1 February 2011
On 21 January I was in Washington for a meeting called by the President of the World Bank, Bob Zoellick, and his Managing Director, the former Nigerian Finance Minister Ngozi Okonjo-Iweala.
The impetus for the meeting was the World Bank's desire to give more support to agriculture in developing countries, particularly to lift subsistence farmers into the commercial sector. The Bank wanted to hear from businesses, NGOs and financing institutions with practical experience in this area.
Hence the invitation to SABMiller. With developing countries accounting for over 85% of our earnings, we're deeply embedded in emerging markets and have clear ideas on how to promote economic growth. A major thrust of our business is to source more of our raw materials from local producers, both to benefit SABMiller's operations and to help local smallholders develop their own businesses. In Africa alone, almost 30,000 smallholder farmers are now working with SABMiller in this win-win relationship.
Among the 25-or-so participants at the World Bank meeting, SABMiller was one of a small number invited to make some pre-prepared remarks. In my comments, I drew attention to three main ways in which the World Bank could make a difference.
One is to provide so-called ‘catalytic' finance to get relevant projects off the ground. As an example, I pointed to our partnership with the NGO, Farm Africa, and the DfID-financed Africa Enterprise Challenge Fund under which an $850,000 grant is helping to establish a network of small-scale cassava producers for our new brewery in Southern Sudan - the money being spent over three years on cassava root stock, processing plants and new skills.
As a large business, we could have developed a widespread local supply chain ourselves but it would have taken longer - three or four years rather than one. As well as the hundreds of jobs created by the brewery itself, the equipping and training of smallholder farmers and the existence of an assured market for their crops is already benefiting thousands more.
My second suggestion to the World Bank was to help fund agricultural growth ‘corridors' such as the one we're currently supporting in Tanzania. A problem that bedevils much of African agriculture is lack of infrastructure to connect farmers and markets. The aim here is to identify an area that already has access to a market (even just a road) and to build agricultural capability along that corridor by investing in irrigation, technical expertise, services to farmers and so on.
Thirdly, I urged the Bank to encourage governments in developing countries to adopt policies to stimulate agricultural growth. A good example of way all parties can benefit was the development of SABMiller's sorghum-based Eagle lager in Uganda. By substituting locally grown sorghum for imported materials, we were able to offer a guaranteed market to Ugandan farmers. Recognising the economic benefits, the government introduced excise breaks to bring down the price to consumers. The result has been an affordable alternative to informal, home brewed beer, more sales for the business and higher revenues for the government.
Lastly I pointed out some of the impediments to widespread local sourcing in developing countries - problems such as poor infrastructure, weak property rights and lack of agricultural know-how, all of which could benefit from World Bank investment.
Others in the meeting made similar points, and it was gratifying to see Bob Zoellick taking them on board. SABMiller has unique and valuable experience at the interface between business and society and we'll continue contributing to high-level decisions by the World Bank and others at every opportunity.