is the agenda viable? financing the agenda – what’s new?

Session 2: “Is the Agenda Viable?

Financing the Agenda – what’s new?”

Bruce Byiers

CIDOB, Barcelona, 15 April 2016

• Are the necessary means in place?

• Is the private sector up to the job?

• How to ensure effective monitoring and accountability?

Can the private sector become the reliable partner that is required to achieve the SDGs?

Questions…

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• From billions to trillions etc• Devarajan’s (2015) MDG Mea Culpa:

Wrong question – the countries that made the most progress weren’t necessarily those receiving most aid…Wrong answer – how do you estimate the cost of achieving interrelated goals anyway? Wrong approach to development – “Poor people are poor because they are stuck in a low-level political equilibrium” – finance a distraction or an excuse?

• Viability: Do such frameworks affect behaviour? (e.g. See ERD 2014)

‘Financing’ the SDGs?

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MoI - Rise of the private sector?

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Millenium Declara-tion

Paris Accra Busan Agenda20300

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Private Sector Poverty Partnership Aid Monitoring

Source: DIE, ECDPM, ODI – European Report on Development

The ‘means’?

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Private sector “up to the job”?

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1. More private sector activity:- Private sector development (PSD) – finance, business environment, industrial policy, matching, Aid for Trade…

- Private sector finance for development (PSF)– new sources, risk mitigation

- Private investment for development (PSE) – guarantees, risk mitigation, partnerships etc

2. Better private sector behaviour:- Responsible, ethical, sustainable value chains

- Voluntary/mandatory reporting etc

Related but distinct agendas

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• Industrial policy• Business environment reform• Access to finance• Public-private dialogue• Value-chain integration• Business development/skills• Making markets work for the poor• Innovation policy• Management skills – vocational training etcChallenges for SDG agenda…• Anything new?• Complexity• The PE of economic reforms

Private sector development

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• Leverage foundations, pension funds, SWFs, equity funds, local currency bonds etc

• DFI leveraging through blending grants, loans & private finance

• Various SDG purposes – not just PSDChallenges • Need to be profitable - targeting• Risk management and balancing• Enough bankable projects? • Legal environment• Primarily a lack of finance?

Private sector finance

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Commercial & development alignment?

• Donors - Private sector engagement for development

• CSOs – Sustainable, people-centred businesses

• Businesses – Africa rising, philanthropy, CSR

• LIC Gov.s - Economic transformation, more & better jobs

Private sector engagement

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Commercial & development alignment?

• Donors - Private sector engagement for development (own commercial interest?)

• CSOs – Sustainable, people-centred businesses (declining core funding?)

• Businesses – Africa rising, philanthropy (‘Licence to operate’, sustainable ss chains?)

• LIC Gov.s - Economic transformation, more & better jobs (political survival?)


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• Perceived > real risk• From CSR to "core business model” • Partnerships - public-private cooperation

models and CSO-business• Beyond aid – DFIs, outwrad investmentChallenges• Inclusivity? Impact? (not just a PS issue!)• Additionality?• Criteria for engagement….?


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…but are they CRITERIA? or goals or objectives:

1. measurable development impact; 2. additionality; 3. market neutrality; 4. shared interest & co-financing; 5. demonstration effect; 6. social, environmental and fiscal

standards.

6 EC Criteria for PSE

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CSO criteria

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SAGCOTPrivate led agriculture PPPPrinciples therehow do you enforceinclusivity questioned - large firms too powerful?

Lesotho Queen Mamohato HospitalPublic led health PPPDifficulty in negotiating along the linePolitical interest?Misadvised?

Better Factories Cambodia - Garments branded firms EXPECTED to payenforcement cost pushed onto supplierslimited transparency

Beyond aspirations…?

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• “The” private sector?• 70 Percent of global trade in intermediate

goods and services• Economic transformation: need for LICs to

integrate with and climb value chains• Rising consumer demand for economically,

socially, environmentally sustainable value chains

• Firm-level licence to operate/philanthropy etc

• ‘Universality’ in value-chains!

An accountable PS?

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Internal• CSR – defensive, charitable, promotional,

strategic, transformational (Visser, 2011)• Do good and/or motivate staff?…depends on sector, size, inwards/outwards orientation, new/incumbent etc

External• Supply chain security (cocoa, extractives)• Consumer demand e.g. FairTrade• New (risky) markets• Finance & gov. backing – e.g. IDH

• Regulations & transparency requirements…

Key factors shaping firm behaviour

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• EU GSP+ => LICs adhere to 27 international conventions.

• Trade and sustainable development chapters of EU FTAs also commonly refer to such international standards.

• EU bilateral agreements e.g. illegal logging, FLEGT voluntary partnership agreements concluded on a bilateral basis

• Binding vs best endeavour (usually the latter)

• Target – countries (trade) vs firms (EU Conflict Minerals initiative of the EU, FLEGT, EU Timber Regulation, or the Accounting and Transparency Directives

Sustainable trade frameworks

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• GlobalUN Guiding Principles on Business and Human Rights; ILO Tripartite Declaration of Principles Concerning Multinational Enterprises & Social Policy; OECD Guidelines for Multinational Enterprises; UN Global Compact; CFS Principles on Responsible Investment in Agriculture and Food Systems.

• Private: Global Reporting Initiative, ISO 26000 on Social Responsibility, Equator Principles (financial institutions) Conflict-free Gold Standard

• Capacity & costs..

Sustainable business

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• Fast-changing definitions and requirements• Burgeoning reporting requirements –

voluntary and mandatory

• Four key trade-offs in defining how policy makers can encourage or require corporate social responsibility (CSR):

Appropriate scope Associated costsThe necessary regulatory mixThe related incentives and enforcement mechanisms for compliance

• Weak enforcement – low access to redress

Reporting

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One overriding issue

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PoliticsOne overriding issue

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• Markets clearly key for development/SDGs• Roles for ODA and non-ODA in working with

the private sector • Trasparency & info. to limit harm &

maximise benefits

• Will the SDG agenda actually alter things?• How to build on domestic

policies/strategies? • Need to understand incentives and

politics!!!

Where does that leave us?

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Thank youwww.ecdpm.org

Bruce Byiers [email protected]

Twitter: @brucebyiers

www.slideshare.net/ecdpm

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http://www.ecdpm.org/

mailto:[email protected]

is the agenda viable? financing the agenda – what’s new?

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