16 February 2009

Africa: Social Benefit of Investment Good for Business

interview

In a New York Times article on February 15, Christopher Flavelle examined the performance of companies with strong commitments to what is commonly called "social responsibility." After reviewing evidence, including previous studies and an exercise in stock screening by five categories of corporate practice, he argued that socially responsible behavior is good for the bottom line. In an era of cost-cutting, he says, companies would be mistaken to cut corners on their programs aimed at larger societal benefits.

Haskell Ward is senior vice-president of Seacom, a company that will provide high-capacity international fibre optic bandwidth this year to eastern and southern Africa, connecting to the rest of the world via landing points in France and India. "In the long run," he says, "it will be difficult for companies to operate with only a narrowly-defined bottom line. The bottom line has to include considerations of how investments made by the company have improved the lives of a broad base of the population."

Seacom's investors are African, European and North American, and Ward is proud that its work was shaped, from the beginning, with African partners. Ward talked to AllAfrica's Tami Hultman about his involvement with Seacom and other African ventures:

In the area of telecom and development, each country has a complex series of regulations which need to be surmounted. Just to go through the regulatory procedures in Kenya, for example, or South Africa, can be daunting experiences. There is often not one regulatory body but several. It's very difficult.

Providing telecom and broadband services takes place in competitive environments, with providers who have an interest in securing and monopolizing the means of communication. An investment can be enormously rewarding financially, but it's a capital-intensive enterprise. It is also technologically intensive.

At the base of many of the issues you face is a set of concerns about control and access of information itself. It is sensitive politically. Many countries don't want unencumbered information going in and out of their country – although they may say that they do.

But the sector is also is a high-growth area – particularly in Africa, which has the lowest rate of connection to services; about one percent of the world's share of connectivity. There is enormous opportunity to provide services much of the world already has – Internet broadband, high-definition television, mobile telephone networks that provide Internet access.

Many opportunities have so far been exploited by those who seek strong financial returns, without regard to providing large-scale access that could benefit a large population. There has too often been a short-term outlook that lacks an understanding of how a broader base of users could also provide a foundation for a long-term return on investment.

In much of Africa, access is largely through costly satellite links. In South Africa or Kenya, for example, Internet access is slow and expensive. You can't send large volumes of information or data efficiently.

Seacom's cable will allow real-time data sharing within Africa and to and from the rest of the world. It can transform the operations of medical services, research libraries and financial transactions, as well as media. When this happens, we will also see creative uses for music and entertainment and for things we can't predict…

When I first went to Africa 1962, it could take weeks for a letter – remember those light-weight fold-over forms called aerograms! – to complete a journey from writer to recipient. When courier services made their debut, delivery could be as little as several days but cost a great deal.

Even after the Seacom cable is fully operational, there will be large parts of the African continent to connect. So there are still challenges and opportunities, but to be where we are now, compared to where we have been, is very encouraging.

I'm also encouraged by the way the process has been managed, with full participation by African investors and with sensitivity to local needs. We in the West tend to want to do things our way; we think it slows us down to listen to people. I think that's a basic mistake. We go in and tell people how to do things instead of asking them, consulting them, bringing them in. Yet projects often fail because of a lack of involvement, collaboration and participation by people on the ground – at the conceptual as well as the execution stages.

The existence of Seacom is noteworthy not because it is a major breakthrough in engineering or investment financing. The really distinctive feature of Seacom is the way African investors were at the table with their concerns, including those about benefiting the larger public. Too often, international investors call the shots and the interests of Africans, particularly the broad base of the population, are secondary. On this project, from the outset, more than cursory attention has been given to designing ways people can benefit – not just to what rate of return can be achieved.

I think this is clearly good citizenship. But it is also good business. There is always a question to answer: will this investment benefit a broad base of African people, where reducing poverty and equitable access to services remain predominant issues? You cannot get around that.

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