We are regularly being asked to broaden Global Hand’s services. While retaining our traditional ‘matching’ activity, many have enquired if Global Hand can support the wider engagement between for-profit and non-profit entities in today’s landscape of Corporate Social Responsibility (CSR) and Sustainable Development.

The following article, by Sally Begbie, was originally published in the Relief & Development Asia Pacific, Middle East & Africa Directory 2008. It is reproduced in this context because it describes many of the engagement types we may facilitate in the future.

TRADE, AID OR TRAID? GETTING IT RIGHT WITH THE PRIVATE SECTOR

Trade? Aid? Both? What strategy is best in combating the intractable nature of global need?

Only recently has it been understood that it is the absence, not the presence, of business that sustains poverty. Only recently, too, have the poor been seen as potential clients and partners, rather than recipients and beneficiaries.                  As this new paradigm emerges, private sector engagement with poverty is undergoing radical change. Partnerships on a for-profit basis are being set up with those in low income economies. Truly commercial in nature, these are driven by a mutual “win win” factor which makes them sustainable in ways that philanthropy cannot be. How far, though, have we come in doing business with the poor? How far have we to go? The popular saying has it that the poor need trade, not aid, but to what degree can we move away from a traditional philanthropy paradigm?

BUSINESS: PROBLEM OR SOLUTION?

Rising 20,000 feet, and looking back over the terrain of engagement in recent years, one has to marvel at the distance public private engagement has come.

It was not so long ago that philanthropy was considered the only antidote to poverty. Business, far from offering a solution, was considered very much part of the problem. It was almost a given, then, that corporate endeavour would result in damage to the environment, abuse of human rights and further malpractice. It was a given, too, that NGOs would try to make the world right again. There were the bad guys and the good guys and our world was fairly neatly divided between them. At that time, non-profit and for-profit entities co-existed in separate universes with little or no attempt at partnership. For corporates, the mantra ran, “The business of business is business” : profit was to be made, taxes paid and it was seen as the public sector’s responsibility to care for the poor. For NGOs, there was, at best, openness to corporate philanthropy, but, more often, outright hostility towards the private sector, with many taking a watchdog stance in regard to unacceptable business activity. For the most part, the beginnings of collaboration came with the advent of Corporate Social Responsibility and Sustainable Development thinking. It drove many companies and NGOs, in the nineties particularly, to seek new ways to align their core expertise with one another in combatting global need.  Early attempts at partnership were most frequently found in the humanitarian arena. Classic disaster response scenarios saw CEOs reach for their phones when public media brought images of crises into their lounge rooms and boardrooms. It was at this time that Global Hand first came into operation, offering online services to link the private sector with appropriate non-profit organisations. The risk of inappropriate engagement was real, however, and all proceeded with a degree of caution. In Global Hand’s case, we began developing Standards of Best Practice.

• On the one hand, no one wanted to facilitate the old patterns of unwise private sector intervention: unsolicited aid clogging harbours, unusable shipments requiring expensive disposal, culturally or technologically inappropriate product, damage to the local economic environment through well meaning, but misguided, intervention.

• On the other hand, while eager to avoid public private partnerships of the wrong kind, all sought to facilitate those of the right kind: more sophisticated, nuanced forms of collaboration that would take the increasing private sector desire to engage and push the paradigm into newer, more strategic application.

Significant momentum was gained in 2005 when the succession of disasters – the tsunami, Hurricane Katrina and Pakistan – generated unprecedented partnership attempts. There were, however, more courtships than marriages. Many UN agencies and NGOs told us they were routinely turning away 95% or more of offers – unless they were purely financial in nature – from corporate actors. Heated disappointment and frustration followed.

Global dialogue began, in earnest, as both sides sought ways to get this right. NGOs and corporates tried to learn the other’s language and explore each other’s landscape. As the conversation went deeper, understanding of the issues grew. It became understood that:

• post disaster activity was not the only, or even always the best, context for partnership. Crises need not have the same depth of impact if infrastructure were stronger in endangered communities. Risk could be reduced by appropriate intervention. Disasters could, in some instances, be prevented outright.

