Is EDUN a success?

edun

In 2008, as part of a conference goodie-bag, I received an EDUN t-shirt. The shirt’s tags indicated my shirt was made in Peru, from organic Peruvian cotton. The small pamphlet attached to it noted that the company, started by Bono and his wife Ali Hewson, was focused on sustainable, ethical and eco-friendly fashions. I remember liking the shirt and the story behind it, especially because my job at the time had me focusing on economic development for small-holder farmers in rural Peru. I liked the idea that not only was the organic cotton produced in Peru, but instead of being exported as a raw material, the value-added product was created there in Peruvian factories, thus enhancing economic returns locally.

Me and my Peruvian-made EDUN shirt

EDUN’s mission though, according to Ali Hewson is to make a profit — not because the executive board needs the money but to demonstrate to other entrepreneurs that it’s possible to do so in developing countries, paying fair wages and relying on local raw material entirely processed and manufactured by local labor, from start to finish.

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An article entitled “Out of Africa, Into Asia” in Friday’s Wall Street Journal explains how the company decided to move a majority of the production to China because of various issues with the manufacturers in the developing world, particularly in Africa. Delivery delays and quality problems were affecting the clothing line to the point where the company hosted “a party in the dark, at the chic cabaret venue The Box, to draw attention away from the clothes.”

According to the WSJ:

After putting around $20 million of their own money into the still-unprofitable brand, Bono and Ms. Hewson sold 49% of the company last year to LVMH Moët Hennessy Louis Vuitton for about $7.8 million. LVMH, the world’s largest luxury conglomerate, helped the company recruit new management and a new designer (Mr. Gregory left in 2007), and then tried to convince the founders to expand their sourcing horizons.

Currently, 15% of EDUN’s products are manufactured in Africa; this particular point led to an interesting conversation on Twitter about whether this means that EDUN is succeeding in its mission, or if in fact it has failed to accomplish what it set out to do. Some argued that EDUN was proving that it was possible to run a for-profit enterprise with a strong commitment to fair and ethical practices. Others – myself included – questioned whether EDUN could be considered successful given how much it seems to be deviating from its original intent.

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I can relate to both sides of the argument here. Bono and his wife set out on a creative enterprise which they hope can become a model. As Hewson told the WSJ in 2009, EDUN is supposed to demonstrate that a for-profit business can be successful and ethical at the same time. This in turn can encourage other businesses to adopt new practices: sourcing products (and not just raw materials) from factories with strong labor and environmental standards in developing countries. These are obviously laudable goals that should be supported. However, my concern lies with the fact that Bono and Hewson didn’t actually prove that this was possible through EDUN, given all the issues they encountered in making their vision a reality.

In EDUN’s “mission” section of their website, it seems rather obvious that the focus is strongly on Africa. A rather tedious and unoriginal video of schoolchildren dancing in a school in the slum of Kibera and a slideshow of nameless organic cotton farmers adorn the webpage, along with a “Made in Africa”section, ominously subtitled “coming soon…”

The mission statement talks about about two partnerships: one with the aforementioned school in Kibera, and the Conservation Cotton Initiative in Northern Uganda with Invisible Children (everyone’s favorite advocacy organization) and the Wildlife Conservation Society. Leaving aside the merits of these two initiatives, they do speak to the rather small-scale scope of EDUN’s impact on African manufacturing. Which is precisely why I find it difficult to construe EDUN as a success: they have only very partially achieved their goal of having their fashion clothing line produced in African factories.

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In the WSJ article, Ali Hewson makes it clear where EDUN’s priorities lie: “we focused too much on the mission in the beginning. It’s the clothes, it’s the product. It’s a fashion company. That needs to be first and foremost.” Now this makes perfect business sense – a good company sells quality, in-demand products at the lowest possible cost in order to maximize revenues. What this suggests, though, is that the fair trade aspect of the mission – while still present – is not a priority. This is reflected in the decision to source a majority of products from China, with only a nominal portion coming from Africa. Furthermore, as EDUN’s website suggests, their efforts in Africa seem to be informed by somewhat vague principles and guidelines.

