local partners, can harness their brand equity and credibility to help raise finance, open doors and encourage local participation and action.
So how do we accelerate and scale up the contribution of business to the MDGs? Clearly we need to make it easier to invest and do business in Africa. But to really enable business to make transformational breakthroughs, new ways need to be found to help business overcome risk considerations and more easily access risk capital. Finding ways to share the burden of risk will ensure innovative business ideas have a much better chance of reaching the marketplace. The Africa Enterprise Challenge Fund is a step in the right direction but we need to do much more in this area to unlock Africa’s entrepreneurial potential.
We also need to be mindful that the growing emphasis on core business activity does not result in business missing the chance to maximise social and development opportunities. Business-led action to tackle poverty needs to be capable of being scaled up beyond the geographical constraints of an operating company’s jurisdiction, or the single-minded focus of a business manager. I argue for a third way, not surprisingly championed by the Shell Foundation, which combines focus on core business operations and disciplines with a constant eye to the social opportunity. Alongside greater access to risk capital, this approach enables the delivery of business value in places where business won’t traditionally go.
Kurt Hoffman is Director of the Shell Foundation
Unilever’s recent study of its economic impact in Indonesia helps to explain why harnessing core business activities is probably the most significant contribution that business can make to the MDGs. The study showed that although the company directly employs 5,000 people in Indonesia, a further 300,000 people are estimated to make their livelihoods from Unilever’s value chain.
We should not though leave unexplored other equally valuable ways that business can contribute to development and poverty reduction. Multinational companies especially have a hugely important and as yet largely untapped potential to apply business-thinking, models and disciplines to poverty challenges traditionally tackled by NGOs, governments and international institutions. I call this “business DNA”.
“Business DNA” has a wide range of potential applications in the development context, from bringing much needed accountability to the delivery of the MDGs, to contributing expertise in the area of supply chain and logistics, for so long an Achilles heal for the development sector. Experienced business-minded people are likely to be much better placed to spot business-based poverty solutions. Also, international business, working with local partners, can harness their brand equity and credibility to help raise finance, open doors and encourage local participation and action.
So how do we accelerate and scale up the contribution of business to the MDGs? Clearly we need to make it easier to invest and do business in Africa. But to really enable business to make transformational breakthroughs, new ways need to be found to help business overcome risk considerations and more easily access risk capital. Finding ways to share the burden of risk will ensure innovative business ideas have a much better chance of reaching the marketplace. The Africa Enterprise Challenge Fund is a step in the right direction but we need to do much more in this area to unlock Africa’s entrepreneurial potential.
We also need to be mindful that the growing emphasis on core business activity does not result in business missing the chance to maximise social and development opportunities. Business-led action to tackle poverty needs to be capable of being scaled up beyond the geographical constraints of an operating company’s jurisdiction, or the single-minded focus of a business manager. I argue for a third way, not surprisingly championed by the Shell Foundation, which combines focus on core business operations and disciplines with a constant eye to the social opportunity. Alongside greater access to risk capital, this approach enables the delivery of business value in places where business won’t traditionally go.
Kurt Hoffman is Director of the Shell Foundation
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