Remember to differentiate development from disaster relief when it comes to private sector programmes

Everybody these days seems to want the private sector involved in development. Many people also seem to want the private sector involved in humanitarian work. But it is critically important that both sides of the great divide – the private sector and the aid industry – very clearly understand the difference between development and humanitarian work.

At a recent seminar organised by Unicef – Business and Humanitarian Emergencies – Andrew Mitchell, the UK secretary of state for international development appealed to the audience, saying, “We are in the market for ideas”.

And an Overseas Development Institute event held just before – titled “Have we got development the wrong way round?” – focused on building effective development partnerships with the corporate sector.

Clueless? 

Now I’m never sure whether to be pleased or worried when a government minister makes a public call for ideas about what his department should do. Does it mean that he is really interested in what I might have to say and is doing some consultation? Or does it mean that neither he nor his department have a clue about what they should be doing in this sector – although they know that they should be doing something?

Based on the quality of the ideas on show, my fear is that it is the latter.

That’s really through no fault of Unicef, or of the companies that they had on parade – Everything Everywhere and Aon Insurance. Humanitarian operations are difficult, sudden and complex and have little in common with the development work that many corporates are now doing very well.

Let’s take development first.

Peter Davis, a research fellow in the private sector and markets at the ODI (and a regular contributor to Ethical Corporation) quoted two studies of Unilever operations in Indonesia and South Africa. These show that, in Indonesia, Unilever had created 5,000 jobs in its own companies and these in turn had supported 300,000 other jobs. In South Africa, every job that it created in the country was shown to create a further 22 jobs down the value chain.

Commercial purpose

These are real and tangible contributions to development that have absolutely nothing to do with government, the UN, aid budgets or what have you. They are straight commercial activity done for commercial purposes. As another of the ODI speakers, John Morrison of the Institute for Human Rights and Business, said: “You can’t talk about development and leave out the major economic players.”

Charlotte Wolff, head of corporate social responsibility at ArcelorMittal talked about what her company had been doing in Liberia. Going in soon after the 15-year civil war had ended, they found a country with no infrastructure. No electricity, no schools, no hospitals. None of the children had been to school during the war with the result that this was one of the few countries in the world where the young were less well educated than the old.

Of course, ArcelorMittal’s presence in the country was not philanthropic. But it has taken six years and a $1.5bn investment before they will see – happening now in September 2011 – the first shipment of iron ore move from the new mine to the coast and be shipped out of the country.

To enable this, ArcelorMittal had to rehabilitate 250km of railway line. Typically this is done by one giant machine, inching its way along the track. But the lack of any infrastructure to support this beast meant that they turned to the old-fashioned manual method dating from the late 19th or early 20th centuries. This gave 5,000 men a job at the peak level of effort.

Help and support 

These men were given clean water, food and proper health and safety support. Each salaried person in Liberia supports an estimated 25 people – and now that the line is finished, Wolff claimed, most of those 5,000 are now employed in other industries.

These are significant development benefits that accrue to the host country as a result of private sector activity.

But the striking contrast at the Unicef event was the lack of any similar case histories and success stories.

Robin O’Kelly, director of corporate communications at Everything Everywhere, talked about how the Orange and T-Mobile networks could use SMS to raise money for Unicef as part of an emergency appeal.

The chief security officer at Aon talked about security and how companies should not just accept that somewhere was too dangerous to go to, but should ask what needed to be done to make it possible to go to these places.

Planning for the unplanned

There was a lot of general exhortation, commitment to breaking down barriers and doing whatever was necessary. But the real problem for the big corporates is that, however strong the will to help, however relevant their skills and disciplines might be, emergencies are, by their nature, unplanned. They are not part of any strategic plan.

If the big aid agencies tend to give lower priority to their humanitarian sections than they do to the development parts of the business, which they do, then it is clearly unrealistic to expect any company to maintain a disaster response unit.

When it comes to the profit motive and, for example, in the case of Unilever, a decision is made to get more involved in Indonesia or South Africa, then they know precisely what to do. And if there is a strong corporate responsibility culture within the company then the move into, or an increase in investment in, a developing country will come with strong CSR overtones.

But I’m afraid I left the Unicef meeting with the thought that no one there – not Unicef, not Lord Ashdown, who was chairing the meeting with both his HERR (DFID’s Humanitarian Emergency Response Review) and his Unicef hats on, not Andrew Mitchell, nor Everything Everywhere or Aon – really had any idea what role a major multinational should play when it comes to dealing with mega emergencies.

These, Lord Ashdown described as: “Not aberrations from the past, but the beginning of a different kind of future.” Governments, he said, can’t deal with these emergencies alone, but need new partnerships, including with the private sector.

He’s probably right, but no one at the moment seems to know quite what to do about this part of our common future.

Howard Sharman is a senior consultant with Advance Aid.