Last June, during the CIES World Food Business Summit in Barcelona, two men proclaimed their Capitalist Manifesto. Craig Cohon, a former executive with Coca-Cola, and Jeb Brugmann, a veteran of Non Governmental Organisations (NGOs), unfolded their vision on a new kind of capitalism that is accessible to the poor and that contributes to the global society at large.
Elsevier Food International, Vol. 6, Number 4, November 2003
Pascal Kuipers

Currently there are four to five billion poor people worldwide that are outside the market. They are not connected to the results of globalisation and live in impoverished urban communities. Should we just forget about them?" says Craig Cohon, CEO of Globalegacy. Quite the contrary, is his conviction, as they represent a large pool of human talent. "These people are not cases for charity or distant development schemes. In addition to their natural and cultural talents, their experience with poverty has often trained them in entrepreneurship and creative problem-solving," reads the website of Globalegacy, which seeks to connect the urban poor with formal markets and public policy making. In doing so, Globalegacy aims for the best of both worlds. "Globalegacy envisions a new kind of capitalism that is accessible to the poor, that provides a mechanism through which the poor can achieve their aspirations and make a contribution to society at large, and that addresses the major vulnerabilities and needs facing impoverished communities today."

Solving problems via business
"Global poverty increasingly appears in urban communities because we are becoming a global urban civilisation. Problems of global concern therefore need to be addressed through action at the city-level," says Brugmann, Globalegacy's president. "Sustainability and poverty elimination will determine the nature of our common future. These are the two major international agendas of our time. Worldwide, cities and towns have developed local strategies for sustainable development, but international development organisations and most major corporations are reluctant to change their traditional ways of top-down business and finance. In my view, more entrepreneurial methods are needed to help communities implement their own development strategies." Globalegacy wants to mobilise private investment by addressing private

"In food, there lies a big challenge for any large retailer that wants to start selling food to people in impoverished urban communities". Craig Cohon, CEO of Globalegacy

businesses to create customer relationships with the billions of poor people that embody a giant space for business growth and social impact. To solve problems via business however, companies must radically change their traditional attitudes, beliefs and business models. "Many traditional companies are preoccupied with advancing
their terms of trade," says Cohon. "In food, there lies a big challenge for any large retailer that wants to start selling food to people in impoverished urban communities. Precondition is that these people need sources of income. Worldwide there are some 200 million urban farmers in urban slums supplying food to some 700 million slum dwellers. The old model says that big suppliers and retailers would compete against these farmers and drive them out of the market to maximise own profits. This would create a social disaster. Food growing and trading in developing countries' cities is a major source of household income. In Indonesia for instance, kitchen gardens provide over 20 per cent of household income and more than 40 per cent of household food supply. The only option is to invest in these local food entrepreneurs. To build their businesses and to integrate them in the supply chain because these people need to have income to become a customer. They also have the know-how and relationships required to develop the industry within this market. But most traditional food companies stay out of this market because of their old paradigm of profit maximisation and competition."

Triple bottom-line
"Growth is the old paradigm in which economic success is measured by metrics such as GOP," adds Brugmann. "Development reflects a different paradigm in which the success of economic

"Global poverty increasingly appears in urban communities because we are becoming a global urban civilisation". leb Brugmann, president of Globalegacy.

activity is measured by its triple bottom line: the ability of business to produce financial, environmental and social rewards. Building business partnerships with local entrepreneurs and city slum dwellers leverages these people's local market expertise into new, scalable business models. The margins of these businesses will remain lower than traditional capitalist enterprises - at Globalegacy we aim for six per cent ROI - but we are looking at real development, not traditional growth."
This all happens within the capitalist framework, stresses Globalegacy. "This is no charity, it's a business strategy," says Brugmann. "Globalegacy is well aware of the legal and institutional restrictions they will confront. Our business process includes eight to ten months of groundwork with community partners and local governments. This is something a traditional company would never do. Business success in a slum environment is often more a matter of social enterprise than a financial or technical endeavour. To succeed in such complex, lean environments you need to build strong social ownership. We must deal with credible representatives of the local community. Perhaps these people have criminal records. That can happen. But you have to negotiate to get support and legitimisation and in the end serve the community. In the townships of Johannesburg for instance, local residents play an active role in looking after the store and protecting it from robbery or vandalism because they believe in its value. These people are co-creators. Their contribution needs to be recognised on the balance sheet. But this is a concept of capitalist engagement that most traditional companies avoid."

"We don't give anything for free"
Not only in slum areas, also in impoverished communities in developed countries, Globalegacy is building expertise in starting up businesses. "We currently receive funding from the UK government for a project that we are doing in East London," says Cohon. "We have structured our business there as a business development service provider, offering a full range of products to public service agencies wishing to invest in community regeneration and local economic development."

Globalegacy (www.globalegacy.com) also aims to transform capitalist practice at a global scale. One initiative is to start a company that develops a range of ‘fair trade-type’ products, actively marketed and visible on the shelves. Their aim is to create scalable business models for key commodity markets, like cocoa and coffee, that will deliver greater financial rewards, more sustainable livelihoods, and greater market leverage for producers and their communities. “Fairtrade operators,” argues Brugmaan, “deliver these values at a small scale, but Fairtrade has built-in even self-imposed-limitations to scale.” “Smaller companies like Max Havelaar and Café Direct did not get enough shelf space.” Says Cohon. “But an uncommon partnership between some ten like-minded retailers and local producers, supported by key NGOs, could bring greater volumes of product directly to the shelf and advocate effectively to reduce trade restrictions against value-added processing in producer countries. One solution might be the creation of a large global private label in commodity markets like coffee, buts and chocolate, a label that delivers good value to farmers, distributors and consumers”

"It’s about making a profit but not maximising profit," he says. "Profits over six per cent will be used to support offerings to local community partners of highly discounted shares in Globalegacy's client enterprises. By providing the community with an opportunity to be a shareholder, we both increase their sense of ownership, their social capital support, and we ensure that when our clients' businesses succeed - and perhaps relocate from the slum or get bought out - local institutions in the poor communities will continue to benefit economically."
Applying their 'not a charity' principle, local partners only secure an equity stake in the enterprises that Globalegacy supports by making an investment decision. "Investment is needed, depending on what shareholders can afford. We don't give anything for free", says Brugmann. "We want to create access to ownership, because in slum areas the lack of access to ownership of land, home or business is what keeps people on the margins and out of the global marketplace. If local partners don't exercise their equity options, it also tells us a great deal about the local viability of that business."