enterprise development that works - tshikululu serious enterprise development workshop 2010

Tshikululu / GIBS ED conference

Enterprise Development that works

6 October 2010

�Introduction to ED

�Summary of Global ED experience

�Key success factors for ED that works in an SA context

ED is growing SMME’s to create wealth and improve quality of

life for the poor

“The key task is to increase the number of

businesses that survive the first few years of

establishment and progress to growth and

expansion, thus contributing to higher levels of job

creation and economic growth” – The DTI

Provide goods & services to help

local SMEs overcome

constraints to sustainability &

growth

Grow local enterprises

Grow the economy;

create wealth; more and better

jobs

Improve lives of the poor

4

Examples of different flavours of ED

1 Micro Ent: Micro-bakery in informal community • Locally made bread would be more affordable and healthier than

mass-produced bread sold in groceries

• 1 bread-baker = 400 loaves/day = 1 business = income for 1 family

1 Small Ent: Internet Café in Orange Farm• Orange Farm does not have a single internet connection

• Students are required to submit assignments via the internet

• Costs much time & money taking taxi’s to neighbouring communities

to submit

Many SME’s: Local Supplier Development Program• Unilever is a major producer and distributor in Vietnam

• Business can be more effective, sustainable, and supportive of the local

economy by developing a range of sourcing and distribution

“partnerships” with local SMMEs

Many SGBs: African SME Growth Investment Fund• Sector Specialised Private Equity Fund to finance growth of small, high

growth potential small businesses in Africa

• Funds under management: ~R375M; 15 investments in 7 years

11

22

33

44

Why ED? ED is globally recognised as one of the most powerful

weapons to fight poverty

• Not just a South African idea, or another BEE checkbox

• However, more important in SA than many other developing nations

– SA is a more difficult environment to create jobs than many other developing countries

– BEE Codes provide ~R20Bn for ED, enough to double rate at which jobs are created in SA

• Almost certainly the most powerful opportunity for YOU to contribute to building

a better South Africa

Poverty must be fought

Job creation is central

Growing SME’s are

key

ED is crucial

What have we learned from global experience?

Good intentions are not good enough!

Good practice is essential

• 60 years of effort

- Governments

- Development specialists (World Bank, IFC, USAID, DFID, etc)

- Corporations (Shell, BP, etc)

• 10 years of intensive efforts

• Tens of $Bn’s spent

• Achieving powerful impact is possible (several success stories)

• Not easy: most efforts fail

• ED is complex and highly nuanced

Why so little success? Foundationally: political and social design

and implementation of ED programs

MotiveMotive

DesignDesign

ImplementationImplementation

Should be driven by&Should be driven by& In practice&In practice&

Political and social agenda

Economic and commercial

fundamentals

Above, plus management

best practice




Target economic

opportunity

Target economic need

(hence, often target areas

that lack real opportunity, or

kill the opportunity)

Consequently, many ED strategies are divorced from economic

realities

• Emerging SME’s in sub-sectors with limited demand growth potential

No growth zones Doomed sectorsNon-holistic

support

Inappropriate

SME targeting

• SME’s in “doomed sectors”, which cannot compete against global suppliers with a far superior value proposition due to inherent competitive disadvantages (e.g. cost structure)

• SME’s which face multiple constraints, many of which are unaddressed by ED programs

• As a result of lingering constraints, SME’s will not grow and realisethe value of ED investments

• Supporting start-ups in sectors where established businesses struggle

• OR, supporting SME’s in sectors where only ME’s can be successful

Description

Examples • Emerging black stationary provider

– Shifts procurement spend (and jobs) from one supplier to another

– Shift destroys economic value (and hence jobs, at national level) without unlocking new value

– Hence erodes national capital base & diminishes ability to invest in job-creating growth

• Textiles (excluding niche players)

– Can never be competitive with Chinese / Indian other dev’ing producers

– Markets will ensure failure of those who compete head on

• “Outreach” focused support

– Leaves several constraints to growth unaddressed

– Growth will not emerge and jobs will not be created

– Better impact possible providing much help to few SME’s

• Emerging, niche textile players, or BPO centres

• Informal area supermarket, vs. spaza shop

Intentions are not enough: several well-intentioned ED approaches, divorced

from economic realities, will have no beneficial outcome at all

Socio-economic returns (measurable only)

Rands benefit per year, per Rand invested

Similarly, inadequate focus on picking high human capital

entrepreneurs due to imbalanced focus on narrow-based

empowerment (on average, poor people benefit 5X versus owner)

Financial returns, 0.16

Social returns, 0.58

R 0.00

R 0.10

R 0.20

R 0.30

R 0.40

R 0.50

R 0.60

R 0.70

R 0.80

Socio-economic rate of return Social rate of return

Taxes

Society and competitors

Complimentary producers

Net customer benefit

Local suppliers

Other staff benefits

Wages

Social returns

Financial returns

• Low income and poor people benefit 2-20X more than owners from successful businesses

• Narrow-based SME ownership is at expense the of broad-based job creation.

• ED aimed at granting ownership to those with HIGH HUMAN POTENTIAL rather than those

with HIGH HUMAN CAPITAL** disadvantages the poor most of all

** NOTE: “It is not about human potential; it is about human capital: that crucial driver of successful enterprise, which

is the existing availability in a human soul of education and skill, a swift, creative mind and proactive spirit, and a vision or dream that fuels

the constant energy required to “sukkle” through hard times. There is no substitute for the slow process of sowing education and experience

to reap human capital, and no substitute for sowing human capital to reap successful enterprise and jobs.”

Unfortunately, often ED programs have both weak entrepreneurs

and weak ED service providers

Talented and experienced entrepreneur Inexperienced entrepreneurStrong BDS provider

PoorBDS provider

“On top of it”

Facade

Blind spot

Unknown

Known to self Not known to

self

Not known

to others

Known to

others

“On top of it”

Facade

Blind spot

Unknown

Known to self Not known to self

Not known

to others

Known to

others

“On top of it”

Facade

Blind spot

Known to self Not known to

self

Not known

to others

Known to

others

“On top

of it”

Facade

Blind spot

Unknown

Known to self Not known to self

Not known

to others

Known to

others

Unknown

Both an effective entrepreneur and an effective BDS

provider are required for a successful outcome

Likelihood of fatal mistakes causing business failure

Likelihood of success

Likelihood of wasted cash and effort

Likelihood of wasted cash and effort

FinallyN

It’s just

hard!

Few real opportunities:

Few viable economic

opportunities in rural / isolated

and underdeveloped

areas

Few real opportunities:

Few viable economic

opportunities in rural / isolated

and underdeveloped

areas

Obstacles to formal

enterprise are profound: Access to markets,

infrastructure, and HR capacity

are primary limiting factors: cannot simply be solved with

money

Obstacles to formal

enterprise are profound: Access to markets,

infrastructure, and HR capacity

are primary limiting factors: cannot simply be solved with

money

Obstacles to informal

enterprise also profound:

Limited cash in local economy

to create markets, or to support micro-

enterprises on a meaningful

scale

Obstacles to informal

enterprise also profound:

Limited cash in local economy

to create markets, or to support micro-

enterprises on a meaningful

scale

14

ED programs that work in an SA context: In summary

Requires a system – i.e. a

business organisation set

up with a long-term single-

minded focus on doing

this well, and building a

system to do it well

15

Most of SA’s corporate and government ED programs are

currently doomed to mediocrity or failure

Do not build

systematic

organisations built to

do this well

Beginning with the basicsN

Set up a holistic solution with right incentives

Be focused

Be realistic

Set up a holistic solution with right incentives:To unlock growth you must holistically address all growth

constraints

Gro

wth

ou

tco

mes

Eff

ort

Resource constraints

(access to skills, raw materials,

technology, systems,

processes, tools, etc)

Capital constraints

(access to finance)

Strategy constraint

(unfocused, inability to

figure out and focus on what

really matters)

Mgmt capacity constraint

(inadequate resource to

effectively plan & execute

growth)

Market opportunity

constraint (quality

growth markets)

“Hunger” constraint

(lack willingness to pay

the price for growth)

Competitiveness

constraint (ability to

sustainably compete)

1

Overlooked constraints

Opportunity constraints Obvious constraints

Holistic

approaches

Non-holistic

approaches

Constraint addressed

This is NOT

how ED works

Med

Low

Low Med High

This IShow ED

works

Effort / spend to unlock growth

Incre

men

tal

gro

wth

un

locked

Hig

h

Non-holistic approaches are likely to be wasted “investments”

Set up a holistic solution with right incentives:Most SME’s will require holistic, long term support to really unlock

growth1

“Low-touch” outreach focused

approachesFocused, high impact approaches

Set up a holistic solution with right incentives: Many “low touch” approaches simply waste funds1

Set up a holistic solution with right incentives:Investment funds and incubators are the ideal solutionN1

• Providing quality business support to really grow good businesses (and hence create real

social impact) requires sophisticated, experienced input (Business Development Service

providers)

• Sophisticated support is expensive

• SME’s can’t afford it

• Outside ED funders (e.g. corporate / state / donors) typically not willing to pay for good BDS

• For those that are, paying for good BDS is the most expensive form of ED

How do you provide meaningful BDS support, despite the cost?

