How can companies and donors work together more effectively on sustainable development?

It’s easy for companies keen to promote sustainability and resilience in their supply chains to neglect the potential of relationships with donor agencies, NGOs and governments.

But if scale is the goal, collaboration is clearly the method. But these two words, scale and collaboration, are hugely over-used and not always well understood.

To cut through some of the confusion, I spoke with Dr Peter Davis recently, given he’s written a fascinating new report related to all this.

Readers should note that Peter is a long standing friend and colleague with whom I’ve worked since 2001. It’s because I know him well, that I thought his work and views were worthy of coverage in a podcast. But the podcast didn’t work, so I had it made into a transcript, below.

(The ‘hook’ for this interview was Peter’s recent paper for the UK’s Department for International Development:  “Private sector development in countries progressing from poverty“)

I thought some of what he had to say in the interview was fascinating. We discussed the following topics:

  • How the relationship between donor agencies and companies is evolving
  • The challenge of development and sustainable supply chains in middle income countries, not just ’emerging’ markets
  • Why approaches to agriculture and land management in supply chains have to grasp political complexity
  • How companies and other actors can make sustainable reforms and programmes ‘stick’ on the ground
  • The opportunities, and limits, of tools and processes such as “free, prior and informed consent”

Here’s the podcast transcript:

Good morning everyone welcome to another Forum Innovation podcast with me Toby Webb. In today’s podcast, we are speaking with Dr. Peter Davis who is Director of Consilience Global. So good morning Peter how are you?

Good morning Toby I am very well thank you very much.

Thanks for taking the time to speak with me about development, policy, trade, aid, big business and land reform. I am sure we can cover all that perfectly in the next 10 – 15 minutes or so.

No problem at all they are small minor issues to deal with.

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Stakeholder engagement, northern Nigeria

Exactly. So, Peter you run a consulting outfit called Consilience Global, so just briefly tell us a bit about that and where it came from and how you ended up doing it.

Thank you Toby. Consilience works with governments on political and economic issues, particularly in relation to the role of the private sector in a country’s development. Essentially, how can the private sector – be that local firms or international companies – work more effectively governments and donor agencies. I work a lot in fragile States, but also in middle-income countries.

I have been in this business for quite some while. I began working with NATO in Central Europe in the 1990s focusing on democratic development in the former communist states.

For most of the last fifteen years I have worked in a range of countries – some of which have been very fragile – and with companies like Anglo American, Raman, Diageo to try and help them understand what goes on in these places. I also work with a lot out with donor agencies like DIFID, World Bank, UNDP to help them work more effectively with companies.

So there has always been a big gap between donor agencies and business and then somewhere in the middle are the NGOs who often have been a bit anti-business when it comes to development in poorer countries. Have DFID and the other aid agencies you deal with which presumably are the slightly more as progressive ones, have they evolved their approach to business these days?

I think they are getting there. I think that part of the challenge is that donor agencies and companies look at the world in quite different ways, and how they go about doing their work is different so there are cultural differences. I think, certainly when you are looking at DIFID there is a realisation that the private sector is a key development actor and they need to engage them much more fully: the question is how to do that.

An example of that is a project on which I’ve just been working looking at DFID’s approach to middle-income countries – places like Vietnam, Indonesia, Nigeria, Zambia – where donors are beginning to realize the need to work much more collaboratively with companies. The challenge is that the donors are not used to working with middle-income countries. Historically, they’ve worked very much in low-income countries, poor countries, where they have a very clear role.

But as you move to middle-income countries, economically the action lies with the private sector, the question is how you engage with companies more constructively.

Over the past century, powerful food and beverage companies have enjoyed unprecedented commercial success. But these companies have grown prosperous while the millions who supply the land, labor and water needed for their products face increased hardship. Now, a rapidly changing environment, affected communities and an increasingly savvy consumer base are pushing the industry to rethink ‘business as usual’. In this report, Oxfam assesses the social and environmental policies of the world’s ten largest food and beverage companies and calls on them to take the critical next steps to create a just food system.

Over the past century, powerful food and beverage companies have enjoyed unprecedented commercial success. But these companies have grown prosperous while the millions who supply the land, labor and water needed for their products face increased hardship. Now, a rapidly changing environment, affected communities and an increasingly savvy consumer base are pushing the industry to rethink ‘business as usual’. In a recent report, Oxfam assesses the social and environmental policies of the world’s ten largest food and beverage companies and calls on them to take the critical next steps to create a just food system.

Thinking about this report, what are the implications for donor agencies with regards to how they should engage with business. It is very easy to throw the word collaboration around, you know in all the conferences we run everyone sits around talking about collaboration, but it’s very difficult to nail down sometimes particularly for the long term when companies have quite long time horizons and some of the donor agencies have 2,3, 5-year programmes. So what does this report and your work generally mean for business in terms of how they can get to grips with longer term partnerships?

I think you’re right and the challenge is that there is a lot of talk about partnerships and stakeholder relationships without a real understanding of who’s best placed to do what.

The key is recognising that it is not about companies coming in and substituting what donors do: there are things that donors are better placed to do and things that companies are best placed to do. For example, in Vietnam a key issue is with the remaining state-owned enterprises.

