Corporates, communities, communications

The inimitable, irreplaceable Nelson Mandela will be buried this week.

 

Despite his message (or because of his distinctiveness), very few South Africans expect the leadership that has followed to rise to the same level, but one thing both government and the private sector in his country will nevertheless continue to struggle with is managing the high expectations of especially younger people in terms of job-creation and service provision.

 

Questions of expectations management arose this week at the 'governance of natural resources' session of the Blavatnik School's 'Challenges of Government' conference I attended  in Oxford (here). This focus was somewhat natural since the conference theme looked at issues of people-power and access and accountability and legitimacy. Yet even if that were not the theme, any contemporary discussion of governance and resources in Africa would need to focus strongly on expectations management issues by communities, governments and investors -- especially in countries that have only recently made significant discoveries of sub-soil mineral wealth.

 

Managing community and other expectations in the extractive sectors is not solely about communication strategies, but they are a big part of it. Firms would be advised not to confuse rolling-out social investment and responsibility strategies with handling short- and longer-term expectations: mollifying expectations is not necessarily managing them.

The challenge is not just aligning with community needs and wants those initiatives and investments that firms think would be and look good. It is also to communicate in credible, accessible ways information that helps communities understand realities such as the long timeframes between discovery and production, and between production and profit, or the difference between government's duties and corporate responsibilities, with all the delicate and political balances involved where the host governments at various levels also face and hold high expectations.

 

Firms still tend to focus on external audiences (the market, or activists back in the first world) in terms of their efforts towards communication strategies on corporate responsibility issues; one question discussed at the conference was whether that focus needs to shift more towards firms communicating what they are doing, can do, cannot do, etc., to (a) local community and government audiences and (b) internally with the firm in terms of explaining social engagement issues in ways that are shown to protect and enhance, not distract from, longer-term shareholder value.

 

Moreover, corporate responsibility issues (beyond the more narrow phenomenon of CSR programmes) arguably lie at the heart of firms' risk-management and value-creation concerns, especially in some sectors. Yet in many cases the issues are dealt with as aspects of corporate communications -- non-core and essentially addressed to external audiences.

 

This week saw the publication of KPMG's annual survey of corporate responsibility reporting (here). This follows trends in reporting on corporate responsibility (by over 200 of the world's largest firms, and the 100-biggest firms across 41 countries).

 

This does not necessarily reflect trends in corporate responsibility practices per se, including how these practices or the issues they represent are treated by boards and executives within these firms. Nevertheless, by assessing firms' reports against several criteria (including whether and how a firm's reporting shows how its management governs responsibility / sustainability issues within corporate governance), the KPMG survey does offer some insight into the extent to which these issues may be migrating from the relative periphery to more core areas of strategic and commercial consideration. One sign of that might be where a firm incorporates these issues into its general reporting to the market, rather than (or in addition to) distinct responsibility / sustainability reports.

 

The report is worth a read. In an ideal world firms and governments are managing problems, not just managing (through communication strategies) expectations about problems. In the real world, the latter will continue to matter a great deal to firms invested in places where formal reports of the sort surveyed by KPMG do not necessarily speak to the issues that lead to political and security pressures on firms and the governments that host them.

 

Jo

 

The politics of the private sector's role in development

This blog largely shares the evident current enthusiasm for exploring more imaginatively, as a matter of public policy, the potential explicit developmental contributions of the private sector.

By this I mean not the process of using aid to develop a more functional local private sector (for the development cascade that may bring), but harnessing the potential contributions of especially big business to the achievement of development goals, as well as including business voices -- as and where appropriate -- in debates about what those goals should be and how they should be achieved.

Many posts to date on this blog deal with the issues arising in such encounters and relationships. A major theme of those posts is that far from being enthusiastic about such engagements, many policymakers either overlook their potential or, if they consider the business community, are unduly ambivalent about exploring working together on issues of mutual interest.

There is, nevertheless, a wave of at least official policy interest from OECD aid donors in these issues.

(There is alot of material being produced. Perhaps the most comprehensive and reflective survey of global bilateral approaches is a Canadian one from January this year, Investing in the Business of Development (here)).

Thus having argued in many previous posts that the problem is arguably too little attention by policymakers to the potential 'synergies' and shared goals, I use my blogger's prerogative to suggest that in many respects there exists in parallel a contrary problem: an approach that sees engaging the private sector as a development panacea, without applying the same caution and critical thinking that is applied to donor-government relations.

Indeed one thing particularly commending the 2013 report referenced above is that it rightly expresses skepticism about this new policy orientation as a development 'silver bullet', arguing that many current advocates assume that from harnessing business's interest and attributes, a 'win-win-win-win' situation must result for communities, companies, donor and recipient governments.

Such assumptions (and the enthusiasm they engender) pay too little attention to just how political, as with 'regular' development, pro-development interactions with business will be at both the general and project-specific level; in pointing out the obviously huge shared public and private sector interests in peace and prosperity, they can tend to gloss over how politicised is the question of who one means by 'the private sector' (who gets a seat at debates to shape the post-2015 development agenda? Which companies does a donor agency engage or neglect? And so on).

Thus current enthusiasm for orienting development policy in search of alignments with business tends to underplay how political, indeed ideological, will be the questions merely of choice -- choosing development partners from among the diverse 'private sector' (for working with on goals, or for discussing those goals), and indeed choosing the overall policy of building such relationships. Such choices go directly to large questions about the role of business in society generally, or the role of the state vs business in providing public goods.

In previous posts I have lamented the narrow-mindedness of most public policy for not thinking imaginatively enough about engaging with business (and vice versa). This reticence does, however, reflect very real awareness of the policy dilemmas involved and often well-founded reservations about explicitly tying-in business to development projects and policies.

