How to engage the private sector in development

As the development agenda turns toward inclusive growth, participatory decision-making and innovative partnerships, the demand has grown for private sector participation in the discovery of viable solutions. One powerful tool for propelling this participation is public-private dialogue, a structured approach to inclusive policymaking. Public-private dialogue facilitates agreement on many vital goals, among them improving the business climate, raising competitiveness and sustaining growth.

Take Kenya, for example. Betty Maina, former CEO of the Kenya Association of Manufacturers, declares that “for more than 10 years, dialogue with government and all stakeholders has remained the pillar of our gains on behalf of our members.” Not only did public-private dialogue encourage a positive business environment in Kenya and regional integration, it also supported peace efforts following the disputed outcome of elections in 2007 and the ensuing violence. “Business was also instrumental in drafting and passage of the new constitution, which we gave ourselves in 2010 and continues to play a critical role in its implementation.”

Or consider the Ethiopian Public Private Consultative Forum, winner of the 2015 PPD Howard Award for long-standing achievement presented by the PPD Community of Practice. This consultative forum has advanced dialogue at federal and state levels on issues such as customs procedures, trade logistics, company registration and property rights protection. Tangible outcomes from this dialogue include a special credit window for small and medium enterprises and title deeds for more than 55,000 irregular and unprotected land holdings. Furthermore, the enthusiasm for dialogue in Ethiopia has done much to build trust between the public and private sector.

Public-private dialogue has proven to be a highly versatile tool for tackling development challenges. In fragile states, dialogue can revive private sector development and sustain policy reforms. Thus, the Nepal Business Forum played a role in building trust and prioritizing reforms in post-conflict Nepal. In a democratic transition, as occurring in Tunisia since 2011, dialogue can build consensus around how to manage the transition process. The National Dialogue in Tunisia produced a road map for social stability, which established the conditions for structural economic reforms.

At a sector level, dialogue can address issues of industry competitiveness and natural resource management. The Jordan Valley Water Forum coordinated responses by authorities and farmers to the water crisis in the region. Public-private dialogue can even be tailored to advance women’s economic empowerment, as shown by the winning entry from Bangladesh in the Global Partnership’s multistakeholder case study contest. The Bangladesh Women’s Chamber of Commerce and Industry promoted a Women’s National Business Agenda, which convinced the Central Bank to provide $93 million in loans to women-owned businesses.

So what exactly happens in the course of a dialogue process?

First, dialogue elevates policy priorities for creating a conducive investment climate and expanding markets. In Kenya, for instance, dialogue between business and government established collective leadership on economic liberalization, export promotion, regional integration and peace building. Second, dialogue gathers input from a wide range of interests. In doing so, it builds a constituency for reform among the business community. In Bangladesh, the Women’s National Business Agenda was the first advocacy campaign of its kind to give voice to the needs of women-owned businesses, and it connected with more than 180 organizations from all six geographic divisions of the country. Finally, structured dialogue improves the quality of legislation through analysis of evidence and incorporation of feedback into implementation of regulations. The Ethiopian consultative forum has done this through extensive investments in research and analysis, workshops to validate issues with the private sector, and technical committees to support the implementation of recommendations.

Although not a panacea, dialogue deserves attention from governments, business, donors and other development actors as a means toward credible and effective development cooperation. The tangible outcomes — in the form of cost savings to business — are real. More importantly, dialogue can kick-start policy reform and develop relationships that strengthen governance and economic performance. Especially in developing countries where institutions are weak and policy information is scarce, a coordinated dialogue opens a path to discovering and sustaining solutions. When done well, the legitimacy that accrues from dialogue is invaluable in preventing reversals of reforms.

The Global Partnership for Effective Development Cooperation has adopted the quality of public-private dialogue as one of its 10 monitoring indicators, by measuring the engagement and contribution of the private sector to development. While the indicator does not directly measure the business environment or private sector impact, it does capture the degree of private sector participation in policymaking and development partnerships. This indicator builds upon evaluation tools from an international community of practice and a charter of good practice.

Those policymakers and business leaders who now are ready to try dialogue can benefit from the wealth of experience accumulated by their peers around the world. When they reach out to their counterparts on the other side of the table, they are taking a big step toward the discovery of win-win solutions.

KimBAbout the Author
Kim Bettcher leads the Center for International Private Enterprise’s knowledge management initiative, which captures lessons learned in democratic and economic institution-building around the world.
Cross-posted with Devex

What’s next for the GPEDC in the post-2015 world?

