engaging the private sector in international cooperation
DESCRIPTION
Bruce Byiers, ECDPM Drivers to engage the private sector in development Human Security Finland 10 October 2012, BrusselsTRANSCRIPT
Engaging the Private Sector in International Cooperation
European Centre for Development and Policy Management (ECDPM)
October 2012
www.ecdpm.org/dp131
Common or Conflicting Interests?
Reflections on the Private Sector (for) Development
Agenda
www.ecdpm.org/dp131
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Push: Crisis, aid squeeze & “value for money”
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Push: job cuts, competition & “new models”
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Pull: Learning from the private sector
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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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“Many ways to skin a cat”
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Business level: International Large domestic SMEs Micro-household based Multinational enterprises State-owned enterprises National monopolies Informal traders Associations
Sectors: Agricultural smallholders Large-scale agricultural producer Manufacturers/processors Export-led industries Extractive sector firms Service providers
Business models: "Raw" capitalism Core business models Base of pyramid/social businesses Fair Trade Corporate Social Responsibility People-centered business Cooperatives
Business constraints: Credit access Infrastructure Capacity and education level Business linkages Labour regulations Market exclusion
Business climate
3 categories of Private Sector Engagement
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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
If only…..
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• Economic transformation
• Regulatory reforms
• Making credit accessible to firms
• Industrial policy
Mixed results
• Endogenous and exogenous conditions
• The political economy of economic
transformations
Private Sector Development Category 1: Private Sector Development
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High Rent Competitive Exports Rentiers Magicians Domestic Powerbrokers Workhorses Source: Pritchett, 2012, OECD Conference, Paris 28 Feb 2012
Private sector characterisation
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• Less clarity on agenda and processes
• Definition of developmental additionality
• From CSR to "core business model"
• What donor tools available?
• How to identify tipping points – trade-offs
• Defining the developmental aspect?
• What do firms say?
Private Sector for Development
Category 2: Private Sector Investment for Development
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• Blending to bring in further private finance • Release public debt pressure and shared risk
burden • Various purposes e.g. PPPs or increasing finance
access • Challenges
- PPPs need to be commercially viable - Risk management and balancing - Legal environment - Capacity to use effectively - Primarily a lack of finance?
Private Sector for Development
Category 3: Private Sector Finance for Development
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Common or conflicting interests?
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• Private Sector: Image and reputation, CSR, risk absorption, high entrance costs, unfair competition from subsidised firms
• Donors: financial crisis and decreasing
ODA, new positive grand narrative • Partner governments: employment
creation, raised productivity, inclusive growth, improved business climate, new types of investment, debt burden, interest groups, rents(?)
• NGO's and CSO’s: people centred
business….
Common interests(?)
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• Tied aid and subsidies
• Risk-sharing balance
• Opportunity costs of finance
• Policy Coherence for Development (PCD)
• Profitability vs optimal developmental
outcome
• National ownership
• National vs local conflicts
• Impact assessments
Conflicting interests
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• Donor support evaluations
• Firm-level own evaluations
• Some diffuse criteria/measures (e.g. UN,
WBCSD, EIB, individual co.s etc)
• What purpose of such a measure?
• How balance development requirements
with "efficient business"?
• What incentives to prove developmental
impact?
How to gauge developmental impact?
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If development is the ultimate goal, then: • Potential to find synergies • Need to identify the trade-offs and cut-offs • Agree on better ways to measure & identify
impact
• Improve PS-donor-gov-CSO communication and mutual understanding
• Regulate expectations and understand the mandate and capacity of the other
Concluding remarks
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