Still, I'll conclude in a tone that continues the lament: yes, the decision to engage business, and then the process of doing so, is full of policy minefields and trade-offs and problems; but these are not that different from the problems and dilemmas encountered in dealing with governments and other familiar development actors. The challenges of our century are too big and inter-connected to be left to public policymaking alone, quite apart from the reality of the huge de facto development impact (for better or worse) that business activity has. One needs as many 'wins' as one can reasonably find. Public and aid policy in Africa should embrace embracing the private sector, and figure it out as we go.

Jo

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.

The private sector's role in poverty-reduction, development and peace

Development policymakers and practitioners are discovering this thing called the private sector, while business leaders are becoming more fluent in developmental issues.

Many observers are cynical. Much remains at the level of rhetoric. Much of the interest is a by-product of development aid austerity. But although it matters what motivates various actors (and until history ends with some universal consensus about how best to develop peacefully, sustainably and equitably) this current trend of debate is overwhelmingly a good thing.

The theme of this week's 10th Brookings roundtable on global poverty (albeit held rather ironically in Aspen, Colorado) is the role of the private sector in the new global development agenda, that is, the macro-framework to replace the 2000 Millennium Development Goals (MDGs).

Next month, the annual UN Secretary-General's 'Private Sector Forum' during the opening session of the UN General Assembly will consider the same topic -- the role of the private sector in shaping and delivering the post-2015 development agenda, this time with a focus on Africa.

This short post just provides a flick to recent previous ones I've done discussing this topic: see in particular here and here on the private sector and the post-MDGs.

Other posts include: the residual tendency to ignore the private sector when defining who counts as a 'stakeholder' in peace, security or development -- see here; thoughts on why development colleagues should be so surprised that the private sector might have a role in their world -- here; and the new pragmatism about the private sector's role that is evident in this decade -- here.

The trend is gathering strength. On the topic I follow particularly closely -- the private sector's role in peacebuilding -- the UN system was largely silent until very recently. A UN forum (see long video) on the issue in June marks a growing recognition of the need to engage with business in building more peaceful, prosperous, inclusive societies. It is good to talk -- although one is often tempted to say 'less activities, more actions'.

Jo

Mobiles, media, and mass messaging in African politics

Within wider debates on the private sector's role in providing, protecting or respecting public goods such as safety and security, non-state media can have special responsibilities.

 

Last week I began preparing notes for a part in the EU Eurojust programme's network on genocide, crimes against humanity and war crimes, whose next meeting will consider the jurisprudence and practicalities around the potential liability of business entities and owners for complicity in, contribution to, or commission of the most grave international crimes.

 

Most attention focuses on classic scenarios such as a firm that provides lethal gas used in a death camp (IG Farben company's Zyklon-B gas in Nazi Germany). Colonial and post-colonial Africa yield some examples albeit ones that mainly have a less obvious chain of causation or imputed intention to profit from crimes against humanity.

 

The role of the media and telecoms sectors is less often considered, although a notable African exception is the role of a privately-owned local radio station in broadcasting hate-speech and incitement in Rwanda in the lead-up to that country's 1994 genocide. More recently, this year's Kenya elections witnessed a wave of efforts to prevent a repeat of the inflammatory private broadcasts and publications that occurred around the 2007-8 election-related serious ethnic violence. Across West Africa in the last decade, a flowering of non-state newspapers and talk-back radio has fuelled greater free political communication but has also witnessed private media houses acting as platforms for ethnic baiting and stereotyping of a sort that can have very serious consequences.

 

Such situations call for state regulation of private media self-regulation to constrain the production of harmful content well before it constitutes or contributes to the sort of conduct that raises the interest of prosecutors in The Hague. The inherent limits on freedom of expression and the normative weight of prohibitions on incitement to grave crimes mean that such situations raise merely obvious duties -- and not really any dilemmas -- for private media or telecoms outfits (although on-line self-publication raises particular challenges for internet service provider firms).

 

A somewhat different situation for media and telecoms firms around Africa involves not mass crimes or their precursors but the many ways in which commercial provision of communications services comes head to head with electoral or protest politics, mundane or menacing. It is where the pressure for self-censorship or altered operations comes from the state bureaucracy in a context where democratic principles and public order are both potentially directly at stake.

 

It is one thing if a valid law requires, for example, that in the interests of public order a private mobile phone service provider not enable political parties to send mass multi-recipient text (SMS) messages around election time. The issue becomes whether that law is reasonable and of general, impartial application. If not (for instance, if used by the state to suppress the voice of its political opposition or to monitor its communications), the telecoms company may need to make difficult calculations, including balancing its relationship with the government with its reputation or its principals' own principles.

 

In many cases, there may be no formal regulatory basis for state officials to request phone, media or social media firms to constrain their output or their customers' usage. Instead, implicit in such requests is a threat, for instance of non-renewal of broadcast or service provider licences in future. Where politics and business intersect in hard cases, it is far easier for armchair commentators to counsel firms to take a path of principled pragmatism than to have to actually walk it.

 

This week sees controversial elections in Zimbabwe to end the 2008-9 power-sharing arrangement. Homegrown independent mobile phone firm Econet has come under considerable pressure to agree to block mass SMS-sending by organisational users. Ostensibly, the request is premised on a need to preserve public order (Kenya took similar steps ahead of its 2013 election). Some argue that the net effect in the Zimbabwe / Econet case will be to favour one party over another. The firm has reportedly and perhaps understandably obliged.

 

Indeed, these Zimbabwe elections are showcasing more generally the evolving role of mobile and internet (and mobile internet) technologies in African electoral politics -- even if the vast majority of voters across the continent still appear to rely on radio for the bulk of their political self-education.

