ecdpm economic transformation and the role of the private sector
TRANSCRIPT
Anna Rosengren
25th October 2013, ECDPM, Maastricht
Economic Transformation and the
Role of the Private Sector
• Context
• Which private sector?
• 3 agendas in 1
• Implications and issues for development
policy
• What are we currently doing at ECDPM?
I. Outline of presentation
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• Until at least the mid-1990s, Africa had “inclusive, sustainable, pro-poor, shared stagnation”.
• Growth necessary but not sufficient condition for long-term development and poverty reduction.
• Need to be accompanied by economic transformation where inclusive, sustainable, pro-poor, shared growth is key objective
• So what does mean? And how is it achieved?
Economic transformation, governance, integration and trade for inclusive growth
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“We want to engage the private sector…”
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• UK: “bring private sector ideas, innovation and investment into the heart of what we do...”
• NL: “Dutch interests first, more so than in the past....PPPs, business instruments and economic diplomacy can lead to gains in both commercial profit and poverty reduction.”
• DK: ”… strategic priority in Danish development cooperation to work for a strong private sector…important that Danish business participates actively..."
“...and help our own…”
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Push factors: Fiscal crisis, job cuts, aid squeeze & “value for money”
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Push factors: competition & “new models”
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Pull factors: Learning from the private sector
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• The private sector is going there anyway…
…and the private sector is “doing development” anyway….!
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So who is this “private sector”?
And what are the implications of “engaging” with it?
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• Private sector developmentOld agenda: domestic, enterprise growth, value-addition, exports, access to credit, business climate, firm-level skills, industrial policy etc.
• Private sector investment for developmentNew agenda: international, partnering with developed country firms, offset risk, link producers & suppliers
• Private sector finance for developmentInput side – promote and leverage private sector finance
Three distinct agendas
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Private Sector Development… developing country businesses were able to startup and expand
Private Investment for Development… there was a way to encourage more inwards investment to link with the local private sector
Private Finance for Development…there was a way to bring in more finance for public investments and the private sector
Assumptions – development would happen if only…..
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• How to promote economic transformation, trade
and value-chain integration?
• How prioritise & implement reg. reforms?
• How to make credit accessible to firms?
• What role for FDI and industrial policy?
• How to make it “inclusive”?
• Mixed results
• Endogenous and exogenous firm conditions
• The PE of economic reforms
1. Private Sector Development: Issues
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• Less clarity on agenda and processes
• What donor tools available? DFIs, ODA, non-ODA
• What about tied aid/PCD?
• From CSR to "core business model”
• Defining the developmental
aspect/additionality/opportunity costs?
• What do firms say?
2. Private Sector Investment for Development
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• About inputs – bringing in private finance for development ends
• Blending grants and loans & private sector finance
• Public-Private Partnerships
• Challenges
- PPPs need to be commercially viable
- Risk management and balancing
- Legal environment
- Capacity to use effectively
3. Private Sector finance for Development
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• Potential to find real synergies
• Need to identify the additionality of engaging PS- trade-offs
• Create better tools to measure & identify impact
• Fully engage national and local governments
• Improve stakeholder communication and mutual understanding
• Regulate expectations and understand the mandate and capacity of the other
If development is the ultimate goal, then:
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• Informal donor sessions
• Cluster
• Private sector approaches to nutrition
• Development corridors
• Emerging economies impact on African
Agriculture
What are we currently working on?
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1. Do you agree with the distinction between the three “agendas”?
2. What challenges are there to working on this agenda? Is there a “good” versus “bad” private sector?
3. What is the link between this agenda and your programme/theme?
4. What are the key opportunities for the future?
Questions for discussion
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Common or conflicting interests?
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• Private Sector: Image and reputation, supply chains, competition, consumer markets, “do good”
• Donors: financial crisis and decreasing ODA, value for money, new positive grand narrative
• Partner governments: employment creation, raised productivity, inclusive growth, improved business climate, new types of investment, interest groups,
• NGOs and CSOs: people centered business….
Common interests (or at least non-conflictive)
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• The corporation as a “psychopath”
• Profitability vs optimal developmental
outcome (people vs profits!)
• Tied aid, subsidies, PCD!
• Risk-sharing balance
• Opportunity costs of finance
• National ownership
• National vs local conflicts
• Impact assessments
Debate: Conflicting interests
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