Business has an interest in Africa developing and poverty being tackled. That’s a given. But what is the most effective way in which the different parties can contribute to the solution?
In the case of business it’s by doing business responsibly and effectively. I don’t argue against aid – it’s needed in certain cases like humanitarian emergencies – but aid is not the most effective path to development.
The most effective path to development in Africa is business. The right infrastructure, investment climate and regional trade and integration are the critical factors which are much more important to Africa’s future.
Many companies are doing very good business in Africa but the development community has not yet fully appreciated the development potential of business.
At the same time, I think when business looks at development they look at corporate social responsibility (CSR), which is fundamentally the wrong place. This is not about CSR – this is about doing business.
When talking about the development impact of business it’s not about social projects but rather how you can enhance your development impact through running a successful business.
For example, when companies source locally they derive a whole range of business benefits such as reduced risk, reduced costs and better supply chain management. The positive development impact of that can be huge – for example, in agricultural value chains, by giving smallholder farmers access to long term markets and to the inputs needed for increased productivity.
Going forward businesses need to remember that innovation – finding new markets and consumers – is a key driver for development. Doing good by doing good business should be their key mantra.
Zahid Torres-Rahman is CEO of Business Action for Africa. This article was first published in Ernst & Young’s 2012 Africa Attractiveness Survey.