 

In addition to traditional media (a new private independent TV station recently began broadcasting into Zimbabwe from South Africa, via satellite), the country is experiencing new phenomena such as the 'Baba Jukwa' Facebook character who purports to disclose, from within the ruling party, its many intrigues; Google Africa has launched a one-stop Zimbabwe election hub site collating news and other stories; website votewatch263.org is attempting to mimic Kenyan 'crowdsourcing' experiences by providing a space for individuals to report issues related to the conduct of campaigning and voting; the Econet SMS measure is a first for the country even if state monitoring of communications there is not.

 

Democratic aspirations and political competition will continue to stimulate innovation in the use of mobile and internet technologies across the continent -- sometimes the innovation will come from pro-democracy groups, and sometimes from incumbent regimes (or indeed rebel or other armed groups who in Africa have taken a strong liking to platforms like Twitter).

 

By choice or circumstance, private sector providers will put or find themselves at the heart of this trend.

 

Jo

 

'Africapitalism': doing good by doing well

That corporations and individuals can 'do well while doing good' seems pretty obvious.

It is nevertheless a notion and neat catch-phrase central to new approaches to the role that business should play in society, or perhaps to what should count as a 21st Century definition of 'success' in business. Such approaches are variously described as progressive capitalism, stakeholder capitalism, creating shared value, triple bottom line (people-planet-profit), and so on.

Implicit in the idea of 'doing well while doing good' would seem to be that businesses make efforts to have a net pro-social impact. It connotes moderating / improving their social, enviro and governance footprint, and suggests both supplementing core business activities with explicit social contributions, as well as directing those core activities towards registering a wider range of impacts than the traditional 'bottom line'.

It is interpreted, of course, to contrast with Milton Friedman's retort that a business has no social responsibilities other than to seek profit: on this view, businesses do good (improve social conditions) when they do well, but their only responsibilities, as such, are to their shareholders, employees, tax-collectors and regulators. In any event the latter relationships mainly involve legal duties, not mere 'responsibilities'.

The idea of 'doing well by doing good' is perhaps a bit distinct, at least conceptually. It connotes a firm that prospers materially as a direct result of its pro-social contributions: improving its brand through philanthropic outreach, or attracting the best talent by developing a reputation for great social awareness, and so on.

Then there is the notion of 'doing good by doing well...'.

The latter appears to be the essence of 'Africapitalism' -- renewed discussion of which in last week's Gaurdian prompted this post.

Nigerian banker Tony Elumelu promotes Africapitalism as the (unquestionably sound) idea that Africa's development should be African-led; it should focus not on aid or government actions but on developing conditions conducive to free enterprise; government's role should be minimal and facilitative -- because by unleashing entrepreneurial spirit and commercial potential, African countries will inevitably improve the developmental conditions of all in society; business has a commercial interest in doing good (building more peaceful, healthy, educated, prosperous societies) because this creates conditions in which business may prosper further. The commercial incentive to do well can foster all manner of innovations that might make life for many Africans easier, more secure, less exclusive; more gender equal.

The focus should be on removing obstacles to African-driven free enterprise and profit-making, Elumelu suggests, because this will "touch" society in transformative ways not achievable under present conditions. By enabling Africans to do well, much social good will result.

There is much that is appealing, to my mind, about this approach. Elumelu reiterates the much-heard (and somewhat true) refrain that Africa need not mimic other societies but can leapfrog others' experiences and development stages, so as to develop its own variety of socially-embedded and communally-conscious capitalism ... in essence, a sort of Ubuntu Inc.

Yet Elumelu will know that Africa is not a blank slate. For every 'leapfrog' opportunity is a 'lag' effect from past and existing patterns of relations between business, government and society. Pervasive features of its various countries' political economy militate against any automatic 'trickling down' effect from the success of some; these bottlenecks cannot simply be dismissed by referring to Africans' greater propensity for familial and communal sharing as the basis for what will perforce emerge, organically, as a more benign capitalism. Income inequality in Africa's fastest growing economies is growing, not narrowing, for instance.

Elumelu is not Friedman reincarnated, nor is he just Africa's Michael Porter. The debate he has led this decade is a much-needed one; it is hard to argue against the reform thrust he proposes, given the myriad obstacles to building a successful business in many African settings. A more dynamic, capable, bigger, richer locally-owned private sector promises jobs, promotes pride in Africa's self-upliftment, and would give African governments the revenue sources to deliver better services and social support. The current momentum behind looking to the private sector for a lead creates many opportunities simultaneously to tackle development and sustainability challenges afresh.

Yet calls for reforms to free up profit-making opportunities and minimise predatory rent-seeking are not new. Perhaps a more interesting practical debate is how the local private sector (assisted by donors and foreign firms, where appropriate) can help build state capacity to tax and distribute fairly and transparently. Philanthropy is one thing, but absent such capacity and will by the state, doing very well in Africa will not do most people much good.

Jo

See some related posts: after this year's African 'Davos' (here); taxation and corporate responsibility in Africa (here); and last week's post on business and development in Africa (here).

See a recent Elumelu speech and his thoughts in more detail (here and here).

The US, China and investing in Africa's development

This week Nigeria's president is in China, and last week the US president ended a week-long Africa trip.

Both the Obama visit and the China-in-Africa story raise questions about maximising the sustainable development benefits of prevailing high levels of foreign commercial interest in Africa, while mitigating any harmful inherent or incidental effects.

The last decade's growth in the quantity of foreign investment, trade, loan financing and other commercial interest in Africa has not always been matched by its quality.

By 'quality' I refer to developmental indicators that lie behind high headline GDP growth rates: foreign investment has not necessarily decreased inequality or insecurity, nor necessarily increased inclusivity, institutional capacity, or the integrity of governance processes (one could list other metrics, but I ran out of words beginning with 'i'...).

Such presumed links between investment-related growth and multi-indicator developmental gains require measurement and research; one aspect that requires more data is whether there are, in fact, relevant qualitative differences (seen from the perspective of Africa's inclusive and sustainable development) between investment from OECD and non-OECD countries.