• development, as well as disaster considerations, needed to be pursued. Longer term recovery for these communities had much to do with their history, their economy, their legal infrastructure, their educational system, and a host of other considerations. 

How, then, ought public private partnerships to operate? Could corporate capacity, coupled with NGO expertise, provide scaffolding for infrastructure that would safeguard sustainable solutions to poverty?

One answer came in the form of for-profit engagement: the idea that those who create wealth should partner with those who battle poverty, if governed by a right moral compass. A triangle approach proved ideal: one in which NGOs or IGOs served in a third party role, using their expertise to direct efforts towards appropriate Millennium Development Goals and advising on sustainable strategies and trustworthy partners. A variety of business models emerged. A sampling follows.

• Health and sanitation “Base of the Pyramid” thinking encourages for-profit engagement with the 4 billion, or more, living at the bottom of the world’s economic spectrum. The company, SC Johnson, chose to apply this in Kibera, one of Africa’s, and the world’s, biggest slums. In their own words, “The Protocol pilot team facilitated the identification of several business opportunities for SC Johnson and local community groups in and helped build new partnerships to develop those businesses, laying the groundwork for future collaborations and innovations” Working in partnership with Taka Ni Pato youth groups in Kibera and Carolina for Kibera, a local NGO, they came up with a range of cleaning and disinfecting services for the local community, utilising SC Johnson products, at a price the district could afford, manned by people from the local area.  A model of this kind sees jobs created, living conditions improved and income generated for both local and international partners. http://www.scjohnson.com/en/press-room/fact-sheets/09-10-2009/Base-of-the-Pyramid-Fact-Sheet.aspx

• The Unbanked A traditional bank account is a luxury well beyond the reach of the individual in many developing or undeveloped economies. Estimates place over 65% of the world’s population in the “Unbanked” or “Underbanked” categories. Moreover, those with accounts may need a journey of several miles’ walk or several hours’ transport to conduct a most basic financial transaction. WIZZIT is a South African company that has developed a cell-phone based banking service. It is compatible with less sophisticated cell phones and works on all phones, across all networks and on all SIM cards. The cell phone bank account is supported by a debit card for use in ATMs and Point of Sale devices where these exist. Where there is not the infrastructure in place, the cell phone of the store owner becomes the Point of Sale device. The company employs over 2500 “Wizz Kids”, unemployed people from low-income communities, to promote the product and help unbanked customers open accounts. http://www.wizzit.co.za

• Urban renewal Waste disposal can be a major problem in under-serviced city areas. Trash, scattered over shared neighbourhood areas, is not only depressing for the local community, but fosters the spread of disease, making it unsafe. TEDCOR, a South African company, combats the problem by training local residents in waste management. They are invited not only to master the necessary skills and learn how to manage the business, but, in addition, to work towards personal ownership of the trucks they use. TEDCOR is now looking into pilot projects that will expand the business model into other African countries including Ghana, Mozambique and Botswana. Working in partnership with municipalities and the private sector, TEDCOR’s approach provides employment for local communities and trains local people to become better small business operators, while building a cleaner environment. http://www.tedcor.co.za

• Telecommunications Education can be a hard-earned privilege in developing countries and, often, one that fails to deliver when graduates cannot find employment commensurate with their skill set. Acusis is a US based company that employs Indian graduates, remotely, for a transcription service. A prime driver in the initiative was the prospect of providing meaningful employment for qualified people in : work they could do in their own locale. Recent reports on the remote IT employment model have detailed the benefits from the employees’ perspective: jobs created, the chance to use their skills, good wages and the opportunity for all three to happen from their own locale. This model cuts through the all too frequent pattern of having to migrate to the city, or, indeed, leave the country, in order to find appropriate employment.  http://www.acusisindia.com

TRADE PARADIGM: CHALLENGES AHEAD

Such companies, in their pursuit of new engagement models, are blazing a trail that may well prove ideal. Their creativity, entrepreneurship and resolve are laudable. Undertakings of this sort, though, are not necessarily for the faint of heart.

