Salutations
⇒ The host and co-sponsors
⇒ The audience
Excellencies, distinguished delegates, ladies and gentlemen,

It gives me great pleasure to extend my gratitude to the host organization and co-sponsors for hosting the 4th Africa Australia Research Forum in Perth. It is also my privilege to welcome the participants to this forum. The African Development Bank through the natural resources welcomes the opportunity to share an perspective and through that to benefit the dialogue that will follow now and in future.

Defining shared value

In its most extreme context the principle of shared value might be seen as counter intuitive in the context of the modern business environment in that it departs from the accepted notion that the purpose of a corporation being to deliver value to its shareholders.

On the other hand, shared value has been defined as the primary reason for the existence of a corporation by delivering economic value in a way that addresses social problems loud thereby creating solutions to address these problems.

In natural resources (especially mining) the principle of shared value adds another dimension. For one the political, social legal environmental context is vastly different.  In Africa, most constitutions vest mineral rights in the state making governments de facto executors of the national estate. Politically governments are custodiary who have the moral and legal authority to manage the assets.

Environmentally, the interface been other living things and mining activities suggests strongly that mining companies and government should adopt the attitude of ‘a good neighbor’ who is mindful of her footprint and looks over her shoulder in the pursuance of goals. Accounting for this footprint, offsetting carbon emission, compensating for land, becomes a way of sharing value. Socially, delivering viable alternative ways of making a living, once subsistence arable land has been sterilized through mining, is a form of tangible shared vale.

The finite nature of mineral resources places a significant moral and financial burden on investors and governments to share not just among themselves but with others with a vested interest. So who are these groups?

- Project financiers,
- Shareholders,
- Suppliers,
- Communities,
- Emerging elites,
- NGOs.

This in turn raises the question of legitimacy and responsibility? For whom should governments and investors create a demonstrate share value? What gives these groups legitimacy, how should the conflicting interests of these diverse groups be reconciled through value sharing?

In many ways, shared value is about finding answers for these vexing questions and striking a balance in the knowledge that there is neither a perfect nor a permanent form of shared value. Failure to do so will have dire consequences on both investors and governments. For instance, 

• Investors risk pressure from communities, governments and consumer groups. This might destroy the confidence of financiers, reduce availability of project finance or avail it at a premium. The perception that their value is not shared value might also destroy consumer confidence leading to a drop in demand for industrial and consumer goods. This could grant manmade alternatives moral high ground to substitute minerals.
• Governments might lose the confidence of citizens. This would lead to social strife and state fragility. The outcome would be lack of competitiveness and loss of investor confidence. The resulting vicious cycle of poverty, social strife and the threat that possess to Africa and the world is economically and socially is the single most powerful argument for the need not just for shared value but the importance of being seen to share value.

But finding the balance between governments and investors and their constituents is not easy. Governments might achieve this,
• Through regulatory effectiveness,
• Security of tenure,
• Contract stability,
• Investing in infrastructure and education,
• Inclusive growth to benefit all.

Investors can achieve this by sharing knowledge and information with governments. Investors can also adopt a long term approach to relationships by seeing themselves as partnering with countries and not a particular government of the day. Investors can partner with national institutions to address social environmental challenges that elude governments.

Possible approaches to shared value include,
• Partnering rather than compelling,
• Mutually defining and agreeing on value,
• Building trust,
• Focusing on mutual rather than material benefit,
• Focusing a common set of values rather than value per se.

To achieve this in the long run, governments and investor must not assume the value of what they pursue is self-evident. Recognize the importance of actively working to reconcile differences, accepting that value is a moving target and that expectations must be aligned to reality is equally important.

Issued by Field Public Relations