The problem is that EDUN, under these circumstances, is hardly demonstrating that “doing good while doing well” is a viable way to run a business. In fact, I’d argue quite the opposite. Their initial focus on product marketing (through celebrity ad campaigns and thanks to Bono’s superstar status) rather than on developing a viable, sustainable business model eventually forced them to rethink their model. This is particularly frustrating because EDUN could have easily sought to do its homework properly and anticipate the predictable problems they ran into. Saundra Schimmelpfennig wrote about this exact topic last year, and there are hundreds of entrepreneurs in the same space whose counsel could have been sought.

EDUN failed to learn the lessons of their predecessors’ mistakes in order to make their model succeed has they originally intended. Instead of proving that their business model was viable, they seem to have proved exactly the opposite. If it Bono hadn’t had the ability to throw $20mm of his own money into the company when it was suffering financially, if he didn’t have the kind of prestige that would make LVMH purchase the flailing, unprofitable company, I highly doubt EDUN would still exist today.

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I’m one to be supportive of daring entrepreneurship, both social and commercial, and I do have a lot of respect for people who have the courage to throw their energy into creating a successful enterprise. That said, when it comes to EDUN, I feel that the efforts were superficial, in more ways than one. Had EDUN done better research, they might have come up with a better model than what led them to be pretty much ashamed of the clothes that came from Africa (cf. the party in the dark to draw attention away from the clothes – for a fashion company!?) I don’t think anyone considering investing in African business would look to Bono and EDUN’s example as a model for success… In fact, I would imagine that looking at EDUN would discourage potential investors.

It seems that we don’t hold Bono to the same standards we hold non-rock star entrepreneurs. His mere trying to succeed appears to be enough to endear him to his supporters. Frankly, I feel Bono doesn’t deserve much praise here. If he was truly committed to supporting African cotton farmers, sellers and manufacturers, he could have invested in a few small or medium size clothing factories, for example. Industry in the developing world needs capital and improved operational standards, and there are several organizations which focus precisely on achieving this. The Grassroots Business Fund, for instance, makes equity, quasi-equity, and debt investments in the $250,000 – $1,000,000 range in agricultural and artisanal businesses, as well as access to finance and BoP services.

I understand: EDUN is a fashion clothes line, not an aid project. Fair enough. But then let’s see this for what it really is: one among many lines of clothing designed and marketed by a celebrity, with an ethical “twist.” To say that EDUN is a “game-changing” initiative is giving much too much credit to an enterprise which essentially failed to accomplish the mission it set out for itself.

Change (ing the world)?

Interesting exchange this past week with @transitionland on Twitter. She asked:

“Does *anyone* really say “I want to save the world”? I’ve never said that. Ever.”

What immediately came to mind is that probably only Bono wakes up every morning to that thought. Actually, he probably doesn’t just think about wanting to save the world, but likely believes he is already well on his way to accomplishing that goal (but that’s a different story/rant).

Bono - saving the world?
Bono - saving the world?

This spawned a discussion about the different perceptions of the possibility of change – what constrains it, what fuels it and why. Mind you, all in 140 character bites. It got me thinking a bit about change and political systems – how different cultures understand change and evolution at the macro level.

In 2008, Americans elected Barack Obama, whose main campaign rallying cry was : “Change we can believe in”. Let’s not talk about whether things have actually changed since his election – rather, I wanted to touch on the way in which Americans construe the possibility of change. 

The belief in the “American Dream” rests upon the assumption that social, political and economic mobility is not only possible, but within the reach of each individual. As Alain de Botton put it in a recent TED talk, in individualistic societies – such as the U.S. – people own their successes as well as their failures. Knowing that your situation can evolve, that hard work pays off, is only as liberating as it is anxiety-inducing: when you struggle to make ends meet, or are on the verge of bankruptcy, it is distressing to think and be told that your failure to succeed is your own fault. There seems to be a pervasive notion in the U.S. that the principles upon which institutions have been founded are not only absolute and timeless, but also designed to create the most advantageous environment for individuals to thrive in.  The fact that the U.S. emerged from the 20th century as the dominant world power, and that, at home, incredible wealth was derived from innovation and entrepreneurship, gives credence to this idea.

Interestingly, though, this fervent belief in the malleability of one’s life does not translate in the realm of institutions – at least not American ones. Indeed, Americans are extremely attached to the structures laid out in the Constitution, as well as to the institutions that have shaped American life for over two centuries now. Since the Constitution was adopted in 1787, there have been a total of 27 amendments to it – 10 of them, collectively known as the Bill of Rights, were ratified at the same time as the Constitution itself. The 17 amendments that followed mostly “expand individual civil or political liberties, while a few are concerned with modifying the basic governmental structure drafted in Philadelphia in 1787.”