Regrettably, we will not be able to develop this new paradigm to its full potential until we have addressed a matrix of obstacles, global and local.  Those factors, varying somewhat in nature and intensity, include the following.

• Legal
  • Registration It is a given that an international corporation seeking to partner with a local company would require it to be registered. Yet registration can be well beyond reach for small businesses in environments where the legal system gives little support. The cost may be prohibitative, requiring several months’ takings, or more. The process may be overwhelming with the need for, literally, scores of signatures. The timing can be crushing too, if it takes months or even years to process. All these factors, moreover, facilitate corruption, with favours being bought at prices that push costs up still further.
  • Cronyism Where legal infrastructure is weak and ruling power strong, nepotism can be rife. Friends of the ruling power, often having put their favourite into office through their financial strength, can demand economic privilege and prevent new, entrepreneurial activity from flourishing. Without adequate legal support, it is impossible to operate a level playing field.
  • Black market Without doubt, international corporations are risk averse and reluctant to invest where legal infrastructure is weak and criminal networks strong. Both serve as disincentives. 

• Educational opportunity Partnerships cannot function where one side lacks the education necessary to prove effective. Specialised skills may well be teachable, but if the initial standard of literacy specifically, or education in general, is insufficient, there is only so much one can do.

• Information Technology & Telecommunications
  • Digital inclusion Without finding ways to deal with the digital divide, it may be difficult for other steps to hold. For viable public private partnerships, it is critical that developing communities have sufficient digital inclusion to function at least at a basic level.
  • Telecommunication support is also mandatory for international partnership. Mobile phones have amazed many by their extraordinary popularity in developing economies and by leap-frogging older technologies. Sufficient satellite provision, however, is required for them to support communication on the ground if public private partnerships are to flourish. 
• Physical infrastructure Physical infrastructure is likewise an imperative. Without the roads and bridges needed to facilitate trade, the sheer impossibility of transport is too great a hurdle to be overcome. 

• Security Conflict areas. Again, given the risk averse nature of most international investment, the likelihood of serious attempts at public private partnerships in potential conflict zones is minimal. Ironically, severe poverty and consequent instability are often incubators of the very unrest that, in turn, worsens this perilous cycle. 

• Finance
  • The Unbanked/Underbanked As above, at least two thirds of the world’s population is unable to open a bank account. This, unless addressed, virtually precludes partnership possibility.
  • Access to credit/capital Start up businesses need both and banks, typically, refuse the new, unknown individual without a proven track record or collateral.
  • Audit systems The absence of an audit tradition, of statutory audit requirements or of professional/affordable independent audit services, restricts access to capital or opportunities for business partnering, especially with international partners.
  • Taxation In an environment where taxation is neither systematised nor transparent, it is easy for arbitrary application to skew fair play. This discourages competition, free enterprise and calculated risk taking.
  • Economics If government spending and fiscal policies are not ordered, equitable and transparent, there will be little interest in international, or domestic, investment. Capital inflow rates will suffer. Economic development will therefore be impeded, particularly to the detriment of those without financial buffer or connections. Because such economic mismanagement results, among other things in the inability to guarantee supply, it can impede export of local produce even if quality is high.
  • International trade policies Subsidies in stronger economies, together with protective trade barriers, make it difficult for developing nations to compete on the world stage.

As if these issues, specific to developing nations, were not challenging enough, there are further obstacles in corporate behaviour to be overcome.

• Risk vs opportunity thinking Risk management remains a prime driver in Corporate Social Responsibility. Adherence to CSR is often driven by the desire to mitigate possible criticism at the public level or, to put it in a crass manner, to have “CSR points in the bank”. It is a rarer phenomenon to find companies who are opportunity driven: capitalising on the fact that, if their host community is one of need, they have opportunity to make a difference to it.   

