The Role of the Business Sector in Peacebuilding in Africa

On November 27, the Wilson Center Africa Program held the final 2018 event of the Brown Capital Management Africa Forum. This discussion focused on the role of the business sector in peacebuilding in Africa. Congresswoman Jane Harman, the President and CEO of the Wilson Center and Mr. Eddie C. Brown, the Founder, Chairman, and CEO of Brown Capital Management and member of the Wilson Center National Cabinet offered opening and welcoming remarks respectively. Dr. Monde Muyangwa, the Director of the Wilson Center Africa Program, framed the event discussion and introduced the speakers. The panel was comprised of Dr. Raymond Gilpin, the Dean of Academic Affairs at the Africa Center for Strategic Studies; Ms. Mary Porter Peschka, Director of the Environment, Social & Governance (ESG) Department at the International Finance Corporation (IFC); Ms. Viola Llewellyn, co-founder and President of Ovamba Solutions, Inc.; and, Mr. Stephen D. Cashin, the founder and CEO of Pan African Capital Group and Chairperson of Africare.  Below are some of the key points made by the speakers.

Congresswoman Jane Harman opened the discussion by thanking Brown Capital Management for their support of the Brown Capital Management Africa Forum. She also thanked Mr. Brown, who serves on the Wilson Cabinet, for his support of the Wilson Center. She took a moment to note the recent passing of former Wilson Center Africa Program Director Steve McDonald. Steve was an important person, who with former Congressman Howard Wolpe founded our Africa program and led it for twelve years, including four years as Director. Peacebuilding was their passion and the memory of both live on at the Wilson Center. She then recognized Dr. Muyangwa, and reviewed the Africa Program’s current activities. Congresswoman Harman concluded her comments by introducing the discussion topic—noting the important, if sometimes contradictory, role of the business sector in peacebuilding.

Mr. Eddie Brown provided context for the discussion, observing that seven of the 14 ongoing UN peacekeeping missions are based in African countries. Asking what it would take to stop the conflict, Mr. Brown explained that the purpose of this event was to find ways that the business sector could better support peacebuilding in Africa. He observed that while businesses face great challenges operating in unstable environments and tend to gravitate away from conflicts, they are critical to rebuilding and stabilizing societies, providing livelihoods, and giving people hope. Mr. Brown closed by asking the speakers to provide concrete answers for how policymakers and business leaders can better collaborate for peace.

Dr. Monde Muyangwa observed that state formation and nation-building are contested processes that are fraught with tension—which sometimes spills over into conflict. Parts of Africa have been characterized by fragility and conflict during the 60 years since independence. African governments and partners have been engaged in peacebuilding efforts for years, often with mixed results. She noted that we cannot keep doing the same thing and expect different results. While some issues always feature prominently in traditional peacebuilding discussions, other stakeholders are frequently absent. Dr. Muyangwa underlined the need to interrogate existing peacebuilding frameworks, strategies, stakeholders, and actors. Moreover, she posited that it is important that discussions around the role of the business sector do not just focus on multi-national corporations, which have a complicated history in Africa, but also include the informal sector. In addition, Dr. Muyangwa suggested that international financial institutions may need to reconsider how they engage on the issue of fragility. She expressed her belief that peacebuilding remains central to U.S.-Africa relations, but that is a part of the larger question of why Africa matters to the United States. She noted that it is important to understand the challenges and opportunities for U.S.-Africa relations, to build a mutually-beneficial U.S.-Africa relationship, for the United States to support positive developments on the continent, and for the United States to remain engaged with international and African partners. She observed that the recent reorganization of U.S. government agencies through the BUILD Act could affect U.S. Government efforts to support business sector development and peacebuilding in Africa. Dr. Muyangwa closed her remarks by introducing the guest speaker panel.

