Speaking notes by Denis Kadima, Southern Africa Trust Chairperson at the Association of SADC Chambers of Commerce and Industry (ASCCI) launch of the Small and Medium Enterprise (SME) tool kit in the Democratic Republic of Congo on 23rd April 2007

The Role of Private Sector in Poverty Reduction. 

Introduction

Ladies and Gentlemen, poverty is on the increase in Sub-Saharan Africa including Southern Africa despite impressive rates of economic growth of the past decade.  We have not harnessed the power of business to fight poverty.  “Business as usual” will no longer work to meet the long-term development challenges facing southern African societies. A new approach is required that must include all stakeholders, including business.

The goals of poverty reduction and economic profitability are not mutually exclusive.  Both can equally empower the poor either by improving their quality of life, providing them with productivity tools and services, or by creating jobs. 
The private sector can reduce or eradicate poverty by contributing to sustainable economic growth that creates jobs and provides income to the poor, as a major contribution to the achievement of the Millennium Development Goals in southern Africa.

Ladies and gentlemen, the poor do have the necessary productive capacity that can be leveraged as input to business to create products and services.  Such products and services have economic value and can be exchanged in the market like any other product.  Companies can undertake traditional value creating activities including buying their inputs from the poor and engaging the poor in production and distribution.

This proposition is not mere political rhetoric:

Examples:

The Southern Africa Trust promotes evidence-based learning by identifying and documenting successes to foster learning about such business practices for more effective poverty reduction.

However, there are many challenges to this approach that need to be addressed through collaboration between governments, business leaders, and civil society organisations in Southern Africa:

In order to succeed in doing business with the poor, companies must strengthen their market intelligence, utilise local leaders and community agents to bring people together.  There could also be a need to educate investors (shareholders) that doing business with the poor and bringing such initiatives to scale, profitability and sustainability may happen much slower than the traditional corporate targets require.

In fact, the companies that do business with the poor must create not just the traditional economic value but also social value. In most cases the poor do not have a voice – social, political or economic – and the onus is on business to demonstrate how their business model improves the lives of the poor.

Partnership for Service Delivery

Ladies and Gentlemen, Governments in many of our countries have recognised the importance of non-state actors (private sector and civil society) in providing public services, particularly to poor communities. Non-state actors can complement the role of government and there is need to collaborate and form partnerships in order to improve public service delivery. 

Health care and education services have long been traditional areas where non-state actors have provided public services to acceptable standards, including in SADC countries.  Non-state actors can go beyond these traditional areas if governments can create a supportive environment in which partnerships can thrive.

However, a conducive environment for partnerships requires a minimum policy regulatory framework that enables non-state actors to be established and function with fewer obstacles. Governments in Southern Africa must continue to adopt policies that endorse and encourage non-state service provision.

Furthermore, genuine partnerships between governments and non-state service providers also require the existence of a formal policy dialogue in which all stakeholders participate in the development of legislation, standards, regulatory and support systems.

The Southern Africa Trust is engaging SADC regional business organisations and governments through intergovernmental structures to secure space for policy dialogue on regional development issues.  It also encourages non-state service providers, especially civil society to set up umbrella associations to represent their interests. However, local-level community-based organisations and local entrepreneurs are still struggling to be heard.

Conclusion

Ladies and Gentlemen, poverty at the local level requires local solutions, poverty at a national level requires national solutions, poverty at a regional level requires regional solutions and poverty at a global level requires global solutions.

The Southern Africa Trust is engaging all stakeholders including civil society, private sector, government and donors at regional level to work together to improve the environment towards better poverty reduction results.  We are engaging the private sector through their regional business organisation such the Association of SADC Chambers of Commerce and Industry as well as the SADC Business Forum.  [ We are grateful that ASCCI invited us to this event ]

SADC governments have identified poverty as one of the key stumbling blocks to regional development in Southern Africa.  They are planning to hold a regional conference on poverty and development and we are partnering with them

We invite business to join this important partnership to find local, national as well as regional solutions to poverty in Southern Africa!