1.BDS fees need to be at risk: directly linked to success of the firm

2.Hence, most effective models are at-risk incubation and finance models (incubation &

finance where most of fees / returns are profit-share linked)

1.Missing Middle Finance (intensive growth support wrapped into tailored finance solutions)

2.At-risk incubators (don’t provide finance, but significant portion of fees linked to profits)

The core ED challenge

Key principles for success

ED Models that work well because they apply these principles

21

Micro-enterprises

Struggling firms

Specific demographic groups

Specific industry / sector

Specific geography

Discrete problem-solving

Focus on support processes

Standard services

Short-term, small projects

Delivered in groups

Build internal capabilities

Allow flexibility

Set prices to buy market share

One price for all customers

Large corporations

Successful firms

All / any groups

All / any industries

All / any areas

Holistic business transformation

Focus on core processes

Customer service

Long term, large projects

Delivered to individual firms

Rely on outside providers

Maintain tight control

Set prices to maximise profits

Customer-specific

SME target market

Support services

Operations

Pricing

Be focused:Enterprise Development takes countless forms

2

22

Summary description SA Examples

Prim

arily

fin

an

cia

lP

rim

arily

no

n-f

inancia

l se

rvic

es f

ocu

s

Venture

capital

Business

Centres

Sector

development

Development

finance

Ho

listic

mo

de

ls

Business

Incubators

Virtual Business

Incubators

Entrepreneur

development

Focused Service

Providers

SMME Finance

& microfinance

• Investment funds which invest alongside management in young, rapidly growing companies

with potential to become significant economic contributors

•HBD Venture Capital

•IDC Venture Cap SBU

•Anglo Zimele

•Fund managers (usually government or ODA funded) which provide finance to entrepreneurs

and businesses in competitive industries, to promote national socio-economic development

•IDC

•Khula / Ntsika funds

•Small banks which provide finance, transactional banking services, and sometimes other

business development services, to micro-entrepreneurs and small businesses unable to

access funding from commercial banks

•Vumela (FNB / Edge)

•Grofin

•Business Partners

•Companies that provide young entrepreneurs with primarily personal development services,

(including entrepreneurial, management, functional, and personal training / coaching /

consulting) and facilitate learning, networking and linkages to resources

•Endeavour (NGO)

•SAIE (NGO)

•Enablis (NGO)

•Consulting organisations which support the development of a particular SME sector by

addressing constraints at and sometimes beyond enterprise level for a vertically integrated

group of enterprises concerned with the same product

•Technoserve (esp. rural)

•Walk-in entrepreneurial centre that offers non-financial services, mostly facilitating business

start-up and early stage growth, on a commercial, subsidized, or free basis

•The Business Place (Investec)

•SEDA

•Business centre that offers start-ups and young businesses premises, facilities, and access to

a suite of on-site services to address constraints to growth (excludes finance). Sometimes

sector focused

•Raizcorp

•ChemCity (Sasol)

•Companies that offer SME’s of any size a holistic business services solution to enable

aggressive growth management (excludes facilities and finance)

•Edge

•ChemCity (Sasol)

•Companies that provide a discrete set of business services (out of the large universe),

including management, functional (e.g. finance, marketing), and technical support, delivered

through training, coaching, mentoring, consulting/advisory, or technology

•The Business Partners

(Mentoring)

Business

linkages

•Customised model which decisively addresses all 3 areas of dominant SME need (financial,

market, and operational), through performance-based growth contracts with either suppliers or

distributors, and holistic managed growth support

•Edge

•RaizCorp

Hybrid models

(many varieties)

•Any of the dominant typologies, with some added features from other models, but still not able

to decisively address all 3 areas of dominant SME need: financial capital, market access, and

operational development

•Edge

•RaizCorp

Be focused: Some examples of SA ED models2

23

Relative advantages Relative disadvantages Best suited to support&P

rim

arily

fin

an

cia

l

Prim

arily

no

n-f

inancia

l se

rvic

es

focu

sVenture

capital

Business

Centres

Sector

development

Development

finance

Ho

listic m

od

els

Business

Incubators

Virtual Business

Incubators

Entrepreneur

development

Focused Service

Providers

SMME Finance

& microfinance

•Provide long term capital to high risk

companies with limited debt access, along

with strategic and mgmt support

•Provides long term debt at subsidised / reduced rate to support sectors / industries with greater developmental potential than investment potential

•Small-scale finance, below commercial bank lower limits, sometimes at competitive rates compared to other alternatives

•Deep, broad, accelerated personal development of entrepreneurs; lasting investment in human capital will benefit country wherever entrepreneur goes

•Creates jobs through export growth/ import replacement, by making sector more globally competitive through removing constraints beyond firm level

•Provide low cost access to basic business skills training and knowledge, for a broad range of SMME’s

•Provide low cost facilities, basic systems infrastructure & affordable access to advice & mgmt development services (training, consulting, etc)

•Similar benefits to business incubators, without residence requirement, & more balanced emphasis on enterprise. More flexible than premises-based model

•Specialised providers able to provide deep support in specific need areas (e.g. mentoring)

•Expect higher financial rewards, hence require

lucrative profit potential and equity share

•Typically only available to sectors with great developmental potential (e.g. high job creation)

•High interest rates, driven by costs •High quality variability

• Limited or no focus on building the enterprise (systems, processes, technology, etc)

•Only has positive benefit where competitiveness is achievable (either domestically, or on global markets)

• Limited selectiveness leads to investment in SMME’s with low/no potential

•Require residence ons-ite•Focus on HR development, not so much on

enterprise development (advanced business processes, systems, etc)

•Unable to provide low cost access to facilities (e.g. premises, reception, etc)

•Huge variation in quality and offerings; high costs of selecting most suitable provider and managing many relationships to address all needs

•SME’s in high growth potential industries or

new markets, with lucrative profit potential (e.g.

new technologies)

•SME’s in Industries / sectors with developmental impact potential, primarily capital needs, and limited attractiveness to venture capitalists

•Viable MSE’s underserved by banks, with primarily capital needs, & ability to meet high, monthly repayments

•Young entrepreneurs, with great entrepreneurial potential, & primarily personal development needs (can dovetail with other ED models)

•SMME’s in Industries / sectors with developmental impact potential or high growth potential, & common firm- and meso/ macro-level constraints

•Primarily micro-enterprises or start-ups in close geographical proximity (e.g. same suburb / town), with fairly homogenous, primarily knowledge constraints

•Start-up / fledgling SME’s needing low cost facilitates, rapid mgmt development and networking

•Established SME’s with rapid expansion potential, needing rapid mgmt development & / or support for major enterprise change programs

•SME market with very specific set of skills / knowledge / advice needs, & sufficient demand to sustain stand-alone businesses

Hybrid models

(many varieties)

•Varied – depends on exact nature of hybrid model (can draw on aspects of any of above models)

•Varied – depends on exact nature of hybrid model (can draw on aspects of any of above models)

Bus Linkages -

Suppliers

•Potential to be most holistic model if finance and non-fin services are addressed, since it inherently addresses access to markets directly

•Can only be initiated by a corporate ED partner, with an appetite to invest in local suppliers, at a cost

• Local SME’s in corporate supply chain, where corporate partner is willing to leverage procurement spend to accelerate local SME growth

Bus Linkages -

Distribution

•Potential to be more holistic model if added to finance and non-fin. services - indirectly addresses access to markets by providing access to quality products

•Can only be initiated by a corporate ED partner, with potential to access new markets/ grow market penetration through growing distributors

• Local SME’s in corporate supply chain, where corporate partner is willing to leverage procurement spend to accelerate local SME growth

•SME’s with more complex needs than

typologies listed above (e.g. suited to business

incubation, but requiring access to capital &

technical skills training)

Be focused: Some examples of SA ED models2

24

Picking the appropriate ED model is crucial. Know the profile of SME’s you

want to support, know their needs, and focus on best model to deliver

Entrepreneur

Development

Enterprise

Development

Focus on developing entrepreneur / owner-manager

(knowledge, skills, networks, etc)

Focus on developing enterprise

(facilities, products, processes, systems, tools, marketing,

financial mgmt, human capital, etc)

Survival

Micro

Successful

Micro

Emerging SME /

1st Stage growth

SME /

2nd Stage growth

Emerging Medium Ent. /

3rd stage growth

Primarily

Entrepreneur

Development

with some

Enterprise

Development

capability

Primarily

Enterprise

Development

with some

Entrepreneur

Development

capability

25-200Employees1-51

0%

100%

% o

f E

D a

cti

vit

ies

1-20 10-50

•Seed

incubation

•Microfinance &

Micro- ED

•Start-up

incubation

•Early stage

incubation

(e.g. RaizCorp)• Expansion finance and incubation

(e.g Edge)

Be focused:2

25

Case study 1: Super low complexity, super low impact

Inputs

• 2 months

• R6k in capital

• 25 hours of support from businessmen earning >R400k p.a

• Ongoing support doing accounts: ~2 hours per week

Outcomes:

• Successful micro-ED venture earning enough money to feed a household

• Successful entrepreneur from the local community

• Lower cost bread for the community

Be realistic:Real ED, even simple ED, requires a LOT of effort

3

1 Micro Ent: Micro-bakery in informal community • Locally made bread would be more affordable and healthier than

mass-produced bread sold in groceries

• 1 bread-baker = 400 loaves/day = 1 business = income for 1 family

11

26

Inputs:

• 12 months

• 1 highly motivated, very talented, full time business owner

• R77k in cash capital , plus donation of satellite connection by IS (big favour!)

