Beyond philanthropy: What happens when a multinational creates its own development agency?

Chevron's Niger Delta Partnership Initiative focuses on economic development, capacity building, peacebuilding, and analysis/advocacy. Here, farmers are testing starch content in cassava tubers as part of an intervention to link farmers in Edo State Farmers Agency to the industrial market in Benin. Photo: Courtesy of Chevron.

Nigeria’s Niger Delta region is not only rich in natural resources like oil and natural gas, it is also rich in socio-economic challenges. The poverty rate for its 32 million inhabitants is close to 50 percent. And with a population bulge on the horizon – two-thirds of the population is under 30 – that rate will climb unless the economy grows significantly. Poverty has played a role in three decades of conflict in the region, as communities have struggled over limited resources.

For a company like Chevron, which maintains significant operations in the region, this cycle of poverty and instability makes for costly business. Like other multinationals, the company faces problems of oil theft, sabotage, and threats of kidnapping and violence.

Instead of viewing the regional conflicts solely as a business problem – or a philanthropic cause – Chevron took a novel hybrid approach, establishing the Niger Delta Partnership Initiative as a semi-independent development organization with deep local roots. The NDPI, through its on-the-ground implementing agency, works to find market-based solutions to local economic problems.

At a time when many businesses are more involved than ever in the global development agenda – both moving toward more strategic philanthropy and experimenting with business-driven models of corporate responsibility – Chevron’s work in Nigeria provides a compelling model of a multinational rolling up its sleeves and applying itself to community-based development.  

Pioneering a new path

Chevron’s approach to community engagement in the Niger Delta grew out of the company’s earlier work in Angola and Papua New Guinea, according to Dennis Flemming, project director of the NDPI.

In those countries, Chevron worked closely with donors to fund and implement development projects.

In those situations, however, the company was largely following the lead of the donor agencies. The company decided it wanted more freedom to define its own agenda, while remaining involved on the ground, according to Flemming.

“We wanted to take advantage of our private sector roots and not simply work like a traditional development organization,” said Flemming. “What evolved was a hybrid of both.”

Chevron launched the NDPI Foundation, a U.S.-based nonprofit, in 2010 with an initial grant of $50 million. Chevron employees make up a minority of the organization’s independent board. NDPI’s implementing agency is the Nigerian Foundation for Partnership Initiatives in the Niger Delta, known as PIND, a Nigerian-registered nonprofit that has its own board of development experts.

“NDPI provides strategy and planning, and PIND is the executing agency,” explained Tam Nguyen, NDPI’s executive officer and former corporate responsibility manager for Chevron.

The initiative has 17 projects ongoing in four focus areas: economic development, capacity building, peacebuilding, and analysis/advocacy. Because NDPI operates independently of Chevron, it provides a platform through which other donors and corporations can contribute.

The balance between international and local interests baked into the governance structure of NDPI is part of what makes the initiative a compelling experiment in corporate engagement, said Jane Nelson, an NDPI board member and director of the Corporate Social Responsibility Initiative at Harvard’s Kennedy School of Government.

“The dual board structure might seem complicated, but it brings an important element of accountability. The Nigerian board brings a strong local perspective,” said Nelson, noting that the PIND board has worked to build relationships with local government in the Niger Delta. “Those relationships are absolutely critical to success.”

Through PIND, NDPI remains closely connected to the work unfolding on the ground, said Flemming.

“This hands on approach forces Chevron to look at sustainability differently,” he said. “Usually when you’re an oil company, you have resources to address social problems, but limited capacity to coordinate the work yourself, relying instead on existing development agencies with other priorities.”

But with the PIND staff of 40-plus professionals operating from three different locations in Nigeria, NDPI “now has more local development capacity than most donors or even local NGOs,” said Flemming. “We are a full-blown development agency.”

And what the initiative has that other development agencies lack is steady operational funding.

“We don’t look for money to put into the organization itself,” said Nguyen. “We look for partners willing to work together to fund projects.”  Donors currently investing in the Niger Delta region through NDPI include USAID, UNDP, GIZ and the U.S. Africa Development Foundation. NDPI generally seeks to leverage Chevron funding through 1:1 ratios, meaning that other donors’ contributions match those of the company’s.

After the first three years of development, the initiative’s scope is still evolving. To date, it has directly benefited more than 10,000 people, created more than 400 jobs and supported close to 100 local businesses, according to an internal analysis. But interest is growing amongst other donors, who have already committed an additional $50 million of funding to the initiative’s projects beyond Chevron’s initial funding. This diversity of funding and support enables the foundation to continue expanding its scope and increasing its impact.

An arms-length: Corporate social enterprise

Of course, explaining the initiative’s unique structure isn’t always easy. “Everyone asks us, ‘Are you an implementer or a corporate donor?’” said Flemming.

To express the concept behind the initiative, Nguyen coined a new term: Corporate social enterprise.

“NDPI is a nimble social enterprise that is trying to solve development challenges through market-driven solutions,” Nguyen said. “At the same time, with Chevron representatives on the board, we are also trying to advance Chevron’s interests by improving security on the ground through development.”

Flemming puts it more simply: “We want to achieve social objectives, but we keep the business in mind.”

NDPI’s “arms length” relationship with Chevron helps establish its independence, and yet the initiative is able to draw on the assets of one of the world’s largest multinationals.

