Is Cargill the Next Bono?

When it comes to identifying actors in international development, we point to the World Bank, the Millennium Challenge Corporation, Bono, and even Transparency International. Whether they’re heroes or villains is a decision for development wonks. The point is, however, that we don’t generally think of big private corporations like Cargill; they don’t usually play a role in development, right?


Some of them actually make quite hefty contributions to development initiatives. The problem, a skeptic would tell you, is that they’re probably not doing it for the right reasons; they may be doing it for publicity, thereby (theoretically) increasing their profits and building their brand.

In some instances, the skeptic might be right. And this may have to do with the fact that sometimes for-profit ventures and development initiatives don’t have much in common.

Recent experience, however, has shown that there are times when profits and development activities can go hand-in-hand, meeting in the hearty middle and creating (buzzword alert) shared-value. The concept is simple enough: when you train farmers in best practices, they can increase their yields. Higher yields will result in more compensation for the farmer. This initiates the sort of multiplier effect that can transform entire communities. It’s called creating shared-value because both sides have a stake in maintaining a sustainable and fair economic relationship.

For the curious, CGP first highlighted the concept when reviewing the Cargill Corporation’s approach to cocoa farmers in Ivory Coast for our 2011 Index of Philanthropy and Remittances. The venture has been so successful that Cargill has attempted to replicate it. A recent article by Reuters reports on Cargill’s plans in Cameroon, where they will “not only train individual small-scale farmers on good agricultural practices, but will also focus on strengthening farmer organizations”.

Of course, the job isn’t as simple as it seems. Part of it is that dumping money into a community doesn’t necessarily transform it for the better. Development requires, among other things, institutions, a dose of financial education, and adequate health services. To overcome these issues, private-nonprofit partnerships can be of tremendous help.

Development nonprofits often possess the know-how to tackle education, health, and institution-building programs. When they enter into agreements with for-profit corporations to help a community, they create a triangle of shared-value, drawn to the left. What this figure shows is that under this scheme nonprofits provide services to both the corporation, by mobilizing its assets to help with the management of development projects, and the community, by providing some of these services. Presumably, the nonprofit receives money in exchange for some of these services and gain utility from helping an impoverished community.

To provide a specific example of this relationship we turn, once more, to Cargill.  In its work in Africa and elsewhere, Cargill has partnered up CARE. In Brazil, for instance, the partnership is responsible for helping cocoa growers diversify their income to protect them against economic downturns. In their activities across the world, CARE and Cargill have tackled a number of other significant issues, including nutrition, sanitation, and education programs.

This sort of behavior has created an interesting shift in how corporations approach development. Traditional corporate social responsibility models are being replaced with more hands-on initiatives, the sort that benefit everybody involved. It has also transformed the way nonprofits relate to donors. CARE, for example, is less interested in partner corporations willing only to write a check. Today, they seek partners interested in real engagement.

Whether these attitudes will change across the spectrum of nonprofit and private corporations involved in development is difficult to assess. What we do know, from the CARE -Cargill experience, is that there is the possibility to do some good. The challenge is to determine whether or not Cargill-CARE’s success is replicable. Intuition suggests that replication should be possible. To discover whether it is, governments, nonprofits, and corporations should challenge themselves to establish these shared-value triangles. If corporations are committed to these ventures, and success becomes the norm, these types of partnerships may very well be on solid ground and ready for public vetting.

Moving forward, however, we should be ready to accept the possibility that the incentives that brought CARE and Cargill together may be unique to their situation. That is to say, it is possible that similar ventures could fail.  The key take-away, then, is rather nuanced: corporation and nonprofit joint initiatives have been shown to be productive, but this might not always be the case.


Libya: At a Critical Juncture

An unnamed participant speaking at the Center for Strategic and International Studies (CSIS) recently remarked that “it would be a mistake to think that the international community’s work [is] over once Gadhafi is gone; it is only then that the real work begins.”
He makes a compelling point.
Although Tripoli fell to NATO-backed rebel forces in less than 200 days, many have warned that development activities in the post-conflict reconstruction period will last for many years. This agreement has provided an opportunity for scholars and practitioners alike. In the months since the beginning of the civil war, the intellectual community has attempted to draw actionable plans for a post-Gadhafi Libya. The number of panels convened is impressive.
Speaking to the Senate Foreign Relations Committee, Professor Dirk Vandewalle, from Dartmouth suggests that the most complex question facing new authorities is how to restructure the state with “a political formula that is acceptable to a number of different players that have traditionally been antagonistic, but that were held together by the authoritarian policies of the Qaddafi government”.
To make a modern state out of Libya, transition leaders have to hold the nation together, without the coercive use of force.Vandewalle insists that traditional tribal identities will make this difficult.
To complicate the matter further, Libya’s economy is highly centralized. The oil and natural gas industries, which are state-owned monopolies, account for about 95% of export revenues and over half of GDP. Consequently, about 90% of government revenue comes from hydrocarbons. Transitional leaders looking to earn the allegiance of tribal leaders may be tempted to to dig into these oil revenues to buy national cohesion.

