Sunday, May 4, 2008

Service Revolution; the future of Africa and Global Sullivan summit

By Bernard Kihiyo

I have to acknowledge I started to have interest on what is Global Sullivan summit just because there are a lot about it in Tanzania media as this year summit viii will be held in our country this coming June 2nd to 6th.2008 in Arusha.

One of the very key goals of Sullivan Summits is to bring together the world’s political and business leaders, delegates representing national and international civil and multinational organizations, and members of academic institutions in order to focus attention and resources on Africa’s economic and social development

The other motive to this summit is the belief that the development of Africa is a matter of global partnerships that Africa’s Diaspora and Friends of Africa are active participants in Africa’s development.

I have been excited on the way founding member such Afro American - Rev Leon Sullivan devoted his life to the well being of others. On establishing this organization they set global Sullivan principle of social responsibility to the corporate world, aimed at improving human rights social justice and economic fairness in the conduct of doing business.

I’m quite excited and have the passion to see African are starting to draw a picture of Africa in twenty, thirty, years to come, it is know we can start thinking of what changes to be expected, which direction to take, what kind of investments are required and what approach to be taken to acquire the intended goal of developing the continent and its people.

I hope no one would like to see Africa with irresponsible business, who are robbing peoples’ abilities to live their dreams by selling substandard products and poor services unless your are benefiting out of this unethical business approach.

Currently the world is in a new economic era which has force to the removal of countries’ trade barrier and companies now are operating beyond borders, through this there is intensification of international competition, in order for companies to survive they require greater efficiency and cost saving, technological improvement, new manufacturing technique and strict control of production costs in order to survive.

During this era we have seen production shift away from the so called 1890’s to 1970’s industrialized European countries to lower cost countries in the South East Asia, the Far East and Latin America.

Companies in Europe closed factories and transfer their production activities to the emerging market of the South East Asia, the Far East and Latin America. For instance there is no businessman who can ignore the reduction in production cost for about 75% by using cheap skilled labour; for instance in China.

What are the industrialized countries like USA, UK, France, Germany and the like are doing after shifting their industries to South East Asia, the Far East and Latin America. They have shifted their effort onto Service Revolution which continues to create more jobs to the citizen; tax base for their governments and the like.

For instance they invested heavily on improvement of logistics management including transport and transportation, warehousing, state-of-the-art shopping centres, state-of-the-art telecommunication, insurance, tourism architectural, engineering, financial sector, stable power supply, a highly educated workforce, a technology and supporting infrastructure.

What remained in terms of industrial production in these former industrialized countries have been in the area of the high-tech goods; such as military equipment, high-tech industrial machines, and telecommunication devises.

In the so called Service Revolution, the trick part of it is to make sure that consumers are getting their goods and services at their maximum satisfaction no matter where they come from. These countries invested so much onto economic infrastructure.

They are very strict on adherence of companies on product and service, good record keeping for traceability, quality management principles as per standards set by International Standard Organization (ISO), CODEX Alimentarius Commission through their local standards agencies and consumers associations.

Others efforts; done by these countries are to; invest heavily on the quality of labour who can give excellent customer service, service providers are trained to be keen to the concept of consumerism, governments of these countries have established excellent policies that allow business and consumers to enjoy the benefits of globalized economy.

For instance; textile goods from China made for UK standards are shipped from China to UK and are becoming more than 60% cheaper compared if the same could be produced in UK. Then with improved logistics infrastructure and automated warehouse management operating under the principle of Just-In-Time (JIT) are filling the gaps of time to be wasted on inbound and outbound logistics.

In the so called Service Revolution; there must be transformation of the way business treat customers; the role of consumer has to be changed from one of human cash dispenser into essential element for the existence of business companies.

This is not possible if companies do not work to win the home game first; customers are the business, it is their demand that drives the whole concept of supply chain, so finding out what customers value and then delivering it is critical, it is only the movement to consumers needs and interest that add the ultimate value, smooth continuous flow of business to the adhered company.

Such a transformation has far reaching effect on the provision of goods and services to the customers, so that the servicing of the requirement of customers is now at the heart of market philosophy in all sector of the economy. This concept has easily transferred to the provision of quality of service that will lead to business and these countries’ economies to prosper.

Deliberate effort must be in place to protect the interests of consumers and promote competition wherever possible to drive prices and improve quality and quantity of goods and services to ensure that businesses, local communities and consumers benefit.

On the matter of fact; the structure of Foreign Direct Investment (FDI) has shifted towards services. In the early 1970s, this sector accounted for only one-quarter of the world FDI stock; in 1990 this share was less than one-half; and by 2002, it had risen to about 60% or an estimated $4 trillion.

Over the same period, the share of the primary sector in world FDI stock declined, from 9% to 6%, and that of manufacturing fell even more, from 42% to 34%. On average, services accounted for two-thirds of total FDI inflows during 2001-2002, valued at some $500 billion.
(Source; UNCTAD; World Investment Report; 2004- The Shift towards Services - Overview)

Middle East countries are now expanding their economies through international trade and many are diversify their economies away from industrial production and invest in infrastructure and service provision to plug into the world competitive market. ‘’If these countries ahead of us are flexible enough to the wind of globalization; who are we not to start the move?’’

Africa requires a serious approach to start Service Revolution for the betterment of our economies and consumers at large. In the meantime we are having a lesser-fair approach on issues and remove all barriers to creative thinking like;- it wont work, we don’t have capital, why change, we cant get there, we are better off, twenty/thirty years to come is very far away from now etc.

We have to start change our mind-set toward the way we perceive globalized economy for instance the old fashioned colonial motto like agriculture is the back born of our economy. I do agree; but we should not be too rigid to involve ourselves on activities which we are not good at; especially into this new economic era; we need to begin thinking about combination and right mix strategies to consolidate our position in this new world economy.

I believe African governments, donors community, businesses and other key allies are working together now; more than ever- as part of the solution rather than the problem; if all these are present; it can be done let us marshal our efforts and start to act now, or rather our future and our economic position in this globalized economy will be ever black.

If you want to participate on Sullivan Summit register yourself online follow this link

The Author is
Executive Director
Tanzania Consumer Advocacy Society

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