Dr. Gilpin established the tone and tenor of the discussion by providing a critical landscape of the business sector’s engagement with peacebuilding in Africa and highlighting the critical issues for discussion. Though the ideas of peacebuilding and the business sector seem straightforward, Dr. Gilpin noted that they are in fact fraught concepts. All too often, practitioners speak of peacebuilding when they really mean state-building, and think of the business sector as a monolith. What is truly needed, Dr. Gilpin posited, is a reconceptualization of peacebuilding as a continuum which requires diverse approaches and resources rather than a single peacebuilding initiative. Upon reviewing African peace accords from the last 4-5 decades, he found that businesspeople had not been present at discussions—their support had been largely inferred. As a result, the business sector has not historically been well-integrated into peacebuilding efforts. He suggested that the traditional view that ‘the business of business is business’ and that if business is done well than peace will follow is inherently flawed, because in fragile and conflict-affected states (FCS) the normal rules of supply and demand, governance, and regulations are largely irrelevant. To build peace in such circumstances, the role of the business sector is critical. Unlike donors and other international actors, businesses are on the front lines, invested over the medium and long term, and maintain good human intelligence at the local level. The question of how to successfully implement corporate social responsibility (CSR) in FCS, however, is far from settled and CSR in FCS cannot be formulaic. Dr. Gilpin offered recommendations around two key points. Businesses should “do some good” by grafting the local economy into the value chain, focus on wealth (not income) generation, and foster entrepreneurship. Conversely, businesses should “do no harm” by thinking strategically about peace, corruption, and security.

Ms. Peschka focused her comments on the importance of small and medium-sized enterprises (SMEs), and ways that the international community and development organizations could support SMEs operating in conflict zones and fragile states. Ms. Peschka gave an overview of the IFC’s work on business sector development in FCS, providing insight into how an important international financial institution approaches this difficult issue. She noted that the IFC has a long history of focusing on FCS, and has a commitment to dedicate 40 percent of its investment portfolio to FCS countries, up from 5 percent today. Ms. Peschka noted that businesses operating in FCS face significant difficulties in many sectors, including infrastructure, corruption, access to finance and land, crime, and skills, among others. While these are challenges for all businesses, they inordinately affect SMEs, which unlike multinational corporations do not have the resources necessary to push through obstacles. While every situation is extremely different, some key themes seen across FCS are that working there takes longer, costs more, and involves smaller deals than in other countries. While many development agencies may want a formulaic approach to promoting business sector development in FCS, each situation requires a deep assessment of the context and issues facing that country. Approaches such as subsidization, efforts to de-risk markets and transactions, and partnerships are critical. It is also essential to have “boots on the ground”—field staff who have an intimate understanding of the actual situation in the country. International partners must also be more careful about sequencing their investments, and start work with the financial sector early on to enhance the impact of their projects. Ms. Peschka’s central recommendations were for international partners to better time their funding to match countries’ capacity to absorb it, to find ways early on in development efforts to support the business sector, to focus more on building local capacity, and to work to systematically integrate the business sector into peacebuilding efforts.

Ms. Llewellyn spoke to the role of the business sector in peacebuilding in Africa through the lens of her company Ovamba Solutions, Inc., a FinTech platform. Ovamba provides short-term, non-conventional capital to both formal and informal SMEs. Most GDP, Ms. Llewellyn posited, lies with entrepreneurs and small and medium businesses. In Africa, however, the small business sector is hampered by an inability to access capital due to an ineffective banking system, and the misguided narrative of Africa as a land of ubiquitous poverty, conflict, and corruption—despite its enormous natural wealth. Ms. Llewellyn suggested that it is important to look at how financing can be carefully directed to support peacebuilding. She also noted the importance of harnessing technology to create transparency, give people more of a voice, and overcome the challenges facing the continent. She underlined the importance of overhauling education systems in Africa, which are out of step with current needs. Ms. Llewellyn observed that many Africans have a strong entrepreneurial drive, but they lack the environment to support this. She gave the example of Cameroon, where many educated young people drive motorbikes for a living. These youth have great potential and desire prosperity, but they lack the freedom to make choices and the business ecosystem necessary to build wealth through entrepreneurship.  Ms. Llewellyn noted that if Africans are free to make choices and engage their minds, and have a business environment that fosters entrepreneurship, they will build prosperous and peaceful societies. Ms. Llewellyn closed with three key recommendations. She implored Africans, including the diaspora, to change the narrative about the continent. She called for the United States to revisit how it engages with Africa—moving away from a charity narrative and towards one of investment for return of interest. Finally, she highlighted the need for continued, honest dialogue on these topics.    