• Environmental footprint vs social footprint CSR has placed great emphasis, and rightly so, on a company’s environmental footprint. As a result, comprehensive measures have been set in place. Far less measurement, however, is available for the social footprint of a company: its impact on society around it. Some researchers say the patterns are too new to be tracked. Others say a system could and should be set in place, citing the old adage that, ‘what gets measured gets managed’. In other words, for change to be effected, there need to be ways to measure and report against it. Otherwise, there will be little motivation for companies to respond.

• Proven models vs models under incubation Even for those companies that are willing to venture into this new territory, the way to do so is not altogether obvious. Workable models have not yet been precisely defined and it is still up to the dedicated and the innovative to blaze the trail.

AID/TRADE? ENTREPRENEURSHIP/PHILANTHROPY

Where, then, are we up to in regard to public private partnership? And where, in the new scheme of things, does aid meet trade, entrepreneurship meet philanthropy?

The new paradigms – with business and NGOs partnering in for-profit strategies – certainly point the way ahead. Yet, one would be hard put to argue that our world, thus far, has reached the point where we no longer need straight philanthropy.

• Challenges For one thing, the above challenges, and permutations of them, mean we have a considerable distance to go before we can see those affectedtread a sure-footed entrepreneurial path out of poverty. 

• Compassion For another, an immediacy of need confronts us today. There are those who will die in the next months, weeks and even days because they lack food, medical care, shelter, security and other circumstance. These may sound like descriptors of a current disaster scenario, yet can be equally true of forgotten disasters, even those which are of many years’ standing, and of chronic poverty. Every week in sub-Saharan Africa, there is loss of life equal to that of ‘tsunami’. If business solutions can be widely introduced, such communities will start to feel the benefits but, without help now, many won’t be around to enjoy them.

GLOBAL HAND & THE EMERGING PARADIGM

Global Hand’s online platform has been built to facilitate public private partnerships of any shape or type.

Coming from a philanthropic background, we are now evolving, even as the sector itself evolves, to facilitate the emerging paradigm.  Currently, we offer:

• a public website, www.globalhand.org, where actors from the public or private sector can express their interest in partnership, describing it in terms of goods, services or funding. Together with this, Global Hand continues to offer its Standards of Best Practice along with a Library of relevant information to facilitate appropriate engagement. 

• a set of private online solutions where Global Hand’s software is adapted for partnering within other constituencies. Global Hand has produced one application of this kind for the World Economic Forum’s Disaster Resource Network. We are, at present, working on one for the United Nations.

In addition, Global Hand has participated in the recently formed Global Commons Alliance: where online ‘connectors’ agree that, if they cannot match possible partners within their own constituency, they will pass these on to a ‘global commons’ where a broader audience might find a partnership opportunity. The goal is to minimise waste and maximise the possibility of a valuable connect. 

THE WAY AHEAD?

What then is the way ahead?

Will it be philanthropy, entrepreneurship or, as other commentators have termed ‘philanthrepreneurship’, suggesting that philanthropy and business can no longer easily be separated? 

Will it be aid, trade or, as others might argue, ‘traid’ : a hybrid that highlights the advantages of both and the weaknesses of neither? It is not easy to predict, and certainly, define a sector which is still burgeoning.  From Global Hand’s perspective, ultimately, the terms matter less than the substance, so long as we get the job done. Our particular focus is on partnerships: connecting corporations and NGOs so that, with their synergistic expertise, sustainable solutions to poverty can be found. Where that means offering a for-profit approach, we will develop new technologies to embrace it. Where it still requires the traditional philanthropic approach, we will continue to offer that track.  Wisdom dictates we introduce business measures for sustainability. Compassion dictates we offer philanthropy for survival. Global Hand is committed to facilitating both.