The China-in-Africa story of course has myriad dimensions. This blog's interest is the business-government-society nexus: there is scope for further empirical research on the nature and efficacy of Beijing's current attempts to regulate the social, environmental and governance (ESG) impact of both state-owned and quasi- or non-state Chinese commercial initiatives and businesses in Africa.

A related question is whether -- and in what ways -- the ESG impact of Chinese firms (or funded projects) is materially different from US, EU, Japanese or other OECD firms (or indeed those from the BRICS, Gulf and other regions). It is often assumed that Western firms' ESG performance in Africa is bound to be superior because of their greater exposure (especially if listed) to regulatory and reputational pressures at home; it is also assumed and that this exposure constrains Western firms' commercial performance (competitiveness) relative to firms hailing from countries that pay less attention to how their companies behave abroad.

Statements by senior US officials reminding Africans to be wary of 'new' (Chinese and other) partners play off or play into such assumptions. They may be well-founded, and indeed they are assumptions that inform some of my previous posts (for example, here) on home-state regulation as an issue in strategic competition for access to African resources.

Such assumptions have an intuitively sound ring to them. However, they are largely working assumptions, sometimes laced with presumptions about the relative moral high ground of Western firms that might not be borne out by facts; if we are to be honest, more research is thus needed on whether there is any clear categorical connection between the national origin of a firm (sometimes, with globalised commodity firms for instance, a rather artificial linking) and its inclination to engage in social investment or to refrain from doing harm. Do we know in fact whether Canadian firms operating in Africa invariably have a superior net ESG impact and corporate responsibility profile than Chinese ones?

Turning to the Obama visit, it highlights the significance of a related trend relevant to this blog's subject-matter:

Policymakers For development/aid policy types in the West, austerity is catalysing a re-think about both 'the private sector's development role' (the role of the private sector in helping meet development goals) and 'private sector development' (the role of development agencies in developing local private commercial activity and/or improving the investment climate, not for its own sake but as a means to achieving traditional development goals).

Private sector For their part, firms are seeing African developmental needs and aspirations as a source of opportunity. Perhaps the biggest 'i'-word in contemporary Africa -- whether viewed as a matter of human development or from the (narrower) perspective of investment risk/opportunity -- is 'infrastructure'. Deficits in 'hard' infrastructure such as ports, roads, rail, electricity deter investment, but also represent an investment opportunity, either to meet pent-up local demand or to facilitate access to exportable natural resource opportunities. It is an issue closely tied to the China-in-Africa phenomenon. Obama's visit announced the 'Power Africa' initiative to fund US engagement in improving electricity generation and distribution on the continent.

There are reasons for some scepticism about the nexus between private commercial ventures and pro-development outcomes. Investors cannot and should not displace government obligations. But much of the scepticism goes too far; there is surely far more reason for those interested in African development to see tremendous opportunities for harnessing the self-interest of firms (and the strategic competition of superpowers) in pursuit of pro-social development goals.

Ultimately, too, debates over whether US or Chinese investors are more socially responsible and responsive in Africa can often miss the point, as I've argued elsewhere. The question is not so much the source of foreign interest, but the capacity and willingness of recipient African governments to ensure that private gain is not at the expense of the public interest.

Jo

ps - my first blogpost reflected on the difficulty of talking simplistically about 'the private sector' including where state-owned firms are increasingly active across Africa: here.

The G8 and Africa: trade, tax and transparency

Since the last post earlier this month, the most significant development at the nexus of business and society in sub-Saharan Africa has probably been last week's G8 summit, where the UK government promoted its 'Three-Ts' agenda (trade, tax and transparency).

This weekend a far smaller meeting took place here in Oxford, organised by the University's China-Africa Network (OUCAN) on 'Emerging Powers in Africa'.

The two very different events are related in at least one sense ... efforts in Western countries to regulate for more transparency in the way that companies interact with developing country governments still have some way to go in making a stronger case for such regulations among industry members that must compete with firms from settings, such as China, which do not impose such requirements.

One dimension of the UK government's agenda has been promoting greater transparency by UK-based extractive industry firms on what these firms pay to host governments. Africa accounts for many of the settings where shortcomings in government revenue transparency are a major issue for donors and lenders, local and transnational advocates, and increasingly for firms themselves (often at the behest of their financiers and insurers).

The G8 meeting followed shortly after the European Parliament voted on June 12 on laws (that will take effect in 2015) requiring European oil, gas, mining and logging firms to disclose payments above 100,000 euros made to host governments in relation to accessing or extracting natural resources -- even if the host government's laws prohibit such disclosure. The European regulatory initiative follows the US Dodd-Frank Act (which applies only to US listed entities' disclosure of payments) and reflects many years of 'publish-what-you-pay' advocacy and extractive industry transparency initiatives, the most notable of which was first supported by the British and other governments.

There are many dimensions to this topic, and what follows is only one thought-line.

One does not need to be an apologist for the extractive industries to acknowledge the force of their various arguments questioning such regulations.

One is the risk that Western firms subject to such requirements might be unable to compete for access to resources with less scrutinised, less scrupulous, and perhaps more socially indifferent firms from China and other 'emerging' powers. One can call this the 'Talisman factor', after the Canadian operator that withdrew, partly under pressure at home, from Sudan's conflict-affected oil sector; its concessions were taken up by firms with far less incentives to implement progressive environmental, social and governance norms.

One sees insufficient efforts by regulators (and their political principals at forums like the G8) to develop persuasive lines of argument about the strategic merits of such transparency regimes, in addition to their moral rectitude.

Late last year I blogged on the place of values and principles such as transparency in strategic competition for natural resources (here). It was a post calling for greater suasion on why such transparency regimes matter and why firms should embrace them.

