Yesterday, TOP co-hosted a lively seminar discussion with CAFOD, raising awareness of the key role of the private sector and especially SMEs in driving development and poverty reduction. We heard from the Minister of State for International Development Alan Duncan as well as being joined by panellists from CAFOD, SABMiller and the Jesuit Centre for Theological Reflection in Zambia.
CAFOD’s Head of Policy, Graham Gordon, began by introducing their recent “Thinking Small”report, which highlights the importance of small businesses in promoting inclusive growth and therefore of integrating them into economic development strategy.
We were then privileged to hear from the Minister of State for International Development Alan Duncan, who outlined the government’s new approach to economic development and its commitment to private sector development and trade to promote sustainable poverty reduction – “Aid only gets you so far – you need economic progress”.
He spoke of the need to shift people from subsistence to sustainability and rise up the economic ladder – the first step of which, into local markets, is often the hardest. DFID is doing more and more to break down these initial barriers to trade and help people to get goods quickly and efficiently to market. He gave the example of DFID’s work through TradeMark East Africa, which has helped Uganda to roll out a modern customs management and clearance system that has reduced clearance times for goods from 5 days to just one.
Geoffrey Chongo, Head of Programmes at the Jesuit Centre for Theological Reflection in Zambia, challenged that economic growth is not currently translating into poverty reduction – despite being reclassified as a lower middle income country, 60% of Zambians are still living below the poverty line. With such a high level of informal trade, financial services and tax systems need to be created that support the transition to the formal sector. Small businesses want to be considered as entrepreneurs and not just as aid recipients.
David Norman, Senior Manager of Sustainable Development Policy at SABMiller, countered that it is not a case of either big or small businesses as being best for development – they must both work together. Big businesses must look to their own supply chains and realise that development aims can be a natural consequence of pursuing simple profit creation. He gave the example of SABMiller’s Cassava beer (the first beer to be made from a root crop). This model allows smallholders, who were previously growing a surplus and unable to sell it as Cassava degrades within 24 hours, to make an income for the first time by manufacturing the roots into a transportable porridge onsite. He also spoke of the importance of big businesses voicing their demands for infrastructure, which will benefit not only them but the small businesses along their supply chain.
To read the Minister’s speech in full click here