Clusters: Poverty reduction through effective civic leadership

In the River They Swim, a collection of essays by Rwanda’s President Paul Kagame, Seven Fund president, Michael Fairbanks, and OTF leaders, Rick Warren, the author of The Purpose DrivenLife, observes that “poverty is a spiritual issue, “that it demeans dignity, shrinks the soul, wastes potential, and inflicts suffering on over half the world’s population. He then poses the question, “Does that matter to you?” It should.There is, of course, a follow-up question: “What can be done about it?” Warren believes that one tenet forreducing poverty is insightful, just and action-oriented leadership. Although it is acknowledged that private and public sector leaders play a key role in answering the question of what can be done, civic leaders are frequently overlooked. In the developed world, civil society organizations, from chambers of commerce to universities’ tech transfer offices, have enabled firms to create prosperity. Civic organizations are most effective in this endeavor through informal associations known as clusters, which also include the private and public sectors.In his landmark book, The Competitive Advantage of Nations, Michael Porter discusses clusters as an approach to enabling innovation and reducing poverty. Clusters are geographically close groups of inter-related companies and associations. They typically include direct competitors as well as production and marketing firms, equipment and raw material providers, partners that buy and sell products and government agencies. The most effective clusters include research institutes, universities, chambers of commerce and other civic entities. Effective clusters help to break the low cost – low investment pattern. Competent leaders understand that in any country where companies export complex products, profits can be re-invested in compensation and training to improve the workforce. Better workers improve the capacity toexport valuable products, which increases wealth for the average citizen. However, developing countries that rely on basic advantages such as cheap labor and sub-soil assets tend to export basic products and invest less in the workforce. Firms in these countries often compete on price, and the workers remain poor. Good leaders understand the need to break this pattern. Civic leaders can play an important role in enabling clusters to compete in unique ways. Since clusters uselinkages and spillovers of technology, information, skills, research, etc., to foster innovation, civic leaders can focus on specific industries in a developing country to help expedite the innovation process. For instance, in Afghanistan in 2005, a newly formed chamber of commerce supported market research and trade missions for businesses in the carpet and agriculture industries. This helped to both reduce the cost of these activities for individual members and allowed joint problem solving for new market entry, and a group in the agriculture industry successfully partnered with Indian retailers to sell produce in India. In Rwanda, there are several established export industries: mining, tourism, coffee and tea growing, as well as nascent agricultural and ICT industries that could benefit from strong civic leadership. For instance, APEHOTOUR, an association created in 2000 to promote tourism, is creating a new institution, the Kigali Tourism School. It offers training in a wide variety of hospitality work, as well as ICT and language training. It is cooperating with Kenya’s best tourism college - Kenya Utalii College to offer regional professional tourism training. This is critically important, as tourists complaints have centered on the quality of services.Although several key civic entities in Rwanda are gaining momentum, such as the Private Sector Federation, which provides support through business plan development and business development centers, there is still much progress to be made. A good next step would be a concerted effort to include civic leaders along with industrial leaders and public sector officials in all clusters.The Rwanda Roundtable on The Role of Universities in Building a Culture of Civic Responsibility, Interdependence and Prosperity provided an important opportunity for its participants from higher education to support Rwanda’s clusters. Just as a national conversation on civic responsibility can provide Rwandan citizens with an opportunity to learn about citizens’ responsibilities for the public good, universities can have a major economic impact by fostering the inclusion of civil-society organizations in clusters formed to increase enlightened and effective business development.In addition to providing knowledge workers, local universities can work with clusters to create products and processes for the marketplace, and create jobs. In developed economies, education leaders work with the private sector through collaborative research, exchanging personnel and equipment, and by licensing inventions for commercialization. The collaboration of leaders in business with civic leaders in Rwanda is an integral part of the national conversation. Prosperity and the public good are partners in progress.This article is part of a series of articles from ‘The New Rwanda: Prosperity and the Public Good’ by Sandra Myers.