• 150 hours of support from businessmen earning >R1M p.a

• A few favours

Outcomes:

• Successful enterprise creating socio-economic value in the local community

• Successful entrepreneur from the local community

• 2 full time jobs

• Students and community receiving several valuable services

Case study 2: Low complexity, low impact

Be realistic:Real ED, even simply ED, requires a LOT of effort

1 Small Ent: Internet Café in Orange Farm• Orange Farm does not have a single internet connection

• Students are required to submit assignments via the internet

• Costs much time & money taking taxi’s to neighbouring communities

to submit

22

3

27

Inputs:

• “Unilever defined quality standards, established the technology input necessary to achieve these requirements, and, where appropriate, provided the financial supportN Training programs on quality standards, inspection and testing methods and warehousing specifications were undertakenN Unilever provides them with &28M of business each year with guaranteed volume at agreed prices and quality levels”

Outcomes:

• Unilever’s partnerships with local enterprises support 5,500 local jobs, more than double the 2,000 people employed locally by Unilever

• 40% of raw materials and 80% of packaging materials purchased from local suppliers

Case study 3: High Complexity, high impact


Many SME’s: Local Supplier Development Program• Unilever is a major producer and distributor in Vietnam

• Business can be more effective, sustainable, and supportive of the local

economy by developing a range of sourcing and distribution

“partnerships” with local SMMEs

33

3

28

Inputs

• Overhead budget 20% of annual funds deployed (R12M)

• Permanent headcount = 11

• 4 dedicated investments officers assessing and prioritising opportunities (avg. salary R950k p.a)

Outcomes

• Deploy ~R60M ED funds / year (80% finance, 20% other support)

• 15 microfinance banks across Africa, providing microfinance banking services to millions of individuals and micro-enterprises

Many SGBs: African SME Growth Investment Fund

• Sector Specialised Private Equity Fund to finance growth of

small, high growth potential small businesses in Africa

• Funds under management: ~R375M; 15 investments in 7 yrs

44

Case study 4: Very high complexity, very high impact


3

29

CSI-oriented organisations tend to be organisationally and culturally

incompatible with high-impact programs focused on larger growing

businesses

Entrepreneur

Development

Enterprise

Development

Focus on developing entrepreneur / owner-manager

(knowledge, skills, networks, etc)

Focus on developing enterprise

(facilities, products, processes, systems, tools, marketing,

financial mgmt, human capital, etc)

Survival

Micro

Successful

Micro

Emerging SME /

1st Stage growth

SME /

2nd Stage growth

Emerging Medium Ent. /

3rd stage growth

Primarily

Entrepreneur

Development

with some

Enterprise

Development

capability

Primarily

Enterprise

Development

with some

Entrepreneur

Development

capability

25-200Employees1-51

0%

100%

% o

f E

D a

cti

vit

ies

1-20 10-50

CSI:1. Specific beneficiaries more important

than max impact

2. Smaller budgets

3. Less business competence

4. No appetite for market salaries for

competent professionals

CSI:1. Specific beneficiaries more important

than max impact

2. Smaller budgets

3. Less business competence

4. No appetite for market salaries for


ED:1. Maximum impact more important than

specific beneficiaries

2. Larger budgets

3. Stronger business competence

4. Appetite for market salaries of


ED:1. Maximum impact more important than

specific beneficiaries

2. Larger budgets

3. Stronger business competence

4. Appetite for market salaries of


Be realistic:3

Key takeaways

Situation• Enterprise Development (ED) is growing small businesses to create socio-economic impact

• ED is recognised globally as a central necessity in the fight against poverty

• In SA, BBBEE regulations create a R10Bn – R20bn (est.) market for private-sector driven ED

• This has the potential to double the rate at which jobs are created in South Africa!

Complication• 60 years of global ED experience makes it clear how difficult it is to get ED right

• Most of SA’s corporate and government ED programs are currently doomed to mediocrity or

failure

Key question• How can we (corporate SA) turn this around and use ED as an effective tool to build the

nation?

Most crucial principles: 1. Think finance PLUS incubation: provide systematic, medium- to long-term support to

unlock growth and jobs

2. Be focused: Pick the right ED model and partners

3. Be realistic: Design a program that matches your organisation’s resources and appetite to

really engage for the long-haul

31

Jason Goldberg

• Jason is a founding Director of Edge Growth - a firm focused

on Enterprise Development (ED – unlocking social impact by

growing high potential small businesses).

• Jason learnt the principles and instruments of identifying and

unlocking business growth potential as a consultant with Bain

& Company, a global strategy firm which advises on 50%

of all large private equity deals done anywhere in the world,

and who’s clients have outgrown the S&P 500 by 4:1 over the last 30 years. Jason has facilitated corporate

venturing and start-ups, was Investment Principal and C.O.O at a Private Equity Investment Trust investing

exclusively in small businesses, has been a Senior Exec in 2 market-leading SME’s, has developed a virtual

incubation methodology to unlock growth in high potential small businesses, has developed ED strategies for

companies ranging from the world’s largest mines to South Africa’s largest banks, and is now Chief

Investment Officer for a Social Impact Private Equity Fund in partnership with First National Bank.

• Jason has studied global ED best practice, attended global forums on entrepreneurship and ED and been

keynote speaker at several conferences on ED. For example, Jason and has been invited as one of 30 global

panel speakers at the watershed Second International Business Forum on Financing for Development in

Doha in November 2008, the primary global forum for government, business, and civil society to advance

best practice approaches to enterprise development financing

• Jason has a degree in Electrical Engineering and a post-graduate degree in Sustainable Development, and is

currently researching best practice in Missing Middle finance

32

Edge Growth

Edge is passionate about creating a brighter future for all South Africans through explosive SME

growth that develops skills, creates jobs, and unlocks other forms of social impact. That’s why we

bring together world-class teams, best practice approaches and tools, sophisticated systems, and

most importantly the right frame of heart and mind, to focus on unlocking SME growth.

Edge’s current focus is in 3 areas: ED Strategy for corporate clients; Impact Investing; and SME

incubation.ぉぉ

EDGE STRATEGY: We have advised a range of companies, including the world's largest mines

and South Africa's largest Banks, on SGB Development strategy and programmes. Our aim in this

arena is to channel private sector Enterprise Development funding towards high impact SGB

Development delivery vehiclesぉぉ

EDGE CAPITAL (IMPACT INVESTING): Edge has recently launched a social venture capital fund

in partnership with FNB. The objective is to grow high social impact businesses in South Africa

through private equity investment and intensive virtual incubation supportぉぉぉぉ

EDGE INCUBATION: Together with a SME private equity fund, we developed a methodology to

unlock growth in high potential small businesses, in an African

1 | P a g e

Enterprise!Development:!A!golden!chance!for!

the!Rainbow!Nation!

!

The!importance!of!Corporate!Social!Responsibility!has!

rarely!been!quite!as!tangible!as!it!is!in!South!Africa!

today.!Few!occasions!in!history!have!so!thoroughly!

displayed!the!mind!of!man,!the!soul!of!society,!as!

Enterprise!Development!does!in!the!Rainbow!nation!in!

2008.!These!next!5!years!will!leave!a!legacy!to!be!lived!

out!by!our!children!and!their!children,!and!it!will!be!

glorious!or!it!will!be!gory;!it!will!emancipate!or!it!will!

subjugate;!it!will!inspire!or!it!will!shame;!and!the!choice!

is!in!our!hands.!!

!

The!global!wealth!divide!(the!gap!between!the!“haves”!

and!“have!nots”)!is!at!historical!highs!!"!it!grew!by!

roughly!2500%!over!the!last!50!years!!"!and!social!

justice!efforts!are!stepping!up!to!combat!these!gross!

inequalities.!This!arbitrary!statistic!becomes!real!when!

you!consider!that!"!in!this!age!of!unprecedented!

affluence!and!convenience!"!a!child!under!the!age!of!5!

starves!to!death!every!five!to!seven!seconds.!!

!

There!are!good!reasons!South!Africa’s!social!justice!

movement!finds!itself!expressed!in!the!Black!Economic!

Empowerment!(BEE)!effort.!Compliments!of!Apartheid,!

the!wealth!divide!loosely!finds!its!form!in!the!black!/!

white!divide!in!South!Africa.!50%!of!black!people,!and!

70%!in!2!of!our!provinces,!live!on!under!R8!/!day!(US$1,!

or!a!loaf!or!two!of!bread).!BEE!aims!to!restore!some!

semblance!of!fairness!and!civil!stability!to!South!African!

society!and!so!also!improve!business!sustainability,!by!

compensating!for!the!inherited!environmental!

disadvantages!of!South!Africa’s!most!poor!people,!who!

happen!(by!vast!majority)!to!be!black!people.!!

!

Alas,!BEE!is,!by!default,!narrow"based!(it!helps!those!

who!least!need!it),!until!regulations!force!a!broad"

based!approach.!Market!logic!dictates!that!it!be!so:!NB"

BEE!is!the!least!cost,!highest!value!approach.!History!

tells!us!that!only!broad"based!empowerment!will!

prevent!a!Zim"esque!decline!into!a!deep!and!dark!social!

and!economic!pit!for!our!balmy!nation.!It’s!not!a!

political!matter;!it’s!a!matter!of!human!nature.!People!

need!hope;!and!if!most!of!the!nation!finds!itself!with!

none!and!a!revolutionary!or!dictator!promises!them!

some,!they!are!likely!to!follow!him/her;!and!the!world!

we!live!in!is!just!crazy!enough!to!make!the!emergence!

of!that!revolutionary!/!dictator!inevitable.!Narrow"

based!empowerment!merely!slows!the!process.!

Perhaps.!Without!broad"based!BEE,!the!Rainbow!

Nation!will!inevitably!become!the!Dark!Cloud!of!Africa!

as!resentment!from!the!starving!masses!wells!up!into!

violent!revolution.!

!

Unfortunately,!the!first!five!years!following!the!2002!

release!of!the!BEE!Codes!of!Good!Practice!saw!the!

implementation!of!BEE!being!very!narrow"based.!

Hence,!most!savvy!South!Africans!would!have!guessed!

in!early!2007!that!the!release!of!the!Broad"Based!

version!of!the!BEE!Codes!of!Good!Practice!(B"BBEE!

COGP)!would!aim!to!stimulate!a!shift!in!the!business!

community’s!BEE!approach!to!a!truly!broad"based!

version!that!helps!the!vast!poor!masses.!Few!would!

realise!just!how!great!that!shift!could!be.!A!single!

change!in!the!Codes!would!hold!potential!to!alter!the!

future!of!this!nation,!and!fast;!and!it!lay!in!the!

unassuming,!unknown,!enigmatic!entity!that!is!

Enterprise!Development.!! !

!

