Archived - e-3 (16 - 27 September): Private Sector Engagement

We thank all participants and moderators for their contributions. This e-discussion has officially ended and a summary of the discourse will be available shortly. Read through the discourse on Private Sector Engagement by scrolling down below. Participating or commenting is still possible but the discussion will no longer be closely moderated.

Please Note:We would like to encourage an open practitioners’ exchange. Please feel free to express your individual views. This means that you are not necessarily bound to represent the official position of your organizations in this space, but to share your own, professional views on the questions you find below

1. How can the private sector in partnership with governments and civil society help advance inclusive and equitable economic growth? 
What are examples of successful multi-stakeholder development partnerships including business?
What sectors/markets/commodities could be particularly relevant to focus on?

2. How can private sector models, operations and investments that contribute to the development agenda be better understood, facilitated and concretely captured and measured going forward

3.How can the role of SMEs in development be enhanced? What type of public private cooperation would be useful to strengthen SMEs and their positive impact on development?

e-discussion 1

e-discussion 2

e-discussion 3

e-discussion 4 

e-discussion 5

Development Cooperation with
Actors from the
Global South

Development
Finance

Private Sector Engagement

Inclusive Development

  Progress Since Busan

  • Knowledge Sharing
  • South South and triangular cooperation
  • Development in middle income countries
  • Domestic resource
    mobilization / Tax reform / Illicit flows


  •  Engaging the private sector
  • Inclusive Development /
    Partnerships
  •  Implementing the
    Busan Commitments

9 Sep - 20 Sep


16 Sep - 27 Sep16 Sep - 27 Sep

25 Sep - 11 Oct

25 Sep - 11 Oct

Respond 

Respond 

Post a response belowor go back to the home page of "e-discussion on Global Partnership for Effective Development Cooperation". 

Moderators

 Albena Melin

Program Manager, Secretariat
for the Busan BB on

Private Sector Engagement, IFC

 

 

Casper Sonesson

Team Manager, Innovation and Development Alliances Cluster,

Bureau for External Relations and Advocacy, UNDP

 

Hannah Ryder

Team Leader

DfID, UK



 


Comments

Casper Sonesson Sat, September 28,2013
Colleagues, since we have had so many responses in the last few days and seen great contributions, we have decided to leave this e-discussion open over the weekend until Monday, September 30. So for those still pondering on whether to jump in, hurry and make your contributions over the next two days! And for those of you who already have contributed, a BIG THANKS, and feel free to complement and provide any final additional thoughts that can help shape this agenda for the Global Partnership going forward, including the lead up to the Steering Committee Meeting in October and the 2014 Ministerial-level meeting.
Best
Casper
Casper Sonesson
Mon, September 16,2013
Dear colleagues, We are excited to welcome you to this Global Partnership e-discussion on private sector engagement, to be held between 16-27 September. We encourage you to seize this unique opportunity to shape the consultations and the agenda for the upcoming Fourth Steering Committee Meeting of the Global Partnership and the Ministerial-level meeting to be held in Mexico in 2014. The results of this e-discussion will directly influence the thematic concept notes to be presented at the Ministerial-level meeting. As experts, researchers, policy-makers and practitioners in this field, your opinions on this topic are therefore essential. We look forward to hear perspectives from across the globe. Over the last decade or so, there has been a growing recognition that the private sector is a critical partner in development. It is a primary driver of innovation, investment and job creation, the main generator of public revenues, as well as an important provider of many essential goods and services that are central to sustainable and human development, including food, energy, water, finance, education and health services. However, to further enhance the opportunities for the private sector to contribute to development in these and other ways it is also recognized that better and more public-private interaction and cooperation will be important. This e-discussion aims to explore how the private sector, in cooperation with governments and other stakeholders can contribute to development and “inclusive growth” as well as how the private sector’s role in development can be better understood and measured. Feel free to share your opinion openly in this discussion. You can choose to respond to one or more questions as you wish. Please also encourage your colleagues or contacts from other networks to join. Should you have any questions, please feel free to reach out to us moderators at any time. To post responses, register below (Hit "reply" and you'll be prompted to log in or sign up). Complete your profile with your information so that we can recognize you for your contributions. We are hoping for a constructive, stimulating and informative discussion - let the debate begin! Thanks and regards, Casper Sonesson
CooperaNet
Fri, September 27,2013

1. How can the private sector in partnership with governments and civil society help advance inclusive and equitable economic growth?  
What are examples of successful multi-stakeholder development partnerships including business?
What sectors/markets/commodities could be particularly relevant to focus on?

En primer lugar hay que indicar que la participación del sector privado en cooperación y la necesidad de vincularlos a ésta tiene que ver con el hecho que el desarrollo socioeconómico es y ha de ser un compromiso de todos y no exclusivamente del Estado. Esto implica que las empresas son responsables no sólo respecto de sus accionistas o su público de interés, sino que respecto de la sociedad como un todo, dado que las empresas son parte de la misma y realizan sus actividades por el consentimiento público en función de satisfacer de manera constructiva las necesidades de la sociedad. En ese sentido mediante una profunda incorporación de la Responsabilidad Social para el Desarrollo Sostenible (RS) que incorpora una triple visión de aspectos financieros, sociales y medioambientales, una organización cualquiera sea su índole y circunstancias puede incorporar estrategias que ayudan en las decisiones y aplicar metodologías que favorezcan a las actividades propias de la operación.  

El sector privado puede ayudar a un crecimiento económico inclusivo y equitativo a través de la incorporación de las comunidades más vulnerables a sus cadenas de valor –ya sea como proveedores de materias primas, productores de bienes intermedios manufacturados, operarios, distribuidores, etc. –, las cuales con asistencia técnica de la sociedad civil, los gobiernos y las mismas empresas, pueden ser capacitadas para sus labores. Del mismo modo el sector privado de los Países Desarrollados y de Renta Media pueden realizar un importante aporte en el fomento del tejido productivo y empresarial, principalmente de los Países Menos Adelantados (PMA), compartiendo su conocimiento y experticia, para desarrollar, mejorar y/o aumentar la oferta de bienes, tanto para el consumo interno como para la exportación, lo que podrá llevar a la inclusión de las empresas de los PMA a las cadenas de valor global.

