Its About Development (not NGOs vs Mining companies)

Canadian International Development Agency (CIDA) is Canada's Official Development Agency (ODA) through which the Government of Canada channels money for international aid and development.  My own experience with CIDA has been that any programs which are simple and useful they tend to kill and while they claim to be "results driven" their bureaucratic overhead is some four times that of comparable European ODAs.  

CIDA has been very reluctant to work with the private sector other than consulting firms, on the grounds that they would rather forgo development than do something a commercial company might benefit from.  But to give credit, they have co-funded some development projects with Canadian mining companies (see article below). Having said that, CIDA has funded some good on-going development programs through NGOs to alleviate poverty in some of the poorest parts of the world.

This is apparently changing.  Policy now seems to be to fund development projects where the investment pays off not in development necessarily but in increased trade.  They are unfunding KAIROS Canada, long time effective development NGO composed of several Canadian churches.  There is a suggestion that KAIROS may have angered the Harper government by refusing to whitewash Israeli atrocities against Palestinians and not necessarily siding with Canadian mining companies when they may be in the wrong.

CIDA has also greatly reduced funding to Canadian Catholic Organization for Development and Peace (CCODP).  You can read more details on Dennis Gruending's Blog HERE. 

Now what CIDA has done is fund to the tune of many millions of dollars Corporate Social Responsibility (CSR) projects with three Canadian Mining companies. You can read the backlash on Dnnis Gruending's Blog and many others. I am not in a position to defend the projects or the companies because I know nothing about them, however I do know a little about CSR having worked on a couple of projects with my friend Wayne Dunn.  When done right, CSR projects can bring real benefits to both the communities around the mine and the mining company.

Wayne has written a couple of articles on his experience with CSR.  The first is reprinted below with his permission.  It is also available on the website of Canadian Association of International Development Consultants (CAIDC).  His second article is available on the website of the McGill Reporter HERE.

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I have been listening to the debate regarding CIDA’s partnership with some Canadian mining companies and felt compelled to put forward some thoughts based on over two decades of experience working at the interface where the interests of communities, global private sector, governments, development agencies, environment, NGOs and others meet.  There have been some spectacular successes and abysmal failures at that interface.  Impoverished people and communities have been uplifted, or they have been pushed further down, environmental miracles and disasters have occurred.  It has been far less about the types of partners involved than it has been about the right partner, plan and approach, based on the specific situation.

The recent discussion over CIDA's collaboration with Canadian mining interests in support of international development has been framed in terms of the interests of Canadian NGOs vs the interests of Canadian mining companies.  The discussion is more properly framed in relation to the interests of the people and communities that should be the beneficiaries of Canada's development assistance.  It’s about the world’s poor and how CIDA can best support education, health and other development issues.

CIDA does not have an easy role.  Its budget comes from Canadian taxpayers and it has a responsibility to ensure that the money it invests in development produces results.  CIDA often works with and through Canadian partners including NGOs, educational institutions, private sector (including mining) and other partners.  There are successful examples for all types of partners, just as there are unsuccessful examples.  No single group holds a monopoly on success, or failure.

I was one of the first to facilitate a large, developmental partnership project between CIDA and a Canadian mining company.  Canadian mining company Placer Dome wanted to go far beyond normal practices and assist the families of 2,500 retrenched mineworkers to establish alternative income streams.  The company committed $5,000,000, CIDA contributed $2,000,000, a number of local NGOs and organizations were involved and the direct impact was felt by thousands of families in hundreds of communities across Southern Africa.  The indirect impact changed the social face of the South African mining industry and led directly to the industry’s progressive (and economically self-interested) HIV/AIDS programming and the project was published in the Stanford Social Innovation Review (link) and used as a case study by the Stanford Business School.

After the success of work in South Africa the World Bank asked Placer Dome to help develop a strategic approach to HIV/AIDS programming in Papua New Guinea that would engage all stakeholders.   We put together a plan and CIDA contributed $200,0000, Placer Dome about the same amount and other partners including Australian Aid, World Bank, World Health Organization, PNG AIDS, Chamber of Mines and others contributed cash and resources.  The end result was a Public Private Partnership Strategy and programming for HIV/AIDS in PNG that was enthusiastically endorsed by a broad cross section of the HIV/AIDS constituency.