The second high-level meeting of the Global Partnership for Effective Development Cooperation (GPEDC) will take place in Kenya in 2016. In the run-up to the event, the GPEDC will need to consider some difficult questions on what to focus on for the post-2015 world.

Basically the choice is between being selective and making a big difference, or continuing with an expanded agenda taking in just about every development theme. If it opts for the former, then it will be a matter of identifying where it can really make a difference and strengthen the global partnership for sustainable development?

The GPEDC was launched at the fourth high-level forum on aid effectiveness in Busan in 2011. The aid effectiveness journey through previous high-level forums in Rome (2003), Paris (2005) and Accra (2008) established principles to improve the quality of aid for achieving the Millennium Development Goals (MDGs). These principles were primarily seen as applicable to OECD-DAC providers of official development assistance (ODA) and developing countries. Multilateral development banks have also been closely associated.

The results of implementing these good principles are becoming visible:

  • Countries are increasingly taking a leadership role in determining their priorities, and articulating these effectively to the development providers.
  • Transparency and the accountability for results of development assistance have improved.
  • International institutions like ADB have mainstreamed these principles, and are scaling up efforts to align their strategies and assistance with country policies, priorities, and systems.

In parallel, the global aid architecture has been changing rapidly, and becoming more complex. The share of ODA in total global development assistance has declined. Funding from nontraditional partners, including emerging donors and philanthropic organizations, and non-aid sources—such as remittances and foreign direct investment (FDI)—has increased. In Asia and the Pacific, for example, ODA is estimated at around only .004% of the potential amount of development finance that could come from combining private savings, remittances, and FDI.

Recognizing changes in the global aid architecture, the GPEDC’s agenda has continued to expand. In its first high-level meeting in Mexico in 2013, the GPEDC brought together key stakeholders to discuss a number of development themes such as importance of domestic resource mobilization, support to and from middle-income countries, south-south cooperation, triangular cooperation and knowledge sharing, the private sector as a partner in development, and climate change. The messages on traditional principles of aid effectiveness such as country ownership, focus on results, transparency and accountability were reaffirmed, but a bit subdued.

Moving forward, the GPEDC Steering Committee, at its September 2015 meeting, needs to take a candid view on the comparative value-add of staying with an expanded agenda. Similar issues—like the importance of partnerships for mobilizing knowledge and resources from all sources (both public and private), role of new players and institutions, and addressing climate change issues—are being discussed at major international development fora. The recently concluded #Fin4Dev conference in Addis Ababa has established new commitments on financing for development. By the end of 2015, two other major international agreements are expected to establish post-2015 Sustainable Development Goals (SDGs), and a path for future action on climate change.

Proposed SDG 17, seen as a successor to the MDG 8 on global partnerships, is directly linked with the GPEDC’s agenda on global partnerships. It calls for action to “strengthen the means of implementation and revitalize the global partnership for sustainable development.” It focuses on three specific areas—financing for development, technology and trade, and data monitoring and accountability— identified as key enablers for the post-2015 global partnership agenda. If adopted in September 2015, SDG 17 is likely to be central to all other SDGs and applicable to all countries, unlike the MDG 8 on global partnership that targeted only developed countries.

The GPEDC can play an important role in supporting the implementation of the SDGs to strengthen global partnerships for sustainable development. GPEDC’s efforts in monitoring the quality of aid and its effectiveness principles are acknowledged in the Addis outcome document. This is an achievement. However, is that enough? In order to add value, the GPEDC needs to be selective, develop its niche in monitoring key aspects of quality of aid, and be a part of a formal post-2015 SDG monitoring mandate. This will also avoid duplication and help keep the transaction costs low for developing countries. The GPEDC’s Advisory Group on monitoring should do a critical review of the existing GPEDC global monitoring framework in light of its agreed priorities and the proposed SDGs, and recommend a relevant post-2015 global monitoring framework, that the GPEDC will focus on.

Kenya will provide an excellent opportunity to facilitate focused discussions and make a big difference. However, this will only happen if a precise set of issues are prioritized in light of the SDGs, based on  the GPEDC’s niche and comparative advantage. Such clarity on the GPEDC agenda is also necessary to energize its stakeholders to participate in a more meaningful way in the future.

ManjuAbout the Author
Ms. Senapaty is ADB’s focal point on aid effectiveness issues, and has also worked in the Southeast Asia Regional Department. Prior to joining ADB, she was an economist with the UK Department for International Development.

Cross-posted from the Asian Development Blog