Enterprise!Development!(ED),!simply!speaking,!is!

helping!small!businesses!grow!in!order!to!create!jobs.!

In!South!African!BEE!terms,!it!is!company!A!spending!a!

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portion!of!its!profits!to!help!black!empowered!

company!B!grow,!hopefully!creating!jobs.!

!

In!the!first!era!of!BEE!(2002"2007),!ED!received!little!

attention!beyond!some!confused!frowns.!The!2007!B"

BBEE!COGP!substantially!bolstered!the!importance!of!

the!ED!aspect!of!the!BEE!Scorecard,!increasing!its!

weighting!from!10%!to!15%!and!the!target!spend!from!

2%!of!net!profit!to!3%!of!net!profit.!At!the!same!time,!

government!began!paying!increasing!lip"service!to!

broad"based!empowerment.!Confused!frowns!now!

turned!into!worried!frowns,!as!the!business!community!

suddenly!needed!to!come!to!grips!with!this!newly!

important!animal.!!

!

Why!the!emphasis?!Why!is!ED!so!important?!Perhaps!

the!best!way!to!make!the!point!is!in!brief:!globally,!ED!

is!the!most!powerful!known!weapon!to!fight!poverty!

and!create!a!vibrant!and!fair!society!that!creates!

opportunities!for!more!of!the!poor.!After!roughly!60!

years!of!concerted!efforts!to!fight!poverty!by!global!

developmental!specialists,!in!which!trillions!of!dollars!

have!been!spent!by!many!big!brains!and!golden!hearts!

on!various!forms!of!international!aid!and!welfare,!and!

many!and!varied!approaches!have!been!tried,!the!

global!community!of!development!(anti"poverty)!

practitioners!has!arrived!in!the!last!decade,!for!the!first!

time,!at!somewhat!of!a!consensus!on!how!to!best!fight!

poverty.!Several!Iron!Curtains!and!Wide!Walls,!a!

number!of!Socialist!States,!a!raft!of!white!elephant!

infrastructural!projects!with!accompanying!debt"crises,!

one!prolonged!bout!of!bad!Neo"Liberalism!and!a!failed!

Washington!Consensus!later,!we!can!finally!agree!"!

thanks!largely!to!some!Asian!Tigers!"!that!the!best!way!

to!fight!poverty!is!within!a!capitalist!economy!with!

strongly!pro"poor!economic!policies!which!aim!to!

create!jobs!for!everybody!by!investing!in!growing!small!

businesses.!There’s!much!more!to!it,!of!course,!but!

that’s!the!crux!and!indispensable!centre!of!it.!

Ultimately,!and!without!discounting!the!importance!of!

parallel!welfare!approaches!and!underlying!

empowerment!and!security!efforts,!the!provision!of!

more!and!better!jobs!is!by!a!long!way!the!most!

powerful!means,!not!to!mention!the!only!sustainable!

means,!of!attacking!poverty;!the!only!sustainable!

means!to!create!jobs!is!to!expand!trade!and!industry;!

and!the!only!sustainable!means!to!achieve!that!in!

developing!nations,!where!small!businesses!generally!

make!up!50%!"!80%!of!the!economy,!is!to!grow!small!

businesses.!That’s!Enterprise!Development:!it!creates!

jobs!and,!therefore,!dignity,!hope!and!justice.!!

!

And!it!works!too.!Several!global!case!studies!

demonstrate!how!ED!can!create!thousands!of!jobs!in!a!

short!space!of!time!through!strategic!and!concerted!

efforts.!!A!World!Bank!study!in!Sri!Lanka!demonstrated!

how!an!ED!program!accelerated!job!creation!by!30%!

amongst!supported!businesses!(5).!ED,!done!well,!is!a!

catalyst!for!explosive!growth,!job!creation,!and!social!

stability.!!

!

While!all!this!may!make!ED!sound!like!purely!a!social!

tax!(which!is!mostly!how!it!is!viewed!in!SA!today),!done!

well,!ED!is!very!good!for!business!and!should!be!used!to!

create!competitive!advantage.!3%!of!net!profit!is!a!big!

expense!item!(for!example,!typical!investment!in!

training!is!only!2"4%!of!payroll).!If!your!competitors!are!

spending!it!poorly!(i.e.!doing!ED!poorly)!and!you!are!

effectively!using!it!to!create!access!to!new!markets!or!

strengthen!strategic!suppliers!(for!example),!you!are!

investing!in!competitive!advantage.!In!fact,!the!most!

powerful!forms!of!ED!are!those!which!help!your!

bottom!line.!In!many!cases,!as!a!contributor!to!ED!with!

a!significant!budget,!working!within!your!own!value!

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chain!to!grow!sales!or!reduce!costs!is!likely!to!have!

more!job"creating!impact!per!Rand!invested!than!any!

other!form!of!ED.!!

!

The!good!news!is!that!SA’s!B"BBEE!COGP!could!create!

sufficient!ED!investment!to!double!the!rate!at!which!

jobs!are!created!in!South!Africa!!South!Africa!needs!to!

create!roughly!600,000!jobs!per!year!to!achieve!the!

State’s!AsgiSA!program!target!of!halving!

unemployment!by!2014.!We!only!created,!on!average,!

280,000!jobs!per!year!between!1994!and!2005!so!

something!simply!must!change.!Fortunately,!South!

Africa!is!in!the!unique!position,!globally,!of!having!

regulations!which!stimulate!a!market!for!somewhere!

near!R4Bn!worth!of!private!sector!ED!investment!(Edge!

estimates).!For!example,!based!on!their!declared!net!

profit,!Sasol!alone!would!need!to!spend!R500Million!on!

Enterprise!Development!in!2009.!R4Bn!worth!of!private!

sector!ED!investment!could!create!between!40,000!and!

400,000!additional!jobs!per!year,!if!available!global!

benchmarks!of!job"creation!efficiency!are!anything!to!

go!by.!

!

In!summary,!if!ED!is!done!well,!there!is!no!more!

powerful,!sub"Divine!vehicle!to!turn!our!humble!

nation’s!potential!miracle!story!into!a!miracle!story.!ED!

is!central!to!the!Rainbow!nation’s!solution.!!

!

That’s!the!good!news.!The!bad!news!is!that,!if!ED!

continues!to!be!implemented!the!way!it!is!being!today,!

this!opportunity!will!be!squandered!with!little!to!show!

for!it.!60!years!of!efforts!by!experienced!ED!

professionals!has!left!us!with!very!little!measurable!

impact!and!many!hard!lessons,!including!that!ED!must!

be!designed!and!implemented!well!if!it!is!to!have!any!

impact!at!all.!While!ED!is!too!complex!to!have!a!“Best!

Practice”,!Edge!has!identified!from!global!research!a!

“Best!Principles”:!golden!principles!without!which!

Enterprise!Development!is!likely!to!fail!or!deliver!

miserable,!unmeasurable!outcomes.!Alas,!most!SA!ED!

efforts!observed!by!edge!(a!few!notable!exceptions!

aside,!such!as!Sasol’s!Chemcity!and!Anglo!Zimele)!are!

being!implemented!with!no!regard!for!the!principles!

that!work!and,!not!surprisingly,!success!stories!are!few!

and!far!between.!It’s!not!entirely!their!fault,!since!the!

South!African!business!community!are!not!ED!

practitioners.!In!addition,!ED!is!far!more!complex,!

specialised!and!challenging!than!even!senior!line!

manager!roles,!and!it!is!not!their!core!business.!

Nonetheless,!responsibility!lies!in!their!hands!to!get!it!

right.!!

!

Both!the!great!tragedy!and!the!golden!opportunity!lie!

in!the!fact!that!a!handful!of!enlightened!but!simple!

decisions!by!a!few!thousand!individuals!(mostly!

corporate!businessmen,!the!DTI,!and!ABVA!"!the!

Association!of!BEE!Verification!Agencies)!would!

radically!alter!the!future!of!this!nation.!Even!a!single!

decision:!let’s!do!what!we!must!to!make!ED!work.!

Simply!making!the!decision!to!invest!the!effort!required!

"!and!partnering!with!those!who!know!how!"!to!make!

ED!have!an!impact!on!your!own!business!and!

sustainably!grow!job"creating!businesses!is!the!

beginning!of!national!change.!We!cannot!point!to!a!

single!other!sub"Divine!project!or!force!that!could!

potentially!double!the!rate!at!which!jobs!are!created!in!

this!nation.!Every!decade!or!so,!a!single!chance!comes!

along!to!make!an!unparalleled!difference!to!our!

national!destiny.!ED!is!it!for!this!decade.!And!today!that!

chance!is!being!squandered.!“My!people!are!destroyed!

for!lack!of!knowledge”.!Well,!now!we!know.!The!

question!is!what!will!we!do!about!it?!!

!

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Our!childrens’!future!is!shaped!by!the!decisions!you!

and!I!make!today.!ED!has!the!unparalleled!potential!to!

make!the!Rainbow!Nation!a!reality:!a!better!nation!for!

all,!in!our!lifetime.!The!business!community!has!the!

power!to!make!a!handful!of!simple!decisions!in!regard!

to!how!they!undertake!ED,!and!so!shift!the!future!of!

this!nation!from!Zim"esque!gradual!decline!to!Asian"

style!steady!climb.!Today,!those!decisions!are!not!being!

made!and!our!children!(and!their!children)!will!live!out!

the!consequences!of!our!present!intent!in!regard!to!ED,!

as!we!are!living!out!the!consequences!of!Apartheid.!!

!

We!can!change!course.!The!future!is!in!our!hands.!

Rarely!in!global!history!has!Corporate!Social!

Responsibility!been!so!real.!Lets!step!up!to!the!plate!

and!change!the!nation.!Let’s!leave!a!legacy.!