Aside from indisputable matters of principle about the importance of revenue transparency, it is possible to make an argument that regulating for payment disclosures is not materially different from regulating for disclosure of other latent liabilities or political risk triggers. The market appreciates such information and, over time, appreciates those firms that are candid about disclosing material risks.

This sort of persuasion is important since regulatory compliance -- as experience shows and theory argues -- is far easier to secure where an industry accepts that the overall regulatory objective is of long-term value to it as a matter of business strategy (in addition to being warranted on the basis of being a responsible member of society).

That is, in order to get support from CEOs and boards we tend to speak of the need to make the 'business case' for voluntary corporate responsibility outreach. But making a 'business case' also matters for issues of compulsory regulation, because making it improves the prospects of fuller compliance.

The extractive industries are formidable forces when it comes to shaping the content of regulation, which should not be deferential to industry as a matter of course. Yet it seems hard to deny that politicians -- and the academics who advise them -- have not spent enough time acknowledging the commercial-strategic reality of collective action problems and the lack of a level regulatory field when it comes to strategic competition for natural resources. This means that they insufficiently frame moves to regulate revenue transparency in ways that persuade Western firms that these will improve those firms' long-term strategic positions.

Jo

ps -- see also my previous recent posts on taxation and corporate responsibility in Africa (here) and corporates, contracts and clarity (here).

ps -- my colleague Hannah Waddilove blogged last week on the G8 summit in relation to African governments' revenue-raising dilemmas: see here.

Taxation and corporate responsibility in Africa

For those following African issues, of all the current topics of global debate about the social impact of business or public-private sector relations one stands out more than others: corporate taxation.

 

Here the tax-tightening agenda of developed but revenue-strapped G8 governments now somewhat aligns with that of developing African governments.

 

The recent 'Africa Progress Panel' report highlighted the extent of unrealised revenues lost to African governments through practices such as transfer pricing; the Zambian government, most notably but hardly alone, has continued in recent months to move on its promise to tighten compliance with existing tax and duty requirements on foreign firms in its mining sector.


 

The relationship between tax issues and corporate responsibility ones is fairly simple, at least in the resource extractive industries in developing African countries.

 

A principal (and principled) argument available to a mining firm under pressure to 'do more' for its host community or country is that along with paying its employees, it pays taxes to the government, whose responsibility it is to provide services and infrastructure to the population. On this classic account, it is the government, not the firm, that should be primarily accountable to the public about the use made of tax revenues. For instance, in March 2012 I heard Ivan Glasenberg, CEO of Glencore, make this argument forcefully if rather unsubtly during a panel on 'resource nationalism' in Africa.

 

Likewise, when faced with government attempts to raise a firm's taxes, royalties and duties, an argument available to a firm which has made extensive local social investments is that the firm should be spared further increases since it is carrying some of the state's social spending burden.

 

The public relations or political risk vulnerability for firms is that if it transpires that their effective taxation levels or volumes are in fact far lighter than is widely assumed, the first-mentioned argument loses its force.

This is particularly so for firms in sectors that despite their revenue by nature do not create a lot of local jobs, something that would otherwise help illustrate their social value even if their tax footprint is low.

 

Of course the dilemma for firms which spend heavily on their social investment side, believing that it is pointless to wait for the government to translate taxes and royalties into palpable gains for the host community, is that the firm's uptake of this responsibility removes the incentives on the government for doing so. Moreover, the firm may pay tax to the central government but be answerable for local conditions to a provincial or municipal government, whose relations with central government may be beyond the firm's control. 

 

Technically speaking, tax issues are matters of legal obligation -- one is either liable or not -- whereas issues of 'corporate responsibility' tend by definition to relate to things done despite there being no legal requirement to do them.

 

The recent first issue of our firm's 'Business and Society Monitor' observed that taxation is one issue that has largely not been framed in the language of 'corporate responsibility' -- no doubt for the legal / voluntary reason just mentioned, yet despite the close relationship between tax and corporate social investment discussed above.

Given the often blurred or highly technical nature of compliance (which underpins the distinction between 'avoidance' and 'evasion' of tax), the Monitor implicitly noted that it would be unsurprising if mainstream corporate ethics, corporate responsibility and related debates increasingly focus on taxation issues. A parallel development is that increasingly social investment issues are covered in investment contracts, so that they become legal issues; this can be in a firm's interest, since it delimits the extent of its otherwise open-ended non-legal responsibility.

 

Like the issue of revenue transparency that the UK will push at this year's G8, taxation issues relate to much broader questions for African policymakers about competitiveness in attracting foreign investment, in the absence of cooperation from peer (competing) governments on uniform approaches to revenue management.

 

One strategic consideration for major extractive industries in Africa is their interest in reducing the share of national revenue for which their industry accounts. That implies that those in the oil sector, for instance, should be interested in boosting the non-oil economy (and non-oil or oil-related employment) in their host country, increasing the number of tax-paying firms and decreasing their exposure as single dominant sources of government revenue. Initiatives such as Tullow Oil's 'Invest in Africa' scheme reflect an understanding that for an oil firm, a booming non-oil sector is directly in its commercial and government relations interests.

 

Jo

 

For a recent post distinguishing (corporate) responsibility from (government) duty, see here.

 

These issues are raised in multiple previous blogs, see for example here on social investment by the mining sector in Africa.

Stakeholder rhetoric: ignoring the private sector

A mindset shift is needed to ensure greater engagement by authorities with the private sector in tackling some of Africa's most pressing public interest issues.

One standard criticism of corporate responsibility initiatives is that they only give superficial lip-service to their promise to engage a variety of other stakeholders.

However, this failure to match rhetoric with reality applies in a different and contrary direction: governments and their multilateral bodies dealing with major developmental, governance and security issues often speak of 'engaging all stakeholders' -- only to then ignore the private sector.

