What Drives Business To Commit To Development?

Mark Ingram, CEO Business 4 Millennium Development

28 Oct, 2015

Let me share some thoughts from our experience.  In a single word, the answer to this question is "profit".  Business is driven by profit, and its various manifestations - reducing cost, improving income, finding new markets, generating new innovation within the business.

B4MD has been working at the coalface of the business/ development interface for eight years now, based on the premise that business is motivated by profit.  And yes, it has taken us that long to understand how we can harness the power of business for development impact.  And we still learn every day.   Motivating business to commit to development, especially in terms of their core business, is a real challenge.  As an organisation, we have focused on presenting the business case - the business opportunity - for doing business with the poor.  We have sought to persuade companies of various opportunities, and then we have persuaded them further to pay us to develop the opportunity, a doubly difficult task!  We broker linkages between companies and low-income communities with intentional mutual benefit.  We do so as a broker and a trusted intermediary, our ultimate goal being to protect and promote the interests of the poor. We form partnerships between communities, NGOs, companies, Government and, increasingly, donors. 

So what kind of companies have we discovered that are prepared to commit to development?  The short answer is those who have the deepest business footprint with the poor.  From the perspective of our centre of gravity here in Australia, extractive industries and food & agriculture companies clearly have the deepest footprint.  From a profit perspective, both sectors have very different drivers.  For extractive industries, they often have a contractual obligation with the host Government to develop local communities within their project impact area.  They especially need to demonstrate how those communities will have a sustainable livelihood post-mine life. These communities, in our experience, are predominantly smallholder farming communities.  Many are very poor - earning around US500 per annum.

For food and agriculture companies, the driver is often the need to source on a long-term basis raw materials for further processing from low-income smallholder farming communities at market competitive prices.  The key for them in committing to development is to determine how they might work with farmers to improve productivity, which naturally creates shared value.  Improved productivity benefits the food buyer who receives higher volume, and the farmer who will generate more income - often a doubling of income is possible.  Most smallholder farmers are yielding less than 40% of the optimal production per acre of their crop due to poor use of inputs and outdated farming practices.  By partnering with such farmers, companies can provide much needed tools and technology to optimise yields, driving mutual benefit outcomes.

So how does this all work in practice?  An example might be informative:  We have partnered Base Resources, a West Australian mining company with Cotton On, a Victorian based clothing company with farmers proximate to the Base mineral sands project in Kenya.  Farmers are being empowered to produce organic ethical cotton, shipped out of the port of Mombasa, into Bangladesh for fabrication into garments and into Cotton On clothing stores.  The mining company is able to create a sustainable future for local farmers, which meets their license to operate requirements with the Kenyan Government.  Cotton On is able to source ethical cotton, an important need given challenges within the global cotton supply chain.  And most importantly, local farmers have a scaleable solution to poverty which can impact tens of thousands of farmers in the South of Kenya.

The potential for business to be a positive actor in development is unlimited. While we have a focus on smallholder farmers, no doubt innovative NGOs can broker ICT, finance, health, education, tourism and other sectoral links with poor communities. They key is to focus on business opportunities that create profit for both target communities and private sector partners. The sky is the limit!


Mark Ingram is featured as an expert on Business Partnerships on ACFID's 'Ask an Expert' panel.

 

  • Mark Ingram, CEO Business 4 Millennium Development
    Mark Ingram, CEO Business 4 Millennium Development

    Mark Ingram is CEO of Australian NGO, Business 4 Millennium Development.  He and his team work with businesses and communities to create sustainable business solutions that expand access to goods, services, and livelihood opportunities for low-income communities. Mark is featured on the My ACFID ‘Ask an Expert’ page from October to December 2015 so do visit and ask him a question! 


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