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Engaging the private sector in international cooperation

Byiers, B. 2012. Engaging the private sector in international cooperation. (ECDPM Presentation).

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Engaging the private sector in international cooperation from ECDPM

Bruce Byiers, ECDPM



Presentation Transcript

Engaging the private sector in international cooperation

1. Engaging the Private Sector in International Cooperation
European Centre for Development and Policy Management (ECDPM)
October 2012

2. Common or Conflicting Interests?
Reflections on the Private Sector (for) Development Agenda

4. Push: Crisis, aid squeeze & “value for money”

5. Push: job cuts, competition & “new models”

6. Pull: Learning from the private sector

7. “We want to engage the private sector”

8. “…and help our own…”
•  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…”

10. “Many ways to skin a cat”
Business level:
Micro-household based
Multinational enterprises
State-owned enterprises
National monopolies 
Informal traders 

Large domestic Large-scale agricultural producer
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

 Business constraints:
Credit access 
Capacity and education level
Business linkages
Labour regulations 
Market exclusion
Business climate

11. 3 categories of Private Sector Engagement

12. If only
•  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 sectorECDPM Page 12

13. Private Sector Development Category 1: Private Sector Development
•  Economic transformation
•  Regulatory reforms
•  Making credit accessible to firms
•  Industrial policy Mixed results
•  Endogenous and exogenous conditions
•  The political economy of economic transformations

14. Private sector characterisation
                       High Rent                       Competitive
Exports         Rentiers                          Magicians
Domestic      Powerbrokers               Workhorses
Source: Pritchett, 2012, OECD Conference, Paris 28 Feb 2012

15. Private Sector for Development Category 2: Private Sector Investment for Development
•  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?

16. Private Sector for Development Category 3: Private Sector Finance for Development
•  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 effectivelyECDPM
– Primarily a lack of finance?

17. Common or conflicting interests?

18. Common interests(?)
•  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(?)
•  NGOs and CSO’s: people centredECDPM business….

19. Conflicting interests
•  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

20. How to gauge developmental impact?
•  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?

21. Concluding remarks
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

22. Thank you
Bruce Byiers

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