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Women in Enterprise: paradox and choice

“Women in Enterprise”: another great teacher of Life. A topic which reminds us of the ever present paradoxes in development, forces us to be real and confront the unbending ways of Life, and to get past rhetoric on the pot of gold at the end of the rainbow and get on with digging for it. Its trenches aren’t pretty and its board rooms not for sissies. We’ll leave the task to the rest of this publication to describe precisely what “Women in Enterprise” means. Here we will stick to the messy topic of whether or not and where it is in fact a good thing. The tension really exists (as all too often is the case) between the macro and the micro, the personal and the strategic perspectives. Much like a married pair, their views disagree fundamentally and both are right! On the one hand, at the micro level, supporting Women in Enterprise is just so noble and progressive and necessary and... well, just! For many long centuries, women were excluded from the economy by culture and regime, so that the most disadvantaged peoples in our broken society today are helpless women and their children. Surely one of the most shameful symbols of our broken society must be the multitudes of Noxolo’s. Noxolo is a single young 17 year old mother with no skills, no education, no parents, no husband, and no hope but to share her bed and body with multiple partners weekly just to put bread on the table for her 2 toddlers, until she gets sick with aids, her boyfriends move on, and she is left with nobody but hungry children to feed and growing inability to muster the strength to still their hungry cries. Without economic means, our Noxolo’s are forced to exploit all they have to survive, and all they have is their bodies. Surely leaving the multitudes of Noxolo’s without help must be one of the great sins of mankind. Which is precisely why “Women in Enterprise” is so necessary: we simply must empower such women to take control of their destiny by releasing them from their economic dependence. Which is why the Women’s’ Development Banks of this world have such a noble task: providing “the least of these” our people (in terms of provision and means) with the skills and means to succeed in enterprise - of any size and sort, though mostly small and simple – and so live with dignity and hope that their children will have a better life. Kudos to you: Women’s Development Bank. That’s the micro level, personal view.

On the other hand, at a macro level, the analytical, strategic mind of Dube - the social economist with a good brain and better heart who takes a big picture view and asks “how can we help the most Noxolo’s with the little resource we have?” - points to the statistics to help us understand how counterproductive the strategy of placing women at the helm of enterprise is, pursued as a dominant strategy, if one is concerned with helping many Noxolo’s at all. Who can understand it? The Invisible Hand of the Market dictates the terms of sustainable economic development and He shan’t be moved by purity of purpose or agony of plea. His purpose is not to redress past injustices; He has one mission: to continue to reward the profit motive and effective enterprise with success and appreciating wealth, and to penalise poor enterprise effectiveness, efficiency and productivity with failure and rapid erosion of the means by which one must achieve all economic ends in this world: capital. He always has. He always will. And so to help the weak in a market economy we shall always have to help the strong. And so Dube reminds us that empowering our Noxolos is the true end for which we strive, and Women in Enterprise merely the means. He will then point out that the best way to help the most Noxolo’s is to address poverty in general, which is achieved most effectively by supporting (directly) not the Noxolos of this world, but the Vuyo’s of this world: the highly skilled, networked, equipped, successful world-beaters with a trail to blaze through the open planes of opportunity the trained and eager eye will see in an emerging market economy. Before you vomit in disgust or put a price on Dube’s head, perhaps hear him out: his logic is really rather sound. Picture a ship nearly wrecked on the rocks near the Milton Sounds. One may be tempted to quickly teach “the least of these” – single moms with children, and others unable to swim - to skilfully skipper a lifeboat safely to shore and take control of their destiny; which is precisely what one should do if you wanted to kill them all. If one wanted to balance out the disproportionate power held by the weak (those

unable to make it to shore without help) versus strong (those able), this is possibly the most counterproductive possible strategy. The strong swimmers will make it to shore anyway: they can swim, after all; it is only the weak that will drown when the lifeboats flounder in the towering swells for lack of an able skipper. It’s always the most vulnerable who lack buffers (savings, assets,

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skills, education, etc) to shield themselves from the consequences of well intentioned foolishness. The hope of the “least of these” is in lifeboats making it safely to shore: the colour or creed of the skipper is really immaterial; his skill as a skipper is not. So, the best way to help the weak is to put the most qualified and able seamen at the helm of every lifeboat to whisk them all safely to shore as quickly as possible. Being the best skipper is not a matter of race or sex; it is a matter of past training. Now is not the time to train new captains. Now is the time to use those who have been raised up for times such as these. To ground the analogy, let’s look at Mao’s China. I am quite certain Mao Zedong had the best interests at heart of the very peasants who starved to death in their tens of millions, when He launched the Great Leap Forward. Yet it was not he or his high ranking government officials who suffered for their failed policies; it was “the least of these” who had no buffer to fend off hunger and poverty when they assaulted the land in a frenzied swarm due to anti-individualistic agricultural policies. It was only years after this unintentional genocide that these Communists with a special disdain for individualism conceded that to help the weak they must help the strong. There is no avoiding it. It’s a pet law of Life. To one is given the gift of labour, to another the gift of enterprise, and to each the gift of the other. The more individualistic approach, then, is to make none gifts to others and assume all are equipped for all tasks, including enterprise, and so rob all of all. And Mao will shout his disagreement from his regretful grave. Similarly, in the struggling vessel of our market economy, Noxolo invariably suffers the most when the cold and heartless waves of poverty crash ceaselessly over the helm. While Noxolo’s boyfriends would be described by the World Bank as poor, they at least can swim (SA offers more jobs for men, such as manual labour in mines, construction, and public works, and there are many more single moms than single dads) and use their economic means to exploit Noxolo, who is truly impoverished by her absolute lack of protection from the battering waves of violent crime and exploitation which almost always overwhelm the weak in the dark night of the poverty storm. The best way to empower Noxolo is through the blue skies of economic opportunity. What Noxolo needs is well-trained skippers who can safely navigate the vessels of private enterprise through the storm of poverty into job-creating prosperity

This is precisely why we will never make major dents in our unemployment rates by throwing all our resources at supporting micro- and start-up enterprises, either for women or for men. It takes so long to train enough people disadvantaged by the Bantu Education System to run businesses able to provide sustainable employment for even a few, that by the time they are all trained up the ship has been sunk and the moms’ and toddlers’ lifeless corpses lie washed up on the beach of starvation. In enterprise, to help the weak, we must help the strong. C’est la vie. Such is life. Lest you think my analogy to be the sly sleight of a self-interested hand, let’s put the example above into well-researched terms. In general, helping the least of these in enterprise limits one to supporting micro- and start-up enterprises – primarily due to the high complexity of starting and running a business, and the low skill and education levels and limited capital in the hands of “the least of these”. Supporting micro-enterprises can really only address up to 10% of our unemployment problem, and supporting start-ups another 10% (and then only if successful on

a grand scale!), due to low levels of

entrepreneurialism and poor success rates of micro- and start-up enterprises.

* Will create over 20 jobs in 5 years This approach to enterprise will therefore fail to help the vast majority of our Noxolo’s. Though this sort of support for “Women in Enterprise” is certainly a part of the answer, a disproportionate focus on this piece of the solution is merely a denial of our responsibility to tackle the heart of the disenfranchisement problem. The bulk of our solution cannot – empirically - lie in this approach to enterprise development. To overcome our high unemployment rates, we must support growth enterprises: significant small and medium sized businesses, with the potential to grow quickly and employ 20-2000 people. The truth is that, as much as the individual

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entrepreneur may be the visible icon of prosperity at the helm of his/her successful enterprise, with well-picked businesses, the benefits of growth to poor people can be 20 times the benefit to the entrepreneur, in terms of annual increases in income (and far greater in terms of quality of life). So if helping Noxolo by helping able skippers means supporting 80% male skippers and only 20% female, since at present most of our trained skippers are males, then C’est la vie – let us not sink Noxolo and her toddlers over this spat. If we are more true to the ends of helping our Noxolo’s than the means of Women in Enterprise, then we must happily accept supporting the entrepreneurs we have, whoever they may be. While it may irk the well-intentioned social conscience to focus efforts on multiplying the wealth of already well-to-do businessmen, the reality Dube devoutly proclaims is this: disenfranchised women are by far the greatest beneficiaries of pro-poor, job creating growth (in terms of improved quality of life); the greatest driver of job-creating growth will be a flourishing growth-enterprise sector; a flourishing growth-enterprise sector must, statistically, be headed by effective entrepreneurs and business managers; these are most likely to be relatively well-educated and already highly able, with relevant skills and experience – particularly in business - and access to capital (human and financial); and finally, if we must lay all the politically distasteful cards on the table, these are statistically mostly going to be white males in South Africa. History does not forget.