“NDPI not only brings Chevron’s corporate financial resources to the table but also brings in corporate accountability, project management and communications capacities,” said Harvard’s Nelson.

While NDPI can draw on Chevron’s deep expertise in management and operations, it still retains the independence to innovate.

Nguyen explained that NDPI has a “high degree of flexibility” in its ability to partner with donors and make quick decisions on the ground. “We take some of the risks that others aren’t prepared to take,” he said. “In that way, we operate like a social enterprise, even though we have corporate roots.”

A community-based approach

While many companies have engaged with national governments around development priorities, few have invested so deeply in working with – and listening to – local communities.

“A participatory approach is not new for the international development community, but it is new for business,” said Nelson, noting that NDPI engaged individual “beneficiaries,” community NGOs and local government entities in identifying focus areas, planning programs and even conducting evaluations.

“It’s very rare for companies to seek out genuine community participation,” she said.

NDPI has focused particularly on strengthening local NGOs and farmers associations. “Capacity building is so un-sexy. The term just makes people’s eyes glaze over,” said Nelson. “But Chevron recognized that development is not just about funding a school or doing a health project. If you want long-term impact, the community institutions have to be more effective, and that involves long, painstaking work.”

Johanna Nesseth Tuttle, who co-directs the Center for Strategic and International Studies’ Project on U.S. Leadership in Development, said that one of the “big surprises” of NDPI has been this focus on capacity building.

“Most development people would agree that training and skills building is at the heart of long-term sustainable development, but that requires hands-on, one-on-one work,” said Nesseth Tuttle. “Chevron has been much more hands-on than many others would have patience for.”

Not just markets for poor, but markets for peace

Krista Hendry, executive director of the Fund for Peace, described Chevron’s attempt to improve the Niger Delta’s security environment through economic development as “absolutely groundbreaking.”

“I haven’t seen anything like it from another company,” she said. “They have involved the government and are trying to be as inclusive as possible.”

Hendry explained that while many conflicts, including those in the Niger Delta, involve ethnic or religious groups fighting against one another, the more fundamental struggle is often over resources including water, food and jobs. Multinationals who work in these environments have a role to play, she said.

“Companies don’t need to get involved in ethnic or religious differences. But they can help with the economic development of the region, and, at the same time, help create a culture of talking things out.”

Hendry and other experts agree that finding employment for young people – particularly militants demobilized through the country’s 2009 amnesty program – is a key to eliminating armed conflict in the region. As a former Niger Delta militant told the Economist last year, “Where there are jobs, there is peace.”

NDPI aligns itself with the “making markets work for the poor” approach to development, according to NDPI’s Flemming.

“We look for growth opportunities in the Niger Delta through research and analysis,” he said. “We ask: How can we remove constraints that prevent the poor from entering new markets and creating new livelihoods? It’s a facilitative role.”

NDPI currently focuses on developing livelihoods around a number of local commodities, including cassava, palm oil and fish. The projects aim to improve value chains, through which many individuals may be employed.

“Instead of helping 10 farmers, or building a processing factory, they are asking system-level questions, like: ‘How do we make aquaculture work in this environment?’” said Nelson.

A model for other companies to follow?

Given the success Chevron is starting to realize through NDPI, is “corporate social enterprise” a model that other corporations should adopt?

Flemming is quick to say that NDPI is not a one-size-fits-all-model. “If we were to go to another country right now and set up a new initiative, it might look very different” because the local situation is different, he said. But he encouraged other companies to consider Chevron’s “experiment” in the Niger Delta and try their own. “We hope others will take this concept, adapt it to their own situation, and see how far it will go.”

The real lesson for companies, said Nelson, however, is “not to reinvent the wheel” of international development. “Become a part of the development community, and bring your business resources to it.”

Companies in the agribusiness and health care sectors could draw important lessons from the NDPI model, said Nelson.

“Most large agribusiness companies are working with small-holder farmers now through their core business. They could set up an effective nonprofit to build farmer capacity,” she said. Health care companies, which have often focused on donating drugs, could engage more deeply in capacity building of local health systems.

Ultimately, however, Chevron’s work with NDPI holds lessons for any multinational operating in today’s environment, according to Nelson. “If you are a global entity operating in a developing country, how do you go beyond all the risk management and due diligence and local content creation – all of which are critical to the business – and answer the question: ‘What do we need to do become a development partner to this community?’ Many will just write a check, but Chevron offers an example of doing something more.”

In the past, companies outside the extractive industry have been quick to dismiss the development work of companies like Chevron, according to Fund for Peace’s Hendry. Those companies perceive that extractive companies are tied to a location, no matter how dangerous, while those in other industries may simply choose to leave a country with an insecure operating environment. 

“Now we’re starting to see a shift,” said Hendry. “Companies are more global than ever, and with events like the Arab Spring, they realized they can’t escape conflict.” With that deepened perspective, she said, experiences from Chevron have become more relevant.

CSIS’s Nesseth Tuttle said that because Chevron has been working in such difficult environments for so many years, it is “further along” in its thinking about how to engage in community development.

“They’ve also had strong leadership from the top that’s been willing to try creative things,” she said.

Tuttle said that she hopes other companies will evolve their own thinking on corporate engagement. “You hear a lot of statements like, ‘We’re investing in the hopes that it will improve society.’ What they should be saying is, ‘We’re investing because we want these communities to grow, and we have got to be partners in that growth.’” 

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