The future of the world is Africa

[Business Action for Africa]

Dr Nick Blazquez
Managing Director, Diageo Africa

Over the last five years we have seen Africa’s economic growth averaging more than 4% per annum and private capital flows increasing from US$11 billion in 2000 to US$53 billion in 2007. For Diageo the African region delivered 65% of Diageo’s net sales value (NSV) growth and 38% of Diageo’s operating profit in the first half of 2009. Diageo’s businesses in Africa employ over 4,500 people and last year we provided £317 million in tax contributions to African exchequers. However, this very foundation is being undermined by a financial crisis and economic downturn that is none of Africa’s making.

As is the case everywhere we work, we do have to be conscious that governance gains made by many African nations are not threatened as tougher economic conditions and food price rises can lead to societal tensions. For Diageo in Africa, a major part of how we do good business is recognising that we have a responsibility that stretches beyond those we employ to the communities they are part of and to the localities where our brands are enjoyed – and it is this that we must protect as much as the bottom line.

Diageo is only one part of this puzzle – but we are playing our part. This crisis calls for inventiveness. It demands new ways of thinking and new momentum to tackle Africa’s infrastructure and trade deficits. This can only be truly delivered in partnership with the private sector. Challenge funds, which allow companies and development organisations to share the risks associated with enabling private sector-led innovation, are becoming increasingly important. One example is the work we are doing to develop the cultivation of sorghum for brewing in Cameroon, which is supported by the Africa Enterprise Challenge Fund. The project aims to create a sustainable market for local grain, raise agricultural standards, yields and farm incomes.

The challenge we face is to replicate and scale up these important initiatives. To do this, we have to create more flexible partnership and funding mechanisms that allow local companies and organisations operating at the grass roots to more easily unlock vital sources of financial and technical support. Greater local ownership will allow us to tap in to key local knowledge and experience, and potentially offers a more effective way to manage and deliver these type of projects, by-passing more centralised corporate and donor structures. This will require a change in thinking and approach that currently predominantly favours larger scale initiatives.

Africa offers immense opportunities for companies to do good business and I truly believe that G8 governments can help themselves during this economic recession by helping to foster an investment climate in Africa so that businesses, like mine, can provide employment opportunities that balance the gender gap; to generate tax revenues that assist governments to implement social and education programmes; to develop and provide technologies to improve agricultural productivity and increase food security; to train staff and build our human capacity; and to provide investments in the community that address basic needs such as access to clean drinking water.

It will happen when businesses can thrive, wealth can be created and poverty can be reduced. Vijay Mahajan in his excellent book ‘Africa Rising’ said it straight: ‘The future of the world is Africa.’

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[David Nahinga]

Greetings Dr. Nick,
I must start by first appreciating the tremendous work that CSR has done on the African continent. I also take great pleasure in acknowledging your post with the theme "Africa is the future of the world".
Being an African, (Kenyan) I wish to propose a few strategies that I believe will be key in re-shaping the way Corporate Citizenship will affect the opportunities for empowering Africans.

In the past, corporate Citizens have heavily invested in Corporate Social Responsibility initiatives that are skewed in leveraging their products in the market. For example, a One million shillings "Challenge" would be preceded by a marketing strategy that would guarantee a Billion shilling "Sale". I have seen this logic many times because it makes business sense. In the future this model may not make any business sense!

I believe the best CSR initiative of the future will shift from being market driven to being community driven.If the Corporate Citizens can leverage their products and at the same time be the vehicles for jump starting Creative Sustainable Communities & Livelihoods, then this critical balance will be struck and profits will be made.

Overly-poor neighborhoods are a threat to thriving businesses in Africa. They are a threat to the staff and the distribution network. Purely market-centered CSR initiatives that ignore the Sustainability Component are only tools that increase the disparity patterns. A lot of the money for CSR actually ends up in the hands of Big marketers and Brokers.

I must admit that Diageo has done many Important Initiatives in Africa but I still believe the best Opportunities are yet to be unraveled.

Currently I am undertaking a study of marshaling all Corporate Social responsibilities in solving Societal Problems and achieving the MDG's. A Possible target problem which you have wisely flagged out is the issue of Inflation. A solution to Inflation and poverty is all at once an across-the-board solution.

I invested a part of my own little capital to an experiment in the retail business that attempts to solve Inflation caused by "Speculative Shopkeepers" and predatory business men. The project has been successful so far and has not succumbed. Because this was a one man experiment, I believe the Injection of Capital to such a Creative Community Retail Model will literally kill the silent tax on goods for a united community. If we can strive to find a successful model to adopt, the rest will be an issue of replication and thriving success both for the business and the citizenry.

Replication of successful Initiatives in Africa is yet a challenge we need to address.

Combined Corporate CSR Initiatives can also address the obvious problems bedeviling Africa.
Africa is Untapped! The wealth is in its people and the great potential it presents to those countries trying to build on Voodoo Economics of stock exchanges. We can invent , adopt and replicate our successes and learnt lessons.

If the West pursues its western models in Africa, the continent of the future, I trust there might be no more continent left for the future. We need to re-invent our engagement and models under the keen eye of creating Creative Sustainable Communities.
Best Regards Sir.