In Turkey Eldorado Gold was in the process of developing a gold mine and their work with local communities identified agricultural development as a key local priority.  CIDA partnered with Eldorado (CIDA $200,000 cash, Eldorado ~$750,000 cash and in-kind) and strategies and programs were developed that helped to increase income and productivity of the farmers.

In all of these cases a development impact was achieved because CIDA picked the right partner for the situation.  The mining companies, by virtue of their presence in the area and understanding of the situation, were uniquely positioned to produce results in these cases. In other cases it may well be an NGO or others that would be the best partner.  Experiences like these should help to guide the current debate. 

Canada has a global responsibility to support development around the world.  The execution of that responsibility should not be about one Canadian group or another, but rather about the impact on development.  It isn’t a mining company vs NGO issue.  The mining sector has done terrible things to people and communities, in Canada and globally.  But, so have churches, NGOs, governments and others.  All these groups have positive accomplishments too.  CIDA cannot, and should not exclude entire sectors from its partnership programs.  CIDA must find the partners that enable it to be the most efficient at supporting development for the world’s poor.

Wayne Dunn has worked with private sector, governments, NGOs, civil society and others on over 60 social responsibility/development projects in over 30 countries.  He can be reached at +1.250.743.7619 or wayne@waynedunn.com

Selling a small (software) company

This post is courtesy my friend Wayne Dunne of Portarlington, County Laois, Ireland.  Wayne is a software developer and while his advice, based on his own experience, was for someone interested in selling a small software company, I think it could be applied to anyone selling a small company.  I have his permission to post it.

1. Make sure the buyer is serious, an approach could simply be reconnaissance, depending on who they are.

2. You will need to have a handover period between the sale and when you are finally free.

Make the handover period as short as possible (because after you get paid and it's not your baby you will find that you don't care as much anymore, sad but true)

3. During negotiations befriend the buyer and use terms such as "I will have to bring this back to the shareholders to decide". Make the shareholders appear to be the bad guy that you are both working to please to get this deal through.

4. You will be tied to some sort of non-compete clause, if you plan to break it in the future then offer a global non-compete clause. Due to this being so vast it will be viewed as being unreasonable (in most cases) by the courts and will be omitted from the contract, without breaking the whole contract. (At least in UK law - see Blue Pen Test)

5. As with all negotiations - know what you want going in and ALWAYS be willing to walk away from a deal. If you feel you must complete a deal, you have already lost

6. Talk with your suppliers about the offer, under the guise of "I am looking at doing this, would this impact your relationship with the firm going forward", really you are going to see if some of them are willing to become potential buyers. (More potential buyers means more leverage for you).

7. Find out the real reason they want to buy you and focus on that, for example when McAfee were a far smaller firm than they are today they bought out a similar sized technology firm, (I can't remember the firm) - But they didn't want their technology, they wanted their sales team. Not the reason why you would expect a technology company to be purchased, perhaps something like this is in play here?

8. Ask for things you don't need during the negotiations, maybe say you want to keep two of your best engineers for you next business, then be willing to give up the things you don't need to get more money or to get other things you may want.

9. Get an M&A advisor if you want, but do the negotiations yourself. This is too important to leave up to others.

10. Talk with a tax advisor, structure things is the best way for you to keep as much of the sale money as you can.

11. If they want to pay in installments get as much as possible in a lump sum up front and tie the installments to easily achieved targets

12. Most people are weak when it comes to negotiations; that includes you, but it also includes him, remember that.

13. Don't tell your customers about the potential sale, unless they are so large they can buy you, and you are so important to them that they will buy you.

14. Lastly, always keep in mind that you didn't go looking for this sale, it came to you, if it doesn't happen your life will go on just the way you had planned before this came along.

When I sold my software business a while back it was to my largest customer. But I subtly prepped them for a long time leading up to the sale.

I began the process by talking with them about how companies often get bought out and how products end up failing under new owners who don't have customers best interests at heart and how much of a shame that is. This was dropped into a few conversations over time. The day they brought it up in a conversation rather than me bringing it up, I told them how important the relationship between us was, that it wasn't something they should worry about, and that if that situation would ever arise I would give them first refusal on any deal. That created the buyer for me while it looked like I was giving something away.

From there I slowly worked on making them think they could make my product better than I could till eventually they believed it too.