Megacities and the development impact of business

This post is written in Cairo -- where the developmental challenges of current and future megacities are manifest even to an untrained eye.

It is a fitting place to read a new book ('The Turnaround Challenge') co-written by Mick Blowfield. Subtitled 'Business and the city of the future', it deals with a host of sustainability and social challenges, and the potential for innovative business practices and models of capitalism that might mitigate or address these.

That is the point of this short post, really: rather than reading my thoughts, I commend the work itself.

This post also comes ahead of a visit next week to North America for various roundtables on the role of business in meeting development goals; next week includes a debate on 'corporate social enterprises' at CSIS under Chevron's 'Forum for Development' speaker programme: see here. For a primer on the sort of things under discussion, see the IDG's report (about a year old now) on the topic of business contributions to pressing development issues: here.
  

The role of the private sector in meeting global development goals is a recurrent them of my blog -- see some posts grouped here.

[Cairo traffic hooted and crawled throughout the making of this blog-post ...]

Jo

Public-private partnerships in Africa: presumptions

The dismissal last week of Malawi's entire cabinet (following a procurement fraud scandal) is easily dismissed as yet another corruption headline. But it also provides a hook for a little-mentioned aspect of public-private partnerships (PPPs) -- among the most fashionable concepts and phrases in current African economic and social development.

Although there is a strong scent of doubtful panacea about PPP-talk and often little precision offered on what exactly such relationships entail, there are many obvious advantages to seeking to crowd-in private sector funding and other support for government schemes. (This blog favours greater engagement with the private sector by governments in pursuit of public goals; see for example the previous post, here).

When PPPs are idealised, societies can see big business become more directly involved (than the indirect means of taxpaying) in the co-provision of public goods; for its part, business can envisage greater influence over the roll-out of infrastructure and other projects, reassured -- by the state's involvement in the project -- about its long-term prospects and return-on-investment.

Yet less ink is usually spent on what these relationships require, beyond viable co-financing arrangements, to work.

In particular, current PPP enthusiasm tends to presume that the public sector ministry or department can in fact deliver as a partner. The Malawi story highlights familiar accountability, transparency and integrity problems with many government departments in that sub-region, but the issue will also be one of sheer capacity and the available skills-base.

The issue is important to debates on promoting pro-developmental business in Africa because PPPs assume a class of public servants and regulators capable not only of delivering utilitarian projects but of conceiving and overseeing PPPs that strive to meet public interest (social, environmental and governance) criteria as well as commercial attractiveness ones.

I think that the issue I mean to address is this: 'We often assume that the difficulty is getting business to take the wider issue of public goods seriously; but many firms accept the merits or imperatives of development goals and are often waiting for a government lead and direction; so, what do hopes for scaled-up public-private relationships in pursuit of developmental goals assume about the quality of public servants, rather than just the motivational posture of private firms?'

It would be interesting to see survey data on whether the majority of today's non-migratory young graduates in major African countries prefer a public sector job to a business/corporate one.

It is often assumed that private sector roles attract the more dynamic, enterprising and capable cohorts, while supposedly more secure but lower-paid government jobs attract those who are more risk-averse, have public service motivations, and so on.

In less-developed African countries, as business-government interactions increase around PPP models, one question that will arise more starkly is the potential drain of government talent into corporate teams. Firms may face dilemmas since their instinct to 'poach' an individual may clash with their sense that more will get done on their PPP if the talented individual remains in government. One idea is for the private sector partner to sponsor government counterparts -- as if seconding them -- to ensure these remain in government; this sounds like a recipe for corporate capture of government agencies but, if not too naïve, holds the promise that PPPs can deliver projects without stripping departments of their best staff.

The Malawi scheme was not particularly sophisticated, but does reveal a degree of entrepreneurialism within government agencies that in commercial life would be rewarded, in relevant appropriate circumstances (see this reflection on the upsides of 'corruption as innovation' here). Yet the Malawi conduct is not the sort of 'initiative' and 'innovation' that PPPs require of public servants if PPPs are to make meaningful impact, as a model, on African growth and development.

See a previous post on 'revolving doors' and the private sector's responsibility for public sector integrity as Africa rises.

