London Debate Abridged Transcript

The debate was held in London's Foreign and Commonwealth Office. It opened with introductions from Michael Elliott of TIME Magazine, Richard Quest of CNN and Dr. Kurt Hoffman of the Shell Foundation.

Michael Elliott: This is the third of the programmes like this we've done. We did one in Singapore back in February, and we did one in Beijing in May. I'll be moderating the session today with Richard Quest from CNN, who I think I can honestly say is a man who needs no introduction. Richard is one of the key anchors at CNN of course, flying from here to LA to New York, all over the world, anchoring many of CNN's exciting programmes.

To get it started, I would like to introduce Dr Kurt Hoffman, the Director of the Shell Foundation, our partners in this venture

Dr. Kurt Hoffman: Can I add my thanks to the hosts Time and Fortune and CNN and of course Shell for bringing us all together. I know my Shell colleagues are very delighted and honoured to be part of this. I'm delighted to be here and to be your first speaker this morning and host for the event. Principal Voices has so far has talked about the environment, innovation in business and will be addressing transport and sustainable transport issues in Mexico in November.

The discussion today is about international economic development. It's taking place in London and it's very fitting that we are meeting here because as you know, next week in New York at the UN General Assembly which will be attended by heads of states the issue of international economic development will be right on top of the agenda, in large part because of the discussions that have taken place here in London generated by international discussions about making poverty history as I'm sure everybody's heard about, and the public meetings of groups like the UK commission for Africa. So having debates, being in London about the issue of international economic development is very fitting.

The Shell Foundation of which I'm the director is a UK registered charity. We are actively engaged on a daily basis trying to tackle issues of international economic development, trying to think through new ways of addressing the desires of those two billion people or so who live under less than $2 a day to escape poverty and to consume more. It's a big challenge, one we are approaching in a way that's probably unique for a corporate foundation or a charitable foundation. We're trying to think through ways to help society harness business assets, the intangible assets of business- knowledge, networks, the creative enthusiasm of business people and get them to be deployed to generate social value that can be harnessed to support the efforts of these two billion people that are trying to escape poverty.

So that's what we're trying to do, it's a different way of approaching it and I hope to maybe throw in a few comments about our experiences later in the morning. It's a tough issue, we've had some successes and some failures, it's because of the failures that I'm delighted to sit down and listen to our panel offer us their insights and inspirations on how to tackle what is really a very difficult issue, so again thank you all for coming. Thanks again to Time and Fortune and CNN and Shell for bringing us all together and we look forward to hearing your voices. Thanks very much.

Michael Elliott: On my immediate right is Dr Solomon Ayalew, an Ethiopian with an extensive background in particularly health and economic issues, who has worked with governments all over Africa, worked with the World Bank and with other international institutions, now based in Sweden and I believe writing a book on Africa's recent history and we'll be hearing from Dr. Ayalew very shortly.

Richard Quest: We also have on our panel Lars Rebien Sørensen who is over on our far right, the Chief Executive of Novo Nordisk, one of Europe's leading bio-industrialists, a man with a mission. As he has said, his greatest wish is to see a cure for diabetes in his lifetime.

Michael Elliott: Robert Annibale on the far left is Citigroup's global director of micro-finance and what a fascinating title that is and what an indication it is that global finance institutions are changing their agenda to encompass many of the key issues of international development.

Richard Quest: Any of us who have travelled will know that the one phenomenon common to developing and developed world are mobile phones. Robert Conway is Chief Executive Officer of the GSM Association, and he will no doubt tell us why mobile telephony is a source of good not evil in our world.

Michael Elliott: So let's start with Dr. Ayalew. What are the things that really bother you when you, as a health economist, look at the developing world?

Solomon Ayalew: Most problems in developing countries are poverty related. What does it mean? For instance in sub-Saharan Africa, a large number of people live under $1 a day. This is extreme poverty. In terms of living conditions what does it mean? People drink contaminated water. Diarrhoea and diseases and famine are widespread, there are food shortages and disease-related problems regarding nutrition.

So these problems are largely communicable and preventable and the strategy in developing countries should be to prevent and to promote health. And you can't prevent all diseases so you need to have some curative care. But on the other hand, the strategy in developing countries is the opposite. They spend a lot of resources on curative care and very little on prevention and promotion. So this is what we have been trying to do, change this structure, spend more on prevention, spend more on promotion.

Michael Elliott: And do you think that you're being successful in getting people to change their mindset in terms of the amount of attention they pay to prevention on the one hand and curative on the other?

Solomon Ayalew: It's a big problem. I'll tell you why. Most of the health conditions of rural people are very different from the health conditions of urban people. The health conditions of the urban people and the elite is very similar with the health problems of developed countries. So the urban population and the politicians are after hospital care, curative care. Most of their diseases are chronic diseases. So we're fighting the most powerful people. On the other hand the rural people, most of their problems are contaminated water, more safe water and better nutrition, but they have no voices. But within these problems we do our best and once in a while we succeed.

Richard Quest: The question of health care and heath, the provision of health care and health services, Lars Sørensen if you don't know something about this we're in deep trouble. You're the CEO of Novo Nordisk with your Master's Degree.......although Master's Degree in Forestry doesn't necessary lend itself to giving us confidence in that regard. But what role do you see that you can play?

Lars Sørensen: Well first of all, forestry is a long-term business so perhaps this gives me a background of looking for sustainable solutions.

I wanted to focus on two aspects. The first is the very, very difficult problem of what is the role of private companies, in my case an international pharmaceutical company, in the whole question of access to health. It's a very, very big question. The second question that I thought I'd like to also bring forward is the balance between the focus on communicable diseases versus non-communicable diseases and it's quite interesting to me to listen to my colleague's introduction because actually he pin-points the two main problems.

Access to health is primarily driven by poverty - or rather lack of access to health is primarily driven by poverty. If the world were like Denmark where I come from, the business of business would be business. But the world is not like Denmark, the world does not have a well-developed public sector, the world does not have well developed international solidarity where there's equity distributed. As a consequence, as actors on the global scene, private companies like ourselves will often find ourselves in situations where we have to take upon ourselves roles for which we have really no legitimacy. In our own case, we'd noticed the escalating proportion of people in developing countries that are developing diabetes. There's believed to be 5 times more people with diabetes than with AIDS in developing countries. And you die from diabetes if it's not treated. You die slowly, you lose your legs, you lose your eyesight, you lose your kidneys, you become dependant on your family and the whole family becomes dependant on diabetes.

My own personal involvement in this stems from the very unfortunate situation where the pharmaceutical industry was in a legal dispute with Nelson Mandela in the state of South Africa on access to Aids medicine. Through that I realised that each of us had a responsibility to do what we could within the areas that we had means to do something, and in our case it's diabetes.

If we look at communicable disease and non-communicable disease, a very difficult problem is how do we bring these two worlds together, that we have a need to look at infections diseases, we have a need to look at hygiene. But we also have a need to prevent the development of cardio-vascular disease, stroke and diabetes and so we need to bring in a way to help the developing countries leap-frog the evolution that our societies took where we developed the health care system which we are now struggling with to have to reach it from catastrophic emergency care to prevention.

Richard Quest: Isn't the problem though, when it really comes down to the core of what you started of when you said of course, it is the poorest countries and the poorest people that most need your products and your services and they are least able to pay? And that's the big problem.

Lars Sørensen: In the case of diabetes, the big problem to me is that the medication is very affordable. We're not talking about $6-10 thousand per year for treatment. We're talking about $1 a day is or less than a dollar a day I know is a lot because that's what you have to live from. But comparing to the medical costs of some other infectious diseases, the costs are very small. So in the area of diabetes, there is a funding problem, but there's foremost the knowledge problem and the capacity problem.

Richard Quest: We'll talk more about funding problems and of course those issues in a moment.

Michael Elliott: This is a wonderful segue into talking about micro-finance because we've already established that there isn't a very clear relationship between questions of health and questions of poverty. And we've got on the table already as a key challenge of economic development, addressing the problems of those who live on $1 a day. Robert Annibale, one does not automatically assume the largest financial institution in the world to be intimately involved in micro-finance and you are the head of an institution that does just that. Tell us why Citigroup regards this as an interesting business , and tell us what you do?

