Corporations, contracts, clarity: from Congo to Cape Town

Last week was full of interesting events for a blog reflecting -- as this one does -- on regulation and responsibility, risk and reward in Africa.

Here are just two thoughts -- one is on possible side-effects of greater contract and revenue transparency measures affecting major listed companies; the other is on the wider question of the private sector's role in Africa's development.

'Public company as public good'

Friday's cover story and lead editorial in the influential Financial Times covered the (not that new) allegations, in the just-released 'Africa Progress Panel' report, of how the Congo-Kinshasa (DRC) government sold major state mining assets at significant undervaluation; the effect has been unrealised public revenue from the national natural endowments of a country whose alarming poverty and under-development levels belie its significant below-the-ground resource wealth. This is a country whose mineral wealth makes strangely ironic the phrase 'dirt poor'.

The controlling interests in one major listed firm involved in this DRC drama are considering de-listing it from the London bourse; both the US and EU are easing in regulations requiring mining firms domiciled there to report publicly on what they pay to host governments.

Campaigns for greater revenue and contract transparency are hard, on many levels and in principle, to disagree with. (The Panel's report decries the public revenues that go unrealised in Africa each year through various evasive transactional measures by firms; its not an over-statement to say that those interested in glamorous impact on advancing financing of Africa's development should eschew conventional debates and take on the less headline-y, bean-counter complex but nevertheless vital topic of taxation: how it is levied, how its proceeds are used).

Yet for all the merits of the transparency trend, there are some other dimensions. Almost exactly a year ago I blogged on whether one unintended consequence of (otherwise laudable) greater stock exchange regulation of responsible investing might be to accelerate the trend of increased preference for more private and more opaque corporate forms -- and so end up decreasing rather than increasing aggregate transparency on major deals: see here.

(See also these posts on corporate form and responsible investing: here; and the wider context for transparency regulations -- strategic competition for minerals in Africa: here ... in this context there is also a question of whether regulatory proliferation will necessarily achieve its pro-social objectives: see here; last week's Economist noted how much consulting and legal advisory work new regulations on such issues have generated from firms unable to digest what counts as compliance.)

The private sector and Africa's development

Last week saw the 'African Davos' -- the World Economic Forum (WEF Africa) in Cape Town.

On one hand, it is striking how businessperson-policymaker summits have embraced vocabularies that for over a decade have been standard issue within the field of pro-poor development; thus one WEF panel looked at how the private, public and civic sectors could work together on "strategies to mitigate vulnerability and enhance resilience of African societies".

This sort of conversation may partly reflect austerity in donor countries but is no doubt to be welcomed -- see a recent post on the private sector's role in the post-2015 successors to the MDGs: here.

On the other hand, I am still struck by how new and surprising many people seem to think it is that the private sector might have some role, responsibility or interest in meeting development aspirations and needs (beyond being good employers and diligent tax-payers -- although there's a strong argument that after that the onus is on government to deliver public goods).

Thus a good friend who participated in the WEF and whose background is traditional development rather than business, was pleasantly surprised to learn how companies all over Africa are doing some pretty dynamic and interesting things towards its development -- doing well while doing some good. Perhaps one day this will no longer be surprising: the private sector, as this blog chimes, inhabits a public world.

'Business and Society Monitor'

Finally, if interested in these issues here is a link to our firm's new, free, quarterly email service monitoring macro-trends in corporate responsibility and sustainability, in the context of the changing role of business in society: sign up (and spread around) -- here.

Jo