Armed conflict and post-conflict situations constitute severe constraints on economic life and present a hostile environment to business and investments. As the primary driver of economic development, the private sector’s ability to prosper is imperative to job creation and investments necessary for human security. The private sector, international and local, has the ability to contribute in at least two rather different ways: by conducting its core business and by actively promoting certain elements of peace-building.
Taking years of practical experience from private sector development in complex environments as point of departure, Sofia Svingby, a private sector development specialist at Stockholm University argue that through conscious engagement and active dialogue promotion business can and does take on an important role for both economic development and peace-building in fragile contexts.
While potentially highly profitable, fragile or complex environments present a multitude of challenges for an international company. According to Sofia Svingby, this risk-opportunity balance must be carefully managed to cater for long-term success. Weak formal institutions, opaque power structures, commercial and political interdependencies and ethnic tension are some examples of particular challenges of the fragile context any business company needs to navigate.
The private sector’s main contribution to developing economies and societies stems from its core activity of its ability to offer products and services meeting local demand, and the related effects on job creation and economic growth. Brian Ganson, Associate Professor at the Business School of Stellenbosch University stated that in their interaction with suppliers, consumers, employees and governments and institutions, companies may transfer know-how, promote peaceful tools of conflict management and good governance through their core business conduct. Herein lie both the inherent challenge and opportunity. According to him a company’s ability to steer towards sustainably successful business models rather than short-sighted and exploitative practices is pivotal.
Brian Ganson, however, argued that in order to be successful, companies can not go about doing ‘business as usual’. In complex or fragile environments, operations and products need to contribute to a virtuous rather than vicious circle of economic and societal development. If implementing conflict sensitive approaches in strategies and operations, companies can facilitate economic development while also contributing to establishing essential conditions for peace-building.
Brian Ganson further noted that a context-sensitive governance model, including means of ensuring local compliance with the corporate code of conduct, is required, but key to implementing such approaches is leadership. Leaders’ ability to navigate complex environments which is harvesting opportunity and managing risk determines if a business can successfully provide benefit to stakeholders, employees and society. In order to do this, leaders need to incorporate an attitude of attentiveness to any aspects in the local context that may influence the company’s operations. According to Sofia Svingby, the key attribute of such an attitude is inquisitiveness, continuously striving to understand the environment in which the company operates.
Joanna Buckley, development economists at Oxford Policy Management Consultancy on her part argued that this approach helps business leaders anticipate and manage the way the company influences the local context, positively or negatively. Moreover, and equally important, it supports the management’s grasp on how the local context, for instance its conflict dynamics, affects the company and its ability to meet the financial, reputational, legal, and other requirements placed on international firms.
Joanna Buckley explained that in addition to conducting business sustainably and responsibly, private sector actors such as individual companies, multinational or local, as well as organised business, may offer channels and methods for trust-building outside the traditional arenas. This potential can be manifested by a well-functioning labour market dialogue or improved interaction between private sector and policymakers. The ability of individual employers or that of business organisations to contribute to conflict resolution, either at the workplace level or in society at large, may be decisive in establishing a dialogue-centred rather than conflict-oriented interaction.
The fact that companies often have an acute awareness of the challenges facing citizens in local communities is sometimes overlooked. Organised business on local and national level, meanwhile, can have an important role to play in holding governments and public institutions accountable. The achievements of the 2015 Nobel Peace Prize laureates, the Tunisian Quartet, clearly demonstrate how business and labour market parties, when engaged in broad cooperation, were able to provide an alternative, peaceful political process at a time when the country was on the brink of civil war.
Jonas Borglin, a known Swedish private sector and industrial analyst argued that business should be viewed and view itself as a stakeholder in sustainable development, even though a company’s status as a commercial entity may render it difficult to engage in far-reaching development work as such. The interests, capacity and mandate of companies and business associations need to be acknowledged if business actors’ potential in building resilient, prosperous societies is to be efficiently utilised.
According to Jonas Borglin, sustainable, responsible business practices and values are not complementary features of long-term successful business, but a pre-requisite. As such, the core business and the way it is conducted is the major contribution of a company not only as a source of financing, innovation, job creation and growth, but through its impact on stability and governance issues, including anti-corruption, peace and security and the rule of law.
