Dame Barbara Stocking, Chief Executive, Oxfam GB, discussing the role of business in poverty alleviation in the context of the current economic crisis

[Business Fights Poverty]

The impact of the current economic crisis on developing countries is variable. Although most do not face the dramatic declines in growth that Western countries are facing, impacts are still significant on what are already vulnerable communities:

• The ILO estimates that 20 million jobs will be lost in the developing world this year alone;
• Remittances, a fundamental source of income for many in developing countries, is expected to fall by $250 billion;
• Plus the resultant drop in foreign investment and purchasing will impact heavily on developing countries.

This is of importance to the private sector as much as to NGOs and governments dealing with this fall out. Notwithstanding the moral case, the business case is also strong - for these are the markets of the future. This is a situation that will hit the bottom line directly so is a core business issue and not just a matter for the CSR department.

To really respond effectively to this situation requires a long-term view and the willingness to sustain business in these countries despite the downturn. Many are familiar with the study that Oxfam conducted with Unilever on its poverty footprint in Indonesia. This revealed the wide impact that Unilever’s supply chain had within Indonesia – impacting on 300,000 workers (full time equivalent) despite a workforce of only 3000. In addition, it showed the positive impact that was achieved from Unilever remaining in Indonesia during the financial crisis of 1997-8. Not only did this help the poor communities impacted by the crisis, but also built for Unilever a trust, as an embedded business, that gives it credibility in developing this market. It built competitive advantage in an emerging market.

Agriculture and the inclusion of smallholders, is critical in the fight against poverty. 2.25 billion people work in agriculture in the world making up the majority of those in poverty. Often this can seem a daunting prospect for business as engaging with smallholders is complex. However, it is possible if intermediaries are used to help organise the smallholders to provide volume and help advocate for security of land and fishing rights. This is where NGOs can help. The Private Sector also has a role, in helping to build smallholders’ ability and understanding of the required quality. Financial institutions are required to help provide access to finance for small enterprises that currently are caught in the ‘missing middle’ with no access to mainstream finance.

Oxfam has experienced the impact that facilitating dialogue between producers, the hotel industry, NGOs (local) and government can have to help address the needs of small producers in the Caribbean. By all parties bringing their special talents to the table, it became possible to overcome the barriers to buying local fresh produce resulting in better business for the hotels and livelihoods for the producers.

However, in all this the role of governments must not be forgotten. The correct infrastructure is required to support markets. Also regulation is needed to ensure that those in poverty have fair access to the market and the ability to compete on equitable terms. A totally free market will not work. Whilst we need to be careful with regulation, we cannot ensure the poor are lifted out of poverty unless we have governments ensuring an equitable regulatory framework for the small producer.

Post written for Business Fights Poverty by Dame Barbara Stocking, Chief Executive of Oxfam GB.

[Okot Alphonse Abude]

Barbara l believe fro m your statement you are very right that at least 20 mikllion jobs will be lost in the developing countries. l must say that this is asensitive aspect of life that needs thorough close watch, otherwise this remains aquestion od concen.

[Sam Thomas]

I beleive that the next growth engine would be the rural sector, the bottlenecks that we face in India is infrastructure development, connectivity and implementation of the business process in an organised way. There is an unorganised rural economy, which can be made more efficient by organising it and making them aware about the benefits of organised business.

[Michael Blondino]

Yves, You're absolutely right. The challenge is the proverbial cart before the horse problem. In the most profoundly impoverished countries, especially in West Africa, there is no possible way to realistically expect their governments to respond to gestures from the international community. So we find ourselves asking, do we work directly with the rural population despite the governments and see it as a 30 year investment into the society hoping for the next generation to gain office, or do we wait. USAID invested years and incredible amounts of money, along with the UN family of orgs, and there is absolutely nothing to show for it.

We are of the opinion that investment in the society is fundamentally valuable because of the future potential of educated young people. If we're focusing on micro-enterprise, then we get profit, and we can expect micro-opportunity. If we invest short term we get short lasting results. If we are not shoulder to shoulder giving our lives, we are essentially giving nothing of value. This is where the fundamental change can be seeded... Our values of long-term, high investment, high return, high touch and high expectation engagement in the developing world. A better world is the result of better people doing better work.

[Yves Peeters]

Indeed buisnesses and NGO's are imortant to fight poverty but without a correct and ethical long-term vision from the governments the problems cannot be solved.
Instead of focussing on money-flow towards developping countries and the debt they creating, we should better aim for a complete monetary reform. With the technologies available today we can provide sufficient food, goods and energy to justify a worldwide basic income. Offcoarse this view may seem utopian to many but by using comon sense anyone can understand the benefits. I strongly suggest the readers to evaluate the ecovaproject (www.ecovaproject.org) and give your valuable remarks and suggestions.
We cannot wait anylonger to take our responsibility now that humanity is ready for a transition towards a better world.

[Trevor Simumba]

It is commendable that Oxfam is partnering with a major private multinational like Unilever to study the issue of poverty. One thing I would like to point out and which I feel is a major issue is that when we discuss regulating the market in favour of small producers we should be very careful what exactly we mean. Small businesses in developing countries tend to be much more heavily regulated already and due to their small size and the nature of their businesses prefer to stay out of the formal net of government regulations. I believe we should be fighting for less regulation and better support mechanisms within developing countries that reward risk and entreprenuership to encourage more small businesses to enter the formal market economic systems. Governments should focus more on creating an environment that supports the free market and broadens the tax base rather than attempting to regulate the market in favour of any one group. At the international level we should ensure that LDC's have access to markets equitably and the developed countries in the EU, Asia and in North America stop subsiding their production at the expense of LDC's. Ultimately we need more private sector investment than donor aid. The developing world must get out of the culture of dependency.