(In contrast, France has known five Republics since 1789 – each with its own constitution. The last revision of the French constitution, in 2008, modified 39 of the 92 articles, created nine new ones, and repealed three constitutional provisions. Only 32 of the 92 articles have not been modified since 1958, when the Constitution was adopted. Compare this to the 27 changes the U.S. Constitution has known in 220 years of existence, and that gives you a sense of the trust Americans place in their system.)

I was an undergraduate during the time the U.S. launched wars in Afghanistan and Iraq, and I remember discussing whether “Western-style democracy” could take root in those places, and what would make this more – or less – likely. Almost invariably, arguments about a country’s prior experience of democracy would come up, with the implication that nations with a history of democracy are more amenable to introducing and upholding the institutional changes necessary for democracy to flourish. 

I always thought this line of argument was short-sighted. Democracy – or, rather, the democratic/liberal model – only truly began to take root in Europe following centuries of authoritarianism. The last two and half centuries have profoundly changed the way in which Western societies function. Without retracing the complex and rich history of Western political thought, the Enlightenment, and what Nietzsche called the “death of God“, had a lot to do with shaping the intellectual and political framework for monumental changes to occur in Western societies. 

The transformation of the West from authoritarian, dogmatic, stratified societies to what we have today took place over long stretches of time. Indeed, it takes decades, if not centuries, for profound changes like the ones experienced by countries such as France, Germany, the UK or the U.S. to take root. Which is why, when it comes to development and democratization, we have to take the long view and recognize that while it is possible for nations and countries to experience and sustain systemic political, economic and social transformations – as exemplified by the evolution of Western societies over the last 250 years – these processes take time. 

In the age of globalization, where expectations of instant gratification (and of instant everything) are the norm, it is easy to become cynical about our ability to affect change and make a difference in the world’s less privileged places. For those working in international development/aid/human rights, it can be particularly disconcerting. The changes which are widely recognized as necessary (for example, the empowerment of women worldwide) cannot – and will not – happen overnight, no matter how many millions of dollars we throw at the problem. It can be very disconcerting for people in this field to spend years working on a project that depends on fickle funding cycles, while they themselves dependent on whether the project or initiative actually delivers quantifiable, measurable results. 

While I strongly believe that monitoring and evaluation is absolutely critical for ensuring accountability, there are often externalities created by a project that cannot be captured in a convenient Excel spreadsheet. While in recent years there have been more and more attempts at measuring social impact at the Bottom of the Pyramid, it is very hard to estimate the long term benefits (or negative impacts) of work that seeks to induce change. Ultimately, we are only able to measure incremental changes in development. The very notion of development rests on the assumption that there is a linear path to follow, from underdeveloped (or LDC, least developed countries), to developing (or middle income countries) to developed (or rich, industrialized nations).

Considering how long it took for Western societies to evolve, we should have a more humble approach to this – clearly, no one, not even Bill Gates and his billions, can create immediate, systemic change overnight. This isn’t to say that we should therefore be despondent and that efforts aimed at change are meaningless. Rather, I’m inviting readers – particularly the more cynical, jaded ones – to mull over the fact that initiatives aimed at change can (and most likely will) take generations to succeed. And that there is value even in very small, marginal changes. It is precisely these efforts that, over time, create the conditions necessary for social, political and economic evolution (revolution?) to occur. We needn’t be impatient, but we should be humble and acknowledge that initiatives carried out today may not have an immediate, game-changing impact. 

For the past half century or so, and through various channels, the democratic/liberal model has been pushed upon the parts of the world which have yet to adopt it. In the early 1990s, Western leaders seem to have all read and integrated the lessons from Francis Fukuyama’s “The End of History“, in which he writes that the defeat of the USSR in the Cold War signaled the victory of the liberal democratic model. The so-called Washington Consensus led the Bretton Woods institutions and Western aid donors to push the developing world to adopt politicies that create the environment necessary for unfettered progress: lower barriers to trade, privatize industry and an insistence on macro-economic stability – all at any cost.

Today this one-size-fits-all approach to development has all but been rejected. What’s interesting about the failed Washington Consensus is that it makes quite clear that a country’s political and economic model cannot be forced or expected to change through policy prescriptions, however comprehensive and far reaching they may be.

