Trade vs Aid

This past week I had the pleasure of attending the Social Innovation @ Ivey forum. One of the speakers was Oliberte's founder, Tal Dehtiar. He spoke very passionately how development driven by the middle class. This is done by generating jobs which does not happen with aid but instead by trade and specifically manufacturing. His company produces high quality leather shoes which are made, in the truest definition of the word, in Africa.

Currently he indirectly employs 300 people, approximately half of which are women in the factories which source him in Africa. The gender split is 50-50 all the was up from manufacturing to junior management and office jobs. In his long term plan the goal is to employ a million people, and jointly own all his factories with the employees who work there. Currently he does not own the factories and they are just under contract with him, so he only has limited control over working conditions. As his operations grow he is able to have more and more influence in ensuring better working conditions.

He was one of the keynote speakers at the conference focusing around social business. He objected with the term "social business / enterprise" however. In his opinion, and I agree with him, it is a ridiculous term in the fact that companies who maybe are not employing people in Africa, but have provided good stable jobs to Canadian families are not considered social businesses. In the Walmart, Monsanto, and Lehman Brothers' era perhaps we have stigmatized business as a horrible evil. However, the fact still remains that it is good business sense to treat people well, that includes your: employees, customers, business partners, suppliers, etc.

I took a business law course last year, and when we were talking about contracts he told a story of a company he had been hired by, who came out of a meeting happy that they had got a great deal. They had screwed over their supplier and gotten a very low price for the product. My prof asked his client what would happen to his supplier in a year or two under that contract. His client paused and then said that there was no way he would be able to keep doing business selling at that price and would likely go bankrupt. I think that was a moment of realization for his client. A truly "good" deal builds a long lasting mutual beneficial relationship which ensures the longterm prosperity for everyone involved. It does not help if you supplier goes bankrupt in 6 months and your need to find a new one.

The same way the term social business or fair trade is ridiculous because every business should be treating people with respect and integrity. Unfortunately that is not the case for all businesses. Hopefully through better information sharing and communications customers will be able to determine which companies are truly treating their employees, suppliers and customers with respect and they will be able to vote with their wallets. Currently there are still great people and great companies doing amazing things, and their numbers are only going to grow in the future.

Cheers,
Michael