Mr. Cashin focused his remarks on the history of CSR, the potential of CSR in FCS, and the challenges facing investment in post-conflict states. He noted that CSR in post-conflict states has historically been outsourced to third-party NGOs, and principally limited to industries seen as “unethical” and in need of a public relations boost, such as extractives. While there is a growing tendency to view CSR as a core aspect of private industry that should be integrated throughout every department of a business, many companies still fail to do so. Mr. Cashin also posited that in FCS, investment and CSR are one and the same. Business sector investment in FCS has significant societal benefits—it validates the economy; creates opportunities and jobs, especially for youth; better integrates the economy into the global supply chain; encourages the formal economy; opens the door to up- and down-stream investment; builds legitimate revenue sources for the central government; and, by diversifying and stabilizing the economy, enhances confidence in the state. Mr. Cashin underlined the importance of building and strengthening impartial judiciaries, the absence of which is highly detrimental to the business environment in many African countries. He clarified that CSR and investment are both critical—CSR ensures that investment is used properly, but companies should not focus too much on CSR alone to benefit society. However, there are several challenges facing investors in post-conflict states—especially regulations by the U.S. and the international community. Mr. Cashin recommended that the United Nations and NGOs do a better job of incorporating local business in their development activities, as they often lead peacebuilding initiatives. The United Nations should be given the authority to promote investment by providing guarantees for banks to lend to businesses. Market growth should be spurred through local banks rather than NGOs. He also recommended that development finance institutions (DFI) take more risks to bring in the private sector. He recognized that some DFIs have outdated risk profiles that make this difficult, but noted that the recently-passed BUILD Act should help with this by expanding the tools available to the Overseas Private Investment Corporation (soon to be replaced by the U.S. International Development Finance Corporation) and other institutions—especially since it does not only support U.S. companies. His last recommendation was for more open source sharing of information on the impacts of CSR, by integrating corporate and NGO work on CSR impacts. He also noted the critical importance of including youth in all efforts, to better leverage their talents and creativity. 

Launched in September 2015, the Brown Capital Management Africa Forum provides a premier platform for substantive and solutions-oriented dialogue on key trade, investment, and development issues in Africa, and in U.S.-Africa relations. Convening business leaders and policymakers, as well as subject matter experts from the United States and Africa, the Brown Capital Management Africa Forum sponsors a series of public events designed to support the development of economic engagement and policy options that advance mutually beneficial economic relations between Africa and the United States. The Brown Capital Management Africa Forum is made possible by the generous support of Brown Capital Management.

Selected Quotes

Jane Harman

“As the business, governance, and conflict environments in Africa evolve, it is of vital importance that we find a way to better integrate the business sector with peacebuilding efforts.”

Eddie C. Brown

“We all know that businesses are guided by their profit motive and will gravitate from conflict or unstable environments, yet they are also critical to rebuilding, stabilizing societies, providing livelihoods, and giving people hope.” 

Monde Muyangwa

“When it comes to talking about the role of business in peacebuilding in Africa, too many times we focus on multinational corporations, and we know that that has been a difficult, difficult relationship on the African continent in many regards... I also happen to believe that the informal sector in Africa is underrepresented when it comes to their role and the support that they get to be able to pick up communities, whether at the micro level, at the macro level, and to foster development in their communities.”

Raymond Gilpin

“In fragile and conflict-affected states, everything we know about economic fundamentals, everything we know about the way public sector institutions are supposed to work, everything we know about regulatory frameworks actually goes out the window. The monopoly of force [and] group identity become a lot more important than demand and supply.”

“The most important thing business can do is to find ways to draft the local economy into the value chain. That could be done contractually, that could be done practically, but what it means is you are not just creating jobs, but you are having buy-in into your value chain, so they are as concerned about your security as you are.”

Mary Porter Peschka

“No one can do it alone, so partnership has to be more crucial and not just a nice pat phrase… Local players are critical. It’s the only way you can really analyze the situation on the ground.”

“It’s not true that the private sector has been integrated into, or thought of, in the approach to peacebuilding very systematically for a very long time, if ever at all. So I think we need to think about that context.” 

Viola Llewellyn

“Peace is very difficult to achieve if you don’t have full clarity into what the truest desires are for the individuals that live on our continent. Most of them really want to be able to be wealthy, but that concept is very difficult to relay to them when many don’t even have the ability to learn how to be wealthy.”

"If we can get all [African] minds working in such a way that they have the democracy and the freedom to make choices from a business ecosystem that supports their ability to build wealth and do business with the rest of the world, I think we’ll go a little bit further toward what is supposed to be a peaceful continent.” 

Stephen D. Cashin

“[Corporate social responsibility] is investment, and investment is CSR. While CSR can ensure that investments and corporate actions be made in a way that promotes equality and benefits a diverse group of people, the impacts are incremental and relative to the investment itself… Just by investing, it validates that opportunities exist in an economy or a country.”

“We need to integrate the young much more aggressively… There is a lot of innovation within our young and we should use it.”