So supporting the best entrepreneurs and business managers is the most powerful way to help the most Noxolo’s, and these will mostly be males. Hardly a poster child for a “Women in Enterprise development” success story, but pragmatically it’s your best bet to help our Noxolo’s. What Dube will tell you in a moment of blind valour is that, while we must support

Women in Enterprise and black empowerment and the many other crucial programs which redress our past (gross) injustices, our progress in this regard will be in direct proportion to the amount of financial and human capital well invested in economically productive programs, and so it is simply counterproductive to willingly discard much of our human capital (those trained males with much education, skills and experience) at the outset of the journey, because of race, sex, or creed. And here lies one of those distasteful truths that “Women in Enterprise” will not allow us to sidestep: the unavoidability of the fate of the weak depending on the fate of the strong, who certainly in South Africa’s case are also mostly beneficiaries of apartheid. Let us again consult communist China, since we know they have no hidden agenda to bolster the cause of capitalism and individual enterprise. For all their disdain of that which reeks of elitism, they have been unable to avoid employing the very centre of the capitalist model at the heart of their economic strategy: private enterprise spearheaded by individual entrepreneurs and “Rainmakers” who, through personal success, drive development and prosperity for many. Though pure communist philosophy is nauseated by “individualism”, “elitism”, and the disproportionate enrichment of a relative few, after decades of various communal efforts, a “socialist market economy” is the way forward for China. That is, “we concede that we need entrepreneurs who become wealthy in order to generate development and create jobs, but we want to distribute the benefits of their successes as widely as possible”. And in China, as in South Africa, these privileged catalysts of development happen mostly to be already advantaged males. This is not to say that women have no place in serious enterprise! With women like Janet Buckland, Thabang Molefi, Mardia van der Walt-Korsten and Chici Maponya about, watch out Tokyo! But on aggregate, we have as a nation more vested human capital in trained males than in females (again, history does not forget), and so we should expect that trained males continue to lead the charge of growth enterprises, if we expect to create jobs for our Noxolo’s. It is not about human potential; it is about human capital: that crucial driver of successful enterprise, which is the existing availability in a human soul of education and skill, a swift, creative mind and proactive spirit, and a vision or dream that fuels the constant energy required to “sukkle” through hard times. There is no substitute for the slow process of sowing education and experience to reap human capital, and no substitute for sowing

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human capital to reap successful enterprise and jobs. Where does this leave us on Women in Enterprise? As with all tensions: with a question to be answered by brave people in high places. The starting point must be our finite resources: we cannot achieve all; we must prioritise our objectives and invest our scarce resources in that which counts most. Having limited resources does not mean we resign ourselves to the grooves history has carved for us and leave women on the fringes of the economy: it means we must choose where change is most important. So the question is simply this: Which is more important: having several thousand fewer Noxolo’s, or several tens more Chici’s? Much fewer women starving, or a few more women at the top? The opportunity cost of doing either is unavoidable. We have limited Rands and we will neither reach the end of helping our Noxolo’s nor create as many Chici’s as there are Tokyo’s in this century, so every Rand spent on one is a Rand not spent on the other. Which is more important? Like I said: not for sissies.

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Time for Africa’s Green Revolution

“Once upon a time there was a tiny, tiny chicken named Chicken Little. One day Chicken Little was scratching in the garden when an acorn fell on her head. ‘Oh,’ cried Chicken Little, ‘the sky is falling. I must go tell the king.’ So Chicken Little ran and ran, and she met Henny Penny. ‘Where do you travel so fast, Chicken Little?’ asked Henny Penny. ‘Ah, Henny Penny,’ said Chicken Little, ‘the sky is falling, and I must go tell the king.’”

I often wake up wondering if I am not in fact Henny Penny, only a little bigger and far more masculine. There seem to be so many Chicken Little’s with mighty megaphones and their own tales of doom that I really begin to wonder if perhaps it isn’t true: could the sky really be falling in on our nice little world?

It only takes a brief foray into the fairly straight-forward question “how do we feed Africa?” to become quite overwhelmed with early symptoms of sky-falling-in-ism . People need food. Food comes from the ground. Africa has lots of ground. What’s the problem?

Follow me if you will through the labyrinth that is Africa’s hunger crisis...

Poverty

Chipo is now 17. She's Malawian . Chipo's parents both died of AIDS when she was 13. Since then, she's been raising 5 siblings on her own. Of course, before she became the head of her household, the medical bills swallowed up their only "wealth" – a few goats and a small piece of land. So they have nothing.

Have you ever had nothing? Can you fathom possessing nothing? Can you imagine driving home from work wondering where to go, because you have no home? Can you imagine walking out of work wondering what to do because you have no car? Can you imagine sitting over breakfast wondering how to earn some money because you have no work and no skills? Can you imagine having an extended wash because you can’t face climbing out the shower to no food, no money, and no work?

Can you imagine waking up wondering how to clean yourself before going hungry all day, because you have no water? Can you imagine asking your parents where to fall sleep hungry, because you have no shelter? Can you imagine brainstorming where to find shelter with 5 hungry younger siblings because you have no parents? Can you imagine all you have is 5 hungry siblings to take care of, and you have no parents, no shelter, no water, no food, no work, no skills, no car, and no home? Can you imagine that - even if you find some work this morning, beg some money this afternoon - tomorrow is the same again and so, having been stripped of all else, you are stripped even of hope?

Food crisis at a personal level

Sometimes Chipo manages to find small jobs – carrying water, a bit of farm work here and there – so she can buy some maize and some cooking oil for her siblings. There's never enough to stop the hunger, of course. But mostly there's enough to live. She's used to the hunger by now. It's the weakness – the struggle to do things – that still bothers her. There's so much work to do. So much. 5 siblings, and they're all under 13. What can they do? Not much. And they give so many problems. They aren't disciplined and they don't listen. They don't want to help and they don't understand why it's important to learn. She can't blame them; they had to watch 2 of their parents dying very slowly. They were so sick, and nobody knew what this disease was. They just couldn't get out of bed. Slowly, very slowly, they just died. So the children have had nobody. Nobody to love them, and nobody to love. Everybody in the area is struggling enough, they can't feed extra mouths. It's hard enough just to feed your own family. And nobody wants to look after an aids orphan. Aids orphans are a problem – they just get in the way and nobody can help. And that disease kills. Aids orphans are dangerous; you must stay away from them. Its better to chase them out of the area so they don't make others sick. So the orphans have to look after themselves. Nobody to love. Nobody to be loved by. Only themselves.

But Chipo now has a figment of hope: World Vision gave her a small piece of land, some goats and some seeds to grow corn. Some people have tried to take it away. Apparently only the big farmers can make money. Apparently the small ones just take up land and waste it. So they say we should go to

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school so we can find work. They say school is like property: if you have property you can live; if you have school you can live. I think they are right: like property, school is something only rich people can have. How can an aids orphan go to school? When will there be time to find food or work for money to eat? So one day there will be no school, no land, and no hope. But today there is land, and while there is land there is hope. Maybe at harvest time, there will be enough to go through the whole year and not be hungry. But that never happens, because if we eat until there is no hunger today, then the hunger will just be worse tomorrow. We must keep some in case there is no food tomorrow. So there will always be hunger. But at least we will live.

Food crisis at a global level

Shortly after World War II, when 500 million people faced famine in what came to be known as a “measureless calamity”, President Harry Truman of the USA said “more people face starvation and even actual death for want of food today than in any war year and perhaps more than in all the war years combined.” Just over 60 years later we have avoided further world wars, sent men to the moon, explored the far reaches of our solar system with space probes, cracked the human genetic code, found ways to cure or control most diseases that plagued the last century, and reached the heights of human prosperity, but over the same period the number of starving people has doubled. There are about 900 million Chipo’s in the world today: people who wake up hungry and go to bed hungry every day. 3.5 million children under the age of 5 die of hunger each year. 32% of all children under five worldwide have irreparably stunted physical and mental growth due to hunger. They will simply never catch up. That number is 40-50% in most of Africa.

And hunger levels are not falling; they are escalating. The number of Chipo’s grew by 122million people in 2007 – that’s nearly 3 South Africa’s of new Chipo‘s in a single year. Admittedly, it was an anomaly of a year, after several years of incremental improvement. But the overall trend is worsening. Escalating food prices, escalating fuel prices, and various other side-effects of our globalised Babel are taking their toll. From January 2006 to January 2008, rice prices tripled; wheat and maize more than doubled. The world’s poorest people spend up to 70% of their income on food alone, so when food prices double, they simply eat 3 fewer days a week. “Let them eat cake”, we cry when the bread runs out. Well they have no cake; they have no bread; they have more or less

nothing. Instead Chipo puts a pot of hope on the fire. It’s empty of course, but at least the boiling water lets the children fall asleep with hope - believing food is on the way - rather than crying late into the night until eventually exhaustion triumphs over despair and the curtains are drawn on yet another sad act in their living lampoon of human tragedy.

A human tragedy The United Nations defines hunger as a condition in which people lack the basic food intake to provide them with the energy and nutrients for fully productive, active lives. Abraham Maslow might say hunger is that state in which humans are denied even a sub-human existence - fulfilling human potential is a dream; outwitting the faceless foe Hunger to live another day is the challenge of the hour, every hour. I say mass-hunger is the point at which we who recline in our manicured homes painting our toenails and working on our golf swing deny ourselves a human existence: when we comfortably coexist with such gross levels of human suffering on such a grand scale - as though it were a tedious flick with a dull plot and poor cast playing in the background - any pretence of humanity being a just and peace-seeking race, elevated over the rest of creation by love and compassion, seems simply absurd. We go to big conferences in Doha to talk about fighting poverty; we meet in Shanghai to pave the way for fair trade; we start blogs and write columns on the age of hope while with our lives we gaily flip to MTV and drown out the weak groans of continents of starving infants. There is more at stake here than statistics. Our humanity is at stake. Our souls are at stake. How will our souls rest with the deafening cries of starving children ever in our ears? We simply must conquer this faceless foe, Herr Hunger!

The nature of the Hunger crisis Now Herr Hunger is no longer so mysterious that He can’t be fought. For many long centuries he roamed the hills in the open day declaring his purpose and ploys. Our forefathers suffered at his hands but later learnt to fortify their rural economies to guard their kin from his hungry paws of destruction. We have all their wisdom and weaponry at our disposal. Why the failure to share our liberty from this merciless, soul devouring beast with the vast numbers of our vulnerable brethren?

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While solving it may not be, the Hunger problem is really quite simple. In essence, we have more people, more hungry, eating from a shrinking plate. It’s a simple supply-demand imbalance driven by population growth outstripping food production. This same pattern operates on a local (village), national, regional, and global scale, but the manifestation of the problem looks a little different for the urban versus rural poor.

Drivers of urban hunger In a fast globalising urban world with a “one food basket” feel (my tomatoes are American; my bread’s baked with Brazilian wheat), urban hunger is most affected by global food market trends.

On the demand side, the world population has exploded over the last 50 years. It took at least six millennia for the world population to reach 2.3 billion people after World War II. The world population has nearly tripled to 6.7 billion people in just 63 years since then. This means our planet needs to produce 3 times the amount of food we did after World War II.