Robert Annibale: Maybe it is appropriate that the largest financial institution operating in a hundred countries should be aware and demonstrate that there is this enormous majority in many of the countries that we operate in, or that we visit, or work in, that are not providing financial institutions to the majority of the people in that country. They simply do not have access to basic savings, credits, insurance products and we take that for granted that in most of the countries that we come from in this room that almost everyone has access to some choice to financial services right down to your postal saving's bank if that's where you want to start with.

And micro-finance is really about those people who have been missed by the banking system, who have not been touched and that's a very large number of people and we operate in many of those countries. For many years, we've looked at micro-finance philanthropically and we continue to do so through our foundation, it's a big effort, building capacity of institutions that were specialised in reaching these populations. And what we've really realised is that there are some excellent models and institutions that are reaching the very poor, and that the poor pay too much for what they get and they get too little, too little choice and that they also repay a staggering levels of interest, that puts to shame many of the best portfolios that you'd have in the US or in Europe

And so we've spent time now really trying to understand how do we extend the reach of financial services to many, many more people and we're largely doing that through micro-finance institutions. Some of you would have heard of groups like Grameen Bank for example, where millions of women in Bangladesh today receive financial services of both savings and credits and have a staggeringly high repayment history. It is developed institutions that can reach the very poorest and deliver appropriate financial products to those. So we've decided to put really our business behind this as well as what we've done philanthropically.

Michael Elliott: Micro-finance as a concept has been around the world, but it seems to me people don't really have a sense of exactly how micro micro is. What is a typical one?

Robert Annibale: Well we work with a group in Chennai in India, Working Women's Forum where are average loans might be forty dollars and that is, when you want to do thousands of loans of forty dollars then you create small groups that are borrowing groups as individuals who are co-guaranteeing each other and you want to provide them with the service it takes. It means that those groups get visited by a relationship officer, accounts manager weekly in some of the cases.

Richard Quest: Now we have one relatively large target in the drug company with us to talk about sustainable development. We have another one the role of the cellular GSM and mobile telephony and its ability to promote growth in the most under privileged, under developed part of the world. What role can that play? Robert Conway is from the GSM association and in many ways the sheer number of phones and use of technology answers the question that it has a role to play, so it does. The question is, how far can it play?

Robert Conway: Let me start of by saying that the GSM Association is not a household word in this world. I'm sure if I ask the people out here what the GSM Association, they might just associate it with GSM but not know exactly what. We represent some 700 GSM operators around the world. Now when you look in the emerging markets, there are every operator in those countries and they are the leading lights in terms of the major companies offering those countries and obviously from a financial standpoint they're leaders of both financially and technically in what they're doing. But we represent the eco-system within the industry. What does that mean? It represents not only these operators but over a 150 suppliers so the Nokias and the Motorolas for example are within the association. But in turn it's looking at driving value within the industry as a totality so we look at how we can benefit the customer how do we drive value for the vendor community, how do we benefit the operators. At the end of the day we cant let out obviously governments because that's a huge part of that eco-system that we need to look at.

Now at the end of this month, it wont be the perfect signs, we will announce that in Singapore we will have hit 1.5 billion GSM subscribers. Now that number is mind-boggling and we do think about that, there's this enormous advancements that we have made but guess what other figures are there. There are 4 billion people on this planet who have no access to communications, have never made a phone call. They are the unconnected.

Our issue is, how do we take what in essence, if I look at it from a business stand point, these are potential customers. The other part of this is interesting, guess what? Nearly 75 to 80% of them are covered by a mobile system. Now there's a cute story of a guy climbing up to a tree and putting a tent in the tree just to improve his coverage. But the fact of the matter is, 70-85%of those people are covered by a mobile communications system. Now, looking at it from a business perspective, what have we got? Four million potential customers, we've got network capabilities, how do we create an eco system to address with these folks and create an economic sustainable win-win cycle. Because you well know you can go in and do massive airlifts, you can do massive administration, massive infrastructure and that's great. Our issue is how do we do something that is simple and sustainable for which those in the value chain will say yea, this makes sense. Now we know something else, because we all know this, we all like the mobile phone, I presume all of you have one here. By the way I begin most conferences, I begin by saying ladies and gentlemen, please turn on your mobile phones!

So I think what's important though to understand, in the emerging markets not surprising to you, people want a mobile phone. Not surprising people want to use a mobile phone. And guess what's most surprising is that people actually innovate in how they use the phone. The ways people use a phone in emerging markets will surprise us in the way that they create economic and social values in the use of those phones but it is enormous in how we do that. And so from the standpoint of that, we know that we can hit a sweet spark from that standpoint. There's one other thing, do you need to read to use the phone? No. A phone has two buttons that are important, a green button and a red button, right? Green make a call send it, red stop it. Do you need to read a manual? No. In fact what we find is some of these folks are getting a phone and all they need to do is have voice capability and you're in business. And so we need to connect up some of those elements. One other point that's very important - we discovered that if we reduced the price of a handset by twenty US dollars, you increase its affordability in these markets by more than 43% according to Lehman Brothers. Now that's an important element to us because that drove us to something we did, maybe I should talk about that in a minute, in terms of initiative we launched, but to set the agenda here of an opportunity that we believe gave us an opportunity to create an economic cycle here.

Richard Quest: Right but I don't want to seem surreal. On this side of the panel, we're talking about clean water and people living on a dollar a day and you're busy reducing the price by 20 dollars on a handset. Is there a disconnect here?

Robert Conway: I'll give you an example of something. A lady gets a phone, her husband by the way worked in a, this was in Rwanda, her husband worked in a place where he was able to scrape together enough money to buy, in this case a used handset by the way. I call her the fish lady and basically what she did, she would fish, catch the fish, leave them in the pond and alive but caught. She takes the phone and she'd make her phone call to a maximum one dollar and 90 cents a month, that's all, one dollar 90 cents. But through those phone calls she was timing getting the fish to a market alive to a customer who bought at the other end. That is a classic case of where getting that phone into the hands of that person started an economic cycle. Normally she suffered because she couldn't get it to the market in time.

Richard Quest:I wont beat him up yet, we'll save you for later. Like the fish that won't go off!

Michael Elliott: Let me come back to you Dr. Ayalew because you started us off here by reminding us of how many people live on a dollar a day or less and of the health needs of the billions of people who live and die of poverty and you've been followed by three distinguished business leaders talking about healthcare, talking about micro-finance, talking about mobile telephony. I just want you to kind of sit back a little and tell us, when you hear business leaders talk enthusiastically about doing well while doing good and business opportunities in poor regions of the world which at the same time increase the live chances of poor people. Does it ring true? Do you think that there is a massive opportunity here for the private sector to really help people improve their life chances, improve health or is this stuff that you've had for man,y many years and you don't see any real delivery?

Solomon Ayalew: In my introduction I have said most diseases are poverty related and the solutions are improvement to living conditions. Micro-financing is one way of improving living conditions in rural areas. One of the problems of poverty and health is illiteracy. Preventing diseases means hygiene and for that you need education, health education and I see mobile phones as one source of information. Mobile phones are also useful for the development of agriculture. One of the problems of agriculture is that farmers are backward, technologies are backward, they need what are known as extension agents. These extension agents are expensive to train and they go around in rural areas and advise farmers when to crop, how to improve their seeds etc. But now with this technology......many farmers have the advantage of extension agents. So with this kind of technology maybe it is possible to spread technological information to farmers. So I can see some useful ideas in these ideas. Also drugs. One of the problems as you know, HIV-AIDS, there is no cure for it. But the cocktail drug for instance can sustain life. Why is it useful? If you know that HIV-AIDS effects the age between 15 and 24 most because in Africa it is mostly sexually transmitted and you find that a large number of educated people are killed by HIV-AIDS and if you can extend their lives, they will be more useful to the national economy. So I see some usefulness in what my colleagues have suggested.

