In the last two posts, I wrote about some of the reasons why money isn’t the only missing link in the fight against poverty as well as RAISE TRADE a new form of trading that brings various stakeholder together with the view to promoting the notion of VALUE ADD. Over the next few days I will explore the money issue further and I will present you with conversations that I had with people I work with in Africa.
I begin with the question IF IT REALLY ISN’T ABOUT THE MONEY WHAT ELSE IS THERE? I answered this question in part in the previous post I will therefore draw from my first conversation to explore it further.
You may recall Tony Blair’s 2005 Commission for Africa, (Blair’s Commission) one of the decisions that came out the commission was the establishment of the Investment Climate Facility for Africa or ICF. The ICF is charged with helping African countries to create a more attractive business environment and realise its potential as a global trading partner. It works to remove real and perceived obstacles to domestic and foreign investment by assisting Africans to prepare and promote the continent as an investment destination (source ICF 2003)
The ICF is based in Africa and in August 2008 I called in on the Chief Executive Omari Issa in Dar es Salaam Tanzania to find out more about their work.
I began by asking him about the money. I have heard it said that money is the number one priority and as such a lot of emphasis has been placed on making it easier for people in African and women for that matter to access finance/loans for business
Omari: I would argue that money is only part of the equation as we have discovered here at the Investment Climate Facility for Africa
That is interesting would you run me through the issues as you understand them?
Omari: Money is not the only constraint preventing folk from starting and running businesses and whilst access to finance is important it is not the primary factor If we consider the group of women you work with at Ethnic supplies,
1. Education, awareness and skills are the number one priorities that must be addressed to ensure economic success for small to medium business and these are mostly owned by women
2. When we break these down you will appreciate their importance. If you take an example of example one of your producers in Madagascar in order for them to generate an income from their baskets certain conditions must be in place
3. She needs to know where the market is and how she can access that market
4. Secondly she needs to develop her product to such a level as to be acceptable by that market,
5. then she needs to put together a business plan to demonstrates a bankable business
Would you care to elaborate on the last point please?
Omari: Well the banks here have a lot of money that they would like to lend people, I know as I used to work for such institutions. However the banks need reassurance that the person to whom they are lending the money will be able to repay it and the only way they can know is through a business plan. Women also need to demonstrate that they can handle balance sheets and this is a question of skills. An important factor is the environment in which businesses are run and that is where ICF comes in
Omari: The environment in which to run a business is important as is money. The environment covers issues such as Customs and Exercise, access to Legal systems that expedites commercial disputes, property ownership, political stability, speedy Company registration even issues such as power outage
Why is power outage such an issue?
Omari: Imagine a Woman who owns a hairdressing saloon but can’t afford a generator if there was a power outage on a Saturday which is ideally her busiest day of the week for her how much business would she lose? Most of the large corporations have access to generators and are therefore not necessarily affected by power outages and as it happens this was the case when I went to a barbers last Saturday (22.8.08) instead of going elsewhere I was happy to have my hair cut the traditional way with scissors otherwise the barber would have lost my business
How does easy and fast business registration help?
Omari: It is important that the setting up of and running of businesses is streamlined, barriers to importing and exporting of goods is made easier by clear and easy to understand customs and exercise regulation? The efficient Customs and Exercise practice and speedy business registration are necessary but are these need to matched up with skilled people on the ground If you can step back and consider a woman who has to travel at least 6 to 8 hours to register a business, by the time she arrives to the Company House office chance are that they will have closed for the day upon her arrival or as is currently the case in most African countries she has to see several people in order to complete the registration process. If that process were to take 8 months how much money would she have lost in bus fares?
He did have a point and I know and work with such a woman, a Masaai woman named Julia a widow who was expelled from her village but has 12 Aids orphans to raise and does so by making and selling beads.
Thinking about women in particular are there key issues that prevent them from achieving economic independence?
Omari: women work harder than men and are willing to work together. In fact women’s co-operatives are more successful than men’s. By addressing the issues discussed here it becomes easier to run successful enterprises especially smaller ones owned by women.
It is all very well working to improve the investment Climate in Africa, but what about people like Julia. How does she benefit? She only speaks Swahili and has to rely on people who can speak English and live in the city to access buyers of handicrafts such as Ethnic Supplies. For instance she missed out on an order earlier in the year because the head of the co-o-op she belongs to failed to get to her.
Omari: that is where good management come in and this come from good education skills and awareness
As I left Omari, I felt that we had had a good conversation and I had a clearer understanding of what ICF is trying to achieve. But it seemed to me that whilst the folk at ICF are doing their best to improve the business environment it will be sometime before this is felt at the bottom of the African society, I wondered too how soon the benefits of this system could be felt by women like Julia.
I also reflected on two conversations I had had with two female African High Commissioners in London. One of them is a strong advocate for Micro finance. I told her that I thought Micro finance was a good idea however that women that are lent this money need access to a much wider market to enable them to repay the loans. In addition that I was aware in some rural areas especially, these women had become victims of loan sharks. She was of the opinion that a much wider market isn’t necessary as people can do business locally and succeed.
The conversation I had with the second High Commissioner concerned Micro loans given by an organisation called HABITAT FOR HUMANITY. The basis of their work is decent shelter for all and they are very active in this particular High Commissioner’s country. Typically money will be give for the purchase of a piece of land on which the recipient can build a basic two room house. She was of the view that whilst people need decent places to live without jobs they will never be in a position to repay such loans. Do you see a chicken and egg situation in the two conversations?
In the next post I will write about the person I met after I left Omari. She unknowingly validated everything Omari told me.
If you have a view about any of the issues raised here or simply want to join the conversation, please do so!