And we are more hungry. Despite growing numbers of hungry people, on average a lower proportion of people are poor, which means people with means are eating on average more and better food, requiring more farm land per person to feed them.

On the supply side, while we have needed a bigger plate (more land to be farmed more productively), our plate is in fact small and shrinking. Roughly 10% of the earth’s land surface is used to produce crops; 20% is grassland with varying degrees of grazing productivity; 20% is forest; and the other 50% is either desert, mountains, or covered with

ice, useless for food production. We have only so much land to use as productively as possible. What’s worse: each year, our little planet loses productive land the size of Uganda to desertification (which renders land useless for food production, or for animal habitation), due to poor farming practices and global warming. In Nigeria alone, Africa’s most populous nation, roughly 700,000 rugby fields are desertified each year due to over-grazing.

And increasingly, productive land is being appropriated for the production of bio-fuels. In other words, this now precious commodity of productive agricultural land is being used to fuel machines, rather than feed hungry human beings.

Not helpful to the size of the food plate is the massive global disincentive for developing nations to produce food. Subsidies and trade barriers applied and imposed by developed nations render

Diabolical agriculture trade environment:

About 75% of the world's poor live in rural areas, and many are dependent on agriculture.

The quickest way to address poverty in least developed countries would be to enable poor nations to sell their farm produce to rich nations

In contrast, OECD nations invest nearly 4X the amount preventing poor countries from selling their agricultural output in their nations (US$280 billion per year), as they do on AID to developing countries (US$50-US$80 billion per year)

The biggest and richest 25% of farmers receive 70 - 90% of all support provided by OECD governments

OECD, 2008

And in si ly od ti l d is bei

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it nigh impossible for even commercial farmers in developing nations to compete on their own domestic market.

Diabolical trade arrangements structured by rich nations virtually create a disincentive for small farmers to evolve into commercial farmers, and for farmers to sell their produce into world markets.

Of course short-term crises like the recent droughts in Australia and Europe (both major producers of basic foods like grains), floods, and political travesties such as Zimbabwe’s decade long economic and social meltdown aggravate the matter, leading to short-term crises like the 2007/8 food price crisis; but it is the longer term trends, creating structural and long term threats to food security, which are more worrying.

So on the surface, the face of the urban Hunger problem looks simple: excess demand (due primarily to population growth, but also to bio-fuel production) and under-supply (due to desertification, low farm productivity, and an unjust agricultural trade environment) are leading to a global food shortage, rising food prices, food being unaffordable to the extremely poor, and consequently mass-scale hunger.

Drivers of rural hunger

Roughly 70% of Africans rely on agriculture for survival. In the poorest countries, such as Malawi, more than 90% of the population depends on small-scale farming for their survival. One simply cannot get serious about poverty in Africa without a

primary focus on rural development.

Global food market trends also impact hunger at a rural African village level, but less so. Rural consumers live to the extent possible off local farm output, so localised population growth and local productivity (food production per hectare of land) are the primary drivers of rural hunger.

In Africa, high fertility rates and falling mortality rates are creating explosive population growth, far higher than the world average. This problem is aggravated by chronically poor agricultural productivity. Cereal yields (output per hectare) in Africa are a quarter of the global average. Despite periodic local progress, average yields for sub-Saharan Africa have not increased for decades, whereas yields in Asia and Latin America have shown a increased steadily over the last 4 decades.

Africa has tried to keep up with its growing population’s demand for more food by growing farmland (a major driver of Africa’s high deforestation rate, which is double the world average), and by reducing fallow periods, thus contributing to land degradation.

Again, short term spikes in fuel prices further hamper farm productivity, as they inflate costs of critical inputs like fertiliser and irrigation, rendering these inputs (which easily double land productivity) unaffordable to subsistence and poor farmers. Again though, it is the longer term trends which are more worrying.

The outlook The underlying trends affecting these hunger drivers are worsening. Chicken Little I step aside!

Chicken Little II takes the stage with passionate pleas to put an end to all human procreation, pointing to a global population of 9 billion people by 2050, requiring 50% more food production than at the turn of the century. That will require additional productive agricultural land roughly a third the size of the African continent, or 120% the size of Brazil. Such additional agricultural land can only be “created” by destroying a very large portion of the world’s remaining forests, which produce much of the air we breathe and go a long way in averting global warming. These demands will naturally lead to massive famines, wars, and the end of the world!

Tackling poverty through rural development: agriculture in Least Developed Countries (LDC’s) Agriculture generally accounts for 20-30%

of GDP and 70% of employment in LDC’s Despite growing urbanisation, 70% of poor

households are still rural in LDC’s Most of these households are small-scale

subsistence farmers; Agriculture is the leading sector in

stimulating broad-based development Productivity gains in agriculture have a higher impact on poverty reduction than gains in other sectors (including labour –intensive manufacturing)

Hunger Task Force, Irish Aid. 2008

“report to the Government of Ireland”

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Chicken Little III decries the catastrophic rate of desertification and soil degradation, shrinking the African food plate at breakneck speed. If current rates of African soil degradation continue, the continent will barely feed 25% of its population by 2025, leading to famine, war, and the end of the world! And that’s before some of our precious productive land is used to produce bio-fuels, instead of food.

Chicken Little IV, intimidated by the rest, merely whispers Africa’s water woes. El Nino’s frequent parties in the Pacific add to already volatile rainfall patterns, wreaking havoc on local farmers and economies. By 2025, half of Africa’s nations will suffer water scarcity or acute water stress, undermining food production and leading to the end of the world!

That leads me to Chicken Little V, trumpeting possibly the greatest unknown in the Hunger equation: Global warming. Desertification, droughts, and flash floods could catastrophically shrink agricultural land and diminish yields. In some cases, climate change will accelerate desertification; elsewhere, increased frequency and intensity of droughts will crush farmers by putting less rain where it’s needed to produce food; still elsewhere destructive flash floods will wash away top soils, again diminishing land productivity. We can’t know for sure where or how much of this will happen, but we do know it will, she cries, and that it will lead to the end of the world!

Chicken Little VI berates her contemporaries for such radical and melodramatic cries which numb the politicians into stunned inaction, before making her own apocalyptic proclamations of yet another wild card, Peak Oil. Inadequate oil reserves and production rates will end the age of cheap oil, rapidly increasing fuel prices, making essential inputs to productive farming (like fertilisers, seeds, irrigation equipment and other agricultural implements) inaccessible to the poorest farmers, further depleting land productivity and taking food prices beyond the reach of still more poor people and literally starving the rural poor, not to mention leading to the end of the world!

And so we have a crescendo of hysterical Chicken Little’s trying desperately to sound the alarm: “The sky is falling! The sky is falling! We must tell the King!”

The way out: A Green Revolution

We’ve seen this play on several local stages before. Several human civilisations have come to

an abrupt end having grown beyond the capacity of their natural resource base to support the population’s needs. “Good Friday for Easter Island” and “Mayans Gone with the Wind” come to mind. Perhaps the sky will not fall in; but it might. And just in case it does we will be in dire need of some mighty big props to hold it up and best we start building them now!

Certainly the demand side of this hunger equation is of great import. Africa has been accused of breeding itself into destruction, and it is true that we simply cannot perpetually feed an exponentially growing population.

However, there are props on the supply side that may be quicker manufactured, which seems rather important given the urgency of this looming crisis. Relatively low African agricultural productivity introduces the potential for Africa’s own “Green Revolution” ala Mexico, India, China and others. Mexico imported half it’s wheat consumption in 1943; by 1956 they were completely self-sufficient thanks to high yield wheat seed varieties. India enjoyed similar success on a much larger scale in the early 60’s.The Chinese agricultural sector now provides livelihoods for 300 million people. Cannot resource rich Africa learn some lessons from these successes? Could a Green Revolution be the last remaining prop to hold up the African sky and save her splendid sunsets?

This is precisely what’s on the minds of strategic philanthropists and developmental agencies like the Rockefeller Foundation (which played a strong role in the Latin American and Asian Green Revolutions) and the Bill & Melinda Gates Foundation, which has become transfixed with the possibility of Africa’s Green Revolution.

Foodonomics

The science of growing food is both marvellously simple and wonderfully complex. While one could

“The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place we are entering a period of consequences..."

- Winston Churchill, November 1936

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certainly write several enthralling volumes on agricultural science, one could equally summarise it in a paragraph, which is thankfully all I will do here. Plants grow from the four essential elements: air, fire (sunlight), earth (soil nutrients, or plant food), and water. They die when they are eaten or diseased. Since air is not yet a problem and there’s not much we can do about sunlight, increasing farm productivity generally relies on increasing water supply through irrigation; various techniques to improve soil nutrient content, typically through proper planting techniques and fertilisers; eliminating pests like rodents, disease, and insects through insecticides and other means; and choosing higher yield seeds which basically produce more food with less water and nutrition and which are more pest resistant.

While there are problems with some ingredients like pesticides and unsustainable use of water and fertiliser, the not-so-secret recipe seems to have worked magically in Asia where agricultural revolutions have underpinned the rapid economic growth and poverty reduction in China, India, and Vietnam in particular. Other ingredients such as the shift from communal to individual land tenure cannot be overlooked (indeed, this was a critical catalyst in both China and Vietnam).

Potential for an African Green Revolution

On the surface, increasing African productivity seems to be a low hanging fruit (no pun intended!). A simple comparative analysis shows how little effort is made in Africa to bolster land productivity.

Surely this can’t be too complex!

It is true that certain aspects of Asian-style Green Revolution are not sustainable. Pesticides are an ecological hazard. Over-use of chemical fertilisers can damage local water supplies and poison soils, endangering local ecosystems. Over-irrigation can damage and even destroy soils. Unsustainable use of natural water supplies (rivers, lakes, springs) can undermine local eco-systems by starving fauna and flora of water.