Richard Quest: Truth is then, Lars, you have to be dragged kicking and screaming, you and your industry to reduce the cost of AIDS drugs. It was only after South Africa threatened to eliminate your patents that you sued the government there and an accommodation was reached. It would have been left up to you, you and your industry would be like the mobile phone companies today?

Lars Sørensen: First of all I'd like to make one point, that we don't make AIDS medicine at Novo Nordisk so I was sort of guilty by association with the sector. But I have to admit that, yea I'm not proud of the fact that the industry was not foresightful enough to see that it is not sustainable to offer drugs at $15 thousand dollars per year treatment to developing countries. That is not working and I think the industry ended up realising that. The take home we got from it was that we looked into our own area interest which is chronic disease and so that there is an equally big problem there even though the drug costs are very low as I mentioned before, less than a dollar a day. People are still dying from diabetes, they go blind from diabetes and therefore as a consequence even in those areas we also had to take initiatives ourselves, but yea I think the reputation of the pharmaceutical industry suffered and still suffers.

Michael Elliott: Robert Annibale, do you find barriers, do you find suspicion on the part of public officials? And if you do, how do you go about satisfying them that you can if you like to do well and do good at the same time?

Robert Annibale: It's interesting. We opened in India in Calcutta, the same year we opened in London in 1902. So we didn't begin going through emerging markets recently, we opened in some of Africa before we opened in France and Switzerland. So it's a long history and yet banks didn't innovate, they didn't begin the work of micro finance. We've been a long time and you can find many reasons why we've specialised in areas where we did in trade, in international finance, what not.

But it's been a long time in many of these markets and most of our staff in these countries are local nationals too, much closer to understanding the real needs and what goes on in their own economies. When I begin to do this work and they see that I'm not from our foundation, that first of all is a big surprise. That I've actually come from a banking background, a business background, reported to CEOs, that's a big surprise. Why would Citigroup want to do this? Why are you doing this? The first thing that we respond is that we haven't come into this very quickly and we don't come into it alone. We really enter working in micro finance with institutions locally that have perfected in many ways very interesting models and have built a lot of cohesiveness in local communities. Without that, you would be this enormous institution coming in without an expertise, because the major commercial banks don't really have an expertise in banking the poor, they haven't done it.

Richard Quest: Is it altruism, charity, philanthropy or good business banking?

Robert Annibale: I think its good business banking and the ability to do the right thing. Because I think what we're demonstrating and what I try to demonstrate, as a demonstration to my own colleagues, you can on a sustainable commercial basis bank low income people. We do it all over the world and in a well-regulated environment in one way if there is competition, it's even better for them. But I think that there is certainly a social level bottom line, people automatically feel it's good that you're doing this, it's important what you're doing and that's a positive motivation. But I think more important is if you want to reach scale, if you want to reach millions of people that need access to again basic financial services, an inclusion in the domestic markets, you need to show that you can do it on a commercially sustainable way. And without that, it stays at a very smaller scale that unfortunately we've seen for too long, good models, good programmes that are just not reaching the people and numbers of people that we're used to reaching when we do a simple consumer product for another segment of the market.

Michael Elliott: So scale is important in this pitch of the mobile telephony point because you would say you've developed scale and you can develop it even more and operators see poor countries as a base where they can make money?

Robert Conway: Well what's interesting is until more recently operators clearly are in all the emerging markets - and there's typically three, four or five operators in those countries. So they obviously see an opportunity. The problem though is one of the biggest barriers to penetrating further down into the economic spheres in those countries was the price of a handset. If you have a $100 handset, then you have people that only make a $150 over the course of a year or whatever it is, you are not meeting the needs.

We are matching up, by the way, on the micro finance side. We do what you call micro payments, so innovative operators for example Smart and Globe in the Philippines, they do micro payments for service at 15 cents or 10 cents and you can move it between people so if you have extra, you can buy SMS, shift it to someone else. So amazing little things that go on and that's being adopted, but the problem was the price of the handset. So what we did was we brought together 10 operators that are in emerging markets like Ericsson out of Egypt and Pakistan. We sat down with these talents and said now look, what can we do to drive the economies of scale of the GSM world, to actually bring this price of the handset down? So we identified and specified a handset, we then went to a tender process very simple, by the way from the time we decided to do this until we actually got a handset was three and a half months. We specify the handset, we got 18 handset manufacturers to respond. Motorola was picked as the winner and was announced in Cannes, France earlier this year at the 3-GSM world congress. And people were amazed, kind of like, where has this been? This phone is......unfortunately I don't have one with me, it is a very nice phone because one of the things we say is, it's not about cheapness, poor people don't want cheapness, they want quality and they want branded products.

So......we drove the price below $40. Now come back to the Lehman Brothers, we said for every $20 decrease in price it would increase affordability by 40 %. The branded phone price until that point was around the $60 mark. So we got it below $40 wholesale. Now the issue is how it comes out at the end of the way in the market place. Now there are some issues, one of them by the way the next big issue for us is taxation. The great irony, the great contradiction is governments realise they've got to stimulate their economies right, they need to get the social and economic development going on. But guess what happens? The operators, these mobile operators because they do have cash flow, they do have infrastructure, they do have the appearance of generating money, guess what? Governments tax them and tax not only the handset coming into the country, they tax the service. So what happens is, you actually create a barrier, because the phone instead of coming wholesale at $35 dollar or $25 or whatever it is, is coming in but then government puts on what could be a 50% tax or 30% tax, and so in essence, you're acting as a barrier. So that is what we're working on now.

Coming back by the way, at the end of this month we will announce results of the second tender because we realised that the first one went very well we're moving in that tender six million phones are going through that way, so its 1% of the world's market. We're now announcing at the end of this month in Singapore at the world congress there, the winner of the second tender. The price by the way has moved from $40 down to sub $30 and we will announce that winner there. Now something else has happened, we had not predicted, but we're encouraging, the value chain. What's happening is chip manufacturers who normally didn't see this market place which we call the ultra-low end segment. They didn't see that there was an opportunity. You may have seen it recently, Infineon, Texas Instruments and Phillips announced we're redirecting efforts into this marketplace because there's 4 billion people there. And they dropped the price of the chip set to $5 and the chip set represents 35% of the handset cost, figure the math, we're going to get down to $20.

Richard Quest: Alright can you see a scenario where effectively the developed world, it's not even happening, where the developed world is subsidising the developing world's mobile phones?

Robert Conway: The beauty of this one is this has no relationship per se to the developed world because the actual buying has been driven in the emerging markets. So the phones that we're dealing with are actually phones dedicated to to these emerging markets.

Richard Quest: Oh no, no, no. You can't get away with that. As we get more consolidation within the operators, as the Vodafones and the T-Mobiles start to consolidate and take over the various operators in individual countries, you rack up the prices in the high countries, lower the cost of supply in the emerging markets, boost up your revenues from one to the other. It's the same as the drug companies.

Robert Conway: Richard I hear maybe that you're a disgruntled customers in the UK and developed markets maybe... But the reality is not......we don't have a situation where they're going to be doing that. These markets exist on their own, when they make investments in those markets they have to make those markets exist on their own and they pay back in those markets.

Robert Annibale: It's just a perspective on this, and perhaps ironically on telephones, in micro-finance for example, what it has led to in certain countries like Bangladesh which have almost universal coverage in terms of your cell phone, my cell phone works everywhere virtually in Bangladesh that land lines work almost nowhere and reach very little of the country. It's become a micro-entrepreneur's business and one of the things Grameen telecom has actually done is make many, many, about tens of thousands of women buy the phone, they take a small loan to buy the phone and they set up a kiosk in their village and they become the telephone booth of the village. They become the replacement and you just skip a whole generation of telephone lines being brought in otherwise.

But they then use that phone when you pay them as by the minute for the calls they make. They also can receive calls from family members who are working in the Middle East or elsewhere as labourers or have gone off as migrant workers. And that means there is at least one way to reach someone in the village from a cell phone and they become that old operator that you'd all ring through to make an international call.

