2005 was a year of bold statements and agreements by the international development community. In this long talk, Niall FitzGerald, chairman of Reuters, hopes that we now move beyond speeches – and believes that the private sector can help:
Promoting growth is the only sustainable way to help Africa help itself. Sustained growth requires strong private sector development and a sound investment climate to attract business interest. A good investment climate creates incentives for all types of firms to grow. And society as a whole benefits from more jobs and more affordable and better quality goods and services.
…Secondly, and more insidiously, there appears to be a stigma attached to being a successful international company in Africa, as if making profits were synonymous with exploitation. The very business of doing business, if done responsibly, has a huge positive impact on society. Businesses generate employment, both directly, and indirectly through their supply chains and distribution channels. Big business probably creates four or five jobs for every one person they employ directly. And businesses create less directly measurable but very tangible social and economic benefits such as training and the transfer of skills, technology, and know-how. The most important impact business can have on the development agenda is through its core business activities.
Thirdly, and most importantly, there are real barriers to doing business in Africa. High transaction costs, lack of infrastructure, absence of a well developed internal market tariffs among African countries stand at about 27% or four times higher than OECD countries- an uncertain legal environment, corruption—these are just some of the challenges businesses face in Africa.
He goes on to site the Doing Business findings and specific company experiences. More coverage via the BBC. On a side note, I think the phrase ‘profit stigma’ might catch on? (Tnx Filippo)
Update: More commentary over at the Globalisation Institute.
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