Partnership Program Brings More Latin American SMEs into Corporate Supply Chains

Partnership Program Brings More Latin American SMEs into Corporate Supply Chains

reduction strategies. A partnership between the Netherlands' development organization SNV and the WBCSD aims at helping companies in Central America and the Andean regions do more "pro-poor business," especially bringing SMEs into their supply chains.

Dung Van Anh works on a Lafarge project aiming to bring small and medium enterprises (SMEs) in China into their supply chain. Dung is of Chinese descent, was raised in Vietnam, and is now working in his ancestral homeland.

Robert de Jongh runs the Latin American operations of the Netherlands development organization SNV. He was born in Brazil and grew up in the United States. He has helped Pronaca, a large Ecuadorian company and member of the WBCSD's Regional Network partner in Ecuador, recruit a collection of small corn producers to supply corn as feed for the chickens the company is raising. Prior to the linkage, the farmers were earning less than US$ 2 a day, while Pronaca was faced with fluctuating corn prices and an unstable supply.

SNV acted as an "honest broker” between the diverse stakeholders to create links between the farmers, local and national governments and Pronaca. The resulting deal produced a stable and lower-cost supply of feed for Pronaca and a 50% increase in income for the farmers, taking them taking them out of the poverty bracket.

These tales of global deals told by globalized protagonists in a meeting room in Beijing reflect the reality of the WBCSD’s relatively new Development Focus Area. This area evolved out of the Sustainable Livelihoods working group - companies trying to do business with the poor in ways that benefit the poor and benefit the companies' financial bottom lines.

Many companies have tried various projects in the developing world, generating dozens of case studies. They have worked with local and international non-governmental organizations (NGOs) and other partners to reach new markets. Many of these efforts have run into adverse framework conditions, such as poor legal, judicial and credit systems, and poor infrastructure.

Thus widening the scope of the work to development in general was logical. Trying to do business at the "base of the economic pyramid" has brought many companies up against the daily challenges that this effort presents. It is encouraging these companies to take a stand for better business environments that support development, and thus become advocates for sustainable development in poor countries.

In calling upon governments in the developing world to improve framework conditions, many focus area members have realized they also want to urge these same governments to be more serious in completing the current Doha round of trade talks.

The round began in 2001, and in 2002 three former WBCSD chairmen -- Chad Holliday, Stephan Schmidheiny and Phil Watts -- wrote in their book Walking the Talk: "We in the WBCSD are a group of business people who feel we have a duty to speak frankly about the need to build a better global market to offer as much opportunity as possible to as many people as possible. This market should be largely 'free’ of entangling rules which could diminish its usefulness as a tool for human development."

In calling on governments to honor their commitment to the Doha agenda that they had all signed, the three added:

"Trade liberalization carries a number of benefits. It encourages productivity and efficiency gains from specialization, helps build economies of scale, spurs efficiency from increased competition and lowers the costs of production—benefits which are passed on to consumers and shareholders in the form of lower prices and higher profits. In addition, liberalization favors trade creation, boosting employment and investment, increasing consumer choice and encouraging the spread of knowledge, technology, and best practice."

Encouraged by the council’s previous work on trade and a push from the World Trade Organization and the development NGO Oxfam, the Development group decided in Beijing to issue its own call for a successful completion of the Doha round.

Also in Beijing, Robert de Jongh and Björn Stigson signed an agreement between SNV and the council to hire people and establish a program to help companies in Central America and the Andean regions do more "pro-poor business,” especially bringing SMEs into their supply chains.

If this "get acquainted" agreement works, it could be replicated elsewhere. SNV has deployed over 1,000 technical experts across 30 developing countries to improve producers’ abilities to become reliable and competitive business partners, to generate jobs and income, as well as increase the quality of and access to basic services necessary for sustainable development.

De Jongh is convinced that "development in emerging markets cannot succeed without business. Conversely, business cannot succeed without an active and engaged civil society, committed to holistic solutions, and most importantly, relentlessly pursuing active partnership with business."

Focus area director Shona Grant said she believes that "this partnership is innovative in that it focuses on building bridges and linkages between parties that would not normally do business together."