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Public-Private Cooperation for Development: A Working-Together-Apart Relationship

View From the Dutch Ministry of Foreign Affairs

11-12-2014

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Focus on economics

The policy for international cooperation of The Netherlands combines aid, trade and investment.


In a coherent agenda we embrace three ambitions: eradicate extreme poverty; promote sustainable and inclusive economic development worldwide; and facilitate business of Dutch companies abroad. Huge efforts are needed to go beyond the realised Millenium Development Goal: to reduce extreme poverty by half between 1990-2015, towards the proposed Sustainable Development Goal: end extreme poverty for all people everywhere by 2030. We continue to combat inequalities, invest in the rule of law and support civil society in the pursuit of human dignity for all. We aim for economic growth beneficial to poor people in need to make a living, with equal opportunities for all for decent work. Moreover, economic growth has to respect nature and wisely use natural resources.

Companies keep the economic engine going. Through innovations and entrepreneurship they boost productivity and create jobs, with a keen eye on new market opportunities. We promote initiatives for a good business environment. Governments have to ensure all companies adhere to basic rules, such as for proper labour conditions. We support local trade unions, farmer cooperatives and employers organisations, being key social partners. Governments also have to provide sufficient room for manoeuvre for companies to produce more quality products. We favour public-private alliances for better infrastructure, and for facilitated trade. Moreover, a good business climate implies easy access to financial services, for companies, farmers and citizens alike.

Governments and companies: why should they and how can they work together?

In particular in low- and middle-income countries, improvements in the business climate will pay off if they go hand-in-hand with direct support to companies, eager to start or expand responsible business. Such support can be given by local governments or by us; to be effective it requires thorough public-private collaboration. The interest to work together has to be genuine. The motivation to do so can be quite different. A company will be:

a) trying to understand government policies for macro-economic and societal development;

b) looking for support to harvest new market opportunities; and/or

c) wanting to develop and communicate its Corporate and Social Responsible business (CSR). A government agency may want to interact with a company:

1) to exchange views on strategic visions, policies and instruments;

2) to (financially) support inclusive business; and/or

3) to ensure companies operate socially fair and environmentally friendly.

In any relationship each party has to be transparent about its own objectives and understand what motivates the other. In the beginning this is not always clear yet. People need to get to know each other and build trust. A frank dialogue on – and acceptance of – different objectives will help to delineate common ground. It prevents misunderstandings and obscured misfits in expectations. It will also help identify the form of cooperation that suits parties best.

Three examples of how we are cooperating with companies

Rabobank is building up a worldwide network with local partner banks. We have established a public-private partnership (PPP), in which Rabobank acquires more insight in new public approaches to economic development, and is supported building capacities with its partners (objective a and b above). We can sound out our strategic vision and policies (see 1 above). Through dialogue and mutual secondments of staff, the PPP is increasing both our understanding of how financial institutes could better serve SMEs’ and farmers’ business demands.

We also substantively support companies in their inclusive business activities (objectives 2 & b), like with our Centre for the Promotion of Imports from developing countries (CBI). The Centre works closely together with SMEs in analysing their export potentials to the EU. Speciality cocoa producers, for example, are matched with Dutch and other European business partners eager to sell quality chocolate products.

Let me finally illustrate how we, together with local governments, aim to ensure legal compliance, while companies deepen their CSR (3, c). We have called upon the textile value chain to act as responsible business partners. By now 23 Dutch companies, including major clothing retailers, have signed up to the Bangladesh Accord on Fire and Building Safety. We work with the industry to broaden efforts to promote decent jobs, also in other countries in the Asian region. In parallel we support local governments to improve capacities to implement legislation, and thoroughly inspect factories.

In conclusion

Public-private cooperation is essential for shared prosperity worldwide. It is encouraging that this is widely recognized. New alliances are emerging rapidly, leading to substantive investments. Collaboration implies common ground on why work together. But it is just as important to be explicit on individual interests. It requires respect that each party is apart in being responsive to its own constituency. The form of cooperation follows from the function parties are willing and able to attribute to it. A common lesson in getting organised, but challenging for innovative public-private cooperation for, with and in developing countries.

Marcel Vernooij

Sustainable Economic Development Department
Ministry of Foreign Affairs, The Netherlands

Twitter: @marcel_vernooij             E-mail: marcel.vernooij@minbuza.nl

 

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Economic Transformation and TradeBusiness and DevelopmentPrivate sectorPublic Private Partnerships (PPPs)The Netherlands

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Marcel Vernooij