Solomon Ayalew: I would like to make two brief points. One is most projects you see, at least in sub-Saharan Africa, are very, very small in scope. They don't reach the majority of the population so we have to be aware of that. The second point I'd like to make is subsidising consumption in Africa, technical assistance in Africa, these are not sustainable. Europe and America could not continue giving subsidies to Africa. I think what should happen in the future is that the assistance should be to help Africa to help itself. How? If we see one of the biggest and serious problems for sub-Saharan Africa is that it had been specialising in raw material production, this happened in the colonial period, producer of material for the colonial country and the mother country exported manufactured goods. Now it did very well at the beginning. But we know that for the last 30 years are so, the terms of trade against the export of raw materials has been declining. So economy declines so the solution should be to have a fairer trade and assist Africa to process its agricultural exports, process coffee, process cotton, process leather and export manufactured products.

Richard Quest: We'll move on for a second...hands up....How many people in this room would willingly have let's say £ 5 or $ 5 a year surcharge on their annual phone bill if it was to provide free telephones, mobile telephones in the developing world?

Three-quarters of the room raise their hands.

Richard Quest: Alright, let me rephrase that. How many wouldn't? Why?

A dozen or so people raise their hands.

Robert Annibale: I don't think we will create a sustainable phone system in these countries if that's how it's based.

Richard Quest: You give free phones away!

Robert Annibale: There are many entrepreneurs working in Africa or in India or other countries which are demonstrating that people will pay and can pay an appropriate local cost bringing it down through all that one can, the cost of handsets, the systems, the taxation but it wont be sustainable to do with that. I don't think that's a sustainable way of reaching the large numbers of people we're trying to reach.

Michael Elliott: And is the same true for drugs?

Lars Sørensen: Well I think that when we look at the drugs sector we have to accept a responsibility in the developed part of the world because of our patent system which creates incentives for innovation in all part of the world which makes these drugs available in the developing part of the world and perhaps at preferential pricing and so in a way you could say that the developed part of the world is subsidising innovation which can then be, in a way it's somewhat like the mobile phone system, I would suggest that the technological development which is being paid by the developed part of the world is enabling mobile phones to be manufactured at a cost which makes them accessible in the future to developing countries.

So that similarity is there. But we have to accept that we will have to pay a higher price otherwise the incentives will not be there. A problem that I see in relationship to medicines for developing countries is that there are areas where we as private companies have no research because there is no market. There is no market for very widespread diseases that are primarily tropic diseases, there's no development or protocols and treatment regimes which are adapted to these environments because there's no market, nobody will pay. So there we have to have another funding mechanism, we have to have international fund created which can offer programmes that we can then bid on to develop drugs that are suited for those environments. Otherwise they won't help.

Michael Elliott: I think this is really important. So some parts of the drug universe can't work just on a normal market principle?

Lars Sørensen: No, clearly. And also it's because the margins, we've been criticised for that, of drugs that work are very high. So that means the actual cost when they go generic is relatively low, so you go from a relatively high price to a relatively low price the moment the drug becomes generic and that then offers the opportunity, that's the whole reason for having the patent system, you get a cycle of innovation going as opposed to protection. So I think the drug sector is built on that, I think we should retain that, I think it still offers some opportunities with the right policies to offers these drugs to developing countries and then they can prioritise what priorities they have vis-a-vis other parts of their poverty problems.

Michael Elliott: We got a question, a couple of questions, over the website and one of them came directly on to the last point that you made, sent from Beijing, China and it says: Can there ever be progress on third world economic development without trade liberalisation in the developed world? Is trade liberalisation a key necessity for economic development? You've got the WTO meeting in Hong Kong in December, meant to kind of include the Doha round. Do you see trade as an absolutely central change agent for economic development?

Solomon Ayalew: I see trade liberalisation in the long run to be useful but in the short run, I think it might destroy the economy of developing countries, I will explain. Trade liberalisation today means like putting two boxers in a ring, one is well trained heavy-weight boxer, the other one is untrained and in a fraction of a second the untrained person will be dead. Now the same thing could apply... say shoes for instance, almost all developing countries produce shoes leather shoes and so on. Now if you liberalise shoes from Italy it will destroy the shoes immediately....the market. Belts and so on, shirts and so on, but if you protect them, if you assist them, if you send technologies to them on credit and so on, in about 5 to 6 years, they will manage to compete on equal footing.

Richard Quest: Sounds like you want your argument both ways, doctor. You want trade liberalisation in the WTO, you want developing countries to come to the table at the Doha round and to be given trade liberalisation in some areas but not in others. I'm not saying that you can't have your cake and eat it. But which is it? You want trade liberalisation or you want protectionism?

Solomon Ayalew: I mean this concept should have phases. It's not this one or the other...

Richard Quest: We all accept that the developing world got shafted in the Uruguay round, that much I think most of us can pretty much accept. There was an unfairness as a result of that. Is that going to be redressed in the Doha round in Hong Kong do you believe?

Solomon Ayalew: I mean like Asian economies, trade liberalisation will work, but if you see the history of Asian economies, the economy of China has been protected for a long time, the economy of India has been protected for a long time, so also these tiger economies South Korea, Singapore all these countries have been protecting their economies for a long time. Now they are ready for free trade and liberalisation.

Lars Sørensen: Why not ask for liberalisation of our markets for entry on the products that can be produced in Africa? The market economy capitalism only works with some regulation and with a well-existing social infrastructure, otherwise it becomes brutality as you were talking about, the slogging match between a well trained boxer and an untrained boxer. It was really interesting for me to be part of the preparation for the Doha round, I was part of the European pharmaceutical industry association board and to see that the agricultural policies have never moved anything. The whole focus was on the pharmaceutical industry and access to drugs and here we are with the European agricultural sector which is highly subsidised where we are as consumers in Europe are paying way too high prices for sugar and all kinds of coffee and all kinds of commodities that we are using. And we should have institutions, social welfare systems that can transition workers, farmers into new sectors which are more sustainable long term than preventing products from the developing countries to enter. I can't see why we shouldn't ask for it.

Michael Elliott: Should we keep this open to these people who have been sitting down...

Robert Conway: Can I make one point, I want to draw upon elements which my colleagues have pointed to, one of them was that Lars mentioned that the wireless as kind of bridging in some ways, we've gone through a cycle of fixed...we have infrastructure, we have cable, we have all of that, in the emerging markets, you got to skip that stage at least for a time being, you got to move. One other thing is that there's a guy C.K. Prahalad who you may know as an author of a book called The Fortune at the Bottom of the Pyramid and it's about how the 4 billion for example actually are consumers and that they can provide value and basically he said the world for the emerging market is a wireless-centric world, not a PC, not a fixed world and that...And he was really talking about the... that independence then you're in a cycle of dependency and one other thing is that the phone is not a panacea, but what the phone does do is kicks off the stimulus, kicks of the cycle of economic development because again, take the fish lady, take the person in Tanzania who says now that I have a phone, I'm now in business.

Richard Quest: Alright then, if this phone is an economic stimulus, if it is so important and could play such a crucial role surely governments and world organisations should be involved in subsidising buildings and ultimately, there's a gentleman over there shaking his head, we'll come to you in just a moment. Why shouldn't, if its going to be such a petrol on the flames?

Robert Conway: I'll add one simple element that I mentioned earlier. Just take the simple element of taxation, there's a country, and I'll mention who, that gets it, they get it enormously, that's India. We spent time with India, we shared with them what we were doing on what we call the emerging market handset initiative and basically what we said to India was there was this opportunity by getting more phones in the hands of its citizens. Shri Dayanidhi Maran who is in the Ministry of Communication there fully gets it. They have lowered the taxation on mobile phones and on service and they pointedly say future for them is mobiles getting phones into the hands of people there.

Richard Quest: So you're agreeing with me. Go one stage further, give the phones away, get the government to give the phones away!

Robert Conway: I'll leave my colleagues to respond.

