Empowering the poor to benefit from global value chains

How can value chains work for the poor? That was the question tackled by participants at a high-level round table at the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Forum on 15 October, which was moderated by Arancha González, Executive Director of the International Trade Centre.

Opening the round table, UNCTAD Deputy Secretary-General Petko Draganov said that more opportunities must be created for women and that more needs to be done to integrate small and medium-sized enterprises (SMEs) into global value chains.

Framing the context for the discussion, Ms. González said that making value chains work is a joint endeavour to eradicate poverty, which is particularly important in defining the goals of the post-2015 development agenda.

‘The importance of trade to sustainable economic development is unquestionable,’ she said. ‘The essence of the ecosystems of our countries are SMEs – different combinations but these companies combined is every nation’s largest job provider.’

‘The key is to develop the skills of local companies,’ Mr. Draganov said. ‘More proactive polices are needed to ensure greater participation in the value chains, especially for the poor and women.’

Greater participation

Mr. Draganov pointed out that in the past, global value chains have helped countries and companies connect to global markets. ‘We now need to find out how to provide greater participation for companies in developing countries, too,’ he said.

Guiseppe Lavazza, Vice President of Lavazza, the Italian coffee-roasting company, presented his group’s work in ensuring sustainability and inclusiveness in the coffee value chain. He said an estimated 20-25 million people earn a living from coffee across the world, but that up to 100 million people depend on the value chain for their livelihoods.

‘More importantly, 78-80% of coffee comes from smallholders,’ he said, ‘and it is therefore important that coffee production is sustainable. But it must also involve job security and be a source of pride.’

Laurent Serge Etoundi Ngoa, Cameroon’s Minister of SMEs, said that his country is looking at how to better integrate SMEs into global value chains. ‘This is a priority, but it is a big challenge for us,’ Mr. Ngoa said.

‘We are continuing to support SMEs and create partnerships for them, with a view to link them to bigger companies. In terms of infrastructure, we have a need for local knowledge and skills. We need to acquire skills to enter the global value chains with hope and optimism,’ he added.

Creating value for society and for business

The audience also heard from David Norman of SABMiller, the second-largest brewer in the world, who said that his company – despite being global – is also a local company. ‘Beer is a heavy business and as such, our suppliers and customers are mostly local,’ Mr. Norman said. ‘Sustainability works because it creates value for society, but also for the business.’

Mr. Norman stressed that for SABMiller, the greening of the value chain is central to all its operations. ‘We buy from tens of thousands of smallholders, and it is here we are able to help the greening of the value chain. In Uganda, Eagle Beer is brewed from sorghum, which is a sustainable and local crop.’

‘As a multinational company, you have to think beyond your value chain,’ Mr. Norman said. ‘We share water with the local community, which needs water more than we do. We are working with local communities to ensure that we both can benefit from the local water.’

During the round-table debate, participants also focused on how design and architecture – through micro-financing and skill building – can play an important role in the value chain.

Speakers were also in agreement on the important role played by SMEs in making the value chain work for the poor. Susanne Dorasil, Head of Economic Policy at Germany’s BMZ, said that SMEs form the core element of job creation. She stressed that more support must be provided to SMEs to allow them to run their businesses in a better way, for example, by ensuring that pay cheques from procurement contracts do not arrive late.

‘Most of all,’ Ms. Dorasil said, ‘to ensure inclusiveness, we have to show that you can make money and still serve development.’

Check out the photo album of the session on Flickr.