Business Has Biggest Impact on Development, IDS Seminar Concludes
13 January 2011
It is core business activity, rather than business philanthropy, that has the most positive impact on development, according to Zahid Torres-Rahman, Director of Business Action for Africa.
Speaking at an Institute of Development Studies seminar last week, Torres-Rahman outlined the challenge of making the link between business and poverty as effective as possible. He particularly emphasized the huge impact of jobs and enterprise in helping people lift themselves out of poverty.
Torres-Rahman argued that by focusing on "businesses doing business" rather than Corporate Social Responsibility (CSR), business activities will have a high social value, as well as a high business value. He gave a number of case studies of core business making a development impact, such as the example of The Coca-Cola Company's locally owned micro-distribution networks. Eighty percent of Coca-Cola's sales in East Africa are made through small businesses, many of which are owned by women.
Developing inclusive business models
During his presentation Torres-Rahman outlined the challenges of creating inclusive business models, i.e. models which are commercially viable and also benefit people on low-incomes. We need to understand:
How businesses should be involved in development,
What core business should look like, and
How to scale inclusive business models.
He highlighted the essential role of intermediaries and networks in sharing knowledge, and the importance of Non Governmental Organisations (NGOs) engaging positively with business.
Why further research is needed
Torres-Rahman emphasized the gap in knowledge about the development impact of business, saying that we need to "move away from case studies and anecdotes, towards academic rigor." He explained that there is a need for systematic analysis of the impact of business on development by sector, by country and over time, rather than relying on stand-alone examples.
New research is needed to develop our understanding of what business activities work to reduce poverty, and what activities don't. This evidence will be useful for convincing companies why inclusive business strategies are important, and for convincing donors why they should engage with business.
About the speaker
Zahid Torres-Rahman is a social entrepreneur who has created and promoted networks of people interested in business and development issues.
He is the Director of Business Action for Africa, a network of over 200 organisations and Founder of Business Fights Poverty, an online community of over 10,000 people including representatives from NGOs, academia, business and government.