25 november 2006
Economic impact of Heineken in Sierra Leone measured
Companies are eager to get more insight in their local economic impact, not only to adjust their operations but also to include societal opinions in their business decisions. René Kim, partner at Triple Value: "There is always discussion between non-governmental organisations and companies. NGOs often accuse private enterprises of merely extracting cash and exploiting cheap labour, whereas companies boast about creating employment. Both views are biased, of course. This model can correct those views by showing quantitative results of the economic impact."
The Economic Impact Assessment model, presented at a BiD-seminar last Thursday, considers both the direct economic effects (cash spending and jobs provided) and indirect economic effects (cash re-spending and jobs generated). In the case of SLBL, the brewery with 175 employees generates employment for some 6,900 retailers, distributors and suppliers.
The model also measures which income groups benefit the most. In order to quantify the effect on inequality, the model distinguishes between the food poor (people who earn too little to feed their families sufficiently), the poor (people who don't earn enough to meet the daily needs of their families) and the non-poor. Analysis shows that the substitution of imported barley by locally grown sorghum, a scheme applied by Heineken in several African countries, is relatively most beneficial to the poor.
René Kim: "The model is generic. By using other parameters it can easily be applied for different companies in different regions. Several multinational corporations, like Celtel and Shell, have shown interest in this kind of assessment."
According to Kim, the model was also well received by NGOs. "Their main objection is that the model is focused on the economic impact and neglects for instance social and environmental effects. That is completely true, but the more aspects you add in a model, the more complicated it gets. Measuring the economic impact is one way of looking at business, but not the only."
P+ Webtip: Heineken in Sierra Leone