Lo anterior debe ser trabajado desde y a través de políticas de RS, ya que ésta apunta a un desarrollo equitativo, mediado entre los beneficios económicos y sociales y asegura la sostenibilidad de los proyectos buscando satisfacer las necesidades del presente sin comprometer la capacidad de las generaciones futuras para satisfacer sus propias necesidades. El uso de dichas prácticas facilitará el ingreso de las empresas de los PRM y PMA a una cadena de valor global, dado por las exigencias de los principales mercados y la necesidad de adaptar las prácticas empresariales a estándares que promuevan la sostenibilidad. Tal como es el caso de los sistemas de compras públicas Europeo donde exigen trazabilidad de RS en los productos importados.

El sector público más allá de fomentar la inclusión del sector privado enfocándose en un sector por sobre otro debe buscar generar y fomentar un marco voluntario de “buenas practicas” hacia el sector privado sin hacer distinción hacia que industria se dirige el esfuerzo ya que podemos sostener que no existe una única industria, mercado o producto que sea particularmente relevante hacia el cual enfocarse, ya que esto dependerá de las ventajas comparativas de cada país (o las posibilidades de adaptarlas o crearlas). Sin embargo se puede suponer que para las comunidades más vulnerables o situaciones más apremiantes será beneficiosa la inclusión y desarrollo en actividades primarias y prioritarias que aporten no sólo a una cadena de valor empresarial, sino que a la vez entregue bienes para la subsistencia de dichos grupos. 

 

2. How can private sector models, operations and investments that contribute to the development agenda be better understood, facilitated and concretely captured and measured going forward

 

Se debe considerar que la inclusión del sector privado en la Cooperación al Desarrollo, –expresado en los gremios, cámaras de comercio, asociaciones empresariales y empresas–, dice relación con que este sector es en cierto sentido el motor productivo de una economía social de mercado. A su vez, es poseedor de un Know-How particular, por lo que resulta una pieza clave en la creación de emprendimientos, empresas, cadenas de valor, etc., y a través de su operar existe un impacto en el medio donde está inserto ya sea para efectos positivos o negativos del grado de desarrollo de una sociedad. El sector publico a través del estímulo del tejido productivo y empresarial, pero también ayudando en la inserción a la economía formal a sectores marginados en las economías  de los Países de Renta Media y Menos Adelantados puede aportar en el nivel de desarrollo de un país.

La inversión privada –asociada al desarrollo de políticas de RS y fomentada por el sector público, encausadas a través de los Objetivos de Desarrollo del Milenio–, puede generar un doble impacto en el desarrollo humano de sectores, hasta ahora, marginados de la economía formal, proveyendo por un lado una fuente de trabajo, que aseguré estándares mínimos de respeto de los DD.HH., prácticas laborales justas, libertad de asociación, igualdad de género y sustentabilidad ambiental. Pero a la vez asegurando –ya sea por una política de RS o dado por una mejora sustancial en los ingresos–, el acceso a servicios básicos para la subsistencia.     

En relación a lo dicho anteriormente, si buscamos que el sector privado conozca la agenda pro desarrollo primero que nada se le debe dar a conocer estos objetivos mediante concientización, fomento de prácticas de RS que estén inmersas desde su estrategia y no solo como algo meramente reputacional.

 

3.How can the role of SMEs in development be enhanced? What type of public private cooperation would be useful to strengthen SMEs and their positive impact on development?

 

El rol de las PYMES en el desarrollo, puede ser aumentado mediante concientización de impactos e  intercambio de conocimientos y buenas prácticas a lo largo de la cadena productiva. Fomento de la RS, talleres de competitividad empresarial, desarrollo empresarial, monitoreo de buenas prácticas, estándares de calidad, herramientas para la evaluación de impactos acordes a objetivos.

Del mismo modo hay que considerar que las PYMES tienen un rol protagónico en el empleo en los PRM y PMA, ya que son la principal fuente de trabajo. Por esto el estímulo competitivo y la promoción del empleo digno puede generar un fuerte impacto en el desarrollo de poblaciones desfavorecidas y un incremento generalizado en los ingresos de los países.  

Inter-American Cooperation Network on behalf of the Chilean International Cooperation Agency (AGCI)

CooperaNet
Fri, September 27,2013

How can the role of SMEs in development be enhanced? What type of public private cooperation would be useful to strengthen SMEs and their positive impact on development?

The role of SMEs can be enhanced by having the public sector formulate effective policies to support the creation of SMEs and foster entrepreneurship. These policies should include a simplified process of starting a business, assistance in legal matters, economic benefits and incentives such as lowering taxes during the formation process. Public private cooperation could be channeled through government efforts that showcase best practices from the private sector to SMEs owners. This exchange of knowledge could range from technical assistance to responsible business practices which could result in a larger and more sustainable growth for the SMEs. Additionally, it is important to create dialogue spaces such as expos, events and conferences where both the private and public sectors can interact to avoid overlapping or duplicating efforts. It is also important to identify priorities and most effective means to address key challenges faced by the SMEs during their initial phase.

