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As the UK announces its ambition to become the leading G7 investor in Africa, Charlie Hare, Director of Global Operations at Business Fights Poverty, explores what this means for responsible businesses committed to scaling the quantity and quality of their investments.
This week the UK Government announced its ambition to become the leading G7 investor in Africa, with UK Prime Minister, Theresa May, pledging £4bn to help create jobs for young people across the continent during her trip to South Africa, Nigeria and Kenya. This came with a welcome confirmation of the UK’s commitment to spending 0.7 per cent of gross national income on aid, and a promise that the UK “will not falter in [its] work to deliver the Sustainable Development Goals”. The PM also spoke about a major shift in how aid is spent, increasing support to solutions that tackle economic and security challenges across the continent.
The announcement by the Mrs May presents a major opportunity for both UK and global businesses to continue their positive work in the region through growing inclusive economies, not least as the PM hopes that the £4bn investment from the UK Government will be matched by the private sector. Many major British businesses such as Anglo American, Standard Chartered Bank and GlaxoSmithKline have had a long presence in Africa and demonstrate that big business can make a profit and have a positive impact on the societies in which they operate, and not just through philanthropy or CSR initiatives but through their core business.
Indeed, the private sector plays a vital role ensuring that, as well as increasing the quantity of investment, the quality of those investments actually fuel growth and broad-based opportunities in Africa, a region with which our own organisation has a strong connection (and which is home to a number of our team, including me). Our sister network, Business Action for Africa (integrated into Business Fights Poverty in 2015) was created around the central belief that Africa is good for business, and business is good for Africa. Through their core business activities and operations, responsible companies can have a social impact by delivering valuable products and services, creating jobs and growing capacity, developing local economic linkages through their value chains and by paying taxes to fund public services.
At Business Fights Poverty we bring together the best people from international businesses, government and civil society to help organisations deliver on their social impact priorities. Last year we ran a Challenge with Standard Chartered Bank, CDC Group and Shell to look at how collaboration can unlock investment to deliver the SDGs in challenging places, a project started in recognition that the UN’s Global Goals cannot be financed by the public sector alone.
The Challenge concluded that there are three key success factors for investment: innovative partnerships, readiness (bankable projects or enterprises with sufficient capacity) and risk mitigation. The Challenge report highlighted a number of innovative collaborations between the private sector, civil society and government that led to successful investments in countries in Africa and Asia. For example, Barclays, GSK and CARE partnered in Zambia to improve access to healthcare by establishing a social enterprise called Live Well that addresses health needs at the community and household level by raising awareness of health issues, increasing access to health products and providing entrepreneurship opportunities for men and women to help them generate supplementary income.
Theresa May’s commitment to the opportunity that Africa presents is clear, and companies that engage with those opportunities in a responsible way stand to create benefit both for the societies in which they exist and directly for their businesses. As Sunil Kaushal, Regional CEO, Africa and Middle East at Standard Chartered Bank points out, “The announcement by the UK Government is a great boost in enhancing the trade potential of Africa. Throughout our 150 years of history, as the only international bank with a major presence in Africa, Standard Chartered has always strived to contribute to social and economic development, financing trade and investment across the continent. We are excited to work with the UK Government to further our contributions and explore new opportunities to sustainable development and inclusive growth”.
The majority of the Government's investment will be undertaken by the CDC Group, the UK’s development finance institution, which plans to invest £3.5bn over the next four years in private sector businesses across Africa to create much needed jobs, economic growth and broader development impact. As CDC’s CEO, Nick O’Donohoe said in his speech on Tuesday, through its investment CDC will target “the economic empowerment of women, climate change, job quality, and local skills and leadership. We’ll also focus our new investments on removing barriers to growth in new markets and on transforming whole industries.”
At Business Fights Poverty, we look forward to continuing our efforts to drive collaboration between business, NGOs and policymakers to drive investment, job growth and economic inclusivity in Africa.
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