Building Trust: How the Development Community Can Engage the Private Sector
Blog originally posted in OECD Development Matters.
Fundamental to my organisation’s success in delivering local impact against several of the Sustainable Development Goals (SDGs) has been developing an ecosystem of global and local in-country partners. And critical to this ecosystem is private sector participation: Corporate partners bring a different lens on what we do, a welcome push for innovation, creative approaches and efficiencies, and a business-like approach and priority to sustainability. Through mutual trust, we are now co-designing new initiatives that lead to positive impact for development and businesses.
I am a strong advocate for engaging the private sector in effective development. The private sector is often a strong and effective contributor to local development in the countries, cities and towns in which its offices are located and where its employees live, generously supporting local services. The challenge now is to extend local purpose and responsibility from “down the street” to a global perspective within the SDG framework. I advocate for this on the Business Leaders’ Caucus of the Global Partnership.
The conditions are aligning for greater peer-to-peer engagement between the private sector and the local and international development community, encompassing government agencies, multilateral agencies, NGOs, social enterprises, foundations, executing agencies and donors. And I observe this growing alignment in several ways:
- Development partners are reaching out to the private sector because they know that the SDGs cannot be achieved without multi-stakeholder collaboration and an important, perhaps dominant, role for the private sector.
The private sector focuses on skills, techniques, innovation, sustainability, efficiency, flexibility and speed of decision-making and execution – and yes, if the business case is right, financing. Virtually every gathering of development partners has a session on the private sector (yet limited private sector participation), and enlightened development partners are busy recruiting experts in creative finance and who know how to leverage corporate experience. Development partners are taking seriously the need to structure policies and programs that consider the interests of and pressures on business.
- Encouraging shifts are also occurring within the corporate world.
Enlightened boards and CEOs are basing long-term strategies around a triple social, environmental and financial bottom line. Profit is being balanced with purpose; performance is measured and rewarded by both profit and purpose. Purpose is no longer the purview of arms-length corporate social responsibility (CSR) foundations, but integrated into the very values and behavior of organisations. The importance of the SDGs is recognised for creating new growth markets, and actively participating in international development facilitates an understanding of these markets and cultures, informs new products and services, provides access to tomorrow’s employees, shapes management and staff as global citizens, and builds brand goodwill. See, for example, the SDG Business Forum organised by the International Chamber of Commerce, the World Business Council for Sustainable Development (WBCSD) survey of business and the SDGs, and the growing literature on business and sustainable development. Consider too what the private sector is doing with a growing respect for purpose-led businesses. I applaud Larry Fink, Chairman of BlackRock, for his letter to CEOs calling for “A Sense of Purpose”. IBM encourages the Fortune 500 to assume a stronger role and responsibility for development, as it does through its Corporate Service Corps programme. A sea change seems to be occurring – customers will reward the companies with community purpose and abandon those without one.
However international development investments are not sidetracked to finance the private sector, but rather to incentivise and reduce risk for engaging the incremental capabilities, resources and comparative advantages of purpose-led private sector entities. We must learn to do this from the growing evidence of case studies on how to select wisely and build trust.
Global Partnership case studies in Bangladesh, Egypt, El Salvador and Uganda have shown, for example, that development partners could do more to make a better business case to attract the private sector to engage, and to better target marginalised populations, including in the informal sector. The studies revealed a range of good practices, in particular to support small business owners: Danone and Care, for example, work with small-scale breeders in Egypt to increase their knowledge and equip them with skills to increase production, as well as overall quality milk supply. The Business Initiative Leading Development (BUILD), a dialogue platform launched by some of the leading Chambers of Commerce in Bangladesh, has become a solid and inclusive voice in shaping policy in areas where growth is critical for realising the country’s development vision, from disaster risk management to social development. Another example are the Salvadorian Small Business Development Centres, one-stop shops where micro-enterprises and SMEs can find a wide range of services to support them launch or scale up their businesses. They provide easily accessible training, networking and engagement opportunities in partnership with many municipalities, and the support of universities and NGOs.
In our experience, two factors help forge trusted relationships with corporate partners. One, speaking the same language of markets, staff development and retention, and return on investment aligns values and builds a mutual case. Two, arriving with developed concepts and programme structures, an understanding of the gaps, and seeking incremental compatibility helps. In one case, a corporation had designed its programme, but needed local knowledge and “feet on the street” that we represented. In another case, we had the programme model and local knowledge, but needed technology and business advice. Our corporate partner knew that they could learn from how we adapted their technology in countries and cultures that they had not considered.
Informed by these examples and experiences, three strong and practical recommendations lay the groundwork for engagement and trust that development partners and corporate colleagues alike would welcome:
Be prepared; do the research: Building a shared understanding, and ultimately trust, for any new venture requires good research. Approaching the private sector is no different. Shift the lens from the development perspective to the private sector perspective. Learn the language of the business and its industrial sector. Websites, annual reports, speeches, and CSR reports are available to explore businesses with purpose, along with their boards and CEO leadership, strategic plans, recent performance, and shareholder expectations. If the “match” is not evident, move on.
The value proposition: Armed with a defined concept or programme design, development goals and impact, and research, develop a business proposition for engagement that integrates value not only for development against the SDGs, but also for the private sector organisation that speaks their language and aligns with their purpose. For example, this could be market knowledge in a particular country that could scale to the region, cultural insights that could influence creativity in product design or upskilling of employees. Be explicit about the assets and value that the development partner offers to reduce risk and ensure success – be it previous experience, proven expertise or funding.
Efficiency and effectiveness: If one factor can destabilise a peer-to-peer relationship with the private sector, it is the threat of bureaucracy. Be up front about decision-making and where decisions are made, by whom and at what pace. Be clear about reporting requirements, monitoring and evaluation frameworks. It is all part of the shared understanding and no surprises that build trust.
The evidence is unfolding of the incremental benefits that accrue by developing an ecosystem that includes peer-level private sector engagement. Guidelines must follow to harness the opportunities and offset any concerns, and I applaud the Global Partnership for its leadership in advancing such guidelines.
Learn more on this timely topic at the Global Partnership event ‘Reinvigorating Effectiveness for the 2030 Agenda’ in Paris on 11-12 September 2018.