CEO Turned Philanthropist
14 February 2008 Percy Barnevik
The success of Hand in Hand International can partly be attributed to its foregrounding of good business practices. CEO looks at how Percy Barnevik's business model is tackling world poverty.
Percy Barnevik commands a formidable reputation. Having been CEO and chairman of Sandvik, Skanska, ABB and AstraZeneca, he is currently an advisor to Hand in Hand International (HHI), a self-help movement based in the southern Indian state of Tamil Nadu. Established five years ago, HHI currently employs 4,000 people along with 11,000 volunteers.
Barnevik's view is that an NGO can be run almost exactly like a company. The better the NGO is run, the more resources become available, and HHI is keen to reward strong productivity and quality. Costs per unit and administration expenditure has also proven far less than other charities.
Barnevik also values good working relationships, with close cooperation between the business sector and the charity world. This has been helped greatly by HHI's identifiable commitment to its five pillars programme.
The programme seeks to mobilise illiterate women, eliminate child labour, improve water and waste management, promote health education and equip citizens with the tools of democracy.
THE FIVE PILLARS
In Barnevik’s view, HHI's biggest endeavour is the women’s programme, which is working to lift living standards in impoverished villages. Around 80% of the women involved are illiterate, often low-caste and living on less than a dollar a day. To date, HHI has taught 280,000 women to read, write and master basic numeracy.
The women are also given business coaching and mentoring, with 6-7,000 new enterprises established every month. Ten Indian banks currently supply credit, although HHI is planning to start its own bank. The repayment rate for these family businesses is 99.6%. By 2011, it is expected that the programme will have created 1.3 million jobs.
In the last four years, 12,500 children have been freed from bonded labour and taken into one of HHI’s 44 transit schools. Often traumatised, they need compassionate guidance before they can enter the government school system.
Over the next four years, 4,000 Citizens’ Centres will be established. Offering libraries, IT facilities and tuition, the centres will strive to address the computer illiteracy of 20 million villagers.
Retired civil servants will also help low-caste villagers join mainstream life – many of which have never even voted.
The centres benefit from donations of used computers and software from IT-companies such as Nokia, Microsoft and Hewlett Packard. HHI also has a joint venture with the Swedish telecom giant Ericsson for e-learning and Telemedicine.
HHI's medical camps run health campaigns that cover 250,000 people per year, while innovative environmental programmes are changing rural villages beyond recognition with regular rubbish collection, water management, tree planting and the greening of previously arid waste ground for grazing.
THE BUSINESS APPROACH
Barnevik believes strong business relationships have helped these endeavours. The president of the Confederation of Indian Industry for South India sits on the board, while Ratan Tata, the chairman of the Tata Group, is an old friend. Taj Hotels is also involved, buying its uniforms and bread from HHI business projects.
In addition, Barnevik expects his own average annual commitment over the next two-three years to be in the region of £3-4m, but other donors are needed to maintain growth, especially as other countries are keen to replicate HHI's success.
The biggest single donation so far has been £2.8m from the af Jochnick family, the founders of Oriflame, a global cosmetics company.
One of the attractions of HHI to donors are the low administration costs - well under 8%. It costs £7.50 to put a woman through the literacy course, as does entrepreneurial training. To run a transit school for one year costs £2,000, and examining one patient, including vaccinations and advice at a medical camp, costs £2.50.
To ‘adopt’ a whole village of 2-3,000 people and run the five pillar programme for two years costs £12,500. The sum includes, among other things, the elimination of illiteracy and undernourishment among children, making a village free from child labour, starting 100 micro enterprises, setting up one Citizen Centre with IT facilities and establishing environmental projects.
The jobs for women programme has received a lot of attention outside Tamil Nadu, and the Governments of South Africa and Afghanistan are keen to adopt the charity’s scheme. The plan is that 30 Indian consultants will train 1,000 local aid workers in South Africa, who in turn will train 3-400,000 women per year.
All documentation will be translated into Xhosa, Zulu and other local languages. In five years, the joint target is to create 1.3 million jobs in South Africa. The target in Afghanistan is 2.2 million jobs.
Other interested countries include Africa, Brazil and China.
With companies taking a larger social responsibility, NGOs are increasingly aware they must work with market forces in order to succeed in eliminating extreme poverty. Barnevik notes with interest that retired businessmen and women are increasingly interested in setting aside six-12 months working as mentors to women entrepreneurs.
"For them and undoubtedly for me, this work has enriched my life," he says, " I would like to go on record as advocating that a bigger share of the world’s £55bn aid money should be reallocated from traditional grant giving to help to self-help projects. These are efficient, cheap, fast and above all sustainable. In my experience in India, it costs £50 to create a job. Thus £3-5bn per year for 20 years could go a long way to eradicating the world’s extreme poverty."