Building Business Strategies for Development Impact in Africa

For nearly 100 years, Africa has been a key driver of our business success. Almost 40 per cent of our assets remain in South Africa. Three of our seven main business groups (platinum, iron ore and thermal coal) and two of our key associates (diamonds and manganese) operate out of southern Africa. These are all globally competitive businesses and we are investing in them: $20bn in Capex in South Africa over the last 10 years, and a future growth pipeline of almost $15bn.

Africa will continue to be a vital region for us: with global resources becoming scarcer, Africa represents an opportunity that no global company can afford to ignore. Some estimate that it hosts about 30 per cent of global mineral resources, and the continent produces more than 60 metal and mineral products, including gold, platinum group minerals, copper, nickel, diamonds, aluminium, uranium, manganese, chromium, bauxite and cobalt. These are products that are central to the 21^stCentury global economy, particularly if we are to make progress towards a green economy (whether this is copper for wind turbines and for hybrid and electric cars, or platinum for hydrogen fuel cells and catalytic converters).

Across other sectors too, business is positive about Africa (read this report by Business Action for Africa and Ernst and Young). Growth forecasts – at 5% – are well above the global average. According to the World Bank’s Doing Business Report 2012, 78% of economies in the region made regulatory reforms to make it easier for domestic firms to start up and operate.

Not only is Africa good for business, business is also good for Africa. There is a growing evidence base on the positive impact that businesses are having on development – not least by generating jobs, taxes and economic opportunities for suppliers and distributors. We are delighted to be supporting a new Impact Zoneon Business Fights Poverty that will pull together the latest thinking on new tools for measuring impact, the results of the latest impact studies, and ideas of evolving business strategy to enhance development impact.

At Anglo American, we have long believed in impact assessment: not just as a pre-development requirement, but also as an ongoing tool to help us manage our business. Our open-source Socio-Economic Assessment Toolbox(SEAT) has become a central tool for our business to help us understand and improve our impacts. Launched in 2003 and revised in 2007 and 2012, SEAT is implemented at all Anglo American operations every three years. We were delighted to have recently won the International Association for Impact Assessment (IAIA)’s 2012 Corporate Initiative Award. For us, the most important feature of SEAT – and something highlighted by the IAIA – is that SEAT integrates ongoing impact assessment into the management of our business, and helps us to both manage risks (to Anglo American and communities) and identify opportunities to enhance our developmental contributions.

This week we are hosting the first London event in Business Action for Africa’s 2012 Event Series, focusing on enhancing local content in the extractives sector supply chain. At Anglo American, we spend over $10 bn annually on procuring goods and services, around three quarters of that from developing countries. That’s comparable to the aid budgets of the UK, France or Germany. It’s a huge sum of money, and a massive development opportunity.

Better measurement of our impacts, and building better business strategies as a result, is central to creating a new long-term alliance between business, government and other stakeholders in support of Africa’s development. Within the wider context of an open and accountable governance framework, this can lay the basis for a new way forward – one that supports mining by ensuring that mining supports our host communities and countries.