Inter-American Cooperation Network (CooperaNet), Organization of American States

Khaleda Atta
Fri, September 27,2013

Greetings again all. Apologies for a delayed response. Thanks for the great interest in the PPD example in Nepal. Our teams are working on a more formal case study which I hope to be able to share with the group before the next meeting in Mexico, however the basis of the example lies in the creation of the Nepal Business Forum (NBF) which has a great website outlining their history and road to success thus far (http://www.nepalbusinessforum.org/

The discussion to date has been quite lively and unfortunately giving timing considerations with the forum closing today, I just wanted to note a few quick points for the moderators to consider as they round up thoughts to share with the working group / PSD steering committee:

  1. Given that the Global Partnership is comprised of governments, private companies and civil society -- the steering committe can take valuable points from the many and wide range of insights shared over the last 2 weeks to actually outline "roles and responsibilities" for each of these actors to play. One colleague mentioned IFAs as  one possible mechanism for binding these responsibilities and providing an actionable roadmap for future meetings. I think it's a great idea to ask the interested parties to commit to actionalbe steps in writing and hold them accountable so they can report on and share their successes regularly.
  2. There's been a lot of discussion on RESULTS and RISK. These are two critical areas that need to be further discussed to really identify pratical ways that these 3 stakeholders can come together to further our common cause of supporting the private sector to play a heightened role in development. However, again, a few points that can be used as a base for future discussions of the committee may include the point I raised earlier about asking private companies to commit to a shift in their operating strategies and focusing on "managing for results". Second, donors and governments together can consider ways that they can commit to increasing direct financing of private firms, and increasing their willingness to take risks, especially in fragile and conflict affected environments.
  3. Finally I sensed a lot of tension on the topic of PPPs and again, much interest in PPD. In our department (Investment Climate, WBG) we have senior experts who can surely provide great insight from their operational experiences in both areas and allow the group to further consider options, best practices, and lessons learned, to apply to their goals. Look forward to staying in touch to further connect our resources to future plans of the steering committee.
Hannah Ryder
Mon, September 30,2013

Khaleda

Thanks so much for your contributions - in both the case study and also summarising the discussions so well in your three points!  I'm going to do some research into IFAs - sounds interesting.  Let's all definitely find a way to stay in touch and keep discussing/debating.

Alexandra Zeitz
Fri, September 27,2013

Dear colleagues, I've attached a very interesting paper on private sector activity in post-conflict zones which was passed along to one of our moderators Albena Melin by Julio Garrido-Mirapeix, MD at KPMG IDAS. I think it adds an interesting dimension to the discussion we've been having, by describing how private sector engagement has to be adjusted to the relevant context, in this case a post-conflict setting. 
What other contexts can you think of where private sector engagement needs to be specifically tailored? How can the Global Partnership support this? 

Attachment(s) Risky Business - Promoting Private Sector Development in Post-Conflict States.pdf
Ababu ANAGE
Fri, September 27,2013

Dear Colleagues ,

I want to share  with you  some of the reflections about  the role of the private sector challenges and opportunities on  ‘1st Africa Food Security and Adaptation conference 2013.Nairobi august 20-21/2013:

Harnessing Ecosystem Based Approaches for Food Security and Adaptation to Climate Change in Africa’’

 

The alignment of ecological approaches that enhance food security with economic opportunities is crucial in undertaking the changing climate adaptation. Looking at how different business models can be used to allow companies to target growth while contributing to better management of ecosystems is necessary for societal wellbeing. The conference deliberated on opportunities for the private sector in underpinning their supply chain with ecological approaches. The following issues were of focus:

 »» How can an enabling environment be created for private sector engagement?

»» What challenges are faced by the private sector that prevents its participation?

»» What are the investment opportunities in harnessing ecological approaches for businesses?

»» What models have worked and how can they be capitalized on?

Private sector plays a central role in society in complimenting the government and other stakeholders in feeding communities. Private sector requires an enabling environment for effective and sustainable production and distribution. Discussants and audience participants put forth initiatives that would assist the private sector in contributing positively to food security and ecosystem management. The contributions included:

»» Providing tax incentives for feeding the public

»» Predictability of government behavior and policy initiatives

»» Clear rules and regulations, infrastructure, raw materials and markets

»» Clear policies by government to support farmers and their linkages to larger companies

»» Smart partnerships and collaboration that is beneficial to all. Therefore government was requested to create a framework for engagement

»» The creation and uptake of research & development (R&D) innovation labs

»» Inclusive and holistic processes from farm to market

»» If international funding is received it should be received at the communal level to ensure funding reaches those affected

»» Efforts to combat corruption in government which compromises transparency and discourages large companies from engaging in various countries

Ababu Anage,National climate Change Specialist ( Boots on the Ground)

 

UNDP- Ethiopia

 

From: notification@unteamworks.org [mailto:notification@unteamworks.org]
Sent: Friday, September 27, 2013 2:28 AM
To: Ababu Anage
Subject: [Teamworks] Alexandra Zeitz commented on the Discussion "e-3 (16 - 27 September): Private Sector Engagement "

 

You can post a reply on Teamworks

Matt Simonds
Thu, September 26,2013

Dear Colleagues,

Thanks for the opportunity to contribute to this e-discussion on the private sector.

I would like to share some of the views from the international trade union movement, responding specifically to questions one and two posed for the e-discussion.

1. How can the private sector in partnership with governments and civil society help advance inclusive and equitable economic growth? 

Private sector partnership with governments and civil society is welcome and needed. The developing world needs jobs in the formal private sector. But it needs to meet minimum quality and rights standards and they need to help support, not weaken two other pillars that are essential for equitable and inclusive growth: access to social protection and access to public services.

In our view, for private sector partnerships would need to meet the following principles to effectively work for inclusive and equitable growth:

  • Monitoring and evaluation: In line with aid effectiveness principles private sector partnerships should demonstratively prove the economic, social and environmental impact and contribution to economic growth and wealth creation for those segments of society that are most affected by poverty. That appears to be a weak point of current partnerships. As reported in Reality of Aid 2012 “donors have, for the most part, failed to analyse how various forms of economic activities can genuinely contribute to poverty reduction (and) have undertaken little due diligence in assessing the distributional impacts, or the potential effects of various forms of private sector development on the livelihoods, assets and capacities of poor populations”.
  • Rights-based approach: Effective compliance by government and by corporations with international UN norms, the ILO standards and promotion of the ILO Decent work agenda should be essential part, on equal footing with improving the “business climate”
  • Social dialogue: Government and public donor agency engagement with the “private sector” should not boil down to meetings with CEOs, business and employer groups. Private sector partnerships should be firmly based on social dialogue mechanism, including international framework agreements (IFA, see below) as a basis for private sector effectiveness and accountability. It should also include NGOs and grass root movements.
  • Developing country ownership & public services: Private sector development should not run counter to the much needed development of public services and strong, transparent and accountable public administration in the developing world. For example, there should be no bias in favour of Public Private Partnerships (see below) by opposition to traditional public procurement.
  • Holding multinational business to account: Multinational enterprises are expected to meet international recognised corporate accountability and transparency requirements as laid down in the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, among others. These are not optional. We firmly oppose any voluntary or “à la carte” approach to corporate responsibility.
  • Ensuring policy coherence: Beyond the ILO Decent Work Agenda, policy coherence must be ensured with other development- or poverty-related forums, as well as with the rising agenda on corporate tax accountability.