This post comes from Rome, where I'm part of a high-level EU meeting considering strategies to respond to organised crime and drug trafficking along the 'Cocaine Route' from Latin America to Europe -- via West Africa and the Sahel-Sahara.

A background paper for the event makes some mention of engaging a "diverse group of stakeholders", but only mentions the private sector at one point in relation to "advocacy strategies" to create a groundswell against organised crime and corruption.

I find it extraordinary that the invitation list for such an event includes no-one from chambers of commerce in key port cities, port and airport logistic firms, banks and others interested in preventing money-laundering, and so on. It is all diplomats and cops -- although some civil society groups are represented, businesspeople and their umbrella groups are not.

Of course, if you define 'multinational private sector' broadly enough, transnational organised crime is par excellence a multinational business activity. It is an illicit one, but large-scale illicit activity is difficult to sustain without passing, at some point, through the licit economy (if only to launder the proceeds of crime). Speaker after speaker here in Rome has highlighted drug traffickers' remarkable innovation and capacity to respond: yet one licit source of resources, capacity and interest (the private sector) is again overlooked as a relevant 'stakeholder' in promoting less corrupt, more crime-free growth and development in Africa.

Innovation in public policy extends to re-thinking who may count as partners or can in some way be co-opted.

This sort of innovation is generally lacking. My doctoral work examined how authorities engaged in post-conflict recovery have tended to ignore the scope for engaging the private sector's capacity to contribute to building peace. From Sudan to Solomon Islands, the problem I found was either authorities' undue ambivalence about engaging the private sector, or ignorance of the potential contributions of businesspeople to achieving public goals.

This sort of mindset leads to the anomaly that one can attend a major conference on international supply chains in drugs without any attendee from the private sector: banks, airlines, ports authorities, shipping firms (and all their insurers -- a node for regulatory influence).

All the 'holistic -- multi-stakeholder' rhetoric rings hollow in such a context.

Jo

See a related previous post, here.

A link to the background paper is here.

The politics of business: 'crazy for good'

Politics, as they say, is a tricky business.

For companies this makes the politics of doing business in tricky places ... particularly tricky.

This is so even (or perhaps, in complex settings, especially ...) where a firm is trying to promote public good-spiritedness and aspirational values, typically in pursuit of its strategy for market position or building reputation / mitigating reputational risk.

Last week in Zimbabwe, Coca Cola found that its new can of Coke opened something of a small can of worms -- highlighting how even firms which adopt a studied neutrality on domestic politics can unwittingly find themselves forced to say where they stand on tense, changing local political issues, and in hard cases to make or avoid value-ridden judgments about which side of history they [may be perceived to] stand on.

The Zimbabwe issue arose as an incidental part of Coca Cola's global marketing / social awareness campaign 'Crazy for Good'. One feature of this is an adaptation of the standard red Coke can, altered to show open hands -- waving, reaching out to each other.

The problem (if it is one) is that in Zimbabwe, red is the colour of the Movement for Democratic Change (MDC-T); an open-palmed hand has long been its distinctive party symbol.

By contrast, its rival (Robert Mugabe's ZANU-PF party) is typically associated with the clenched fist gesture so often used by its long-time leader.

The 'Crazy for Good' / 'Open Friendship' campaign and its new Coke can happened to coincide with the lead-up to probable 2013 elections given that the mandate for Zimbabwe's dysfunctional post-2008 ZANU-MDC power-sharing government expires at the end of next month. Some over-sensitive ZANU politicians accused Coca Cola of blatantly aligning its brand with the MDC -- just in time for electioneering. The brand I suppose is typically associated, through the company's efforts over decades, with fun, freedom and friendship.

Coca Cola of course can easily refute the suggestion, pointing out that its brand colour has been red for decades and that this is a global campaign. (In a post-Arab Spring world in places with restless politicised youth one wonders how threatening some of the world's more paranoid and less secure leaders might find any new version of Pepsi's long-running mantra with its emphasis on a 'New Generation... !').

Anyway, the incident neatly raises the dilemmas that brand-sensitive firms can face in juggling neutrality on political issues (on the one hand ...) with their desire to align their brand with aspirational sentiments or universal values (on the other hand ...).

This dilemma is a subset of the wider difficulties global firms have in navigating local political turbulence, and often the strategic decision of whether to abandon pretence at neutrality, subtly re-align oneself for alternative possible futures, or hope that one's firm is not found exposed at the intersection of politics and business.

Coca Cola's recent full-page newspaper advert in nearby Swaziland raised some controversy -- it wished happy official birthday to the king of Africa's last absolute monarchy, which has strongly suppressed alternative political expression (even if the royal family as an institution retains considerable popular loyalty especially in rural areas).

Then there's a firm like South Africa's Nando's which took a different tack: one advert openly mocked Mugabe, resulting in threats to its staff in neighbouring Zimbabwe -- it withdrew the adverts, perhaps having calculated that Youtube hits would continue soaring and that the kudos in the SA market was worth whatever happened in the much smaller Zimbabwe one.

Close political ties can be handy, but also be a handicap ... That is, these issues are obviously especially acute in places like Angola where the local business elite (whose cooperation may, as there, be needed for any viable corporate strategy) is for all material purposes indistinguishable from the political elite. Relations, explicit or otherwise, that make things easy or which are unavoidable in the short term might carry with them long-term liabilities (whatever their implications on foreign corrupt practices laws and the like). Operating hand-in-glove with political elites carries both near-term reassurance and longer-term risks...; yet remaining even-handed can be difficult where one's brand or operation is singled out by either the incumbent or the opposition (or activists).

Greater demand for electoral democracy in sub-Saharan Africa means that firms which in the old days needed only to appease the incumbent may need to consider, for example, the risk that a change of administration might make them vulnerable where they are perceived to have 'taken sides'. Firms that have already sunk a lot of capital into a country or which hope to be there for a long time to come will need to strategise around the prospects of change and of the implications (there and abroad) of enforced lack-of-change.