Dead Aid Bandwagon

If you are a development nerd, you have probably read ad nauseam about Dambisa Moyo’s new book, Dead Aid. In the last few months, there has been an interesting debate happening between different schools of thought. Essentially, Moyo argues that foreign aid to African countries is one of the preeminent root causes of Africa’s underdevelopment (for lack of a better word), and that instead of throwing billions of (wasted) dollars into the hands of dicators, African governments should instead be given access to more private finance. 


Having worked at the World Bank and Goldman Sachs, Moyo – who hails from Zambia – offers a refreshing perspective on the aid debate (which is typically dominated by white males… no surprises there, right?)

Her book unleashed an outpouring of commentary – some condemning her views, others wholeheartedly agreeing, and everything in between. I have been tempted to throw in my two cents, but the more I read about it, the more convinced I am that a) everything that could be said, has been said and, b) the debate over whether aid should be stopped or not is such a macro discussion that, ultimately, we’re getting stuck at the “50,000 foot” view – and that doesn’t really help move the debate forward constructively. Because, as we all know, foreign aid will NOT end – even if you were able to show by a+b=c that aid caused most of Africa’s problems, Official Development Aid (ODA) is still a critical foreign policy tool, and to call for its halt is unrealistic.

Anyway.  

Most recently, Francis Fukuyama voiced his opinion on the matter in Slate. He compares Moyo’s argument with another prominent African scholar’s views, Wangari Maatai. His piece, I thought, actually touches on a couple of really key issues, which most commentary on “Dead Aid” have failed to focus on. Excerpt:


Both women see sub-Saharan Africa’s fundamental problem not as one of resources, human or natural, or as a matter of geography, but, rather, as one of bad government. Far too many regimes in Africa have become patronage machines in which political power is sought by “big men” for the sole purpose of acquiring resources—resources that are funneled either back to the networks of supporters who helped a particular leader come to power or else into the proverbial Swiss bank account. There is no concept of public good; politics has devolved instead into a zero-sum struggle to appropriate the state and whatever assets it can control.

This view actually echoes what one of the most prominent French African scholars, Jean Francois Bayart, writes in his book “L’Etat en Afrique: La politique du ventre“. In this book, he writes that the “politics of the belly” – which is to say the political culture that is prevalent in Africa whereby rulers seek to accumulate power and possessions –  is not only the fundamental issue that has been plaguing the continent, but also a product of its very particular social, political and economic history. In his book (which I unfortunately don’t think has been translated into English), he describes how complex social and political networks arose in the context of colonial and post colonial sub-Saharan Africa, and how the polity that emerged is defined by an intricate interplay between foreign dependency, reliance on local (and often socially constructed) tribal or ethnic identities and leaders’ destructive desire to selfishly accumulate resources. 

Of course, given that we’re talking about a whole continent, generalizations are very hard to make – so while one can certainly find counter points to Bayart and Fukuyama’s argument, there is an element of truth to it, which to me captures the most powerful criticism of Moyo’s book: it’s not aid per se that’s the problem – it’s what’s being done with it, and how it’s being managed. And of course, Moyo knows this. But, as Owen Barder notes:


It seems to me that Dambisa Moyo has set up a false dichotomy between aid and entrepreneurship. Many of the things Moyo would like to see – better access to financial services, a better business environment, lower tariffs – can be (and are) supported by aid. 

It’s been frustrating to read Bono’s response to Moyo, as well as the reactions from a lot of people “shocked” that Moyo would call for an end to foreign aid. But, if (like me…) you subscribe to the Easterly school of thought that holds that most ODA ends up being horribly wasted and that an entirely new ODA regime needs to come about, then her argument, while virulent and, frankly, aggressive, makes sense. 

Just recently, from (of all places) USA Today:


Two United Nations agencies spent millions in U.S. money on substandard Afghanistan construction projects, including a central bank without electricity and a bridge at risk of “life threatening” collapse. 

In the current context, I think it’s great to debate the virtues (or lack thereof) of ODA – however, focusing on that macro question shouldn’t be a reason to turn our focus away from the real issue: today, there are millions of aid dollars at work – how do we actually make them work, with a view to incrementally decrease countries’ dependence on foreign assistance? 

Oh, aid effectiveness… You are hella elusive. 