In this regard, some have suggested that pushing for wholesale democratic reforms today may precipitate the undoing of the Libyan republic, particularly in light of a foreseeable struggle for national authority.  As Soumaya Ghannoushi of The Guardian reports: “The vacuum created by Gaddafi’s departure is now filled by two polarized camps”: the National Transitional Council  on one side (NTC) and the political and military leaders that liberated cities across Libya on the other. Until the power struggle between these two factions is resolved, it is unlikely that a sustainable path to development can be achieved. Furthermore, it would be unwise to liberate Libya’s frozen funds to any side without having solved the political question first.

Once these issues have been squared, controversy will move to spending (how and how much to spend). According to Reuters, Libya’s sovereign wealth fund holds around $70 billion in assets.  Legitimate transition authorities will inevitably have to tap into these funds to bring Libya up to its economic capacity. To do so, they must seek guidance from both friendly governments and the private sector. In this, the opportunities are limitless.

However, before all of the complexities associated with economic development are analyzed, Libyans must decide for themselves how to organize politically. How long this will take, or the end result of said process is, however, unknown. Thus making this a critical juncture in Libya history.

Corporations and Nonprofits: Joining Forces for Development

The words “international development” often conjure images of hard working nonprofit volunteers stranded in the middle of Sub-Saharan Africa. Their selflessness and dedication in the face of adversity makes the rest of us seem frivolous. But there are other actors, some less selfless than our imagery of volunteers, which are part of the development community. Increasingly, large private organizations (the size of Wal-Mart) are playing a role in international development efforts. Understandably, the activities of corporations in developing regions are usually fraught with suspicion: aren’t they doing it only for the publicity? Paying close attention to the work of Cargill, a large American corporation, and their partnership with CARE, the international nonprofit, reveals that long term and thoughtfully planned commitments can, on occasion, create opportunities for individuals in the developing world while they tangibly contribute to large corporations themselves.

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CGP Water Series | Sanitation Matters

Before this post gets ahead of itself, a small disclaimer:

This post is about sanitation and all things related.

Still reading? Good.

According to the World Health Organization (WHO) sanitation is defined as “the provision of facilities and services for the safe disposal of human urine and feces”. In term of raw numbers, the crisis is appalling: about 2.4 billion individuals are deprived of adequate sanitation facilities. Compare this to data on access to water issues and it is evident that sanitation is the biggest contributor to the Global Water Crisis.

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Poor but MIFFed

Given the many and confusing acronyms in the world of international development, new ones are at a significant disadvantage—unless of course they sound funny or appear in a column in The Economist. Such is the case of MIFFS or Middle-Income but Failed or Fragile States, as featured by the British magazine last June.

In one sense, MIFFS represent a contradiction in terms because they describe countries that have “have graduated from poor to middle-income status” and yet are still considered to be failed or fragile states. According to the World Bank there are 86 economies that fall within the middle-income range. It should be noted, however, that the range is quite broad, “with the highest income MIC having a per capita income 10 times that of the lowest”. Continue reading

The Ethos Poverty Index | El Índice Ethos

How do you define poverty, how do you measure it, and why are its measurements useful? These are the questions that Ethos Foundation, a think tank based in Mexico City, addresses in the recently released Ethos Poverty Index 2011. The Index innovates by including social, political, and economic indicators to contextualize and measure poverty in select Latin American countries. In this post CGP reviews the Index, touching on its philosophical foundation and commenting on some of its results.  Since Ethos is a Mexican organization, this blog is also in Spanish! Continue reading

Biweekly Review: June 20th to July 1st

Dear Reader: Ever too swamped to catch up with our blog? Fret no more! Beginning with this post CGP will bring you a brief biweekly review of what’s gone up on our blog! We hope this will help you engage with our posts long after they’ve been posted!

Without further ado, our Biweekly Review: June 20th to July 1st

Who Needs Development If the World Ends First? explores why climate change could be the world’s most challenging economic problem over the next fifty years.

Text AID to mGive looks at how mobile donations are changing philanthropic giving.

Globalization: the Bad and the Good digs into the complexities of private investment in Africa.

Connecting the Dots: Managing Uncertainty with Women points to the fact that women are good at delivering public services to the broader public and bringing transparency to development efforts.

CGP Water Series | Water: A Human Right looks at water as human right via some international legal instruments.

CGP Water Series | Fifteen Minutes: a Shower, a Coffee, an Education uncovers research which suggests that reducing water collection time might improve educational attainment.

China is Investing in… the U.S.?  reviews a Wilson Center event on Chinese FDI.