Tags
livelihoods, M4P, markets, mindset, NGOs, Nike, private sector
When I started work in the area of livelihoods, 15 years ago, life was simple for NGOs. They provided resources, technical inputs and voila – production increased. It was only when production increase failed to translate to substantive poverty alleviation that the need to think about markets arose. Consequently, over the last few years, NGOs working in the livelihood area have stepped up engagement with the private sector considerably. This is engagement is not really a new phenomenon. Traditionally it has been at three levels
- Dialogue, including an oversight into business practices – readers will remember famous cases involving Nike, Starbucks (sourcing, water wastage etc) amongst others.
- Financial relationships – private sector entities, primarily large corporate houses, have been supporting charitable work from time immemorial.
- Environment protection – where NGOs have been primarily acting as watchdogs over some of the sharper business practices that could lead to degradation of the environment.
What is relatively new is NGOs partnering private sector in socio-economic development / poverty alleviation programming.
It is easy to understand why private sector engages. At a basic level private sector is also a supplier / service provider to NGOs. At the more corporate level, the drive is not just ‘image’ but many a time triple bottom lines of economic prosperity, environmental quality and social justice.
Why do NGOs engage? What is their role?
- Demonstrating, with evidence, that small producers can effectively engage with markets and this engagement is beneficial for both.
- Getting small producers engaged in a way that their bargaining power is enhanced – traditionally markets can be quite exploitative for the small producer.
- Ensuring that markets become gender sensitive and women small producers also carve out a dignified role for themselves.
- Advocating for policies that favour small producer engagement.
What is (should) NOT the role?
- To build supply chains for large private sector entities – they can do that much better.
- Marketing produce for small producers under the guise of establishing linkages.
- Treating middle-men as evil which needs to be purged. They have a role to play.
- Distorting market mechanisms by providing inputs to producers – this is not sustainable if done as grants. If it is deemed essential for producers to get technical inputs, it is best that they be provided by a service provider who gets paid by the producers.
One area where I find most programmes failing is by treating private sector engagement as an activity. It is NOT. Engagement requires
- A change in approach and mind-set.
- A good understanding of how the private sector operates. What drives it. Having staff who genuinely know this becomes critical.
- Institutional systems that are flexible to allow this engagement. For instance, one cannot appraise a private sector partner with the same metrics that one would use for an NGO partner.
- Monitoring & Evaluation mechanisms that look beyond the traditional sphere of control.
- Short learning loops so that M&E findings can inform programme strategies and tactics and
- Flexibility in programme design to accommodate these changes.
Questions that come to my mind when I reflect on NGO-Private sector engagement are
- How much efforts have NGOs really taken to understand all this? Should they not invest in understanding better? Can they even engage on equal footing if they don’t?
- Does engagement with private sector compromise the former’s ability to influence and oversee? Is it genuinely possible to walk the tightrope? If so, which aspect is primary? Oversight or engagement? How can one decide which delivers more value?
Makarand
Hi Makarand,
Very pleased to see this discussion happening. As Justin hinted, your blog has generated a parallel e-mail discussion in the Oxfam office in Tanzania. That’s also very good as it gives people space to discuss with colleagues without the whole world knowing. There is so much misunderstanding about the private sector, and these discussions are useful to shape a common vision.
I agree with your, Justin’s and Jo’s opinions about the positive effects that private sector can have on development, and the power of NGOs to influence the rules of the game. But I also agree with Jo that we don’t always need to be an outsider, and that a lot of change can be effectively influenced from within. One particular way of collaborating with the PS, ‘building supply chains’, can be a very good thing. Our work in the sisal value chain in Tanzania clearly shows this. Oxfam has been very instrumental in building a supply chain in Kishapu District, a district that once was a forgotten one, and where no PS invested in. We did this in collaboration with a company, provided loans to this company and indirectly to small-scale operators in the district, invested a lot in capacity building of nursery operators, producers and processors, facilitated business models, and we were the watch dog at the same time. The key is where to let go. At some point other big companies came into the picture and started offering better prices to producers and processors, in other words, some healthy competition emerged. This was a natural moment for us to open up the value chain and direct our support to others in the value chain, in our case women rope makers.
Hi Ralph, Great to hear about the debate. Tremendously satisfying.
Like your Sisal example, we have some fascinating things happening around the pineapple value chain in Rwanda. Oxfam is playing a purely facilitation role with a host of stakeholders. It has reached a point where others (Micro finance Institutions) are actually driving the scale up.
I love your point about ‘letting go’. That is so very critical. It is NOT our role to control people’s lives and destinies; but more to help create an environment where they would deal on their own. Of course it is very difficult to actually do so but we must try and get into that habit.