I heart CGD and apologies

First, the apology: I should have been blogging a lot more last week from the Clinton Global Initiative, but it turned out to be pretty much impossible in light of many work related obligations. I will say, though, that I was really glad to be involved only from afar with the logistics of this event (unlike my NY based Clinton Foundation colleagues) – so much work goes into the organization of a high-level conference such as this one, I was tired just looking at the small army of Clintonites running around for 3 solid days.

It was a really great experience – even though I sometimes felt a little out of place, a little bit like a “fly on the wall”, as the majority of those present are incredibly accomplished individuals from all sectors – NGOs, governments (although not enough Western reps in my sense), private sector, international institutions. They all gather for 3 days around Bill Clinton (seriously – they gather around him), and make promises to change the world. It’s pretty incredible. This year, members made 250 commitments, valued at $8 billion, to impact 158 million lives.

Those are some serious numbers.

One of the most positive aspects of this conference is that it allows attendees to mingle during pretty fascinating working sessions (the one on poverty alleviation chaired by Madeleine Albright was great for instance). It allows for views and perspectives to be confronted in interesting ways. Then, the fact that throughout the 3 days, commitments are made by the prestigious attendees, really enhances the quality of the gathering. If anything, this conference encourages meaningful cooperation between sectors, and the search for common solutions to common problems prevails over particular interests (at least in the short run – I am not that idealistic…)

While not my field of predilection, I highly recommend to reading/watching/listening to some of the sessions on climate change, particularly this one, which features John McCain and Barack Obama, among others – and, because he was such a great speaker, Al Gore’s comments in the opening plenary.
Or just watch the whole thing here.

In related news, Nancy Birdsall, the president of CGD, delivered some sharp remarks at the UN, highlighting the painful truth of highly inefficient and non-transparent official development aid:

“How ironic that the United Nations carefully assesses and reports on the progress of developing countries against the MDGs, but has no measures or indicators and no periodic official reports on the progress of the rich countries against their commitments to those goals!

“At the moment the only concrete measure of rich country commitment is the proportion of GDP dedicated to aid. Yet the quality of aid is on average so poor—because it is tied, fragmented, uncoordinated and unaligned with developing country programs and budgets, and almost entirely input-based instead of outcome-oriented—that the quantity from any one donor is a poor measure of even that donor’s own real contribution. And of course aid itself is only one measure of a rich country’s overall commitment to development and the war on poverty.”

It makes me wonder whether a case could be made that international development (not humanitarian efforts, which are different), should be undertaken by non-governmental actors (in

the broad sense of the expression). I’m not the biggest free market advocate out there, but something should be said about how much more efficient private sector efforts are in bringing about positive systemic change in the developing world.

Some photos of CGI:

Mayor Bloomberg, Lance Armstrong, WJC

The Queen of Jordan, Ellennnnnnn!!!, the chairman of Coca-Cola, Bono and Al Gore.

H.W. Bush and WJC

A pretty crappy shot of Gordon Brown

Here is Bono, spreading the good word – apparently, he’s been doing it elsewhere too.

Second Plenary – generating profits, jobs and equitable growth

Well, this morning’s plenary session was really pretty amazing – on stage, the Queen of Jordan, the President of Liberia, the Chairman of Coca Cola, Bono and Al Gore. All had some really interesting and inspiring stories to tell (save maybe for the chairman of Coke, who merely encouraged MNCs to continue investing and engaging in emerging markets). Al Gore pleaded with the youth to take part in acts of civil disobedience if the authorities weren’t changing course – his entire intervention, as well as that of Bono, was incredible.

Bono reminded us that we managed to find $700 billion last week to rescue Wall Street, but that we were having a hard time scrounging the $25 billion it would take to make a huge difference in the fight against AIDS, malaria and TB. While drawing this kind of comparison is a bit of a cheap shot (the stakes of non-intervention in Wall Street are different – and one could argue higher – than the stakes of saving the lives of children), the whole point of this first plenary (and I’d say of this entire conference) is to motivate and inspire those who have the ability to make things happen. I suppose that’s the reason that first session was entitled ” A Call to Action” and not “Deep Thoughts on Development Strategy”.

I unfortunately missed the working sessions, as I was called into some meetings for the Clinton Giustra Initiative, but now I’m back in the midst of it – another plenary is about to begin, and then, “A Conversation between Bill Gates and Bill Clinton about Giving”. Should be great.