In 2011, Africa received $7 billion USD more in foreign direct investment than foreign aid, providing unprecedented potential for large-scale economic growth and opportunity. In fact, as companies expand their operations in frontier markets, we are witnessing businesses from developed and developing countries alike delivering a profound, positive impact through employment opportunities, training and education, supply chain linkages, new products and services, and more. These social and economic impacts are stimulated by fundamental business needs, and companies are increasingly recognizing their value to long-term, bottom-line growth.
This week, the Initiative for Global Development (IGD) launched a working paper, The Business Case for Development: How Companies Can Drive Sustainable Development and How Government Donors Can Leverage Their Impact, at a CSIS-Chevron Forum in Washington D.C. The report was written with input from leading U.S., European, and African multinational corporations and highlights the private sector’s potential for contributing to positive development impact through core business activities. We also explore the opportunity for donors and governments to leverage the power of business to achieve large-scale, long-term impact.
The working paper describes many examples of how companies are changing communities and lives, including:
- Ecobank Transnational Incorporated, the parent company of the leading independent pan-African banking group, has a presence in 33 African countries. Ecobank is a leading provider of supply chain finance across Africa and recognizes that a strong agricultural sector is key to the continent’s future growth and the creation of a bankable middle class. To achieve this, Ecobank provides support at critical junctures in high-impact value chains by financing inputs (e.g., seeds, fertilizer, irrigation, and chemicals) and post-harvest infrastructure. Ecobank also has an array of innovative finance products specifically targeted to small and medium enterprises (SMEs) and low-income individuals and provides a number of working capital products for entrepreneurs to scale their operations.
- Cummins Inc., a global power leader, faces a growing shortage of skilled technical workers, especially in frontier markets where large skills gaps exist. To resolve this, Cummins is launching a new effort to build and invest in local education programs to increase the number of people with industry-relevant training that are ready to work in skilled jobs. In six test sites—Brazil, China, India, Turkey, Morocco, and Nigeria—Cummins is working to identify and engage other companies with similar technical skills needs as well as local partners and stakeholders to build new programs and commit additional resources to support enhanced vocational training and education within those communities.
By highlighting the “business case for development,” we hope to stimulate further knowledge-sharing about how companies can successfully invest in Africa and other challenging markets while delivering long-lasting economic and social value to communities in which they operate—and how governments and donors can leverage that impact. This is a win for development, a win for business, and most importantly, a win for communities in need of economic hope and opportunity.
Jennifer Potter is CEO of the Initiative for Global Development (IGD). IGD engages global business leaders to reduce poverty through strategic, catalytic investment in the developing world, with a current focus on Africa. The IGD network is comprised of CEOs and other business leaders from African, South Asian, U.S., and European companies who are recognized sector leaders and share a commitment to poverty reduction.