What are examples of successful multi-stakeholder development partnerships including business?

The notion of “private sector” and “private sector partners” should not be limited to employer groups and business organisation. Workers are a key constituency of the private corporation, they, and their representative trade unions, are private sector constituencies as well. This requires government engagement with private sector to be firmly based on social dialogue with trade unions and employer groups.

As a general rule, we believe that the active promotion of representative and independent trade unions can help a lot for successful partnerships. In this regard the active involvement of the ILO, and of its technical assistance programmes in the development of private sector partnerships would be welcome.

International Framework Agreements (IFA) constitute a good example of successful multi-stakeholder partnerships. An IFA includes contractual commitments signed on by an MNE and the trade unions representing the MNE’s employees (at national, regional and global levels) regarding labour, human rights as well as environmental rights. 

2. How can private sector models, operations and investments that contribute to the development agenda be better understood, facilitated and concretely captured and measured going forward

Private sector partnerships can take various forms between a public party on the one hand – be it a public donor, another type of aid-related public institution, or a public administration – and a private party on the other – a private sector company and/or an investor. The type of relationship between the public and private party is important from a trade union perspective because it will determine the extent to which the public party has influence, if not effective control or at least stewardship over the project and, from there, who holds employer responsibilities.

What is central is to ensure fair risk sharing within partnerships and make sure that gains are not privatised while losses are socialised.

On that we are particularly concerned about Public Private Partnerships (PPPs) as a preferred model. PPPs are here understood in a strict sense: private contractual arrangements whereby a private operator Design, Build, Finance and Operate (DBFO) a given project. Current international forums dealing with private sector development – Busan Partnership, EC Agenda for Change & G20 WG on Development – have in common what we perceive as a uncritical, unbalanced understanding Public Private Partnerships – as opposed to traditional public procurement.

PPPs are far more complex to operate than “traditional” public procurement even for supposedly sophisticated OECD-based government administrations, and as evidenced in the demanding requirements laid down in the 2012 OECD Principles for Public Governance of Public-private Partnerships.

Hannah Ryder
Mon, September 30,2013

Matt - thank you very much for sharing these principles and bringing the IFA example to our attention in particular.  These will be important for the steering committee to discuss.  Do you have any specific examples where IFAs have been signed and they have led to an uplift in development impacts?  Thanks!

Matt Simonds
Mon, September 30,2013

Thanks, Hannah.

IFAs are generally negotiated between global union federations (international union federations organized on the basis of industry sector or occupational trade) and multinationals.  There are many such agreements already in existence, which you can see here: http://www.global-unions.org/framework-agreements.html--you can actually find the full texts of the agreements.

As to evidence the ILO has conducted some empircal research/case studies on the impact of IFAs on global industrial relations, which you can find here: http://www.ilo.org/global/publications/books/WCMS_159643/lang--en/index.htm

Carola Dorothea Kenngott
Thu, September 26,2013

 

Great to see such a lively discussion on the role of the private sector in development, and the role of the private sector partnerships with government and civil society for inclusive and equitable economic growth!

Very timely, with regards to Casper’s, Jeroen’s and Khaleda’s comments on the private sector as driver for innovation and inclusive development, the topic innovation for development solutions has been discussed this week at the General Assembly of the United Nations in New York during a High-level Forum on Accelerating Action and Partnering for Impact:

http://webtv.un.org/watch/part-3-mdg-success-high-level-forum-on-accelerating-action-and-partnering-for-impact/2686958779001

The forum brought together panelists from the Rockefeller Foundation, Facebook, as well as Bill Gates in person to discuss concrete examples and prerequisites of scaling up successful innovations for development. The emphasis was on the “how” – bringing together examples from partnerships across the spectrum of the MDGs and the SG’s multi-stakeholder initiatives and movements.

I have captured a few key messages here:

- The Rockefeller Foundation spoke to the potential of scaling up development solutions through innovative techniques such as crowdsourcing which allow young people, marginalized people and others to identify a development challenge and contribute to the identification of innovative solutions to those challenges.

- Bill Gates spoke to the transition from the Millennium Development Goals to the Post 2015 Sustainable Development Goals. According to him, the Millennium Development Goals are much about equity and have been central to prioritization – both in terms of fundamental “freedoms” of each country’s population, and in terms of the donor’s focus on funding priorities. Innovation can lead the key to accelerating the achievement of health related goals (e.g. in the field of health, such as vaccines, delivery of health care systems or prevention of child mortality).

- Facebook spoke to the power of social media in giving every individual the power of having their own voice heard to the world – even in the most remote, rural areas. Connectivity was highlighted as a critical enabler for innovation and achieving sustainable results.

Have a look at the discussion – it is worth listening in, when speaking about private sector as driver of innovation for development solutions!

 

Albena Melin
Thu, September 26,2013

Hello All,

have been a little silent, sorry! Thanks much for all the comments so far. I wanted to ask a different question linked to partnerships as we haven't touched upon it as far as I see. In my experience a lot of talk recently is centred around leveraging private money with public funds, the financial side of a partnership counts a lot as well in times of diminishing ODA flows. Are there any good examples of how this is actually done, how a development project is financially engineered in partnership between private and public actors to make most of everybody's resources and create real shared value - profits and purpose?  I'd love to hear more on that!

