Targeting the right audience, with the right incentives, may be the key to progress on the Millennium Cities Initiative, writes GEG guest blogger, Christina Ward.
On Wednesday, 10 December 2008 the Earth Institute of Columbia University hosted its second Millennium Cities Investment Day in London. The Millennium Cities Initiative (MCI), founded in 2005, aims to assist nine selected mid-sized cities across sub-Saharan Africa, located near the Millennium Villages, to achieve the Millennium Development Goals (MDGs). Perhaps the two of the most striking features of the conference were the different audiences being addressed and the differences in delivery across the country panels.
The starkest contrast in speeches was between the opening speakers, Lord Hastings of KPMG International and Jeffrey Sachs, Director of the Earth Institute and senior consultant to the UN. Lord Hastings, raised in Jamaica with Angolan roots, delivered a message of the role that good investment can play in liberating the continent. He juxtaposed his critique of the leadership crisis with one of the hugely promising investment opportunities identified by KPMG, an international tax, audit, and investment advisory firm, through its extensive pro bono work for MCI. Unfortunately for the continent, the ‘Robert Mugabes’ of Africa have soured attitudes towards investment. Yet MCI is working to change this image by exposing the unique competencies that cities in countries with strong governance have to offer. The world’s first bamboo bicycle, for example, is soon to be launched out of Ghana thanks to MCI-facilitated partnerships. Featured in the 27 November 2008 Economist, three prototypes have already been tested in New York City and have been priced around $100, much lower than bicycle imports now sell for.
Juxtaposed with Hastings’ exciting and innovative proposition were Sachs’ moral appeals. Sachs explained the background of MCI, how it was born out of the Millennium Development Goals with cities selected because of their high poverty rates despite being located in well governed nations. In response to alarming poverty statistics and development indicator performance, the spectrum of issues being addressed in these cities through MCI include health, education, agriculture, and infrastructure. He closed with an emphasis on the determination shared by himself and those behind the Millennium Cities Initiative to change whatever policies necessary in the Millennium Cities to make the business climate acceptable to investors. Sachs boldly noted that “frankly, I can talk to the Secretary General or heads of state” and get the problems solved, be it a tax issue or infrastructure deficiency. “We’re with you all the way to success.”
The question that these two speeches beg is which audience or audiences were these points being directed to? The first speech took a clear business angle on MCI. However, the second taken out of context would seem to address the interests of the NGOs and development agencies with an appeal to the African ministries themselves. Most investors with a profit motive would be turned off by the idea of inadequate infrastructure and excessive rates of infectious disease. Is the expectation, then, that investors will look to these opportunities not purely out of profit motives but also because of corporate social responsibility? While global firms like KPMG have a public reputation to maintain and extensive resources at their disposal, will the many smaller investment firms, which made up the majority of for-profit attendees at the conference, have the same leeway and incentive?
Sanmit Ahuja, CEO of ETI Dynamics, addressed the pink elephant in the room by calling to attention the recent pullout of four major investment banks and three private equity funds from Africa in response to the financial crisis. Indeed, the only banks in attendance were Credit Suisse and Standard Chartered. Among other interesting suggestions, Ahuja raised the same issue as all previous speakers of the need to get policy right. And all governments represented voiced this to be a mutual goal. However, one must question whether this is not a mirror performance of those that produced the failed implementation of governance conditionalities in the 1990s; then prospective African beneficiaries learned how to say all the magic words of “good governance,” “gender equality,” and several others, and almost invariably received the aid they sought. Indeed, directly following a speech by the Kisumu, Kenya government on their active and effective anti-corruption measures an American entrepreneur from a farming entity quoted the $100,000 in kick-backs he had just paid among other altercations.
The notable contrast between panels presented the second striking feature of the conference. The Kisumu panel featured not only government, but the American farmer noted above along with a local and now international entrepreneur. Together they balanced the presentation on measures the government has taken with narratives of their own personal experiences. From a Western perspective, the latter speakers were extremely engaging, talking about the growth and success of their businesses. Coupled with clever government suggestions for ventures, including “Obama tours” through the home town of the father of US president-elect, their presentation seemed to go well with western entrepreneurs in the audience. Certainly one attendee at my table was swayed. The Ondo State, Nigeria panel also brought a local entrepreneur and a minister who delivered an even-handed depiction of the challenges and areas of progress. However, the stylistic difference between the Western and African entrepreneurs was noticeable. The difference between dignitaries with extensive experience in the West and those without was also noticeable. In the most extreme case, a minister representing a Millennium City, whose phone went off for the fifth time on his way towards the front, read a speech from his paper in a monotone voice without looking up once. It is well known in the African context that everyone leaves phones on during meetings and the government officials do not work to have the same charisma as Western ones. But one wonders whether the Western investors in the room also know this, or if they were turned off by these differences in approach.
This brings us back to the question of audience. One audience not targeted that perhaps should have been the primary one is the Africans who have taken their money out of the continent. A recent Oxford study found that 40% of the continent’s money is abroad, a figure far outstripping annual aid to Africa. Africans accounting for part of the capital exodus and would likely relate easily to African entrepreneurs and ministers. Perhaps a proportion of this group would be very amenable to the myriad investment opportunities that KPMG has identified, which ranged from bamboo bicycles to shea butter to hair extensions. And perhaps this is another issue of “getting the policy right” but on the Western side of things. Tax evasion of multinational corporations operating in Africa is a scandal of much greater magnitude than any kickback a local administrator might demand.