Jo

'Good business' in Africa: governance of corporate responsibility

What is more significant in determining the social, environmental or governance impact of larger businesses operating in Africa -- their host government or their home government?

 

During our mid-September conference (see here and previous post), in the Africa political economy discussion group, one delegate asked whether firms from any particular countries were notable for generally doing 'good' (socially responsible) business.

 

We often field questions seeking to define and unlock the formula, strategy, approach, style of firms from Brazil, Turkey, China and so on increasingly doing business in Africa -- questions which assume that such firms display distinct, recognisable attributes on the basis of their national origin, or even that it is possible to attribute a single nationality to many larger firms. Implicit in such questions is often a sense that firms 'from' some jurisdictions are likely to be better corporate citizens abroad than others. A previous post noted that such claims are intuitively appealing but often lack empirical backing -- see here.

 

In reacting to the conference question my first sense was to say that the origin or home of a firm may not be as important as the will and ability of the host government to encourage or ensure responsible investment activities.

 

My particular interest lies in fragile and conflict-affected states. Here, even if interested in promoting responsible business conduct or able to spare the capacity to do so, such governments may fear that placing demands on firms would make the proposition of investing too onerous: it is hard enough attracting responsible firms to risky places (even if many activities to mitigate social impact would also reduce political risks).

 

In weakly governed settings the significance of self-regulation and non-state (or external) sources of regulation increases. That is -- to address the conference question -- the weaker the host government's regulatory capacity, the more the home origin of a firm may matter in terms of whether it feels pressure or inclination to act responsibly.

 

In theory, self-regulation can obviate the need for a capable state across both mandatory (but not enforced) and voluntary activities. For voluntary commitments this is especially, but perhaps really only, where there is sufficient alignment with core business objectives. Transitioning these undertakings to something more formal and systematic generally takes more than goodwill on the part of a single firm or pressure from certain groupings.

 

As a very good, short, recent paper points out, the governance of corporate responsibility -- call it the regulation of self-regulation -- may ultimately depend on the powers of a regulatory state. These powers and the incentives for using them vary across investment-sending and investment-receiving states: the prospects for doing 'good' business in African settings will very often depend on very localised factors and is more complex than labelling certain countries better at being good.

 

Jo

'Africa Rising': enhancing public-private ties

It is easy to discern the coexistence across Africa of fast GDP growth rates alongside significant (and in places growing) deficits in infrastructure, service delivery and regulatory capacity.

 

This phenomenon not only prompts the question 'what counts as success?' in the current 'Africa Rising' debate, but also prompts reflection on ways in which business-government relations can be (appropriately) enhanced or reconfigured to ensure that economic growth is more sustained, inclusive and pro-developmental.

 

This week (18-20 Sept) sees our firm's annual 'Global Horizons' conference here in Oxford. One conference sponsor has elsewhere identified enhanced government-business ties as one of six macro trends shaping the business world into the future (see here).

 

The Africa panel is entitled 'Measuring Success' while the discussion groups on Africa follow the sub-theme 'Growth, Governance and Public Goods'. One topic we may be discussing in the Africa sessions is what political, policy and practical issues arise in relation to the private sector becoming more explicitly or directly involved not just in infrastructure development, but in institutional strengthening.

 

For instance, if the longer-term answer must lie in African governments' abilities to tax and spend/distribute more efficiently and fairly, is there a role for corporate tax-payers to assist in this regard? At first glance, no firm seeks to create a more robust tax-man; yet over time, some firms might come to see that improving host government capacity to deliver public goods might help reduce local expectations that firms will do so instead.

 

Meanwhile, blog readers will discern that I'm very much an advocate of exploring greater engagement by and with the private sector in pursuit of greater quality and accessibility of public goods in Africa, but some voices take this too far.

 

It is one thing to note that austerity on the part of donors -- along with self-interest or impatience on the private sector's part -- is leading to greater attention to the latter as a stakeholder in meeting development goals. It is another thing to simply substitute firms for donors when thinking of solutions to enduring developmental problems.

 

Yet this is what one sometimes hears from some of the more enthusiastic supporters of the private sector's developmental duties or role. On this view, donors' retreat is not a developmental problem in Africa because business will step in with funding and expertise; or, one only waves a magic wand called 'public-private partnerships' and all ills are solved.

