Why Everyone Wins When the Private Sector Fights Poverty

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SEATTLE — Ending global poverty in all forms by 2030 is a challenging goal set by the U.N. Senator Bob Corker (R-TN), chairman of the Senate Foreign Relations Committee, recently declared that the U.S. needs to give more foreign assistance to aid the poorest people in the world.

While the U.S. is a generous donor, the country spends less than 1 percent of the federal budget on all foreign assistance and diplomacy. Corker noted, however, that private sector interests intersect with development assistance. When the private sector fights poverty, it’s an investment in global markets, costs reductions, marketing and the impoverished.

After Corker’s opening of the Foreign Relations discussion, executives from Mastercard Inc., the Coca-Cola Co. and Starbucks Coffee Co. gave testimonies on private sector engagement in development assistance. Each executive outlined investments its company has made and the benefits seen by all parties. All three executives explained that if businesses want to grow its market, then these companies should logically help with development.

The Coca-Cola Co. vice president of international government relations and public affairs Michael Goltzman stated that 80 percent of the company’s sales come from outside the U.S. Foreign production plants provide all of the ingredients and raw materials used to make this soda. It then makes sense for the Coca-Cola Co. to invest in farming education, entrepreneurship, education, health and infrastructure.

Coca-Cola started Project Unnati in 2011, teaching fruit farmers better ways to plant and care for fruit trees. This helps lift farmers out of poverty, as they have better crop yields. Thus far, the initiative trained 18,000 mango farmers (including 3,300 women) and increased mango productivity by 200 percent.

Additionally, the private sector fights poverty by investing in women; the Coca-Cola Co. also started the 5by20 initiative in 2010 and the ENGINE program to support women entrepreneurs. 5by20 trains women in business skills, helps them navigate investments and offers mentorship to women interested in opening stores, distribution centers or farms. Meanwhile, ENGINE helps educate marginalized adolescent girls in Nigeria. These measures help create women who can provide for themselves and their families. However, it also expands Coca-Cola’s business and workforce.

Goltzman pointed out that when the private sector fights poverty by tackling epidemics, such as HIV/AIDs, malaria and tuberculosis, corporations benefit as well. The U.N. collected research on how HIV/AIDs costs companies money; in heavily impacted countries there is significant absenteeism due to these diseases. In Ethiopia, HIV/AIDs is responsible for 53 percent of all employee illnesses. Furthermore, in Swaziland, 25 percent of the workforce has AIDs and was expected to die within ten years. This will incur great costs in training new employees over the years and does not account for the expertise lost by the death of senior staff.

In response to these situations, the Coca-Cola Co. created Project Last Mile, which helps the U.S. government in purchasing HIV/AIDs, tuberculosis and malaria medicines. This program works with seven African countries tracking medicine distribution and marketing.

Other members of the private sector fight poverty in similar ways, as evidenced by Starbucks Coffee Co. Director of Ethical Sourcing Kelly Goodejohn testified that coffee is the world’s second most traded product and Starbucks purchases 3 percent of all the coffee grown. This creates millions of jobs and its own global economy.

Like Coca-Cola, Starbucks invests in its farmers. The company offers coffee farmers the latest in agronomics research, trains them in good farming practices and helps farmers in regions of conflict maintain their crops. Starbucks also realized that soil testing is an important part of crop productivity for coffee plants; however, it is often too expensive for farmers in developing nations. In response, Starbucks offered the service free of charge, and 13,000 farmers have had their soil tested through this program. The coffee company also had a fertilizer company create a blend that addressed the primary soil problem while advising the remaining farmers on which fertilizers would work best for the rest of the issues.

Starbucks Coffee Co. has also invested in infrastructure, such as clean water access. In one instance, an organization received a $750,000 grant providing clean water access to 25,000 people in 90 coffee-producing communities in Indonesia. Clean water is an important component of coffee production, as it’s needed to water coffee plants. Contaminated water can contaminate coffee as well.

Goltzman, of Coca-Cola, also noted that women and girls tasked with gathering water are taken away from their education and unable to contribute to the workforce. Furthermore, like epidemics, water pollution can lead to disease and cause sick days and loss of productivity. The WHO estimated that during the late 1990s, China’s economy lost $13.4 billion from water contamination illnesses. In 1991 in Peru, a cholera epidemic cost the country $1 billion to treat. This figure does not include the cost of lost work and productivity for companies. The WHO estimates that investing in clean water infrastructure as a preventative measure would have only cost $100 million.

One more example of the benefits from when the private sector fights poverty is market growth. Walt Macnee, vice chairman of Mastercard Inc., testified that when his product helps poor populations in developing nations, the brand gains respect and trust of local businesses and authorities. This is marketing for the company that fights poverty at the same time.

Several Mastercard programs partner with NGOs to give displaced populations and disaster victims digital vouchers. These can be used to buy the specific aid needed, whether it’s food, clothing or shelter. Mastercard noted many benefits for the NGOs: purchase tracking, remote management in areas of conflict and quicker access to money. The Brookings Institute also reported that digital vouchers reduce transaction costs, are safer to use than cash and are more likely to be used by victims as opposed to in-kind food donations. The Brookings Institute pushes for the use of digital vouchers in food aid reform.

Mastercard Inc. also grows its market by investing in farmers. The program, 2KUZE, connects farmers, agents, buyers and banks by providing mobile banking and payment services. Launched this year in East Africa, the program utilizes Mastercard products while helping businesses in developing nations.

The theme in these testimonies was that ending global poverty is a large, yet possible, endeavor. Macnee noted that for the private sector to invest in development aid, it needs the incentive of business growth. The desire to do good is there, but companies need an extra push. Fortunately, these testimonies show that when the private sector fights poverty, everyone wins.

Mary Katherine Crowley

Photo: Flickr

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About Author

Mary Crowley

Mary lives in Shortsville, NY. She has a degree in Medical Journalism and Mary’s other academic interests have gravitated toward pathophysiology, local social issues, and creative fiction. Mary is currently working on a collection of short stories and vignettes for publication. Each piece tells the story of a woman working through pain or injustice that is uniquely suffered by women.

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