Big multinational firms operating in Africa are finding host governments ever more proactive about seeking the private sector's help in improving the business climate -- and in helping government's political and policy challenges in meeting social and developmental goals.[*]
Business-government relations were one topic under discussion at the summit I attended last week in Cape Town, 'Growing Beyond Borders' (Strategic Growth Forum).
Discussion on the topic covered familiar issues, for instance, delineating the proper relative roles of governments and business in providing public goods and services like safety, healthcare and basic infrastructure (see previous posts on this Blog on 'business and government').
Yet what about relations below the national level, between foreign firms and provincial/state or municipal/local government authorities?
This relatively neglected topic did not come up at the Forum -- or at least the distinctions between different tiers of government did not. What important public policy (and related corporate strategy) issues arise when influential firms and sub-national governments engage one another -- what opportunities exist to promote public interests, what risks arise to private sector interests?
The fact that a large majority of corporate social investment / corporate responsibility strategies and spending are very local in nature and impact means that firms are, especially in the extractive sectors, often very familiar with sub-national government relations. Moreover, it is only natural that where the subject is nationally-applicable fiscal or other regulatory measures, the focus will instead be on business dialogue with the national government.
But in general I think it is fair to say that debate on business-government relations in Africa focusses on national goverments in a way that neglects an important trend: in the same way that investment into Africa often focusses on cities rather than countries (many firms have a Lagos city/state strategy not a Nigeria-wide one, for instance), city and provincial/state leaders in Africa appear to be becoming more proactive about directly engaging externally on everything from investment self-promotion to climate change mitigation.
If so, this trend holds the promise of finding, beneath the national-level, a wider set of people and institutions among which business-government dialogue and cooperation can occur on alleviating social or environmental or governance bottlenecks or backlogs, on giving substance to rhetoric about pro-sustainability public-private development partnerships, and so on. For example, corporate contributions on air or water pollution mitigation, youth job-creation, or greener supply-chains may be too political or daunting when approached at a national level, but responsible business might find more to talk about and do (and show measurable progress on) with a mayor's office.
This 'emerging' trend of greater foreign investor engagement with sub-national African public authorities may not be new (much pre-colonial trade and diplomacy developed between city-states that pre-dated present-day countries; city officials have a taste of 'foreign policy' roles when they bid to host major world sporting events). Nor of course are more recent trends of sub-national government pro-activity on foreign policy or global issues limited to Africa -- witness various US states moving ahead with their own carbon emissions-related legislation whatever Washington's position in multilateral forums; my friend Jabin Jacob, for example, is an expert on sub-national investment and other relations between Chinese provinces and Indian states; Australian state governments have fairly developed 'foreign investor relations' capacities.
In the African context, Nikia Clarke (here in Oxford) has recently pointed out the growing direct bilateral relations between Chinese cities and provinces with African ones, irrespective of national-level interactions. Mineral-rich provinces of large states with weak central governments -- like Congo-Kinshasa -- are increasingly confident in making direct overtures to foreign investment. One is just as likely, at an African investment conference, to find a Nigerian state governor as one is to meet a federal investment promotion official. Often, there is considerable scope for such city or state officials to discuss where the private sector can help alleviate local social or developmental problems, furthering the local public interest while cementing a firms' local 'social license' to operate, or its ease of operations.
Having briefly mentioned above the promising dimensions of such trends and relationships in terms of advancing sustainability concerns, two caveats spring to mind.
First is that while we should welcome plurality of 'bottom-up' inputs and initiatives by all levels of sub-national government on globally-shared sustainability challenges, and the private sector's role in these conversations and activities, these are ultimately no substitute for the sort of multilateral or bilateral movement that follows dialogue between sovereign states. Second is that in the African context, relations between central and provincial or city authorities will often be highly political, some even fraught with a history of secessionism: corporate engagement with sub-national governments to address particular localised issues or build local regulatory capacity might, executed poorly, create risks of adverse reaction from central government.
Jo
* Ps -- the pattern of greater business-government dialogue relates to countries other than South Africa, where relations between big business and the ANC-led Alliance have particular distinguishing features: for previous posts see for example here (balancing too much and too little business access to officials) and here (building trust) and here (private sector role in development).
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