Robert Annibale: I only think that if we could look at that, we've done that in grants in financial terms, for other things for many years, we've given a grant rather than necessarily engage people into having their own credit and their ability to represent themselves as a viable economic person. I only think that again.....it reaches the idea of sustainability....how realistic is that. Setting the right environment where if you are subsidising landlines as a government, if you are putting subsidies into your national monopoly because that's what you control that may be a limitation, that may be a problem and certainly not over taxing. But I think the phone sector and most emerging markets should go to have demonstrated that they are very viable and that they are prolific expansion happening already and the cost is continually going down. So I think you want to look at if there is anything that is impeding that from a regulatory or otherwise perspective. But if you want to reach the millions of people and you want them to be able to pay their bills once you've given them the phone and use their phones wisely, you need to have it built based on the domestic economy on a scalable basis.

At this point Michael Elliott opens the debate up to the floor

Karin Christiansen: I'm Karin Christiansen Overseas Development Institute. I'm based in London. I think the identification of business as a central solution to poverty is in part tautologist. Wealth creation is poverty reduction definitionally, business is fundamental to wealth creation. There are issues around the distribution of that. For me I think this sort of elephant in the room hasn't really come up although its been referred to repeatedly is the role of the state and the governments in these issues. And we've got a cycle here effectively of the reason why there's very little active business or it is at such a low level in large numbers of these countries is because of the failure of states to provide regulatory frameworks and policy frameworks that actually lend support to the development of business.

As a development economist and somebody who works with a particular focus on the aid industry and the supply of free mobile phones in the big metaphor and there are huge problems with our ability to supply goods effectively. I'm increasingly retreating to the position that what we need to do is to make states function, and their interaction with their own population both in terms of political, social and economic interactions work. That isn't about aid, aid doesn't do that very well. That's something that we haven't really yet developed, state building is not something that we are very good at, but as leading business leaders, your insights and thoughts and reflections on what you need from states would be very interesting and useful and what you think are some of the biggest constraints and issues that you are facing.

Robert Annibale: Business is not a solution to development but it's a participant in it in some of these tools in development... business needs to be regulated as it is in any other environment too because there is not a sole purpose in terms of development. But I think what you say about working with governments on specific issues that make things more conducive, when we work with micro finance institutions, when we call on a central bank together with an institution it's a very unusual event that you have a large commercial bank, going in with an NGO or a non profit or a micro finance institution because we have a common interest, whether it be interest caps or it be having a credit bureau in the country so we can expand credit, know who's barred and who isn't or we have appropriate judiciary so you can actually make mortgages and know that there is a legal process in the end that makes it meaningful to call at a mortgage.

That's a really important step and I think that's where in many cases business, when you are speaking with development economists, NGOs or in my case micro finance institutions - seeing regulators is a very powerful voice. And I think where you can co-ordinate some of these issues and find common ground, it's a very persuasive and unusual voice to have it coming together.

Trini Leung: Thank you. I'm Trini Leung from Oxfam. I would lie to take up the question that was raised with the panel just now on trade and especially on the current development round at which at the WTO. Indeed trade is very important and we do believe trade can lift poverty but it has to be fair as pointed out by Dr. Ayalew and it has to be based on rules that are pro-poor, and I agree very much with Lars Sørensen, that it has to be that the priority has to be on agriculture and the north and especially the rich countries have to readdress the protectionism on agriculture and even on textiles, as we recently saw in last week's debate. But I would like to go to the patent issue. Currently the problem with two billion people in the world, which can't have access to medicine has to be redressed and making medicine affordable has to be the top priority. At the WTO the pharmaceutical industry has been lobbying for a very strict patents rule and I would like to ask Lars Sørensen whether you think the pharmaceutical industry should try to have less strict patent rules, which will address this issue or you want a strict patients rule in all trade agreements.

Lars Sørensen: Well thank you very much for giving me this opportunity. I have to say that I'm not speaking on behalf of the pharmaceutical industry. I'm no longer a member of the executive board of the European pharmaceutical industry. Because I may have slightly different views on this then my general industry peers, but for what it's worth I think one has to be very, very cautions when one looks at the intellectual property rights because we have to understand that the fact that intellectual property rights have been created is a system to introduce investment in areas of risky research which creates stimulus which the innovations are then publicised and then made available to the public. I think that has generated.....that system has generated a lot of innovation from which we benefit. I think the problem that you are trying to address is one of equity and one of pricing. It can be dealt with, without infringing on the intellectual property right system by discussing, perhaps some kind of pricing scheme. I know this has been brought forward by the EU commission, at least when I was working with the EU commission, this was the position of the EU commission to see if the industry would be willing to offer their propriety medicines at reduced prices, which are related to the economies in the different markets, that has then some knock on effects on global distribution and trade of drugs counterfeit drugs and a whole host of issues, but I think these can be largely resolved.

So rather than focus on price you should use classical economic theory as long as you can cover your cost and as longs as there a markets that have demand to expand your business by lowering the price.

Solomon Ayalew: There is an emerging view that is becoming more and more popular. That is that Africa needs fair trade more than assistance. This may surprise you. I'll give you one small example: coffee, for instance, whenever you drink coffee only 10 percent of the price you pay here goes to coffee producers and that is broken between taxes middle men and the peasants and this ten percent had not been able to lift the extreme poverty of coffee producers, so the meaning of fair trade is that you allow coffee producers to process their coffee, we have imposed heavy duties on process coffee and if this happens there will be a lot of revenue that Africa can use for buying mobile phones for micro-financing and so on. And I think the point form the lady from Oxfam is a very important point.

Dr. Kurt Hoffman: Let me throw something on the table that may get out some of the blockers that aren't making the connections between the issues we are talking about. The development problem has been around for a long time. Development agencies came into being just after the war. And along with a drive from the rich countries that felt they had to do something about poverty. And so the development business ..... grew up in conjunction with this since that aid was needed, charity was needed to do something about poverty. And a whole series of expertise and whole series of institutional experts grew up, including myself. And we struggled for years to do our best to use aid to generate economic growth, particularly in the poorest countries. And of course the record has not been particularly good.

We've not been very successful in using aid, public money, to generate economic growth. Usually when it's there in great numbers it tends to lead to a reduction in economic growth and things like democracy and reform and so on. Paul Rosenstein Rodin, who is a famous economist who was really one of the originators of Jeffery Sax's model of Poverty traps said that when the World Bank thinks it's financing a power plant it's actually financing a brothel. The reason is....I'm not saying that because I'm bringing up the issue of corruption, it's that when you have two communities talking to each other in the same language of development, poverty and aid and charity, there delivering public sector types of solutions to the problem. And so you find that when it comes to the current period where you are getting this opening of opportunity, international companies are recognising the value of the bottom of the pyramid markets there's more emphasis on markets and private sectors offering economic development.

One of the things that's missing is that the paradigm of aid and public sector solutions is still dominate. And so what I think one of the things that needs to happen to move things along to change the paradigm is to in a sense get into particular big companies, who we have heard here are making great progress in progressive engagements with countries but often are still stuck in a corporate sensibility. They're making great progress in examining the bottom of the pyramid markets and that's good, but they also have to realise that there full of these intangible assets that I mentioned earlier.

Business skills, how do you asses risk, how do you understand markets, how do you understand what your customer wants, they understand that when you as a business person, you future in a sense is tied to satisfying the needs of your customer 11:00:26 and innovating and driving down costs...their attention is focused. Now in the aid business the attention is not focused on. The intent is focused on, using aid to do good, but what the deliverers of aid are focused on the international people who sign the cheques, the politicians, and the aid agencies, so the market signals are going the wrong way around. They're focused on the agenda of the market makers like the aid agencies rather than the customers. Business understands that, my community, the development community, understands that in theory, but not in practice. And so the things we come up with don't quite work the taxes how to get markets working...

And so business has a real opportunity I think to reach back into itself and get its value creators, people who manage supply chains and procurement and do risk assessment and find ways to work to transfer their skills their business DNA to the civil society in order to get this system to work which obviously has great potential because it generates so much wealth in the rich countries and what we need to do is make it work to generate wealth in the poor countries.