The private sector and environment
THE WORLD IS BURNING
In these times of heightened uncertainty, the likelihood of collapse; states corporations, etc. is becoming increasingly probable. All one has to do is look at situations in South America and the Middle East, to say nothing about other regions. Countries that were once deemed democratic are now moving towards dictatorship. Thoroughly democratic governments are continuously demonized when they try to become relatively independent. Characteristically, the deep state encourages military coup when a particular state’s political objectives and economic policies start to diverge from its own desires. The real reason behind empire’s overt offensive is to protect and sustain the prevailing neoliberal globalization!
In South America political situations are shifting dramatically. A decade ago almost all countries were pushing socio-economic policies that were primarily pro people. The current situation is more mixed. There are a number of countries that have endorsed neoliberalism in full, while others have opted to temper it. In general and in both cases, results are not all to the likings of the sheeple (human mass). The states of Ecuador, Chile, Brazil and Bolivia are moving further to the right, while Cuba, Nicaragua and Venezuela are still resisting empire’s neoliberal imposition. Mexico and Argentina are trying to revert back to a more balanced trajectory, in regards to their general socio-economic policies. In South America things are always in dramatic flux, worse than our continent!
In the Middle East, Lebanon and Iraq are also burning, so to speak. Again, the issues of inequality and mal-governance remain at the heart of the problematic underlying the chaos in the Middle East. Certainly, there are differences between the two regions. For a start, the longstanding fascistic political tendencies that prevail, mostly within the political classes of South America is a peculiar issue within the global south. In South America, the ruling classes are mostly composed of descendants of European settlers. This thorny issue of antagonistic racial divide is always at the background in that vast region. In other words, racial and ethnic diversity has become one of the major tools for frustrating the project of harmonious coherence. We believe there are lessons here for Africa and other parts of the world system.
The shallow and divisive (ethnic, etc.) policies of our (African) copycats elites, mostly implemented to satisfy the greedy needs of corrupt politicos and oligarchs (local/foreign) will only give rise to insurrections and revolutions! Unlike South America, economic polarization in Sub Sahara Africa is only skin-deep, without significant racial or ethnic connotations. It doesn’t go back centuries, save South Africa and few others. Even then, outside settlers have not been as entrenched in Africa as they are in South America. Therefore, Africa’s indigenous empty suits, at the service of outsiders, are recent creations and can be dealt with once genuine pro people movements take over state power across the continent! In the mean time, countries in Africa, particularly those who are very diverse in terms of their ethnic compositions, should be very, very, careful about their socio-political strategies. Unless African countries make concerted efforts to collectively forge a unified front, they will end up being even more marginalized. Granted, coming up with new socio-economic arrangement that is more egalitarian, resilient, democratic, etc. might not be easy, given the dearth of critical thinking on our continent. Nonetheless, blindly pursuing the dead end logic of unsustainable economic and social policies, as prescribed by global dominant interests (IMF, WB, WTO, etc.) will only result in chaos and fragmentation. The youth comprise the majority of the population in Africa and its expectation is sky high, while the actual reality on the ground is rather gloomy!
New procurement proclamation to mirror gov’t electronic system
An incoming procurement proclamation is undergoing massive changes to streamline with the digital route taken by government courtesy of the electronic government procurement (EGP) system.
This financial year, the Public Procurement and Property Authority (PPPA) has rolled out the EGP to 74 public offices with over 1080 tenders and purchases being published on the locally developed portal.
According to the plan, by the end of the budget year, about 490 billion birr worth of procurement will be undertaken through the EGP.
Leaders at PPPA remarked that despite the digital shift to EGP being new, the execution has been seamlessly adopted across the board in its first year of application.
The electronic procurement system was first piloted with selected nine public offices in the 2021/22 budget year and later expanded in the 2022/23 budget year. Currently, 74 public offices are undertaking their procurement through EGP.
“Of the total 74 public offices, 61 have become most effective in using the new system,” Woldeab Demissie, Deputy Director General of the Authority, said.