But more sustainable versions of the same tactics are being discovered in ancient and natural wisdom. While the economic viability of these approaches, particularly for low cost food production, is yet to be proven, Organic Farming (essentially leveraging natural processes - such as leaving soils covered with organic matter – together with well-managed technologies - like irrigation and appropriate drainage - and other techniques like crop rotation to maximise soil nutrient content and water retention) and Holistic Farming, ISFM, or Integrated Soil Fertility Management (which involves assessing local soil and water resources and considering how organic matter, fertilizers, cropping systems, and farmer knowledge can work in concert to create highly productive and environmentally sustainable approaches to soil revitalization by combining judicious use of inorganic fertilizer with locally adapted “organic” methods) have been known to

Enhanced

soil

productivity

Resilient

crop

varieties

Higher and

more stable

yields

Better

markets

Increased

profits

Improved

household

income &

food

security

National

economic

growth

The Rockefeller model of change for African Agriculture

Interventions

Outcomes

Asia Africa

% of

arable

land

irrigated

39% 4%

89%5-10%

190 kg’s per

hectare

13kg’s per

hectare

% of

farmers

using high

yield seed

varieties

Use of

fertiliser

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actually regenerate land, reverse desertification, and double yields within 5-20 years.

So perhaps the African sky can for now be held up by sowing the seeds of Africa’s Green revolution.

Obstacles to the Green Revolution It will not be easy, though. The obstacles to Africa’s Green Revolution are profound, both in terms of the natural environment and the socio-economic environment.

The Natural obstacles The natural conditions for improving agricultural production in Africa are substantially different from and more challenging than those that existed in Asia in the 1960s

A diversity of very complex challenges requires a broad variety of locally adapted or developed Integrated Soil Fertility Management approaches. This in turn will require a large number of researchers working for long periods in many diverse locations to develop approaches, and a lengthy and expensive process to convince and help local farmers to adopt far more complex farming approaches.

“The conditions for improving agricultural production in Africa are substantially different from and more challenging than those that existed in Asia in the 1960s. Rainfall is often too little or too much and erratic, there is little irrigated land, the rural population is more dispersed, labour is scarce and labour-saving mechanization is mostly absent, the cost of inputs is high, and there are few roads and railroads providing access to markets. Africa also has a much more diverse set of agroecologies and cropping systems than Asia. Consequently, higher-yielding varieties developed by international centers and others have tended to have a limited range of influence. In fact, the increases in production that have occurred in Africa are largely the result of expanding the area committed to crop production rather than increases in yields (production per unit area). Between 1961 and 2001, for example, cereal production in sub-Saharan Africa did increase from 31 million to 77 million tons, but more than 90% of the increase was due to expansion of the area under cultivation. This increase has led to a rate of deforestation two times the global average. Over the same time frame, the population of sub-Saharan Africa more than tripled to nearly 700 million, one-third of whom are now undernourished. Food production has not kept pace with population growth, and Africa remains the only region where average yields have been stagnant and food production per capita has steadily declined. The type of Green Revolution that rapidly spread across Asia, raised agricultural productivity, and laid the foundation for broader economic growth has, to date, bypassed Africa. The “one size fits all” approach that worked so well for the vast irrigated regions of Asia is simply not appropriate for the highly diverse rain-fed farming systems of Africa. What Africa needs has been called a “rainbow” of crop improvement revolutions that combine productivity growth for many different crops and place greater emphasis on farmer participation, local adaptation, strengthening national and local institutions, and the building of agricultural value chains that enables farmers to generate profits from surplus production. With such locally well-adapted interventions, most African farmers have the land assets adequate to provide food security and to rise above subsistence farming. To do so profitably, they need to intensify production by combining genetic and agro-ecological technologies that require only small amounts of additional labour and capital, and they need greater access to markets.”

The Rockefeller Foundation, 2008. “Building an Alliance for a Green Revolution in

Africa.”

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Natural conditions: Africa versus Asia

The Socio-economic obstacles

Farm productivity is driven strongly by new technologies (natural and non), and the rate at which farmers adopt new agricultural technologies is directly linked to the strength of market institutions. When farmers cannot reliably purchase fertilisers or seeds from established and conveniently located intermediaries, uptake of technologies like seeds and fertilisers is very low. So, in turn, is productivity growth.

Africa has faced a very different set of circumstances to those faced in Asia 30-40 years ago. The green revolution in Asia spread in part due to a conducive business environment which made it easy for small-scale farmers to obtain fertilisers, irrigation equipment and seeds, and to sell products to regional markets. These conditions are almost reversed in Africa.

Asia Africa

Crop

varieties

Soil

productivity

Primary problem was appropriate, resilient, high yield crops, which could be addressed by a handful of high yield seed varieties

Primary problems are far more difficult to address with seed varieties: poor soil fertility; pests & diseases; major natural stresses (drought, floods, etc), as well as a diversity of climatic and rainfall patternsRequires not just one, but a diversity of “miracle crop” seeds

Soil fertility and water were seldom important factors limiting crop production - Asia already had large tracts of irrigated land, with highly fertile soils

Soil fertility a crucial obstacle, due to old soils, over-farming and consequent mineral depletion, together with very little irrigationRequires a broad variety of locally adapted or developed Integrated Soil Fertility Management approachesRequires a large number of researchers working for long periods in many diverse locations to develop approaches, and a lengthy and expensive process to convince and help local farmers to adopt far more complex farming approaches

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Socio-economic conditions: Africa versus Asia

A range of other obstacles accompany this historic lack of investment in the agricultural sector, including lack of credit institutions to provide farmers with finance to pay for productivity enhancing inputs; lack of institutions for farmers to access information on pricing and technologies; and lack of infrastructure such as roads, silos and graineries which help farmers access local markets.

On top of these, there are other socio-economic challenges which cannot be blamed on the developed world. Corruption of national and local governments is a major obstacle to agricultural development, preventing poor farmers from accessing fertilisers and seeds and markets to sell their products, as corrupt government officials pilfer funds meant to benefit small-scale farmers.

Hope persists Fortunately, life is never without challenge; nor without hope – in this case very much of each.

Malawi provides a powerful case study, demonstrating how a few simple but well targeted measures can radically increase small-scale farmers’ food production and reduce hunger levels. One of the world’s poorest nations, Malawi has fought famine for forgotten centuries. The nightmare recurred with a bad corn harvest in 2005, leaving almost five million of Malawi's 13 million starving, kept alive only by emergency food aid. Yet in 2007, Malawi began exporting food and sold more corn to the U.N World Food Program than any other Southern Africa country.

Socio-economic conditions: Africa versus Asia

Asia Africa

Crop

varieties

Soil

productivity

Governments and donors manipulated input and output markets to promote adoption of yield-enhancing technologies by farmers.Governments built roads and grain silos, subsidized seeds and fertilizers, provided financial services and price support to ensure farmers made a profit from surplus production, established grain reserves to stabilize prices and insure farmers against famine-associated production shortfalls

Washington Consensus / Western imposed Structural Adjustment programs virtually eliminated donor and government support for the agriculture sector, including subsidies and infrastructure development. Agri-Aid fell from 12% in to 3% (80’s-2006) African governments (under the squeeze of structural adjustment programs) spent only 4% of public budgets on agricultural development, as compared to 10% in Asian nations during their Green RevolutionFall-offs negatively affected rural development and small farmers hardest

Farmers had opportunity to sell surplus produce to local markets (were protected from global competition) prior to market liberalisation under the Washington Consensus and World Trade Organisation’s Trade

liberalisation drive

Liberalisation of trade markets is an accomplished fact in most African markets, pitting small scale African farmers in direct competition with large, commercial, European and American farmersEU and US farmers receive up to 70% government subsidies for their produce, making it impossible for small scale local farmers to compete on price even in local markets, eliminating commercial opportunity

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Malawi’s farmers attribute this staggering turnaround to a single factor: new government fertilizer subsidies. Malawi’s soil is badly depleted, and most farmers cannot afford fertilizer. Government subsidies provided much needed access to this basic ingredient to increase farm yields. Of course this approach (both chemical fertilisers and subsidised fertiliser provision) come under heavy fire from critics (“down with fertilisers” shout Organic Fundamentalists, desperate to be heard over the much more vocal neoliberals’ salvation cry of “down with government intervention; we must free The Market so he can save the world!”), some of which are justified; but surely the 5 million now-fed Malawians provide grounds to look to this practical and dramatic success as a potential prop to hold up the sky?

More than that, partnerships such as AGRA – the Alliance for a Green Revolution in Africa – are already underway with the work of finding the many “miracle crops” and Integrated Soil Fertility Management approaches needed to prop up our Africa’s skies, and the Rockefeller and Bill & Melinda Gates Foundations have already contributed several hundreds of millions of Dollars to the cause. Hope persists.

Action imperative Our Chicken Little fable has taken on many endings over the course of time. Sometimes Chicken Little reaches the king only to be embarrassed: the sky is not falling in after all, it was only an acorn. Sometimes Chicken Little is eaten by a fox on the way. Sometimes the sky falls and kills the fox, saving Chicken Little.

However right or wrong Chicken Littles III – VII may be about global warming, peak oil, water security, et cetera, this much we know: Chicken Little I is right - Africa’s sky is falling, we are on the road to mass starvation unless Africa’s supply of food increases drastically and quickly, and the only good ending to this story is that we find some very impressive props. And one very impressive potential prop is precisely what we have in Africa’s Green Revolution.

We do not have all the answers. We have no secret recipe. But sometimes one must enter one’s Promised Land with an inadequate strategy, compensated for by very much purpose and still more determination. This is one of those times. We must apply all our innovation and all our determination to help

small-scale African farmers produce much more with less, while improving soil conditions and protecting water supplies. And perhaps Africa’s Green Revolution shall, in the end, hold up these skies which look down on so much promise.

“The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place we are entering a period of consequences..."