Thanks also Khaleda for bringing up the PPD example in Nepal. Glad you think it works well now - I was one of the people who worked on getting it off the ground a few years ago. It is very country specific, takes a lot of time and negotiation and a real public private engagement with an issues agenda and action points on the table! This PPD in Nepal led me to believe more and more that a partnership without a clear issues agenda and a common challenge to solve as the goal is only a process without an impact in the end! Thoughts welcome!

Albena Melin, IFC

Hannah Ryder
Fri, September 27,2013

Hi Albena - I posted your question on whether aid should leverage the private sector more on twitter (linking to a piece by the head of the African Development Bank Donald Kaberuka which says that it should) and these were the replies I got:

1) Leveraging the private setor works when we support real markets. But most infrastructure/PPP projects are simply monopolistic contracts for the private sector - often less efficient and more expensive.

2) stuff we say so easily but I am yet to see genuine examples of how donors can facilitate this (maybe they can't)...

two things struck me about these replies.

First, that - as the private sector representative on the Steering Committee has argued - there may be a need for some sort of roadmap that identifies how donors (and others) can skill up to be able to facilitate this... And it would be worth engaging with providers such as the Islamic Development Bank and the Singaporean Cooperation Enterprise which - I understand - is trying to join up knowledge sharing efforts among public sector and business partners...

Second, that infrastrucure - unlike other projects - is very often a natural monopoly.  If there is a lack of sucess (i.e. expensive, inefficient) is this because donors/multilaterals/others aren't tailoring aid to deal with that fact?

Looking forward to your/others thoughts on this.

Thanks!

Hannah

 

Albena Melin
Mon, September 30,2013

Hi Hannah and All,

 

Thanks for that !

1) Agree that donors should support real markets and work from a markets perspective and approach - but as it stands very few do. And PPPs do not necessarily have to be in infrastructure (or not in hard physical infrastructure as road building for example), it can be in financial or social infrastrure as well (e.g. building heath systems).  I am not sure i agree and understand teh comment of PPPs being less efficient and more expensive, it depends how they are structured, procured and implemented. And often neither the provate nor the public sectors are able to deliver the service on their own...

 

2) Yes, a roadmap on how donors can skill up to facilitate and understand private business investments is crucial and we need to think beyond aid traditionally, namely that aid can enhance private finance (which many are still opposed too). For those of you who are aware the GCs - The Grand Challenges are great examples of how public funds leverage private investments as are smaller Challenge Funds like the AECF - but it takes a lot of new and multidisciplinary skills to design and implement them in order for us to be able to take them to scale. Hopefully the BB on teh Private Sector can do more to showcase such initiatives as wel as work towards a better and common understanding on financing and leveraging private funds with public money.

Thanks,

Albena

Hannah Ryder
Mon, September 30,2013

As a quick update on this - I also received a tweet reply from Dirk Willem Te Velde from ODI who pointed out some studies that are relevant to leveraging the private sector through aid.  He pointed to the work on aid for trade - which he suggests in a blog is going to become more "bundled" together to deliver more impact.  See his piece here: http://community.businessfightspoverty.org/profiles/blogs/dirk-willem-te-velde-debating-the-potential-for-third-generation

He also pointed to a paper that he and some colleagues wrote earlier this year on development finance institutions http://www.odi.org.uk/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8326.pdfwhich suggests that those DFIs who are more exposed to industry and agribusiness - i.e. business/the private sector (such as DEG, EIB, Swedfund and Finfund) have the largest job creation effects, which is becoming increasinly important to many governments in low, middle, and high income countries alike.

Jeroen Kwakkenbos
Thu, September 26,2013

First off thank you very much for initiating this discussion. I would like to note that in the spirit of the discussion I am not representing any official position regarding private sector engagement within the framework of development effectiveness.

Private sector engagement in development cooperation has again become a hot topic in all international fora concerning development so the role and additionally of the GPEDC engaging in this agenda is a crucial question. Within the context of public private dialogue, aside from assessing the quality of this dialogue, the role of the GPEDC should be to ensure that the principles of development effectiveness are mainstreamed within proposed reforms from PPD and that stakeholders from vulnerable and impoverished communities are fairly represented. The example of the Maldives highlights the need to specifically engage SMEs within PPD as they do not have the resources of larger national firms and multi-national companies.     

There are some further points I wanted to raise for further consideration:

The private sector has an important role to play in development and requires careful assessment in terms of what it can realistically bring to the table. A key element to note is that the private sector is not a homogenous entity. It represents a wide variety of activities and interests that can be compatible or conflicting. Individual firms are also not homogenous as they consist of different needs and interests between employers and employees. The private sector also does not operate in a vacuum and its activities can create both positive and negative externalities. Determining best practice and identifying appropriate partners is crucial to successfully engaging the private sector within a discussion on development effectiveness.

Creating a business friendly environment should not supersede protecting the rights of citizens. The question should not be so much how to create an enabling environment for business, but how to create an environment that enables and incentivises businesses to achieve development objectives. Multistakeholder dialogue could develop clear and achievable targets for the private sector that are aligned with development objectives and could then be captured and measured. Furthermore this dialogue could also identify constraints upon the private sector that hinder its ability to achieve these development objectives.  

The example Kazi raises of targeting women entrepreneurs is a potential area of where multistakeholder dialogue can determine priority sectors that can be supported by public policy. Determining constraints and needs of vulnerable communities and SMEs and then determining appropriate partners and actions that can address these needs could be a measurable output for public private dialogue.

The example highlighted in the discussion in Ethopia points to a clear area where public policy objectives and the private sector intersect. Public procurement offers a sizeable portion of public spending that can be targeted to sectors aligned with development objectives. Below I have outlined three areas where public procurement policies can enable the achievement of development objectives through engaging with the private sector:

Pro-poor procurement can increase the share of public spending that goes to the poor and help develop their capacities. It can promote the use of labour-intensive supplies and methods and create jobs for the poorest in society.

