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 www.ecdpm.org/dp131

2. Common or Conflicting Interests?
Reflections on the Private Sector (for) Development Agenda
www.ecdpm.org/dp131

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:
International
smallholders 
SMEs
Micro-household based
Multinational enterprises
State-owned enterprises
National monopolies 
Informal traders 
Associations

Sectors:
Agricultural
Large domestic 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

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
www.ecdpm.org
Bruce Byiers bby@ecdpm.org