Business Solutions to Hunger in Africa
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Business Solutions to Hunger in Africa
27.01.2006
World Economic Forum Annual Meeting 2006
The father of Bata Shoe Foundation's Chairman Thomas J. Bata once reportedly dispatched two emissaries to quietly investigate business growth potential in Africa. Returning from the east coast one warned: "Don't bother, it's a complete waste of time here. I mean, people are going around barefoot.” The other landed on the west coast and enthused: "It's wonderful here. The opportunities are unlimited. Everyone is still barefoot!"
This session applied the second approach to doing good while doing well in the fight against chronic hunger and malnutrition in Africa. Key options included: setting up national hunger councils to draw up plans, increasing yields through technology transfers, improving transport and warehouse infrastructure, training farmers to be entrepreneurs, lowering trade barriers, and putting cash directly in the hands of rural women.
"There is an emerging realization that there is not a contradiction [between doing business and doing good]," said Hugh Grant, Chairman, President and Chief Executive Officer, Monsanto Company, USA. "Making money and doing really cool stuff at the same time is a magical formula. Business needs to talk less and do more."
Why bother? Because beyond ethical reasons, panellists pointed out, eradicating poverty and hunger makes good business sense. "We talk about selling to the bottom of the business pyramid," said Antony Burgmans, Chairman, Unilever, Netherlands. "But the bottom of the pyramid is not the bottom of society. There are a billion people who cannot be business consumers" unless they are helped to climb out of poverty.
Grant agreed, emphasizing: "This isn't altruism. Through starting with good clean seeds you can sell more and more goods to farmers." If it's made practical, investments can pay off quickly, he added, pointing out that "with US$ 7.50 in seeds and US$ 32 in fertilizer a farmer can feed his family of six for a year and invest the surplus. Delivering grain as quick fix aid costs US$ 400 per year." Food aid deprives the hungry of purchasing power to improve their economic situation or that of businesses, he remarked.
Moderator William V. Hickey, President and Chief Executive Officer, Sealed Air Corporation, USA, estimated that "30% of food in Africa spoils or rots while waiting to be sent en route to market." This absolute waste in human and natural resources highlights the potential for a higher return on investment to come through investment in basic agricultural infrastructure.
"The climate, the soils, the water is all there in Africa," noted Firmino Mucavele, Chief Executive, NEPAD Secretariat, South Africa. "Good regions can grow not one or two but seven tonnes of grain per hectare. But while family farmers can grow enough excess to generate income, transaction costs remain too high."
Mucavele stated that with micro investments "in small roads, small storage, small places to sell goods, farmers can increase profits 45% once the infrastructure is improved. Then you get a humane business."
"It remains a fact that you can't transport food if you don't have roads," added Marie Christine Lombard, Group Managing Director, TNT Express and Member of the Board of Management, TNT, Netherlands. She noted that collaborative partnerships with other companies, including competitors, to improve transport and logistics are paying dividends for all parties through lower transaction costs.
Yet not every business move in Africa has proved benign to hunger, cautioned some panellists and participants. New roads can be a route to market but also vectors for HIV/AIDS. Big infrastructure projects may leave certain rural communities displaced. Some activities raise risks, impacts and the vulnerability to climate change.
"If you want to help, look at what you are doing and ask whether it is increasing or reducing poverty," cautioned Barbara Stocking, Director, Oxfam GB, United Kingdom. Oxfam partnered with Unilever in Indonesia to study impacts of supply chains. Some helped, others hurt. "Look at the whole activity in a country to find what is your poverty footprint. This is not a quick fix. This is a system problem."
Business Solutions to Hunger in Africa - To learn more about this author, visit World Economic Forum's Website.
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