Promoting decent work, social inclusion and environmental sustainability. Governments and aid agencies can require contractors to comply with labour and environmental standards. They can also use procurement to benefit marginalised groups including women.

Driving private sector development, innovation and inclusive growth. A long-term and predictable commitment to purchase from governments and donors can boost investment in productive capacities. Most common targeted procurement practices are:

granting price preferences to local bidders,

setting aside a share of contracts in particular for SMEs, and

debarring firms involved in fraud or corruption cases, and firms registered in tax havens or involved in human rights violations.

Promoting SME development is usual practice in most developed countries and targeted procurement practices should also be applied in developing countries. Coordination between SMEs and the public sector is crucial in order to assess existing constraints and determine sustainable and effective strategies that enhance capacities and promote practices aligned to development objectives.  

Stephan SCHMITT-DEGENHARDT
Thu, September 26,2013

Dear colleagues,

Thank you for initiating this discussion, during which many interesting examples were given, and even more interesting questions were asked. I guess we are currently at a stage in the global development, where all we can do is continuing to chip in further questions, question those questions, and this way edging towards a better economic and social system for the world.

Let me please start by coming back to highlighting a few points raised during this discussion.

Who is the “Private Sector”? The UNDP Private Sector Strategy is absolutely right when it emphasised at one point that the Private Sector is not a monolith, but made up of very distinct participants with very distinct capabilities, perceptions and expectations. When we discuss “partnership with the private sector” we should thus clearly distinguish whom we are addressing. The necessity entrepreneur who makes up the largest percentage of all businesses definitively requires different instruments for engagement –if that is at all feasible- than an SME or a MNC (and business membership organisations). And within the micro and small businesses we should even further distinguish between locally oriented businesses, growth oriented businesses, etc.  The capabilities, perceptions and expectations of those different actors require very different approaches.

What is a “partnership”? Alone this word will raise very different imaginations by different people. I just concluded a small (privately done) survey among businesses in China, India and Russia and –unsurprisingly- found that often used expressions like “trust”, “competency”, and even the very idea of “business partnership” etc. invoke very different notions among the people, much of which could be proven as culturally contingent. Even we ourselves use the word “partnership” in quite a variety of ways: big businesses made it very clear to me that “PPP” is nothing else but a “powerful push for profit” – and does not have anything to do with our more socially oriented view of PPP. Yet, we use the same name.

What is the purpose of a “partnership”? Values are clearly very different among societies, so shared values are also different. This is again the local dimension which all of us rightfully always emphasise. And we should look at further dimensions: the planning horizon of most micro and small businesses does not go beyond about 1 year (if at all); larger businesses can and do plan longer. (And in democracies, the planning horizon of many governments does unfortunately often not exceed 4 or 5 years). If a partnership shall result in some concrete outcome, then we might have to adjust the planned outcome of the partnership to the planning horizon of the partners in that partnership. As it was said in one contribution, the private partner would not like to wake up to the point that they suddenly have the obligation to continue indefinitively.

What are businesses willing to invest into “partnerships”? There is preciously little credible research on partnerships, and even on CSR. SME appear to invest on average 0.05% to 1.0% of their turnover into CSR, while micro-enterprises and household units seem to invest up to around 5%. Unsurprisingly, the larger the business the more contributions are made financially (versus in kind), the more are the activities external (versus internal), and the more are the companies ready for collective CSR. Overall, collective CSR engagement is negligible, though the largest businesses of this group, medium sized businesses, appear to be most active in it. In other words, internal CSR, or internal “shared values” are already –to a certain degree- a reality for most businesses of the world (micro enterprises). The larger the business, the more they are ready to engage into external activities – but still at negligible rates. Yet, they are not ready to partner with any multi-stakeholder forum: in many countries they prefer to engage with their church and not with governments. Understandably?

Where does that leave us?

First: pick up the people where they stand! At global level we can quite successfully engage global companies into global partnerships. To engage the vast majority of the small businesses –or even micro-businesses (I want to clearly distinguish between these groups)- we need to first understand what are their partner selection criteria, their perceptions and expectations. The said little research shows how different those selection criteria can be, and that these –again!- can be mostly seen as culturally contingent. Equality –mentioned as well in one contribution- is also of core importance. And if partnerships between two parties (businesses) are already difficult to achieve (see the failure rate of joint ventures), and more difficult to achieve sustainably, we can imagine that multi-stakeholder partnerships are even more difficult to achieve if they shall go beyond talk-shops and short-term efforts.

Adjust the goal to the participants. Having said this, and keeping in mind the planning horizons, it might at local level be easier to get businesses engaged into one specific campaign with a clear, achievable goal and end. Engagement needs to be experienced and learnt.

Business rights – also for the smallest. Businesses as people should have a voice. The best mechanism known so far are business membership organisations (BMOs). Yet, in most of the world they don’t function well, and, as also stated in a comment, rather represent the interests of the bigger members. Coming from continental Europe, with a –partially- continental European mindset, my preferred recommendation would be to lobby for public law chambers, instead of the prevailing private law chambers. It has its drawbacks –as any model- but increases sustainability and voice for the smallest. Why is that important for a partnership? A BMO can easier foster sustainability, networks, channel ideas, increase peer pressure, but simultaneously give the individual member an easier drop-out ability.

What can governments do? We come here quickly into the old, well-known topics: A predictable and stable environment increases planning horizons and thus the ability to engage into longer term activities (I assume). Low corruption reduces ego-centric behavior (again, I assume – I don’t have evidence for this). Tax systems can be designed to facilitate engagement, etc.  Nothing new here. But, I believe, most importantly is to enhance overall credibility: if an educational system stimulates shared values, but the reality strikes hard at those who implement them, and benefits those who don’t;  if governmental and non-governmental leaders talk about partnership and shared values, but don’t act accordingly;  if gains can be privatised and losses socialised ... in such a world we still have to walk in small steps, as outlined above.  Simultaneously, we might be able to dream up a revised economic and governance system over the next decade, which is more partnership and social oriented. The Global Partnership could contribute some elements to that dream.

