"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
PRESENTS
COMMISSION FOR AFRICA
JOHANNESBURG - SOUTH AFRICA WORKSHOP
16 SEPTEMBER AND 05 NOVEMBER 2004
**********************************
Statement from the Johannesburg Business Round Table
Participants thanked the Commission for Africa for providing an opportunity to contribute to its deliberations.
General Issues
The challenge:
Poverty reduction or wealth creation?
The need to change “mindsets” and foster genuine government and private sector dialogue. There is a strong sense that changing the mind set of government towards the private sector is fundamental. Although NEPAD and the AU’s efforts mean that government is beginning to listen to the private sector, the key is implementation, and many good policies exist only on paper. The private sector has a major role to play in helping to bridge this gap, and applying its capacities to implementing new policies. But this requires a much better sense of the respective roles, with government’s critical role to set and improve the policy environment.
Where growth is targeted is critical to its sustainability:
The Investment Climate the regulatory framework
The limitations of the official aid system in delivering sustainable solutions which meet Africa’s needs – examples of poorly designed and implemented aid were cited. There is a belief that the a lot of the official aid system, both bilateral and multilateral, is failing – with inappropriate technical assistance, competing schemes which put pressure on national decision makers to accept programme objectives, and aims which are unworkable. Lack of ownership and ability to implement in host countries is common, and evaluation of performance shallow. Reform is needed.
The meeting also discussed specific sectors and ideas:
Infrastructure and Capacity
In many cases the private sector - for its immediate interests – does what in more developed countries would be the preserve of government – acting as a kind of “mini-state” in a particular area. Or many companies are forced to compensate, for example, for failing tertiary level education by training staff directly in areas such as maths and engineering. There is a debate within the private sector about how far companies should go in investing beyond their immediate duties to shareholders and the bottom line. Many companies CSR is a form of marketing or self-promotion, others have substantial investments in community and social development. The lack of acceptable human development standards in education and health require greater investment, and business has to play its part. Multinationals are critical centres of excellence for skills. There is a need for utilising this, and setting benchmarks on accountability of their spending. Practical projects such as Africa Recruit should be supported by NEPAD.
With respect to physical infrastructure, has the world forgotten about the importance of infrastructure as a driver of growth? This is a huge priority.
Successfully tackling poor infrastructure requires, in addition to overcoming management constraints, long term finance.
Development banks and donors could help reduce the risk, with private sector involvement as a long term partner. The development of infrastructure should be encouraged by linking it to debt relief, market integration and improved regional cooperation..
Governance
..........Government:
..........What can business itself do to help build effective regulatory environment?
Customs Management
There was a general agreement that reform of customs management needs to be given greater attention as a component of improved market access. The advantage of customs reform it is rapidly self-financing, so does not require large donor or tax funding. The best-practice book on customs including peer review, measurement and management has been written. What is lacking is the will to tackle the rent-seeking beneficiaries.
The barriers to travel of business personnel is a real obstacle – the AU needs to improve mobility of professionals.
..........The G8 could improve access to information by setting up a global database, publicly accessible.
Trade
Importance of agricultural system to the economy is overwhelming. Participants strongly support trade reform especially removing agricultural subsidies which limits exports and have devastated some sectors such as cotton. In addition, too little is said and done about removing barriers to Intra-African trade, which is vital. Harmonisation of trade policies difficult but critical.
.........G8 could help by improving the capacity of willing African governments and institutions to implement trade reform, and help NEPAD build the capacity
HIV/AIDS
Governments should join with all stakeholders in addressing two major social issues resulting from the crisis – the huge numbers of orphans, and the importance of leaders tackling stigma head on.
SMEs
Johannesburg, 5th November 2004
Participants support the Commission’s focus on raising living standards rather than alleviating poverty. This is symbolically important - changing attitudes and expectations will help Africa’s renewal. Poverty is the language of failure: it encourages people to expect solutions to be provided for them.
There is a tendency to pit them against each other - with government’s duty to focus on the first, and the private sector the latter. This is a conceptual misunderstanding. Poverty alleviation and wealth creation are two sides of the same coin, with business and government as partners addressing both. For example, strong labour laws may be seen by government as protecting the poor, but by business as an obstacle to growth. How to balance social protection and labour flexibility in an overall national strategy needs dialogue to get the balance right. But this is still a missing element which requires…..
Poverty - in all encompassing sense of poor health, education, opportunity - has caused a vicious circle of decline, conflict and more poverty. Growth strategy in Africa will only work if it is able to break this cycle and target core social needs. The Commission needs to recognise this African reality, and look to African-developed solutions which rapidly attack poverty and poor infrastructure.
