Promoting investment and protecting development in Africa through responsible business and collective action

[Business Action for Africa]

Adam Leach
CEO, International Business Leaders Forum

At the World Economic Forum on Africa in June, Kofi Annan, Graça Machel and Linah Mohohlo launched a report that stated that the global economic crisis imported from the North is hitting Africa harder than any other region.
In different parts of Africa, the recession threatens to increase unrest in conflict prone areas; undermine nutrition and sanitation for millions at risk from disease; and stifle the striving economies that have powered much of Africa’s recent growth. Meanwhile confidence in business and its leaders has hit rock bottom.

In an increasingly interdependent world economy in which the responsibility for growth is shared between both advanced and emerging markets, business has an important role to play in addressing development challenges and helping to shape the “inclusive, green and sustainable recovery” called for in April’s G20 communiqué.
While many companies have been in the news for their poor behaviour, there are examples of the positive contribution business can make to development, and of African governments creating some of the conditions for responsible business to prosper. It is possible to get this right. What is needed is more concerted effort, from governments and businesses, African and international.

G8 governments can follow the OECD example, where governments are making the case to their MENA counterparts for responsible business practices as a means to maximise both investment – from domestic entrepreneurs and international companies – and the development benefits that follow. Raised business standards and improved governance can help move domestic entrepreneurs out of the informal economy and attract investment from international companies, who must meet international requirements for responsible behaviour.

G8 governments can also encourage their companies operating in Africa to engage in more local dialogue with domestic and international companies, and take more collective action on areas of shared value: boosting the vocational skills and entrepreneurial culture of local people through training centres and enterprise academies are key steps in creating local jobs and increasing employability; working together in conflict-prone regions can raise business standards and deliver peace-building initiatives; forming coalitions can increase transparency and reduce corruption.

All of these are areas companies can act more collectively. Firstly, because the constrained environment of a recession demands it. Secondly, because we have seen that collective action works.

This is also the time for African governments to show confidence and leadership, to honour their commitments on governance and transparency, to invest in infrastructure, and to build on their ability to partner with companies and non-profit organisations.

The North-South transport corridor rehabilitation project offers to dramatically reduce transit times and will be a test case for inter-regional economic cooperation. Its development will allow greater investment in Africa and, crucially, enhanced trade between African nations.

Investment, jobs and enterprise can further be supported through investing in telecommunications infrastructure – which is already supporting much of the most innovative private developments in the lives of people across the continent.

As investment from non-G8 countries becomes more important to African countries, African governments can re-assert the importance of responsible business standards with all inward investment.

Finally, African governments can increase their own capacity to form and deliver on cross-sector partnerships - as a way to create sustainable solutions to the challenges they face. Partnerships offer much but the practice of partnering is not easy. From almost two decades of work, a more systematic approach to partnering is emerging which can bring far more productive working relationships and greater development impact. For example IBLF is working with the governments of Zambia, Madagascar, South Africa, Ghana and Gabon, the German Sustainable Development Agency (GTZ) and international companies to explore how best to help each government to partner more effectively with business.

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