Sometimes the risks are in plain sight; sometimes they are foreseeable even if unlikely; sometimes they take firms by surprise. In some cases, mere presence in a controversial country represents a value-based decision by reference to democratic or human rights norms -- or is seen that way.

In many cases, the firm's licence-to-operate and brand will emerge intact, perhaps only with a rap on the knuckles; most will be able to make a good fist of staying well away from political controversy. Firms that are newly entering have one set of dilemmas, but those with existing investments tied up in a country to some extent have one hand tied behind their backs in terms of backing down in the face of politicised counter-campaigns. The main consideration for brands with global exposure is an awareness of the importance of consistency across markets on value-based issues: the left hand needs to know what the right hand is doing.

Policy choices impacting the business environment can be highly political -- raising the question for business of when and how to explicitly join national conversations about such issues. In considering the role for socio-political leadership by business, this blog has referred for example to the dilemma individual firms face in South Africa in putting their heads 'above the parapet' rather than remaining silent. Speaking under the umbrella of a business chamber mitigates that risk. Note that this last week apparently saw a Guatemala business group criticising the genocide conviction of a former head of state: now that takes 'private' business engagement on public interest issues to a whole different level!

Jo

See the South Africa version of the Coca Cola 'Crazy for Good' campaign -- here.

See one (note -- mainly anti-ZANU) news story of the Zimbabwe-Coke story -- here.

See my earlier post on the Swaziland-Coke story -- here.

See the Nando's advert about Mugabe -- here.

See discussion in an earlier post of Coca Cola's entry into Myanmar -- here.

See discussion in an earlier post of (limited) reputational risk from mere country presence -- here.

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

Corporate responsibility -- government duty

In terms of corporate responsibility and regulatory debates there is no recent African analogy to last month's shocking Dhaka building collapse that killed over 600 mainly garment workers and injured thousands.

Like much reform generally, momentum on governance reform (by both the private and public sectors) on social impact issues often requires (sadly) a landmark, shock-inducing event.

(Empirically, such events do not necessarily lead to change, although they may add a pulse, perhaps no more nor less, to the general thrust of pressure for change; see this BBC online debate post-Dhaka: here).

There are few African analogies. The 1995 execution of activist Ken Saro-Wiwa (by a Nigerian military dictatorship) is one such event which prompted reassessment of business-government relations and the parameters of corporate influence on host country policy. By contrast, today many of Africa's better-known corporate impact issues are slow-burning ones without particular spike events -- from gas-flaring to toxic waste-dumping to conflict minerals.

That selective list itself illustrates how random or arbitrary it will often be whether a particular sector or issue or firm comes into the corporate responsibility spotlight -- a point made in a recent post on reputational risk, here. (This is not to say firms cannot plan for foreseeable contingencies). Other issues of profound significance, such as climate change, are in some ways too diffuse and unwieldy to fit easily into targeted campaigns by either firms or governments or activists. An expert's briefing published by our firm this last week noted how academic debate takes some issues as squarely within the field of 'corporate responsibility' while others which involve significant social impact by business, and which conceivably could become framed in that way, do not.

One question prevalent in the media and industry since the Dhaka event has been whether this is indeed a 'corporate responsibility in global supply chains' issue, or rather a question of weak government supervision of local statutory standards; enforcing local laws is not a corporate responsibility.

The answer may lie somewhere in between, since through their purchasing conduct foreign corporations and financiers have some capacity to 'regulate' local regulators (especially in weaker governance zones) to ensure these officials enforce their own rules; they also have some potential influence over the local commercial actors who mediate activity in their global supply chains. There are wider forces and considerations at issue relating to local control, global competitiveness and the allocation of responsibility and conscience-calling.

The Dhaka misery and debates on global supply chain integrity are too big for one post, in an Africa-focused blog. (Since I cover South Africa a lot, it is natural to think of the decimation of jobs in that country's garment sector as the ANC tries to promote its 'decent work' agenda in the context of Chinese and other manufacturing competition -- an unenviable task, at which they are at best drifting.)

I have been thinking this week of analogies with the 'aid to Africa' debate, where it is right for aid effectiveness / transformation activists to spare a lot of their energies typically directed at donors, to the behaviour of recipient governments. In the same way, while global brands can wield some regulatory influence over government complying with their own local standards, the responsibility in so many respects lies at home with governments. There is another analogy with aid, one familiar to corporate social investment debates: the more one asks of firms, the more some governments become removed from responsibility and unresponsive to local constituencies.

The challenge as ever -- across regions -- is to move from blame-game to game-changing steps in regulating, within what is realistic in a globalised market, the conditions under which people work.  That includes moving from an either/or approach to responsibility to appropriate apportionment and cooperative approaches to creating shared value and distributing shared risk.

Dhaka's victims fell at the intersection of small, particular regulatory norms (capable of altering local circumstances) with the more universal, amorphous norm which the ANC's emphasis on 'decency' captures. Big firms in Africa can do their brands and workforce a favour by thinking (individually or in sector coalitions) of how, beyond tax-paying, to improve the regulatory competence and integrity of government agencies -- even if the latter should always bear by far the primary responsibility for creating conditions for a more decent life.

Jo

Corporate (re-)entry, sanctions and risk: the Myanmar / Burma example

Geopolitics, universal values and corporate strategies intersect where firms decide to (re-)enter 'transitional' states emerging from relative international isolation.

Previous posts have discussed African settings where bilateral or bloc-mandated sanctions apply (from Sudan and Eritrea in the Horn of Africa, to Zimbabwe and Madagascar in southern Africa), but this week's post looks at Myanmar (Burma).

On April 22 the EU lifted all its remaining trade, economic and personal sanctions on Myanmar (bar the arms embargo) in recognition of its reforms towards greater inclusivity and political space.