There is a big problem with the lack of transparency – these companies have greater connectivity with government and therefore advantages in terms of contracts, land access and all these things. Until that issue is solved the private sector cannot move forward. This is a political issue, and something therefore that the donors have to pick up.

Donors need to focus more on the political issues but also act as a facilitator to allow companies to get on with their work. I think that is a role which donors are still trying on for size.

Of talking about companies like Syngenta, anybody with an interest in mining, agriculture, a lot of the major sectors of some middle income and emerging economies, a lot of the companies are very concerned about land rights and land tenure and the form. It seems to be an issue that is everywhere these days, very complicated from what I understand.

Obviously very dependent on the countries internal rules and so on. What are your views about better models that you’ve seen for companies to look at when thinking about how land reform can work well in the interest of stakeholders as well as for the companies themselves.

DFID cover

Well worth a read

I’ll let you roll the discussion back one stage because the ‘best model’ is an interesting term because a lot of the discussion over the years about land rights, particularly in Sub-Saharan Africa is gloriously uninformed by the realities of these places.

Obviously, the best model for land laws is what one would see in most of North-West Europe where you have got an established land registry, based on a cadastral survey and backed by a clear rule of law.

In many emerging markets you have none of that. In most of these countries there is only a very limited formal process of land titling, and rarely is there a record or a piece of paper that can prove even use of land much less categoric ownership of land.

Where records exist they are most likely to be paper ones – I remember visiting the land registry in Bahir Dar in northern Ethiopia. It was just full of these large books mainly which were unreadable because they were damp.

Therefore in most of Africa trying to establish – in a formal way – who owns what land is pretty difficult to do. Even if you do have a type of process it usually is only urban land or agricultural land where there has been a need to demonstrate ownership. Then you have got a question of who owns the rest of the land? In some cases, it predominantly resides with the government, but in other places, it is more complicated.

So, in Tanzania, some types of land sit with the central government but there are other smaller parcels of land that sit with local communities.

Alongside this clunky process of formal land registration, you normally have traditional processes of land holding where local tribal elders or traditional leaders exercise a degree of authority of who owns what land, and who has nominal rights to use land.

So a farmer might be able to claim that ‘my father worked on this land, down the river beyond across the burnt tree.’, and if another farmer wants to come across the river and try to use that land then it is up to the tribal owners to adjudicate what happens. These traditional land rights are also meant, for example, to protect the interests of women and children.

This is all a very inexact process to deal with, and collides with the normal Western ideas of clearly defined lines and demarcated plots of land. Nevertheless, any discussion about acquiring access to, and use of land for commercial purposes therefore needs to take place within this complex mix of formal and traditional land rights. Any discussion about land tenure which doesn’t delve into these complex and highly-varied issues is, frankly, pointless and bounces of the surface of the realities on the ground.

So for companies you’ve mentioned the notion of the contract farming model, tell us a bit more about that

Given the significant challenges of land titling, contract farming provides a way of getting what is needed in terms of access to productive land, but without the complexity and hassle.

Contract farming gives companies access to a relatively small piece of land perhaps to use a demonstration plot to train farmers on good production techniques, and then buy in from a large number of small-scale farmers in the surrounding area. Because you are using contract farmers you do not have to get involved in the whole process of ‘do they actually own the land they farm?’, because the fact is that they have the right to use that farm because they have had it for 10, 20, 30 years.

As well as the advantage of avoiding becoming embroiled with complex land ownership issues, a company is also better able to demonstrate that it is adding value to local communities. There is often a sense – correctly or incorrectly – that companies come into these countries, take things that are not theirs and there is no benefit for local people.

By using contract farmers you can quite clearly demonstrate the benefit you are providing to local people. You are skilling them up, to ensure that they are able to produce goods of the quality required so you are leaving something behind while you are investing in the local community. I think you have got more of a secure business because you win trust, win friends, a willingness to collaborate. You will then be seen as part of the party rather than an outsider.

IMG_3260And I suppose you are not really wading in, as you probably shouldn’t as a company, into the messy business of the national land rights into the policy. You are simply creating a model which isn’t taking land from anyone and it is perhaps showing what can be done if companies and small farmers work together.

I think that’s right. Obviously, from the operations perspective the agricultural companies, would much rather be able to say, ‘We have 30,000 acres and we will just run it through a bunch of farm managers and that will just be easy’. By working through contract farming operationally things are more complicated but you are avoiding some of these challenges.

The challenge I suppose in places like Liberia where there isn’t necessarily a culture of smallholder farming because it is such lesser developed country without wanting that to sound too negative a term. Somebody I know who runs an agriculture business company there said ‘I just can’t develop that number of small holders, really if we want economic development we need big agri-business with land rights so people could perhaps learn to do their own thing in 20-30 years time, but in the meantime we can create some jobs.’

