Oireachtas Joint and Select Committees
Wednesday, 29 May 2013
Joint Oireachtas Committee on Foreign Affairs and Trade
Sustainable Economic Growth in Africa: Discussion with Traidlinks
3:35 pm
Mr. Paddy Maguinness:
TradeMark East Africa got its money from large donors driven by the British Government, which wants to help integrate the economies of east Africa. Other donors have also come on board. TradeMark East Africa has amassed a significant pool of money. If one looks underneath its skin one can see that it is managed by KPMG. There is a trend for large donors to move away from NGOs and international organisations and towards the private sector for possible solutions. TradeMark East Africa works hand in glove with the State. It operates inside the revenue authorities and assists with revenue collection and custom duties. It has a good philosophy, which is worth examining. It focuses on capacity-building by the state but is motivated by profit. It sort of says, "If you do this right, you will get money into your exchequer and be able to pay for services." That is the mentality that TradeMark East Africa has adopted in order to deal with problems. That is its thrust.
Education is key. We have a lot of knowledge on education and have many links with different places. We work with the food technology section at Makerere University in Kampala. Truthfully, it is not even close to where Teagasc and Traidlinks are here. Members will have read the note at the end of my submission. We need structural links at that level but it is not just Traidlinks that should be trying to achieve this. Teagasc and Bord Bia should talk to their counterparts in these countries. That is what I mean by strategic engagement, and Traidlinks has done its bit.
A person from the Uganda Export Promotion Board and one from the Uganda Investment Authority attended a course by International Development Ireland, IDI, on exporting. The IDI is an IDA spin-off. It is a private consultancy company and runs courses on exporting for developing countries. The Irish embassy in Kampala city said it would fund the attendance of one person if we could fund the other person, and that is what we did. To me, such courses are only dealing with the tip of the iceberg, and we need a much more structured approach. We need deliberations to flesh these strategies out. It is fine to include it in the White Paper, which can act as the skeleton, but we must put meat on the bones.
We have a link with the Smurfit Business School. Professor Damien McLoughlin, head of international marketing at Smurfit Business School, designed our market link programme with us and provided guidance on how to build the programme. The school helped us develop the programme and is still open to helping us. Irish institutions have shown great goodwill towards these initiatives.
Smurfit has helped us to develop that and are still open to it. I must acknowledge the goodwill of institutions in Ireland towards these kinds of initiative. They bend over backwards to help. We have had many Irish private sector companies come to look at what we are doing and they have all paid their own way. We pay nothing. They pay their air fares, hotel bills and everything else. Someone from one company alone has spent perhaps €50,000 on travel to Uganda to go down and help. He has no significant business interest there but feels he has a great deal of knowledge to impart. Knowledge is key. As set out in my recommendations, a new Africa agricultural alliance network is trying to get off the ground in Dublin. It is being spearheaded by Self Help Africa, a very interesting NGO in Ireland. It is trying to create a knowledge-sharing network.
The issue of oil and gas industries was raised. I have had a long career in development having worked for Concern for almost 30 years and have quite a sceptical view of extractive industries myself. Their track record in Africa has been very spotty to say the least. Traidlinks spent the first six months dealing with the corporate social responsibility staff in Tullow Oil and we indicated that we wanted to move away from that. We do not want this to be a charitable engagement. We look at this simply as a core business issue. The company is operating in a landlocked country and if it wishes to export billions of barrels of oil, it must build a pipeline across some of the most inhospitable territory in Africa. That may be from Uganda to Mombasa, or whichever port is decided on. Forget about philanthropy; this is about business interest. Is it cheaper to buy a banana from the local corner shop or to import it from Brazil? I spoke to a brewing company in Kampala which spent $15,000 to fly a welder from South Africa to fix a pipe. It took him an hour. No one locally had a certificate from Lloyds to carry out the weld. It is a practical issue. Investing in the vocational training of Africans is not only the right thing to do, it is the smart thing to do. One would be stupid to do otherwise. One thing I have noted about the oil companies is that they are not stupid.
There is a genuine attempt to do this which is why we have chosen to engage. We will not be hurlers on the ditch in this particular game. We have our vision, ethics, mission and morality as an organisation and we will engage with these companies. We reserve all our rights given the nature of who we are to point out where things are going wrong. I have pointed out to companies building clinics and maternity centres that they are building something completely unsustainable. Who is going to sustain those facilities when the company has left? It is better to give a contract to local farmers for the food being eaten in camps and to pay a premium to allow them to build the clinic. We are very businesslike in Traidlinks and work with supply chain people in oil companies rather than with the corporate social responsibility people. We are not looking for a cheque. It is not about that. Our relationship with Tullow Oil is contractual. We built and are running an enterprise centre, the capital costs of which Tullow Oil funded. It pays us a fee to run the centre. This is not Tullow Oil saying it thought this was a good idea and would give Traidlinks money to do something nice. This fits into its strategy as an oil company. I take Deputy Byrne's point. While he is right to be sceptical and to ask the hard questions, our experience thus far has been that there is a real intent to do this and we are going along on the journey.
I was asked if we had picked the wrong products, etc., for the heart of Africa. While some of these things are fine, there are structural issues to consider. Some of the things we have been trying to do have been too small and the scale must be increased. They need processing plants and the ability to add value in Africa, which is where the private sector can help. It can get in at strategic level to make a significant investment. It is happening. Glanbia has invested €180 million in west Africa. People said to me initially "Shock, horror, they are taking milk powder to west Africa". While it would have been a horror story a few years ago, Glanbia is taking the milk powder in, selling it and building myriad businesses off the back of it, which are all indigenous to Nigeria. They are making yogurts, creams and products for bakeries. Consequently, a dairy industry is being formed in Nigeria as there is now a market for Nigeria milk. Tastes are changing. There is a middle class and people like yogurt and cream. There can be win-win situations. The bigger guys like the Irish Dairy Board and Glanbia understand Africa. They do not need a Traidlinks to tell them what to do there. They are very strategic, business-oriented people who know what they are about. We see an opportunity for smaller Irish companies to get engaged and we can help them to do that.
Deputy Neville referred to management skills, which are absolutely necessary. It is why I say "Too many entrepreneurs, not enough managers". More managers are required in Africa. The issue is to build skills at an institutional level albeit it is not about taking Africa to where we are now. There is no point in taking the example of large company like Keelings, which can grow fruit by the hectare with two or three workers. Africa needs the technology we had 20 or 30 years ago. The institutional development we had 20 to 30 years ago is what they need. They need an AnCO or a FÁS, though that body may be bad news here. They need those kinds of institutions. These were the building blocks that built our economy and we should interface with Africans on the basis of what we have learned as a nation. Those are the kind of things they should be doing rather than to try to copy what we are doing now. What we are doing now is not the answer in all instances and they should be looking at the steps we took to get here. Glanbia started with 15 people in a room who formed a co-operative and is now the largest food and nutrients company in the world.