So I asked my Oxford Analytica colleague Herve Lemahieu -- who follows the country closely -- a few questions about the issues where risk, regulation, reputation and responsible business conduct meet in post-sanctions Myanmar:

JF: What have been historical (1990s and on) patterns of Western corporate engagement and how quickly is this changing?

HL: “Two decades ago, Western companies were rushing out of Myanmar under pressure from shareholders and activists. Pepsi Cola, Apple, Levi Strauss, Unilver, Texaco, Carlsberg, Heineken, Disney and Hewlett-Packard were just a few of the big names to exit the country following high-profile campaigns. In the mid-1990s and into the early 2000s, Western economic, financial and political restrictions, in place ever since the failed pro-democracy uprising of August 1988, were steadily ratcheted up and bolstered by consumer and civic pressure groups discouraging all trade, investment and tourism.

There is little evidence that this boycott had much more than symbolic value. Twenty years of military rule and Western sanctions allowed a narrow, state-linked business elite to thrive while hitting the general population the hardest. The West lost influence while allowing Asian competitors an open field. Rather than acquiesce in Western calls for sanctions or add to pressure for regime change, Beijing and ASEAN favoured the military regime's own top-down transition and seven-point roadmap to ‘discipline flourishing-democracy’.

Many western observers failed to recognise what the military regime was trying to do during its two-decade rule because it did not conform to categorical ideals of democratisation. However, the integration of opposition leader Aung San Suu Kyi and her National League for Democracy (NLD) into the fold of the country's ‘disciplined democracy’, in which the military remains the most influential de-facto and constitutional powerbroker, has been judged ‘good enough’ for Western businesses to rapidly return to one of Asia’s last remaining frontier markets.”

JF: Are corporate engagement strategies out of line with diplomatic ones, and does it depend on whether Western or other company / government?

HL: “Government and corporate policies are now, broadly speaking, mutually reinforcing. Most Western governments have conceded that sanctions exercised only limited political leverage over the previous military regime, and are opting instead for pragmatic engagement to secure political and commercial goals in the country. For their part, many companies have learned from past experience to become more risk-averse and reputation-conscious as they prepare for market re-entry. However, there are still nuanced differences in the economic diplomacy espoused by different capitals, with varying private-sector implications:

· Japan has led the field in normalising ties and increasing its commercial presence in Myanmar -- something political liberalisation now allows it to do at far less cost to its international reputation.

· The EU has today agreed to follow Norway, Australia and Canada by permanently lifting sanctions, rather than conditionally renewing their suspension.

· That leaves the US the only country to maintain curbs on the country as part of its piecemeal ‘action-with-action’ approach of easing sanctions through presidential waivers.

Corporate and diplomatic strategies still clash in as much as US business leaders have complained that Washington's policies require extensive compliance paperwork and present legal/reputational uncertainty, while European and Asian rivals gain first-movers advantages. Many US multinationals are undeterred, including Coca-Cola, General Electric, Hilton Worldwide, Visa International and MasterCard which have all entered Myanmar in the past six months.”

JF: Is there a case for saying that corporate engagement at this time helps support wider reform / transition in Myanmar? What counter-arguments do you hear among those watching the country?

HL: Some Western politicians and lobby-groups have sought to portray Myanmar’s transition and the resurfacing of ethnic and religious violence as, respectively, evidence of the effectiveness of, and continued need for, conditionally withholding western business activity in the country. However, governments and voters alike are becoming more sceptical of their ability (or indeed the general desirability) to micro-manage political change through blunt economic polices implemented from half-a-world away.

As the logic for broad-brush 'complicity-by-general-association-or-presence' risk starts to recede for corporates re-investing in the country, risk will start to lie far more in particular relationships and actions that firms might take, such as labour relations, community and environmental impacts. Given the absence of well-developed physical, financial and regulatory infrastructure, the challenge will be for corporations to self-regulate, hedge risks, and assess their own ways in which they can contribute to the wider reform process.

Already, we have seen prospective and actual businesses drive the government’s efforts to adopt international standards, from labour rights to financial regulation and environmental protection:

· Nearly 400 government officials were sent to jail on corruption-related charges between mid-2011 and December 2012 (almost as many as political prisoners released in the same period). This includes a crackdown on the endemic practice of accepting or soliciting kickbacks and bribes to award contracts.

· The government is negotiating entry into the Norway-based Extractive Industries Transparency Initiative and will likely remodel its energy contracts according to the voluntary regime’s stringent requirements for financial transparency, environmental standards and corporate governance for the natural resources industry.

· Japanese trading houses – including Mitsubishi, Mitsui, Marubeni and Sumitomo – have spearheaded efforts to diversify away from the extractives sector by investing in the labour-intensive sectors, such as manufacturing, services and agriculture.”

My thanks to Hervé.

The Myanmar outcome came a day after the Bahrain Formula 1 Grand Prix, where the organisers (and indirectly, the sport's many sponsors) were forced to defend their decision to hold the race in the face of a campaign for greater political freedoms in the Gulf state. Politics, human rights and calls for sporting boycotts are nothing new, but there is no doubt that especially brand-sensitive corporates nowadays need to navigate these issues more swiftly, consistently and comprehensively.

For previous posts on this topic, see here (corporate engagement in ‘pariah’ states), here (entering 'closed' complex settings like Ethiopia) and here (reputational risk from mere presence?).

Jo

ps -- of note to a blog on this general subject matter relating mainly to Africa, the US Supreme Court last week rejected Nigerian plaintiffs' arguments that US courts should exercise jurisdiction (under the ATC Act) over claims against Shell for conduct allegedly occuring outside the US. In a future post I'll reflect on litigation strategies in the context of wider efforts to 'level the playing field' for responsible business activities by firms -- whether from the 'West' or 'emerging markets' -- in Africa.