Robert Annibale: I think there is fortunately some movement in the aid world too which is acting more as a convener of a lot of these parties and clearly business should do what its expertise is and what its capacity is and you should not always suspect that it always is the best one to make the broader social decisions or development decisions. But we see that happening more and more where they are acting as conveners of pulling together these different groups and we are working alike, whether it be in finance or other sectors I'm sure, groups like Difford UK and others are trying to combine a lot more creatively.

I think the strengths of the NGO sector, what is the private sector able to bring to it, also the advocacy and the strength of the private sector can bring to some of these issues, both to the political groups and to Washington, to the multi-nationals and others. We find ourselves lobbying together to be sure that the Africa commission or to be sure that the G8 had microfinance or other areas in their development agendas and that was something, which by combing our abilities to advocate we were able to bring up into the political forum a lot closer, so it is a hopefully some transition among G8 donors, we see them.

Andrew Jowett: Andrew Jowett from an NGO called Harvest Help. We work in Africa with farmers on small business and farming. And we came to join the run up to G8 and said don't double the aid programme, because one of the planks of the make poverty history campaign was to double the aid programme. In terms of the subsidies of northern farmers doubling to 50 billion a year doesn't sound too generous, but unless the aid programme is spent well, it can be counter-productive, a lot of aid is not focused on the poorest countries. A lot of aid goes straight into government just helping them to try and balance the budget. And our big point, which hasn't been addressed yet, is that yes creating opportunity is the key to reducing poverty once you've dealt with the most vulnerable through different methods, through welfare or whatever, the people right at the bottom, who would struggle to get a small business going is we're not investing nearly enough in the basic skills individuals need to take advantage of new opportunities. The basic business skills, how to do a little bit of market research, how to...reduce their costs. And I just don't see a significant portion of the aid programme where I work in southern Africa going right to the bottom to the poorest people who need it most, who have the potential to do great things for themselves, because we see that where we work in small pockets and really position themselves to take advantage of new opportunities it's just not happening the aid programme has got it seriously wrong in my opinion.

Lars Sørensen: It has been greatly motivating for us, and this is an aspect that w haven't talked about, to try to organise patient communities, we've seen that we've been able to organise patients in a therapeutic area, stimulate the information of patient associations, which can then publicise their rights and give issues on the agenda. Together they also in a way can build financing communities because they realise that they are a community and if we talk about diabetes, for instance, it hits the poor as well as the rich and the rich in that patient community will then pay a little bit more for their medicine and then allow the poor to get their medicine free of charge.

We've seen those systems being set up in Tanzania, we've seen them being set up in India and that is also for us if we look at as a global business, our customers feel they're part of a global community or physicians or nurses, health care professionals that are treating people with diabetes and to the extent that we are able to offer something to their community in the lest fortunate part of the world it has a direct business effect for us in the developed part of the world, so for us it's been very motivating to be able to work at the grass root level and it also ensures that we do get the help out to those who are really needing it and not leaving our support in the infrastructure and at the government level.

Robert Conway: But what we learned was that's not enough because if you don't show governments an incentive, because remember the government goes, hey I've got money in hand right? Why should I give money in hand on the fact that maybe later on this might be good. Well, the way we got to do this is we're launching a tax study which will hopefully show them that the reality is if you get more of these in people's hands you generate more business opportunity they actually make more money our of revenues than that short term focus. Trying to create ways to incentivize and not to take the short-term six-month view, but the longer three-year, four-year view, but with a dramatically increased multiplier on the taxed revenues. And so in any one of these problems you got to look at the chain of who's involved, what's the incentive for someone to step in and of course again, what's the sustainability of that. Very simply I think we've all identified that if it's not sustainable it brakes down somewhere along the chain.

Solomon Ayalew: If you have worked in a few countries, particularly in Africa, you can see how frustrating it is to work with governments. Several reasons: I think you should remember that Africa has a unique history. If you see 500 years of African history, the first phase was slave trade. 300 years people killed each other and hated each other. And then you had colonialism less than a hundred years. Divide and rule. Africans hated each other even more, and then independence overlapping with the Cold War, Africans hating each other. After independence the people who set up the government or the state are those ethnic groups that were close to the colony rulers. They hated all other tribes you see, because of this history.

Now when you go in Africa you have divided people. The ethnic leaders rule their countries as a colonial country. So, what you see as corruption makes sense to the ethnic group. If you see an ethnic group it is not corruption corrupt within itself. Now I think one of the big problems you see frustrating you can be solved by reconciliation of ethnic groups and democratisation of the society. Now Europe and America have been requiring, just recently, not during the Cold War, just recently, that there should be democratic election. But you see each and every one of the elections are rigged.

Because the ethnic rulers are afraid of the other race, they hate them. In Rwanda the Hutus wanted to kill all Tutsis and they wanted to create a Hutu only country. Now the EU and the USA send monitors all over Africa to see the elections are fair, but the number they send are just 400, they don't even go beyond the capital city. If you have seen the opposition that the governments agree on election results in the capital cities, in the rural areas where observers are not there, there is argument because there is rigging, the government rigs.

Now, what I suggest is, to improve the performance of the government, I think you should send huge numbers of observers. If the United States can send a huge army to Iraq I don't think it will be difficult to send 20,000 monitors to an African country. So I think I agree with you that the government, whatever assistance we give to an African country whatever resources Africa mobilised domestically, whatever laws Africa received had gone down the drain. Africa at the end of 2004 was the most highly indebted country. Why? Because of this. So this strategy, you can't talk about aid before we change the structure. First of all there should be some kind of international law that says elections should be fair and free so that there can be legal action. I think both should happen.

Richard Quest: So you would be in favour of inflicting greater economic misery on those countries where elections were less than free and fair.

Solomon Ayalew: Absolutely. They are not inflicting economic hardship. This is only in the short run. In the long run the countries would be democratic and economic development would be stimulated, foreign assistance would be more productively used, local resources likewise. I think it is a better measure than continuing the status quo.

Lars Sørensen: Are you then arguing that pharmaceutical companies should withdraw from countries where there is not a legitimate democratic government. This would be very, very hard to do. My customers will die if I respond like this. So I would suggest that when we get to situations like the one that you are just painting now we enter into a scene that is very, very difficult because we assume a responsibility which legitimately should be placed somewhere else in societies which are often corrupt and that brings us into a very, very difficult situation.

Robert Conway: In a way there is this quiet communication process through SMS, text messaging, through voice communication society in a sense gets more democratically informed and I think that some governments have come to conclude that facilitating the take-up of mobile phones is society is actually one of the foundation stones for the democratic process.

Richard Quest: Now I spot a whiff of hypocrisy here. In the United States you are effectively giving phones away. In the UK you are effectively subsidizing phones through the operators. You have safeguards in place through the pay-as-you-go system. So it has been tried in developed countries, it is being tried in developed countries. So now you're turning round and saying don't do it on a lesser scale in developing countries!

Karin Christiansen: It's a nice easy conceptual shorthand of equating elections with the development of responsive domestic institutions, responsive capable domestic institutions. If the aim is responsive, capable domestic political and state institutions, which is what we can probably all agree on, elections are not a good proxy for generating that. One of the big statistics that we have is around elections actually generating greater levels of conflict. It is one of the big predictors of high levels of civil war and violence, so we just have to be slightly careful about thinking of it as a panacea.

The aim of generating capable responsive domestic institutions is a long term and internal process. That doesn't mean that as outsiders we can't be effecting or influencing it, and I think going back to some of the critiques of the aid industry, the aid industry is actually very good at fragmenting it and this is one of my big please for this situation. We have to remember that projectized interventions - a small project here, and small project there, a little bit here, a little bit there feels very good to us, but if you're the guy in the Ministry of Finance or the Ministry of Health trying to administer 50 different projects with 17 different procurement systems, believe me not a single one of those procurement systems will work.

If you then try generating a sensible policy framework when you guys, all of us from the aid industry are drifting in and saying oh but our pet subject for today is X, our pet subject for today is Y, please business do not get into that same framework and model of engagement in these types of situations. The aid industry has I think in a lot of countries fundamentally undermined the development of strong responsive government. Business needs to learn from the mistakes of that model rather than replicate this highly proectized approach that feels nice to the supplier but if you're the person receiving it it's a totally different story.