 

This is unrealistic, even if donor austerity does provide multiple opportunities for re-thinking strategies for Africa's (self-) upliftment, and even if much of Africa's developmental challenge may lie more in better assessment, levying and use of tax on private sector activity than in aid disbursement. It is also unsatisfying, because for all the chorus on PPPs as a commercial and developmental panacea (and for all their undoubted potential as a concept), one seldom sees much precision on what form these should take for particular sectors or services. 'Enhancing ties' between business and government is appealing but also raises a host of questions about proper roles and relationships, ones that require unpacking.

 

Any transfer of focus from donors and/or governments onto the private sector is not in firms' interests; but it is not necessarily in the wider public interest either -- despite the untapped promise that undoubtedly exists for harnessing business more directly to poverty-reduction, environmental management, and inclusive growth.

 

Jo

 

Previous posts have noted (or advocated) growing attention to the actual or potential alignment of public goals with private sector interests in Africa's development: see recently this post which groups some of them.

African dimensions of the Snowden saga: technologies of trust

The African growth and development story that gets the most airtime -- alongside sometimes misplaced hype about urbanisation and the 'rising middle class' -- is the proliferation of mobile telecoms (and gradual greater internet penetration).

 

The trend is not new now but the scope for innovative, cheap and wide-ranging platforms and services still excites for-profit outfits (telecoms, internet and consumer firms, and financial service providers), as well as policymakers interested in how expanding access to mobile technology and new media sources can help promote more reachable, responsive, and responsible government.

 

Some of the most exciting potential lies at the intersection of public and private sectors and interests: the significant scope in Africa for collaborative schemes and financing models that match corporate capital and dynamism with the policy authority and objectives of major public institutions -- think for example of the World Bank's work with Google Africa on deploying 'MapMaker' and community/crowdsourcing mapping technology in support of monitoring public services, political events, or humanitarian and disaster response efforts, and other partnerships on improving public access to government online data.  

 

Yet through mid-2013 discussion of the mobile/internet story in Africa has continued in isolation from the 'Snowden revelations' about the extent of US and other government agency access to private communications data, and the extent of corporate cooperation with security agencies in that process. Discussion of the pro-social impact of new technologies often lacks consideration of the down- or dark-sides to that, and the balance of interests in the user-provider-regulator triangle especially in those African countries where democratic space is constrained.

 

This week's blogpost is prompted by a brief line I spotted in the latest 'Zambia Weekly' letter alleging that the Zambian government had obtained a new ability to intercept email correspondence.

 

As noted in previous posts (see the three grouped here), new technologies merely provide a medium -- in a sense they are neutral as to the use made of them. Thus while pro-democracy activists welcome greater internet and mobile penetration and more repressive regimes generally dread it, the latter are also able to use such technologies to their advantage. In some cases, this will create dilemmas for consumer-facing telecoms firms operating in such settings in Africa, as the previous posts discuss.

 

Survey and anecdotal evidence suggests high levels of trust and goodwill among African consumers towards mobile phone companies (and the services they provide). This could prove an interesting 'social capital' resource for all sorts of initiatives. Yet, again, caution is needed in assuming that a greater technological imprint in governance or political processes in Africa will necessarily benefit pro-democracy forces, or necessarily engender public faith in electoral or other systems.

 

Greater proliferation of e-governance and i-politics has potential but will not necessarily mean intangible transfers of power to citizens over governments. Last week I returned from post-election Zimbabwe, where much controversy surrounded an Israeli-owned firm's role in managing the electronic voter's roll: some of our Africa experts at Oxford Analytica have examined the impact of new e-registration and e-voting technologies, explaining to clients how these may not necessarily win the confidence of voters nor improve electoral integrity. Indeed they might have precisely the opposite effect.

 

There is more work to be done exploring the extent and potential utility of public trust in telecoms service providers in Africa and their relations with host governments (see a previous related post here). 

Jo
 

ps - the public's trust was a key theme of Oxford Analytica's most recent (Edition 2) free quarterly 'Business and Society Monitor' (available here) which discusses the work of in-house experts who have been following and explaining the global industry and governance implications of the Snowden/NSA issue.