I think there is naivety in a company making that remark. Inevitably the consequences are going to be that local people will say ‘you’re stealing our land’, even if you’re talking about areas of scrub land that no one has used for decades. What needs to happen is for everyone to realise the mutual advantage to the country as well as to the company that a chunk of land can be used as a ‘plantation’ for a period of time. Also how does a company work with donors who are quite possibly trying to find ways jobs can be created? I think donors are increasingly realising that ‘formal jobs’ is also a way to go to try and get more of a mixed economy in these countries.

To actually go in and try and work with local government to try and develop a more formal process of what is actually happening takes time. The governance and corruption challenges in these countries can make these longer processes. I think that is where these collaborations come in, companies need people who are readily able to discuss with DIFID, Liberia or the World Bank, whoever is there on how they can find a way of doing it.

An example of how this can work that I’ve seen recently with a company I was working with in Bangladesh is a company that was trying to develop a market for bio-pesticides, so moving away from chemical pesticides with the use of pheromone traps and so on. Initially, when they went to governments to say we think regulation needs to be put in place to do this, the government reaction was ‘no we don’t want to because you’re saying it is good so it must only be in your own interest.’

But by working with various donor agencies they were gradually able to persuade the government that this would actually be good for Bangladeshi farmers, both in terms of lowering cost, improving their health and improving yields.

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SME in Bangladesh

The government decided that they needed to move forward with this and there is now a well established regulatory framework for bio-pesticides in Bangladesh. I think in exactly the same way, I don’t see why things like that can’t be achieved in places like Liberia on larger scale farming. It requires a deeper understanding on some of the political, economic factors that are again a collaboration with some of the big donors that I advise.

You’ve expressed reservations to me about the practical use of free, prior and informed consent frameworks on the ground. Let’s remember as far as I recall previously it was about consultation and then a few years ago it turns into consent, that shift has caused quite a lot of problems.

The NGOs will argue that is well overdue and people should have the chance to offer their consent rather than just to be consulted and have the project to go ahead anyway. You have expressed reservations to me on how FPIC can be used on the ground. What are those reservations?

I think that FPIC is another one of those things that sounds jolly nice when sitting in a conference maybe somewhere. However when you’re on the ground it all gets rather complicated. I don’t think anyone will deny the idea that a group of people whoever they are that live in a particular location should have a very strong say in what happens to where they live. That is no more or less the case that would be for you or me to sit comfortable here in Western Europe. The challenge is that the reality about land holding is much more complicated: here are some of the problems.

If you have a situation where you haven’t got formal land titles, which is the case of most sub-Saharan Africa and quite a lot of Asia and south-east Asia too. You can have a conversation with people, but it is not their land to say yay or nay to its development, then what’s the point?

So you go and speak to local community elders who are the traditional leaders, so they get a say in what happens on your intended site. To what extent are you going to get them saying things reflect the interests of their people, or their own interests? I remember doing some work with a big mining firm in Southern Africa a few years ago and they managed to work out that the tribal leader they were working with decided that the most important investment that was needed was a road to his wife’s house.

So you talk to the government. Well they may well have the ability to grant land use, but how do you know whether the benefits are going to be shared with the people who are going live on the land?

In fact, all of these conversations need to be had, as well as many others. But the next question is ‘so which land are you talking about’? If there is no formal land registry how do you know exactly which area of land you are talking about?

And then, of course, there is this whole challenge of power biases. A company goes in there to try and get FPIC on a piece pf land. Who does the talking? Local people are almost certainly not going to open up to Europeans or Americans. So you use local people.

But the locals you use are going to be very different from those they will be talking to on the ground. They will perhaps be of a different background or more educated or they may be from a different part of the country in which case they may be very significant challenges in terms of a usable dialogue.

So he list of these issues goes on. It’s not that FPIC is undesirable: of course the concept makes sense. The challenge is that doing it, and getting it right is a long complicated messy process.

So what do you think of some of the most sensible ways or practical ways companies can approach this issue? Are there toolkits, case studies, resources where they can benefit from earlier learnings on all this?

I am not sure if there is any simple toolkit because I think there is a lot of this is as much to do with the individuals and the company who are at the front end of the process but also a corporate system that allows a degree of flexibility around these things. So I think there is a lot to be said for those companies who are doing a reasonable job at it.

Look at companies like Syngenta, Cargill and Anglo America who with different degrees of success in different places are trying to understand some of these complexities on the ground and to work with them as far as possible. I think that kind of process where you gradually try to formalise the process over time. I think there is also a need for companies to work much more closely with bigger donor agencies too – they are thinking about these issues too.

Last year I worked with an IFC, (International Finance Corporation) project working with a US$ 3bn investment in Guinea. The project was exploring how the investment looking at an investment in [Guienne] which is a £3m investment how they might be viewed by the local people, how they might consult local people effectively in terms of land use and all of these issues. It is taking these companies being prepared to flex their own systems sufficiently to be able to work with these countries, but also have a degree of sensitivity, still being clear about what they still want to achieve and where the parameters are commercially for them.

Peter thanks for your time today, where can our listeners go if they want to find out more about your work and the reports you have done recently?

Well, shameless plug at this point, the website is www.consilience.global and there are some case studies and various papers on that website. Also, here’s the link to the DIFID paper “Private sector development in countries progressing from poverty” which you might find of interest.

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