Richard Boulter: My name is Richard Boulter, and I work for the UK Department for International Development. I just want to gather a couple of things together. I just want to go back to what Lars started with when he said that traditionally the business of business is business, and the fact that businesses have moved on from that a little bit. They have recognized that some of what they do is development, and hugely over in that corner with micro-finance, if you speak to micro entrepreneurs who are developing businesses, if you speak to mobile phone operators, Grameen phone etc., they are developing businesses.

But my challenge for you is if we talk about the aid industry, or the development industry, and some of the things that the Dr. is involved in over there, have we yet convinced the development industry that the business of development is business? And obviously that is quite a challenge there because traditionally the development industry has had rather a lot of civil society and civil servants involved in it rather than ex-business people. And I certainly see this forum obviously as part of finding that solution, of getting people in the corporate sector to find out how they work more closely with governments and with the aid industry. So I just wonder if any of you have some ideas from that perspective. How do you convince the development industry to get more involved in business?

Lars Sørensen: I think we can benefit from having joint projects. I think part of the problem is in terms of the public perception of foreign aid has been the lack of good examples, the lack of human stories of what it is we are doing, how can we benefit the developing countries in a meaningful way that can be easily communicated. And of course we are addressing the problem that you raised that when you look at it from the recipient's perspective you can't have 25 nations and 50 corporations coming in every other day and making suggestions for projects. So that leads to sector programmes as the preferred route of foreign aid, but when you try to tell your taxpayers in Denmark or in the UK that we are engaged in a sector programme together with 8 other countries, people forget it, they don't see the big results.

So what we convinced the Danish government was that we should work together was that we should work together. They would do a sector programme building public health in Bhutan or some other place and we would latch onto that a very specific arm which created stories in one therapeutic area which was diabetes which would be visible, which would be communicable so that people would understand in this field we work together and improve the lives of so many people, and we reduce the mortality rate and such and such and such. So I think that we can benefit from working together.

But there we are back to the problem of the pharmaceutical industry in general having a very, very poor reputation and we have to come from a platform of having to rebuild trust with the government authorities and with the NGOs that we are also trying to work with. It's going to take some time but I would suggest that we should work together rather than work separately.

Phyllis SantaMaria: My name is Phyllis SantaMaria and I work with a charity called Planet Finance which is involved in the training and technical support for the micro-finance sector. And am also a part of ....this is the United nations Year of Micro-Credit, which a lot of people don't know about. And we have a UK national committee and I am the co-ordinator for that, so I have been working with Bob and with other people. And so first it is a comment to emphasize what Lars has just been saying. It is very refreshing to work together with government and the business sector as well as NGOs in this national committee. It's sort of one of the few places that this is happening, and I think that this is the way of the future, learning to speak a common language. Sometimes it's been like herding cats or being in the middle of a bunfight because the language of the NGOs and business are quite distinct.

I wanted to bring up another topic for Planet Finance. We are doing a project in Ghana. And the reason we have chosen Ghana is because the Ghanaian diaspora came to us. And I think this is a very untapped resource. We have for example in the UK a quarter of a million Ghanaians, and they want to do something for their communities in Ghana. And so I am just asking the panel if you have been able to use some of the resources - if you like the brain gain - here from the UK or from Europe in projects in the developing countries because I think that this is a sustainable approach.

Michael Elliott: This is very interesting. I edited the UNDP Human Development report in 2000 or 2001 where there was a whole chapter of stuff I had never heard of on the use of diasporas, particularly interesting programmes in South Korea, in India. I think something that has been more developed in Asia than in Africa or in Latin America, but certainly the South Koreans take this very, very seriously, of using the diaspora and getting people back.

Robert Annibale: We're looking at that because it's quite interesting. Remittances is an example of diaspora. The United States is one of the largest remitters - workers within the united states - to Latin America. Latin America received last year some $47 billion of remittances. It was more than all foreign direct investment and official flows combined. And that came from those thousands and thousands of small monthly transfers that people made, legal and illegal, all sorts of migrant workers, and the largest source of it was out of the United States. What we have tried to look at very much is that that community has enormous links with their communities back home. They're really been divided, they've been divided for all sorts of reasons, and certainly by the banks - less than 13 % of that money goes through the banking system. The buying power, the consumer value of those families is understated and underrepresented. And what they should be seeing is services and products catering to that end of that remittance. So we're working a lot more on how do you bank two ends of a family in two parts of the world.

Jasmine Nahhas di Florio: I work with an NGO called Arzu - we provide economic developments and health and education to families in Afghanistan and I come from the private sector and much of our discussion this morning has been about the power of markets to drive change, and that as corporate leaders you really see market driven solutions as the preferred and most sustainable avenue, which I agree with. I think, however, that we have a real challenge in terms of conflict zones where markets don't work, nothing works, and Afghanistan is now emerging from that and in fact all three of your sectors - telephony, pharmaceuticals and micro-finance are all rebuilding Afghanistan.

But several years ago the micro-finance that was there collapsed under the Taliban and my concern is that some of the people who are in greatest need around the world are living in war zones where nothing works, and so the question is: what, as corporate leaders, would be, or is your approach to helping in those situations, and then number two, how do you justify that to your shareholders who are seeking to maximize profit when you're spending dollars on lets say humanitarian aid or other types of aid in conflict situations.

Robert Annibale: I think it's a very good point. I often have micro-finance people coming to me to ask this. And I say there are limitations to both the market and the private sector in their expertise. And that is where really some of the most specialized institutions perhaps working with us make more sense. Those who have worked in post-conflict environments for example. And in those cases where most of the support tends to come out of your philanthropic side, at least at that end........maybe it's not even appropriate to be doing commercial lending at that level and the situations people......we have that in Africa and other post-conflict environments too, and if it is going to be delivered in that way it really needs to be delivered by people who can also assess other needs of that community, other essential decisions that people are making when they have to make a repayment in a post-conflict environment, whether it be in Sierra Leone or in the Congo or in Afghanistan. In that sense I think our shareholders see it as one right thing for you to be supporting and doing. They don't expect it to be the thing that is going to pay their dividend. I also think they often take it from their foundation and they often say that's the appropriate place to give those funds to the right intermediary institutions that probably need to give very specialized delivery of services in that environment because we could make....we would run the risk of the private sector treating it unlike other environments and perhaps causing more harm than intended.

Lars Sørensen: We have been involved in many, many situations of the kind that you are mentioning for the reason that we are treating chronic disease and as a consequence when we have built up trading relations and distributing our products in countries that then go through political upheavals and we are of course faced with the situation that we have to make decisions on whether we will continue commercial collaborations and we have always taken the very long term view that we will be very tolerant with credits, we will try to set up emergency distribution systems and I can say we have never lost money. I mean we have to extend credit rates, we have gone through the situation when Russia collapsed, when Cuba was not able to fund it's public health system after the collapse of Russia, in Afghanistan, when there was war going on in Iraq there were shipments going through Falluja as we were seeing the big bombardments. It is possible to do and if you take a long-term perspective on this at the end of the day you will also financially be able to justify it.

John Elkington: I'm John Elkington from SustainAbility. I have been fascinated to hear how many people have spoken in terms of a more active role for business in all of this. I think it is interesting, given the panellists, that you are comfortable talking about things like business models and scalability, but if talk to most people in Corporate Social Responsibility departments, or whatever we call them, they find it very difficult to explain what business models their companies use, they don't think in terms of scalability. They do think in terms of I love NGOs, they want to engage those folk, they want to do corporate reporting, but are we in real danger of having institutionalised corporate responses to these big challenges in completely the wrong way - ie. In being nice to people. And just to be provocative, should companies instead of trying to engage more and more NGOs being going out and trying to engage social entrepreneurs and some of the people.....not just talking about the problems, but trying to build solutions and trying to scale them up as fast as possible.

