Profit and Nonprofit: A New African Business Partnership
By C. Payne Lucas and Kevin G. Lowther
C. Payne Lucas was president of Africare from May 1971 to June 15, 2002, and Kevin G. Lowther is Africare's former Southern Africa regional director. The following was delivered by Lucas as a speech before the Business Advisory Council of the International Finance Corporation, in Washington, D.C., May 20, 1996. The speech was reprinted in Vital Speeches of the Day (Aug. 1, 1996).
It is a pleasure to be with you this evening, among fellow business people. I say "fellow business people" because running an NGO (nongovernmental organization) is like running a business. I have to make a payroll every two weeks. I have a board of directors scrutinizing our balance sheet. I have to make risky investments. I know that there is no sure thing. The only real difference between you and me is that you can get your banker to cover a bad year. A nonprofit can't afford to have a bad year.
Africa, as I am sure you are aware, seems to have nothing BUT bad years. They started with the slave trade, which accounted for about 250 bad years. Colonial rule was at best a mixed blessing during its century or so. The years of white minority rule in Southern Africa were clearly a losing proposition. A plague of post-colonial conflicts has added to Africa's development deficit.
I could spend my allotted time this evening trying to explain Africa's predicament. It would be a chance to get a lot off my chest. Africa has been my life for the past 35 years, and I still get a thrill when I recall the hope and promise that permeated the Africa that I first met in 1961. But I am sure you do not want to hear me apologize for Africa, or vent my disappointments.
I am here this evening because I still believe that Africa has an important role to play as part of the international community; that the world needs an economically viable Africa, an environmentally sound Africa, a peaceful, stable and growing Africa. I am also here because I believe that you and we — business and the so-called NGOs — have more in common than we might realize.
Africa is just beginning to cultivate what we frequently call a "civil society" — which is nothing more than the web of institutions, associations and other connections which enable a People to identify with one another and to share resources in pursuit of a common destiny.
Africa is shedding its cumbersome and scaly governmental skin. It is learning that governments do not exist to monopolize the national wealth. They exist to create a frame work that encourages people — and the private sector — to generate wealth and, through that wealth, to promote greater well-being for the people at large.
This shedding of skin is a fitful and uneven process. It is grudging on the part of politicians and soldiers who have grown accustomed to sharing the spoils of power — a power that gradually is being diluted by the inevitable rise of the three "za-tions": democratization, privatization and decentralization.
That is why I am confident that the Africa we will know a generation from now, well into the 21st century, will be a considerably different and better place. Do not look for miracles in the short term. Renaissance is a long-term proposition. Look instead for a slow but steady defusing of ethnic conflict and political instability. Look for fewer refugees and less rapid population growth. Look for more effective conservation of natural resources. Look for acceptable levels of economic growth fueled by development of a broader middle class, by a more entrepreneurial spirit and by relatively cheap solar energy and hydropower, among other factors.
I cannot promise what may seem too optimistic a scenario. However, I can cite encouraging indicators of change. First is the sobering realization, throughout Africa, that there is a fundamental choice to be made at community, national and regional levels. Do we follow the self-destructive path of Somalia, Rwanda and Liberia? Enough Africans read the newspapers and watch CNN to know, secondhand, the horrors of communal violence and factional wars. Many more know it firsthand. Most, I would argue, have seen enough.
A second promising indicator is the rise of a better educated and more pragmatic leadership. These are people who are less captivated by ideology than those who came of political age in the struggle against Western colonial rule. The first generation of African leaders indulged in socialist experiments, which helped to blunt economic growth and retard development of a genuine private sector. Today's leaders are increasingly interested in making things work, in part because they are increasingly accountable to a voting public.
A third factor might surprise you: women. African women, to be more precise. My colleagues and I at Africare have come to the conclusion, based on long experience, that a development program which does not substantially involve women is almost bound to fail.
African women are becoming more engaged in development, in business, in civil society and in governance. They are excellent business people, incidentally, and very good at taking care of money. I believe women will have a qualitative impact on the pace and direction of change in Africa, in part because they seem to have a greater appreciation for the bottom line.
This is just one of the lessons we and others have learned in Africa, over many years and sometimes in defiance of common sense. Donors and development banks alike have encouraged Africans to invest in quick economic fixes, in untried schemes and theories. We all wanted to see results in a reasonably short period of time. We relied for a long time on working primarily with governments. We talked a lot about involving the people — the beneficiaries — but that was frequently lip service. Why ask questions when you have the answers?
Africare and many other NGOs have long operated on the assumption that genuine development had to be based on self-help, and that this required the people's involvement in conceptualizing, designing and implementing programs. But if we are honest with ourselves, we have often honored this principle in the breach. It took us some time to take our own preaching seriously.
The World Bank, as you know, has come to the same conclusion. People's participation has not quite become a watchword in the Bank's project cycle, but it is getting there. There is greater appreciation for scaling down the scope of development programs, starting small so to speak, so that the beneficiaries are not marginalized by the sheer magnitude of an undertaking. There is also, among development professionals, a healthier respect for taking one's time. Development is a long-term proposition.