“We had limited the number of public offices to 74 to first prove the capability of the system. We will include others when we make sure the system stability is improved and have ample capacity in terms of providing support for offices that will be included on the system,” he explained.
Additional public offices will be included in the coming budget year and in the coming five years time all regions will be part of the portal.
“Except for few higher education institutions, all central government offices will be included on the system as from July, which is more effective with regards to accessibility which leads to attraction of more bidders than the manual scheme,” Woldeab said.
In the budget year, about 1,080 bid and pro-forma procurement were processed via the platform with over 138 contracts being awarded. So far over 8,000 suppliers including international suppliers have been registered.
At the beginning of the year, the number of suppliers was not more than one hundred, but that has since grown gradually.
Lack of awareness is stated as one of the challenges in expanding the number of suppliers. To this end, the authority with different stakeholders is working to draw attention to the new scheme.
The system also supports international tenders and so far, seven international bids have been issued on the portal.
“Experts from World Bank, who have assessed the new scheme, have appreciated our system and we have agreed that when the system stability is at top tier standards, the World Bank and other international partners’ procurements shall be procured, through the same,” said the Deputy Director General, adding, “They have given us some comments on the system. If we make the necessary updates as per the requirement, the World Bank and other international partners will undertake bids through our system.”
Lack of professionals on the sector was also stated as one of the challenge to which the PPPA has revealed it is designing a center of excellence to train experts on the sector.
In Ethiopia, up to 70 percent of the government budget is channeled to procurement.
Production capacity of sugar turns sour, import process ridiculed as sluggish
Ethiopian Sugar Industry Group (ESIG), a state owned estate, is projected to fulfill the production of 2.27 million quintal of sugar, which is half of its capacity. The sluggish import process for the sweet despite performance bond provision by the supplier raises criticism among sector experts.
The group which manages about eight active farms with milling facilities stated that several external and internal challenges hampered its activities making it to not attain its maximum potential.
According to Reta Demeke, Public Relations Head at ESIG, the millers have so far produced 858,000 quintals of sugar this season, which mostly picked up at the end of the rainy season.
“Owing to various reasons, production this year has been a shadow of what it was last year. Some of them, a few weeks ago have run out of production,” Reta elaborated.
Astonishingly, Wonji Shoa, the oldest sugar estate in the country has been out of operation as from mid-November. Similarly, Omo Kuraz 2 has halted its production a month ago, while Arjo Dedessa and Tana Beles resumed production last month.
As Reta informs Capital, sugar millers are now operating in Metehara, Kuraz 3, Tana Beles, Fincha, and Arjo Dedessa.
“Most of them started production late because of several challenges including lack of parts and external challenges,” Reta highlighted.
As per the PR head’s explanation, sugar production is a chain process which primarily is supposed to be done in the preceding seasons.
“Foreign experts who engaged on projects before left the country during the pandemic and the ripple effect is catching up with us now,” Reta explained whilst pointing out reasons of why some projects have been delayed.
The sector’s character is often cyclic, for instance, plantations ought to be carried out at least 14 months prior to this year’s sugar production. According to the head, because of challenges some of the operation was not conducted as per the sector demand.
Ethiopian sugar millers have a capacity to produce over 4 million quintal per annum, while the actual demand is estimated at about six mllion quintal.
“On the consideration of circumstances for this year, we have projected to produce 2.27 million quintal of sugar,” he said.
Besides local production, the Group is also importing sugar to fill the gap. For this year, the bid was opened early November in 2022, to which a company relatively new to the Ethiopian market, Osirius Group, was selected to supply 200,000 metric tons of sugar owing to its lowest bid offer compared to other two bidders.
Currently, the process to start shipment faced delays unlike the past experience owing to the US Company providing its performance bond later than expected. At the moment, the Group has opened the letter of credit to precede the import that will be loaded from Brazil.
“Regarding import such kind of obstacles was not seen in the past, but the process is currently ongoing,” Reta said.
Sector experts opined that due to lower local production and delays on import, the market has been widely covered by francovaluta.
They criticized that the government procurement process has become defunct, “Since the opening of the bid, the process has taken almost half a year. The sugar is yet to be imported. This shows that government’s lead procurement process is failing.”