I liked the comment that,NGO’s need to understand the PS and viceverse for best engagements and collaborations.However, sometime this seem to be not very easier when their vision and mission are antagonistic. On the other hand,the term watchdog role of NGO need more clarity. Do NGO`s well placed to act as watchdogs? What kind/type of NGOs are we refering to? what about their technical,operational and values capacities? are they right? who watch for NGO roles,is it the rural poor,donors,government or ????. Who should watch for the PS? It is also agreed,there is a non ending list of PS-NGO`s enegagements options.But what should be the best PS-NGO engagememnt option for the 21 century?
Shija, I am not sure that the goals of NGOs and PS entities are antagonistic. Different yes. Are NGOs best placed to act as watchdogs? Well they should be. At least those who believe in empowering people. Those who want to deliver services, may not need to have those skills. I believe that it is the responsibility of government to deliver services to its people and not that of NGOs. There is no ONE best form of engagement. Each agency chooses to engage or not and if engaging HOW.
NGO’s work with the Private Sector extends far beyond the roles which you outline. While I agree that a number of primarily development NGO’s have defined working with the PS narrowly to enhancing smallholder power in markets, there are a raft of NGOs and companies that engage in completely different ways.
There is a rich body of examples in the environmental sector which led the way in working with the PS. In the 1990′s a number of visionary NGOs began to engage companies. Partly this was for funding reasons – and the engagement remained in the realm of corporate or public affairs and social responsibility, bringing about the range of ‘green’ or ‘white’ wash which one of the commentators discusses. But a number of engagements led to changes across industries, becoming part of fundamental ways of working for many companies. In the mining sector, environmental standards have risen amongst leading MNC’s; community involvement become routine and addressing social issues – ranging from HIV/AIDs to gender equity are fundamental to successes of major mining companies. Whilst the regulatory environment is critical to policing against social and environmental abuses, NGO’s have been at the forefront of many partnerships leading to improvement in company policies and practices.
Another area of positive impact is the power of such collaborative engagements in changing mindsets of all parties involved. Companies working with NGOs on educational programmes have been able to develop their employees’ understanding of the business’ impacts on the environment and develop innovative new approaches to environmental management. (See for example the Earthwatch Europe Employee engagement programme.) Based on employee experiences, consultancies have built entire departments and even started seperate companies operating to specifically address challenges of development – and in some cases provide subsidised support to bring much needed business skills into the NGO sector. People working in these private sector organisations are taking their learning from collaborative work with NGO’s beyond their immediate functions when they work with other institutions – including governments!
Even development NGOs working with the PS through ‘markets based approaches’ are deepening their engagement with the PS – from focusing on support provided to the producer end of the value chain, to influencing and changing the whole ‘business model’ of how a value chain operates. From provision of imbedded services across the value chain, to improving procurement processes so that small holders are better able to understand and meet the demands, changes are emerging in FMCG companies that are becoming ‘good practice’ across the industry. This is not because of CSR but because it simply is good for business.
The days of PR driven philanthropy and CSR are numbered – visionary companies and NGOs seek to raise the bar to where their businesses do good not bad – so long as the costs of doing bad exceed those of doing good. That is where NGO pressure on companies and governments comes in – to hold the PS to account to the people and planet that they affect. To influence the PS, NGO’s need to understand the PS – and what better way to do this than through collaborative efforts?
Thanks Jo. Very valuable inputs.
Agree completely on the ‘watchdog’ role. Be it on environmental issues (BP and a host of other oil / mining companies) or worker’s rights (Nike). Moving to a sustainable & responsible business model, in all respects is what CSR is all about – not ‘funding’ some nice projects. That would, as you say, need mindset change – something that NGOs can assist with.
I see a role in NGOs engaging with PS in ensuring that value chains are built differently; say for instance protecting rights of small holders. However, very often this degenerates into ‘building supply chains’ or being ‘marketers for small producers’ – I do not think that is a good role for NGOs.
On the collaboration front : I, personally, am not very much in favour of NGOs working ‘with’ private sector or for that matter government. That, surely, is not an NGO role. they can do very well on their own. What NGOs need to do is be a watchdog on these institutions to ensure that they do not trample upon the rights of the voiceless (this categories include sea turtles damaged by tankers spilling oil in the oceans). The moment you start working ‘with’ or collaborating you become ineffective in the role of the watchdog. To stretch an analogy – NGOs cannot (& should not) hunt with the hounds and run with the hares.
What do you think?
Hi Makarand,
Here in Tanzania, the Oxfam team has been having some discussions over your blog, with some varied opinions. I thought to share some of the thoughts, along with a few of my own, and maybe get comments back in from you and some of your other readers.
We started our debate with the point of “NGO’s ” patterning” (sic) with Private sector is the unconditional move forced by the ongoing global economic breakdown.”. This view comes from some of the work that oxfam is doing here, where we have some large and small national (one international) private sector organations that we are working with, trying to understand their aims and approaches, and seeing how these business can benefit from and promote the livelihood advancements of small holder farmers in Tanzania. The partnering with private sector is just one of several approaches we are using.