Improving the climate for doing business - should be at the top of the development agenda. Simplified regulations are absolutely key, and there is too little transparency. The participants welcome the proposed new private sector Investment Climate Facility (ICF) as a practical step which the private sector and governments can take together.
The lack of capacity looms large in every sector. There is much talk of capacity-building. However, national skills development planning is generally absent across the continent, or policies are not applied in practice.
Tackling bad governance, improved transparency and combating corruption are massive problems for the continent. Governance needs to be defined broadly including issues for companies, national governments and international structures (e.g. it is important to reshape international organisations and their policies to make them more responsive to Africa’s interests).
· needs to step back from a lot of areas where capacity is almost non-existent and is a high priority because it is a root cause of negative perceptions of the continent.
· There should be clear international incentives for reform – the APRM 23 countries should be credited for their efforts, and Investment of new aid resources should in general be linked to clear, measurable and specific plans to improve the investment climate through the economic and corporate governance reforms under the NEPAD Peer Review Mechanism
· The first job is for the private sector is to tackle corruption in its own operations.
There is no hope of reducing corruption unless the company bears the responsibility for zero tolerance. The temptation is to remove headaches with the police or customs by making illegal payments, change will come when we are prepared to accept a loss rather than compromise standards. Where zero tolerance is introduced, often the front line staff is targeted for reprisal or victimisation, and support needs to be provided. Key culture change in institutions – specialised units don’t succeed and often become a source of perpetuating the problem. There is need to coordinate existing work, and involve the private sector work at a continental level. Poverty fosters corruption, but the big beneficiaries are the powerful interests.
· There is strong support for third party assessment systems as an incentive to reform. The meeting commended the proposed scheme being piloted by the Convention on Business Integrity which sets standards for corporate governance and to which qualifying companies are assessed by business peers. This form of business peer review mechanism could be a powerful tool for improving standards, and providing investors with an accreditation system for working with local business.
· Good corporate governance addresses all business sectors and is one in which the private has to take lead. There will be need for donors to help companies apply rules to improve standards across the board in environment, extractive industries and not just financial services Many smaller companies find the costs of compliance to high, or too difficult to attain.
· The particular issues in banking were noted and the difficulty caused by uneven application of rules.
This is a sensitive issue in terms of setting criteria but there is need for a focus on comprehensive Codes of Conduct, applied by all financial and governmental institutions, and with sanctions for countries that do not respect these codes/conventions/legislation.
Poor customs administration hampers international and intra-regional trade. It is a disincentive to investment, and can badly distort local markets, where traders often don’t have even basic information on the regulations, allowing for widespread corruption. On the positive side, many good models of best practice exist, and the private sector can be directly engaged by governments to implement such best practice. Customs revenues typically provide 30-40% of total government revenue but sometimes because the pursuit of revenue targets without supporting administrative structures has the perverse effect of reducing actual government incomes by incentivising corruption. A much broader programme addressing domestic taxation as well as inward tax (customs income) is important.
The Commission should make it clear that its economy theme is addressing the key issue of trade issues. The WTO is seen as critical. AGOA has been a success and should be replicated.
The problem is serious but there is a belief in the private sector that the problem is beginning to be addressed, and that HIV/AIDS will not create the economic havoc forecast in the some dire predictions. The private sector has been innovative role with companies adopting substantial programmes of action to protect workforces, provide education, counselling and medical support to workers and their families/communities. These practical responses need to be built on, and the pharmaceutical companies be asked to work to reduce the costs and improve the availability of low-cost health care.
The SME sector is the job creator for the future. The experience of entrepreneurship training and capacity-building shows that this only works if there is improved market access to go alongside it. This includes reducing barriers to entry, improved information on tenders and business opportunities. Although there is a tendency to consolidate and reduce the number of companies in the supply chain, there are two ways the private sector can assist:
· Larger companies can strengthen the SME sector by tying in capacity development to their supply chains.
· The larger organised business sector can press governments to improve the enabling environment – the changes which SMEs do not have the resources or muscle to advocate.
· Government can work to reduce interest rates which crowd out the private sector, and thus facilitate borrowing
· A Code of Practice should be developed to provide a working framework for companies.
**********************************
WOULD YOU LIKE TO COMMENT?
SEND US AN EMAIL:
CONTACT US
**********************************
BACK TO COMMISSION FRONT PAGE
**********************************
BACK TO
FRONT PAGE
***********************************
DISCLAIMER
The
Foundation for the Development of Africa
Accepts no responsibility for incorrect detail listed above!
Kindly notify us of any discrepancies:
**********************************
© Copyright 1999
Website search technology courtesy:
Foundation for the Development of Africa
The Hosting of this Website is Proudly Sponsored by:
FreeFind.com