Reinout van Santen
Wed, September 25,2013

Dear Colleagues,

Thanks to all the Moderators, contributers and facilitators for making this discussion possible . Trusting that this discussion seems to attract enough expertise on how established private sector players can be engaged in effective development I would like to focus on SME’s's

SME’s represent the grass roots of private sector. Understanding SME’s should influence the root off any development policy that targets the private sector as a whole. They might be small or medium sized, they are large in number and make up a sizable portion of the formal or informal economy of development countries .This is why, looking at the numbering of the question, I am going straight to question three: How can the role of SMEs in development be enhanced? What type of public private cooperation would be useful to strengthen SMEs and their positive impact on development?

In all developing communities I have ever encountered I have met entrepreneurial people. These people have the same entrepreneurial drive as many other entrepreneurs that are enterprising in a more nurturing environment. Understanding the barriers that hinder SME’s to take the next step in becoming solid enterprises in developing countries is the way to best act on this targeted ‘sector’.

The promising thing about SME’s is that they are already present everywhere. A good way of enhancing SME’s role and strengthen their positions would be to support transnational and regional networks of entrepreneurs that think alike and have common goals. It has already been many years ago since I was an intern at the ‘business in development network’ (www.bidnetwork.org). It is a good example of how a network, now part of a network of like-minded national entrepreneurial organizations, can stimulate private sector development in developing countries. Their  way of actively linking ‘coaches’, ‘investors’ and ‘entrepreneurs’ to each other has proven to be successful. In combination with business plan competitions and a model for corporate social responsibility, this approach stimulates entrepreneurs to think their plan through with the help of entrepreneurs that have more experience. This works two ways since established private sector players are linked to the emerging private sector development in developing countries and are also introduced to practices of corporate social responsibility and possible interesting investment opportunities. 

It would be a great step forward if governments in collaboration with international organizations such as the UN could support these kinds of networks in any way they need and engage them in local and international policy dialogue about national and regional policies that could help create a more nurturing environment for doing business. In relation to this, certain countries or in a certain regions there are common denominators that harm the success of national private business in general. Sometimes these barriers are obvious, for example in conflict regions. In other examples they are less obvious and require analysis. To have entrepreneurs' voices heard, it would be best to support existing or emerging private sector umbrella organizations, such as networks, employer’s organizations and trade unions, and explain entrepreneurial views on how to best deal with these obstacles on a local or regional level. 

Casper Sonesson
Wed, September 25,2013

Dear colleagues,

Thank you for our first week of debate and for your substantive and thoughtful contributions. Below is a short summary of the e-discussion so far, which might be helpful if you’re only joining the debate now.

I have also added a few short follow-up questions below to see if we can further explore and tease out some of the key points that appear to be emerging in the debate.

Hurry and make your contribution to the discussion before it closes on September 27!

On establishing successful multi-stakeholder development partnerships that can contribute to inclusive growth, we heard from Hussain about the “Partnering 4 Development”
(P4D) forum in the Maldives. Hussain argued that the success of the P4D initiative hinged on treating the private sector as true partners, rather than as either end beneficiaries of or as providers of resources for development projects.  Instead of focusing mainly on
joint projects, he argued that we need to focus on supporting sustainable business models that can offer long term, sustainable solutions to development challenges and viewed the P4D Forum in Maldives as a way to enable encourage and support this. Key success factors he mentioned includes trust and communication between the public, private and communities.

We also heard from Kazi that the Government of Bangladesh is reinvigorating its Public Private Partnerships in key sectors such as Power and Energy, Transport, Tourism, Housing and Information Technology. Hearing of such sector focused approaches raises the question of how these partnerships and public-private cooperations are organized. It would be great to hear more from Kazi on this!

Kazi also mentioned a need to focus on labor-intensive industry sectors. In addition Kazi gave an example that in order to increase access to capital for women, Bangladesh has required all financial institutions to have a desk dedicated to providing financing to women entrepreneurs, many of whom operate SMEs. This is coupled with training for women entrepreneurs in collaboration with development partners.

Ababu shared a great initiative from Ethiopia, centered around the Climate Resilient Green Economy strategy of the country, in which a public-private partnership has facilitated the launching of a pilot programme of 12 e-taxis around the country.

Another emerging theme has been the question of how much responsibility the private sector can carry on its own, and how much of a role the government must take in order to both foster and regulate the work of the private sector. Khaleda suggested that the private sector should individually focus on ‘managing for results,’ but that governments had
crucial roles to play in setting up business-friendly institutional frameworks and acting swiftly to enforce relevant regulations. Khaleda also mentioned the PPD example from Nepal, which we would love to hear more about, if there is a more detailed case that can be shared?

 A few follow-up questions that builds on the original question 1 but aims to probe
further could be:

**What conditions have to be in place for the
multi-stakeholder development partnerships including the private sector to
succeed? What should be the distribution of roles and responsibilities between
public and private?

**Are there other countries that have established similar platforms to the one in the Maldives or partnerships related to select industry sectors, such as in Bangladesh?

** What specifically could the Global Partnership do to further promote and strengthen these types of collaborations and dialogues between the public, private and other sectors?

On question 2 and related to different models of private sector activity,
fellow moderator Hannah asked what role the Global Partnership could play in
supporting emerging approaches that go beyond CSR such as “shared value” and other
similar concepts (e.g. inclusive business approaches).

It would be great to hear more views on this point about what the Global Partnership could do (including in the upcoming Ministerial meeting) to encourage, enable and support the private sector to further commit to “shared value” business approaches?

Thanks to all and we look forward to some additional insightful comments in the last few days of the discussion. Hurry up to make your contributions!

Kazi Shofiqul Azam
Mon, September 30,2013

Dear Colleagues,

In reponce to the quire regarding  how thesePrivate Public  partnerships and public-private cooperations are organized in Bangladesh is given below:

Kazi Shofiqul Azam

Bangladesh

Public-Private-Partnership in Bangladesh

 Public-Private-Partnership is relatively a new concept for Bangladesh. The government of Bangladesh has initiated to take projects/programs through the Public-Private Partnership (PPP) to attract the scale of private investment required in the social and economic infrastructure of the Bangladesh.