We have also learned, I hope, that development is not dependent on foreign aid. If it is, then we are in serious trouble. No developing country can possibly hope to see past levels of donor grants and concessionary lending restored, much less sustained at current levels. Although the cutbacks we have experienced in U.S. foreign assistance have been draconian and harmful, they send a necessarily blunt message to aid recipients: Make better use of donor assistance and generate more of your own development resources. Foreign assistance can only be a catalyst and a complement for local initiative.
If any one sector can fill the development gap in Africa, it ought to be the private sector. Along with farmers, you exist to produce, to create, to add value. Here, too, there is mounting appreciation in Africa that the private sector needs greater room to do what it does best.
The private sector has something more essential than capital and technology: It has know-how. A budding African entrepreneur can usually find credit and obtain the right machinery. But does he or she have the experience, knowledge and management expertise to translate plant and capital into a productive and competitive enterprise?
This seems to be a major short circuit in developing a more dynamic African private sector. Africa's large informal sector, which is hidden from statistical view, may account for as much as half of all nonfarm economic activity. This is fertile ground for nurturing the business instinct. But we are not really taking maximum advantage of this resource.
Several NGOs specialize in working with the informal and small-scale enterprise sectors. Some of you may have heard of Technoserve and the International Executive Service Corps, American NGOs which focus on providing the know-how I just mentioned. Many others, Africare included, look for opportunities to integrate their regular development work and business enterprise. You might be interested in some examples of Africare's private-sector involvement in Southern Africa alone.
One of our earliest initiatives, in fact, involved an IFC-supported development bank in Malawi. Africare was asked in the early 1980s to provide technical assistance to small-scale agribusiness clients of Indefund, the medium-sized loan window of Indebank, which I understand has been a very successful IFC investment. Our own experience with Indefund was productive. We helped several Malawians to develop business plans for submission to Indefund and provided them technical and managerial advice during their start-up phases. More than 800 jobs were created during our five-year involvement.
More recently in Malawi, we have been working with smaller-scale entrepreneurs in one district, helping them to develop marketing strategies and to use credit more efficiently. In Zambia, we have spent the past six years promoting a manually operated press for expelling oil from sunflower seed. There are now nearly 1,000 of these presses operating in villages throughout the country, with an estimated potential of at least 10,000. We have assisted several machine shops to become manufacturers of the press and have built a national network of sales points for seeds, presses and spare parts. Sunflower production has expanded dramatically and several press owners have graduated from informal to small-scale enterprise status. We now are in the process of spinning off our oils management unit into the private sector, under the ownership of several of its Zambian staff. We are now looking at similar potential for Zambia's latent honey and beeswax industry.
In Zimbabwe, we arranged a small grant for a U.S.-educated electrical engineer and have helped him to establish a highly successful concern manufacturing solar-light assemblies for use in rural areas. He is now exploring export potential in the region. A portion of his profits, under the terms of the original grant, will eventually endow a local Africare fund to support other renewable energy enterprises.
In Namibia, we are working with several major companies, both local and multinational, to provide short-term training to improve management skills of mid-level Black staff members to qualify them for promotion in a transitional, post-apartheid working environment. We are also exploring small-scale agribusiness opportunities with emerging Namibian entrepreneurs.
Finally, in Angola, we recently arranged a visit by representatives of a multinational which is interested in participating in the recovery of what was the world's third largest coffee industry prior to a prolonged armed conflict. We know nothing about coffee, and the multinational knows little about Angola. Together, however, we may be able to collaborate on a long-term initiative which could contribute to Angola's postwar economic revival. The multinational is interested in profit, of course. We are interested in helping the company to become a good corporate citizen of Angola, which could translate into setting aside a small portion of the company's income to rebuild clinics, schools and roads in coffee-growing areas.
We have been flirting with such collaborative arrangements for many years, but have yet to consummate one. Part of the problem has been our lack of fluency in the language of business. Part of it is companies' lack of understanding of NGOs. That may be changing. Six of our eight country representatives in Southern Africa, for instance, have backgrounds in corporate management and finance. These are people who do speak your language.
International as well as indigenous NGOs can be a resource in identifying worthwhile investments, in strengthening the small-scale and informal sectors, in promoting domestic savings, in transferring technology and management skills, in fostering the growth of a middle class.
If you leave here tonight with just one thought, let it be the idea that the private sector has a vested interest in developing long-term working relationships with NGOs. Why? Because a strong NGO community is a sign that the local body politic is no longer rejecting the transplanted notion of private versus government initiative.
Without private initiative at all levels, to anchor a sense of national values, we can hardly expect the growth in Africa of social and political systems capable of sustaining peace and development. This is the surest way, possibly the only way, to release Africa from its economic and political shackles and enable it to engage more productively in the world marketplace.
If we believe that the private sector will be pivotal in building functioning nation states, diverse yet stable societies and growing economies in Africa, then it is logical that we pool our resources wherever we can. We can do this on an ad hoc, one-on-one basis. But we might also consider forming country-specific coalitions: what we might term "chambers of development," in which NGOs, companies, trade associations and financial institutions could better target how to achieve mutually beneficial objectives.
Copyright 1996, C. Payne Lucas and Kevin G. Lowther. All rights reserved.