Robert Annibale: It is the common question people often ask as soon as I go in: do you work for the foundation, do you work for socially responsible investor relations, or the community of public affairs group....I don't work for any of those, I work for the CEO of a global corporate investment bank. It's the expectation that most people have is that...not that what we're all doing is not the right thing or a good thing as you say, it's just that I come with a different set of skills and a different set of resources too than they do. They have grants and public funding and programming and all sorts of things. I really have to engage with institutions on an issue where I can bring a certain group of technical skills, mine and the majority of the people who work for Citygroup, the majority of the 300,000 people are actually involved in business models and scaling, they work in these countries and they work in the local markets with local regulators with local currencies, very relevant things that they are doing in that area.

So I think there is an evolution going on within socially responsible investing as well because the need there is really to be able to assess what is an effective deliverer of what you are trying to encourage. And much of it came out of the negatives. You began socially responsible investment by not doing cigarettes, not doing alcohol, not doing guns. You'd make the no list. And it's growing into a stronger view of how do you have an effective ‘yes' list. We want to have these objectives and who can help us achieve that. So my interaction within that SRI (Socially Responsible Investment) has changed quite a bit. And I can only talk to them from a very pragmatic, engaged sense, but I know where you're coming from. It's the first question I always get.

Lars Sørensen: Just a small comment, and I made this comment to John Elkington before the session. We work with Sustainability as an organisation, and he is of course trying to move on, and I just caution him to be patient. It takes a much, much longer time than I had expected to implement these principles and to get these principles integrated into the way we do business. Since we have worked together it has taken almost twenty, twenty-five years for our corporation to integrate environmental aspects and social aspects and very recently access aspects into all of the things we are doing in business. So all of a sudden I am having my business people coming back to me and talking about triple bottom line reporting and how fascinating it is and how it drives differentiation for our company and motivation of our employees, and now we are trying to move on and see how can we take it to another level. Let's be careful - we could kill the baby that we've just created by being too impatient.

Luke Disney: I'm Luke Disney and I work with TNT, and I think that's an interesting point. We have since 2002 had a rather comprehensive partnership with the United Nations World Food Programme, and when we talk with numerous agencies the questions we constantly get as a business are, right, what's your business model, how are you going to earn money on this. And I think it begins for a business with responsibility, and I think there is another side to the coin as well in terms of what the benefits are. And for our company in terms of internal motivation of our employees, in terms of our external reputation. As a company we have reaped perhaps a lot of other benefits from corporate social responsibility that are not necessarily directly related to sales.

I think development is extremely complex, obviously, and as a business you're not going to solve the problems but you can accomplish an enormous amount I think by starting to look at what you are doing and how you are doing it in these countries where you are on the ground. For instance in our industry, which is transport and logistics, looking at issues like HIV-AIDS and the spread of HIV-AIDS in sub-Saharan Africa. Dr. Ayalew in the beginning mentioned that a lot of the funds in developing countries go into care and what we can do as a transport industry is focus on prevention aspects, making sure that our drivers know what's going on, making sure that they are getting educated so there is another side to the coin. The bottom line is responsibility perhaps and not profit.

Richard Quest: We are getting to the point where lunch is on the agenda, so let me pull some of these strands together and ask our panel for some final thoughts. And perhaps I could go first to you, Lars Sørensen.

Lars Sørensen: I am convinced that the private sector can play an important role, and we are fortunate in working in the healthcare area where it's very obvious how we can link our efforts between what is the mission of the company, what is the interest of the shareholders with what we are doing in developing countries. I think it is far more difficult when we get to other sectors where they find it difficult to identify programmes in developing countries that they can, but they have to be creative, I think that it can be done. I think we have to worry about the legitimacy issue, understand that we are working for our shareholders and that we are primarily intended to create profit for our shareholders and that's the role that we should play. It's been rewarding to work with the NGOs. I used to have nightmares about NGOs - Oxfam and others - when they called me. I am delighted to work with them because it is highly motivating, they have a different perspective of the world than we have. And through working together, and also with the government, it is highly enriching for private companies. So there is something to benefit all parties in what we have been discussing today.

Solomon Ayalew: In devlopment it is very difficult to talk about one or two problems because there are so many. We have no covered all of them, although some have been suggested. And one problem which is not raised is the co-ordination of donors. You can have as many as 20 donors or 30 donors including NGOs, 40 NGOs just for one ministry. And you find one or two NGOs coming every day of the year, and so you can see the ministries entertaining foreign donors throughout the year. The other thing about donors is that each one has its system of accountability as a requirement, and those systems are not the same. So you do the same thing for 20 donors with different accounting systems. And the third difficulty about donors is that each one has its own ideology, its own thinking, and if it is UNICEF it comes with its own ideas, and if it is a US donor it has its own idea about what to do. And what happens when they come in is that there can't be a dialogue.

The other thing which I would like you to remember is that development is not just economics. I think that development in Africa is more about politics. We have seen that in the last 30 years the only region that went backward was sub-Saharan Africa. Backward in real terms, real economic terms, a decline in GDP. All the assistance has failed, all the efforts have failed. So we have to remember that one of the biggest problems in Africa is that our social structure is not ideal for development. Again, to repeat what I have earlier said, democratisation is one way of doing it. And I know that the process should be internal. But on the other hand think about what happened in the Ukraine. When the vote was rigged the opposition said no, and Western countries said yes we will support you, and the government fell down. I think we should do the same thing. I'm not saying that we should go and advise people about democracy. Some of them might know better about democracy than some people from outside. But I still think that we should do more than what we are doing to put pressure on African governments.

Robert Conway: I guess I come back to something I mentioned earlier, but I guess is a sustainability element, at least for us. The fact that you can replicate, and you will replicate whatever you are embarking on. Because what we do see is that otherwise, at least for our community, you get into the one off. It's nice for the moment, but it's quite limited, and quite unsuccessful in a longer term.

But I want to touch upon something here which has been a profound thing for me, and that is.....someone mentioned something about the language between NGOs and business, and maybe between governments and business. That is profound for me because that line of communication, how we talk to each other is probably one of those conundrums of we can either talk over each other or we can talk under, but it's about how do you line up that communication. Because I know that in my own community getting that collective understanding is a challenge. We probably are a bit further along in understanding each other. It's how do we communicate then with the NGOs and others. And there is no easy answer, but I must say that I have been touched by that today because I realise that we as a community - that's going to be a challenge for us because we want to do things in disaster relief and we want to do other things.....We have a fund for example that is coming out of the emerging market which is where operators and vendors are contributing about 50 cents per phone and that fund is designed to look at ways of replicating things. We want to engage with the NGOs of the world, and we are doing some of that, but I think we have a way to go to understand how we can do that successfully and I certainly welcome those of you from this audience who wish to get in touch with us or some of my colleagues over here - we would be delighted to engage some of you because we are trying to see how are community steps up, but does so in a way that is intuitive for you and intuitive for us.

Robert Annibale: I don't really have a peer in the financial sector today. I have local peers in different commercial banks, but I don't have an institution that is trying to implement a global programme, so how do you replicate, how do you scale it? How do we make an extension of financial services to the vast majority of people? So I really am the minority in most of these groups I'm working with in terms of meetings.

We embarked on a programme realising that we were not the innovator in this case. It's a humbling thing to tell a management committee: you can't buy all of these NGOs and micro-finance groups, we didn't launch the first one. We might do innovation today with them....So we've got to go with people who have built an expertise. And frankly that's how we've done it. We've launched each of our initiatives in a partnership with micro-finance institutions and networks. It's a very different way for us to do business. I think it's the way for us to do it more successfully, commercially and even in terms of our social impact that it will have. And the demonstration effect of Citygroup doing that well will have......and much more importantly of many more banks get into this sector. So we have gone cautiously, and we have tried to benefit in that sense from those who were ahead of us in reaching the poor. Which was not, unfortunately, the commercial sector.

Michael Elliott: Very good, and thank you all very much indeed. Robert Annibale, Solomon Ayalew, Robert Conway and Lars Sørensen. My esteemed co-moderator Richard Quest. Thank you all for being a terrific audience and asking some very thoughtful and stimulating and provocative questions. So please join me in thanking our four panellists.

Applause. Debate ends.