This created a response of “Many of the most effective NGO engagements to bring change with large corporations have been to challenges them vigorously in a way that one could not do if getting money from them. Many of the most succesful livelihood interventions have given small producers access to markets independent of big corporations although normally working with local business, small traders and local retailers.” This highlights another angle of our work. We have seen that by taking on big business in terms of their ethics it has forced them to change the way they do business. But we have also seen that markets (local and global) can operate with “big business” in the way. From my personal experience, I seen this well with the Shea industry of Ghana, where small business (majority women ran) worked with local markets selling the oil for cooking, and linked to global markets with the likes of Body Shop to sell the butter cream into the European market. Similar work on alternative markets being seen in Oxfam’s work on sisal here in Tanzania (local ropes – at the same time selling some into buyers for national and international trade)
I think both the views above, also raise the question of “what is the private sector”. From the original blog, some felt that it was describing the private sector just as big/global companies. This is not always helpful, as we have very different views on what this is. Makarand, it would be great to hear more from you on what is private sector (your opinion)?
I support stongly some parts of your blog. I believe that NGO’s need to be helping people living in poverty to get access to markets so that they can trade what they already have to offer. But it is more than just access, we need to be addressing the power and governance of markets as well (too often, we see those who are setting the rules for how the market should operate, are also the same individuals benefiting the most financially from the very same market). Our access question must be long term visioned, but with short sharp interventions and this is the short loops that you refer to. The governance question is one of policy that your refer to, but also addressing the social norms/practices that too often do not lead to the policy becoming the practice.
I think it is possible to walk the fine line, but we must be ready to use the approach that is right at the time – too often we are too absorbed in promoting one approach for all problems.
There is more to the debate here in Tanzania, but a start is shared with you on the blog.
At the outset, let me make two statements that I dearly believe to be true
1. An ethical business enterprise does far more to alleviate poverty than ANY NGO ever can… It is sustainable and delivers value for money; if it did not – it would be out of business. Of course, unethical businesses also create wealth but are often illegal, immoral and create wealth only for a few.
2. An NGO has NO business working on ‘livelihoods’, at least not directly. We have all seen that input driven ‘livelihood’ work does not, well, work. this is what i call “cat amongst the pigeon statements”. To me, the key role of an NGO (in a non humanitarian situation) is “to make people wise” and then leave them to take decisions.
Private sector is a very loose term – a man selling cigarettes at a street corner is also part of the private sector. So are all farmers. My piece was primarily referring to the more organised larger sector (not necessarily transnational but organised nevertheless)….
I am not very much in favour of NGOs working ‘with’ private sector or for that matter government. That, surely, is not an NGO role. they can do very well on their own. What NGOs need to do is be a watchdog on these institutions to ensure that they do not trample upon the rights of the voiceless (this categories include sea turtles damaged by tankers spilling oil in the oceans). The moment you start working ‘with’ you are, finished in the role of the watchdog. To stretch an analogy – NGOs cannot (& should not) hunt with the hounds and run with the hares.
Interesting observations….I’ve been thinking along the same lines albeit in reverse order ie how the private sector engages with NGOs in their CSR endeavours.
Recently visited a CSR initiative of a private ompany that has set up a ‘foundation’ to engage with the social sector for reputational gains (and also to clean up some misgivings of the past). This foundaton has a mix of development professionals brought up in NGO culture and some corporate guys on deputation. This happens to be the first level of negotiation (read, value incongruence). Secondly as the foundation holds the money bags, they interact with the NGOs as a donor – contract them to do the job. However as they know how NGOs operate there is the danger of ‘showing’ them how to do the job. Therefore this dealing with a corporate foundation donor with an NGO mindset is another level of negotiation. Mind you the foundation’s activities have very little to do with the corporate’s core businesses. In fact they seemed to have a tough time convincing the ‘business’ of their approaches and the time required to achieve results. In the NGO world, the major constraint has been that of resources – funds; typically NGOs have enough time for building rapport with communities, soliciting their participation, building ownership of activities and outcomes. Corporates have the money and want quick results. If they want to acquire a piece of (grazing) land for a project, they are willing to build a temple or a community hall in return. Thats their idea of a win-win.
Your questions are relevant in this context too – can the private sector engage with NGOs on an equal footing? guess investment is required on both sides.
Agreed Mona. This type of ‘CSR’ helps no one in the long run. I would much rather see a company or even a volunteer try and do something in an area of their expertise. Like a friend said a few days back “painting fences on the weekend may be a great thing to do, but if you are a banker should you not be supporting small enterprises with your banking expertise?”
Donor-NGO-community negotiations are part of the game. What is needed is understanding of the other’s perspective.
Hi Makarand,
Is this post of yours pertaining to a specific region? In other words, are your opinions in this post based out of cases out of a specific geographic region?
No not region specific..