Getting down to business at Davos 2009

4 February 2009
Comment
As I mentioned in my previous blog, debate at Davos may have centred on the global financial crisis, but development issues were still in there. Three in particular: the role of business in development; climate change; and humanitarian issues.

Business and development
There was much discussion of business engagement in development, both philanthropy and commercial engagement. The World Economic Forum (WEF) has various initiatives on sustainable food production and on agriculture that focus on practical actions: setting targets, mapping successes, learning.

In food, this translates into a major initiative on value chains and business opportunities, as shown at one workshop for CEOs from sectors as diverse as telecoms, logistics, retail, and input supply. The Boston Consulting Group, for example, had analysed opportunities up and down the value chain, and businesses were (a) keen to demonstrate that they were already active and (b) anxious to do more. Prime Minister Odinga from Kenya talked about convening quarterly partnership fora for government and the business sector, a format that he says works very well. I had interesting discussions with the retailers about the Japanese experience of commercialising local products (One Village One Product) and about village-based business hubs.

There were discussions on agriculture with Odinga, Luisa Diogo from Mozambique, the Ministers of Agriculture from Rwanda, Tanzania and the UK – and 20 or so CEOs of major agribusinesses. Once again, the story was about the need to find profitable investments. Old arguments were still in vogue, with people saying that 40% of crops are lost in Africa – a ‘fact’ I thought had been debunked by Michael Lipton and Martin Greeley years ago. Hugh Grant from Monsanto said that if someone offers you an ounce of gold or an ounce of improved tomato seed, take the tomato seed, it is far more valuable.
The somewhat hidden agenda was policy – e.g. level of protection, and investment to overcome market failure. Montek Ahluwalia, celebrated India’s achievements in agriculture. Asked about trade protection, electricity subsidies, sunk costs in irrigation, he said Indian farmers could compete against foreign farmers but not against foreign treasuries.

Interesting that fair trade and labelling were not discussed in either meeting or in the Boston Consulting Group papers.
Interesting fact: France and Germany give subsidies to people to buy new cars: 1,000 euros in France, 2,500 in Germany. This is being presented as a green initiative. Not protectionist, say the governments – you can buy any car.

Climate change
A meeting of the travel and tourism industry cluster dealing with climate change raised some fascinating issues:

  • A shared view that there is strong demand for increased mobility and air travel.
  • A strong belief among airlines that technology could deliver large reductions in carbon emissions, with jatropha, algae and more traditional biofuels to account for 30% of fuel by 2030.
  • The airlines proud to be part of the European Emissions Trading Scheme (ETS), but still unclear whether they will receive free carbon permits and, if so, how many. There is one proposal that permits should be free up to a minimum standard of best practice, so that only worst performers have to pay for carbon.
  • Another proposal is a kind of tourism equivalent of the Clean Development Mechanism (CDM), with a levy on revenues from aviation ETS to fund the greening of tourism in developing countries.
  • An African minister insisting that the conversation stay within the UN Framework Convention on Climate Change (UNFCCC) and not the International Air Transport Association (IATA) or the International Civil Aviation Organization (ICAO), because of the core principle of shared but differentiated targets – African countries want the right to expand air travel.

Climate experts reiterated the urgency and the scale of the carbon reduction task. I pointed out that both aviation and tourism had made major contributions to development, but should not, surely, be lumped together. The African ambition was laudable, and the question was how it could be achieved in a green way. One example: the Minister said that only 1% of tourism revenues came from domestic tourism. How about that as a big growth sector? Second example: perhaps people should stay on holiday for three weeks rather than two, reducing the carbon emissions from air travel for a given number of visitors. Of course, the work of ODI on Pro-Poor Tourism is highly relevant.

A private meeting on adaptation also focused on practical actions, an advance on last year, when the discussion was theoretical. There was discussion about the importance of generating money within the system, e.g. by levies (such as the tourism example above). It would be good to hear the views of public expenditure and aid people on this, as there seem to be enormous risks in hypothecation – tying tax revenues to specific expenditures - with uncertain total volumes and volatilities. I am, in general, sympathetic to Ministries of Finance that dislike this practice. On the other hand, this is not a good time to be asking Ministers of Finance for money.

Kofi Annan’s Global Humanitarian Forum will launch a climate justice campaign later in the summer. He illustrated the issues with a climate joke. A pig and a chicken are discussing hunger in the world. ‘I know how we can solve this’, says the chicken. ‘I’ll provide the eggs, you provide the bacon. Job done’. ‘Hang on’, says the pig. ‘For you, that means a contribution. For me, it is total commitment’.

Interesting fact: Switzerland has more weather stations than the whole of Africa. And here’s another: 11 US power stations had to close during the 2008 summer drought because of the lack of cooling water.

Humanitarian issues
The WEF Global Agenda Council (GAC) on humanitarian issues has been calling for a new business model for humanitarian assistance, with more emphasis on risk assessment, country capacity-building and prevention, including in fragile states. This is partly driven by our belief, emergencies like Gaza notwithstanding, that the emergency caseload of the future will contain a greater proportion of natural disasters, and also of disasters in middle income countries: think Pakistan or China earthquakes rather than Darfur. We met with Ashraf Ghani, who chairs the GAC on fragile states, and he will ask his group to identify principles that humanitarians should follow in such situations, so as to integrate better with local systems, without compromising humanitarian principles. One key principle could be to avoid the portrayal of hungry people and those affected by emergencies as helpless ‘victims’ who lack any local networks and who always need outside help.
The WEF has its own initiative on the private sector in humanitarian relief, which has established principles and also created a clearing house function for businesses wanting to help in emergencies. I presented our GAC conclusions at a meeting of the initiative’s steering group, which is planning detailed case work in one country, Indonesia, to test how far new partnerships can be taken. All the agencies present recognise the limitations (e.g. very few business want to work in conflict areas), but there are impressive levels of commitment as well as case studies from, for example, logistics, medical, and construction companies.

Josette Sheeran and her World Food Programme (WFP) team were in Davos making the case for stronger business partnerships on food and nutrition, and highlighting continuing food needs worldwide. The King of Saudi Arabia was thanked for his contribution of $500 million to help WFP purchase vital supplies at the height of the food price crisis last year.

I was among those taking part in a very powerful simulation of the refugee experience, put on by the Crossroads Foundation: role play, barbed wire, minefields, men with guns. For a brief moment in time, we were thrust into the world of refugees who face attack, mine fields, corruption, and the perils of survival in a refugee camp. I became a 10-year old child, with measles and a leg injury. I lost my parents. I was hungry, ill, frightened and powerless. It was an effective and moving way to convey stark realities, followed by a discussion on the situation of refugees and what kind of help is most effective in meeting their needs.

Finally, it’s amazing how little discussion there is of Europe, or EC presence come to that. Were any EU Commissioners in Davos? I don’t think so.

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Authors

Senior Research Associate
Simon was Director of the Overseas Development Institute from 1997-2009. He is an economist who [...]