Monthly Archives: November 2011

Stakeholder Engagement

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Stakeholder engagement, how do you please everyone or can you?
I watched a PBS special from the series on “Woman, War, & Peace” this morning entitled “The War We are Living.”  This was in preparation to attend the Schulich Business Case Competition in Toronto.  The team I am on is preparing a case on mining sustainability.
This episode deals with indigenous people in Colombia who are fighting to hold on to the gold rich land that has sustained the community through small scale mining for centuries.  The Colombian Bureau of Mines recently sold the land rights of this village to an entrepreneur from Colombia.  He claimed that they had no rights and that they needed to vacate or be evicted.  Obviously, the community was very upset and fought against the eviction notice.  Recently, the judicial system reversed the sale, so for now, the village can continue mining.  This region is known for the gold deposits and has many more communities who could potentially be in the same situation.
I want to analyze three stakeholders, the government Bureau of Mines, the entrepreneur, and the community.  First from the perspective of the Bureau of Mines, if the land is sold and entrepreneurs or companies can build mines this is positive growth.  This creates economic development which will increase employment, tax revenue, infrastructure, and more.  Corruption is most assuredly a factor as well.
From the perspective of the Colombian entrepreneur, he can expand his company and provide employment, better resources to indigenous people, and higher profits for his business. Elected officials want to see economic development projects which they can boast about come election time.
From the perspective of the community, they are happy with the status quo and do not want anything to change.  Economic development, job creation, and income generation are not high priorities for the community or are not as essential to daily life.  It would appear that the local community should be happy to see development which would create higher wages, better mining conditions, and better living conditions but that is not so, why?
How do elected officials, companies, or government agencies interested in development account for the rights of indigenous people?  How are the rights of indigenous people protected when many more people could benefit?  Do we as a western culture assume that what we want is what everyone wants?  What is happiness about?  How is it possible to appease these three stakeholders at the same time?  What does this say about democracy?  As I ask all of these questions and more I realize how critical stakeholder engagement is and how important it is to obtain a “social license to operate.”

Trade vs Aid Debate

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Currently there is a debate thriving over whether trade or aid is better to assist developing countries achieve a better standard.  The model of foreign aid being given to developing countries with few strings attached has virtually been shown to not be effective.  Corruption, dependency and many other issues have plagued foreign aid for many generations.
The current proposed solution is to empower developing countries to enter into trade to enable growth and progress.  There are many flaws to this theory that are cause for concern.
  • Current subsidies by developed nations do not allow free trade across borders.  For instance, in Ghana, the sale of chicken is predominantly imported from Europe.  This chicken is primarily legs and thighs because the breasts are sold in Europe and the “waste” is shipped to Africa and subsidized.  Consequently farmers in Ghana who want to raise fresh chickens cannot compete due to the price and the quality of the product.  
  • Providing financing for business is not enough to sustain and improve to livelihoods of people.  Even microcredit has issues in that access to financing is not adequate to ensure profitability. Proper training to assist small business owners is critical to development.  Providing financial assistance to allow someone to open or expand a business does not guarantee entry into the local or world market.  Far too many businesses are created with the same plan without regard as to how to be innovative.  I have walked down the street and seen five businesses selling scratch cards for prepaid mobile phones in a 100 yard distance.  Access to more funds will not empower these individuals.  Simple bookkeeping is also an issue as many business owners cannot verify whether they are profitable or not. 
  • Trade in many developing countries is often controlled by government agencies which are corrupt and consequently the money is not evenly distributed. For instance in Ghana, the control of cocoa, an international commodity is regulated by the Ghana Cocobod.  This creates a scenario where the actual farmer has no control over the price that they are given for the crop. Routinely cocoa growers on the Western edge of Ghana would smuggle there crop into Cote d Ivoire where they could obtain a higher price.   On a more local scale, the Ghana Customs Excise and Preventive Service (CEPS) would routinely stop local transportation on the standard routes into the country from other regional trading partners many times and ask for bribes from the local traders.  Consequently, local traders are unable to effectively predict what the price and profit margin would be for most products. 
As a concept I agree that trade is better than aid but it is much more complex than this.  As a citizen of a Western country I can sit here and say that the world is flat but in actuality it is very round and circular and many of the issues with trade are in a repetitive loop that does not allow for developing countries to get out.  Developed countries control international trade and the economic system via the WTO and the IMF and other systems implemented at Bretton Woods.