Fighting poverty makes business sense to firms
It’s been a bad week for a global anti-poverty summit. Even before Wall Street’s turmoil damped the generosity of donor countries, economists were predicting that food and fuel price shocks would drive 100 million people into destitution across the world.
But Thorleif Enger and Michael Landau see opportunity amid the gloom. They have launched investments aimed at helping some of Africa’s poorest countries ease the crisis by producing more food.
Enger’s Norwegian fertilizer giant, Yara International, and Landau’s New York-based financial services company, Map International, announced the ventures this week in response to an appeal to corporate chiefs to join a United Nations campaign to reduce poverty in Asia, Africa and Latin America.
Unlike previous U.N. pitches to business executives, which played to their sense of social responsibility, this one asks them simply to look for profitable markets in underserved regions of poor countries.
“If you look at where is the biggest potential to increase agricultural production, it’s Africa,” Enger said in an interview. “We’re there to make money. We make no secret about it.”
Yara plans to spend $60 million to build two seaport terminals, in Tanzania and Mozambique, to speed shipments of its fertilizer to millions of African farmers, bypassing now-clogged government port facilities and lowering the product’s cost.
Map expects to bring modern electronic banking to 1 million Ugandans within two years via low-cost, specially programmed mobile phones. Many of its target customers are long-isolated farmers, who would gain access to credit.
The commitments were among $16 billion in pledges announced this week by private companies, governments, charities and U.N. agencies during a summit of the world body’s 192 member states to finance its anti-poverty goals.
Those pledges included $4.5 billion to get all the world’s children in school by 2015, a $1-billion-a-year program to buy surplus crops from poor farmers and $3 billion to fight malaria.
U.N. officials are struggling to meet the 15-year Millennium Development Goals they set in 2000. The plan aims to cut in half the number of people in the developing world who live on less than $1 a day; an estimated 1 billion still do. Its other targets include reducing child mortality, stemming epidemics and reducing debt and trade barriers.
After rising for several years, development aid to poor countries has slumped since mid-decade, falling behind target. Secretary-General Ban Ki-moon said donors needed to provide $72 billion a year to put the program on track.
Ban called the $16 billion in pledges “remarkable” in light of the financial crisis, but his appeals for more aid encountered resistance. French Foreign Minister Bernard Kouchner said it was “sort of unfair” to hit up rich countries in the midst of market turmoil.
The U.N. appeal to entrepreneurs was a response to critics who said the anti-poverty plan overemphasized the need for more money and lacked a broader strategy.
More than 60 companies have signed commitments to invest in poor countries in support of the development goals, U.N. officials said. They include Coca-Cola, DuPont, Vodafone, Sumitomo Chemical and Microsoft.
U.N. officials gathered executives of 33 companies, many of which have not yet signed up, for lunch Wednesday. They heard an appeal by former President Clinton, who said the drive for self-sufficiency in poor countries facing food shortages offered “staggering” opportunities to invest in agriculture.
Executives said the credit crunch was not a serious obstacle to planned investments, although some said they would seek support from their governments to face the risks involved.
Private overseas investment in poor countries is often plagued by lawlessness and weak regulatory regimes. But Enger and Landau said they were not discouraged by conditions in Africa.
“There’s a lot of goodwill on the part of governments there,” Enger said.
Enger’s company is offering to help link its port terminals to isolated farming regions by road or rail so that farmers could import fertilizer and move crops to market faster and more cheaply.
Landau’s project would tap into a huge advance in recent years: the spread of cellphone coverage to more than three-quarters of the developing world. His company would bring farmers’ co-ops into the banking system, equip them with ATMs and enable customers to make transactions online. It would profit from subscription and transaction fees.
“This will open a whole new avenue for microfinance for these farmers,” Landau said. “They want to buy a goat -- it used to cost a fortune to travel to borrow the $100. Now, they’ll be able to do it with the phone, click, and get the money immediately.”
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