 

A key component of a successful PPP program lies in the development of the enabling environment and institutional framework for PPPs. Much progress has been made in this area since the current government revitalized the national PPP program in 2009. In August 2010, the Government of Bangladesh issued the Policy and Strategy for Public Private Partnership (PPP) to facilitate the development of core sector public infrastructure and services vital for the people of Bangladesh. The PPP program is part of the Government's Vision 2021 goal to ensure a more rapid, inclusive growth trajectory, and to better meet the need for enhanced, high quality public services in a fiscally sustainable manner.

Under this new national policy, the PPP Office (http://www.pppo.gov.bd) was established as a separate, autonomous office under the Prime Minister's Office to support sector line ministries to facilitate identification, development and tendering of PPP projects to international standards. In addition, a PPP Unit under the Ministry of Finance was established to foster an environment of fiscal responsibility and sustainability in PPP projects. The MOF PPP Unit has responsibility for overseeing the fiscal viability of PPP projects and sanctioning support funding for their development and financing. It has management responsibility for overseeing three key, catalytic funds, the PPP Technical Assistance Fund, Viability Gap Fund and Bangladesh Infrastructure Finance Fund.

The PPP Unit works on behalf of the Government to monitor budget implications of upcoming PPP projects and manage any contingent liability exposure that the government may deem appropriate to support PPP project financing. In this role the PPP Unit provides critical support to overall public financial management by providing inputs to the overall national Medium-Term Budgetary Framework. Moreover, a draft PPP Law has been developed and presently it is waiting for approval. It is expected that with the adoption of the law, PPP in Bangladesh will get the expected outcome, i.e. more infrastructure through the Public Private Partnership.

Up to now, the PPP Office has endorsed a number of projects in different sectors such as health, communication, shipping, roads and bridges, housing and works, tourism, etc. But Government’s target of operational the PPP projects are yet to be achieved. Major reasons behind the failure in PPP project implementation in Bangladesh are the failure in identifying priority projects, lack of technical knowledge and experience in project design, financing & management in PPP operations, etc. Therefore, the government needs to take appropriate and pragmatic steps to effectively and successfully implement the PPP projects in the future.

 

 

abul faizullah
Mon, September 30,2013

Government of Bangaldesh,  in line with inernational initiatives, considers that private initiative and innovations should play an important role in the provision of public goods and services.  Government introduced the PPP in the 2009-10 budgets to promote infrastructural development through private investment. The PPP scheme was intended to raise the investment to GDP ratio to 35-40% from the existing 24%. 

Asian Development Bank  had been assisting the PPP wing of the prime minister’s office in finalizing paper works on appointing consultants for public procurement and execution of projects. Up until this May, a total of 37 projects have been selected, of which 17 have been listed, 14 have seen the appointment of consultants and the implementation of six projects has begun.

Still, crux reality is,  little progress has been so far made and doubts were cast over the future of the PPP projects, which had been included in the Annual Development Programme every time over the last four years, because the private sector had shown little interest. It could be safely said that heavy reliance on PPP for infrastructural development only is responsible for poor progress in the sector. Institutional and legal frameworks of PPP have not proved sufficient to attract private investors who have less or no  connections with power-matrix could be another potential area to be looked into. We, yet to caome up with any successful pilot PPP project to have proper lesson-learning phase.

We trust that Government’s PPP initiative would unlock the  partnership with the national and international investment community, financiers, and civil society to realize the needs for a growing and more prosperous Bangladesh. Bangladesh's comparative advantages in some selective sectors should need to realized while making PPP projects. We want some exclusive policy supports(removal of tariff and non-tariff barriers, etc.) and confidence buidling steps to go further. Some of our trusted development partners could assemble their strengths in a more structured way to operationalize PPP vision along with our own efforts and commitment. And, finally, the best way to predict the future of PPP would be to invent it with solid promises and steps.

Abul Mansur Md. Faizullah

Joint Secretary, ERD

Hussain Jinan
Sun, September 29,2013

What conditions have to be in place for the multi-stakeholder development partnerships including the private sector to succeed?

From what we have learned through our previous engagement is that in countries where private sector is at infant stage, it’s always better to map out and look into avenues or areas where private sector has interest and work on identifying business cases on those areas and develop a common multi-stakeholder platform which is recognized and endorsed by the government and not just line ministries and where trust and communication plays a stronger role. Please see the attached booklet we did for last year P4D forum and also the partnership strategy, which was just developed based on the discussions for that forum – as it was agreed to re-work on partnership strategy prior to every forum with on objective of what material would be taken for discussions. It is much more like an innovative market place where there is no distinction between who is the end consumer or final product or guaranteed market, but a place where issues, problems are discussed based on which partnerships are established as solutions to overcome them.

What should be the distribution of roles and responsibilities between public and private?

 

Based on our experience, financial resources and a market integration is which private sector could bring in and public sector on institutional capacity and skills development and agencies to play more on the facilitation role to build & foster better partnerships or establishing linkages.

Please see the curtain raiser for the P4D made for last year forum and also find attached the presentation which I have given during the forum on the point of the need of such a forum. 

http://www.youtube.com/watch?v=z_WoFWFdX2s [p4d curtain raiser]

Attachment(s) P4D Booklet 2012.pdf
Presentation P4D.pptx
Partnership Strategy 27 11 2012 FINAL.pdf
Ababu ANAGE
Mon, September 23,2013

Dear Allexandra:

 Thank you very much for initiating this timely discussion.I am gald to share with you the Ethiopian experience on  the involvment of the private sector in the implmentaion of the Climate Resiillient Green Economy Strtaegy of the country.  

Ethiopia developed the continent’s first national vision and strategy for a Climate Resilient Green Economy.The five year plan of the government, Growth and Transformation
Plan(GTP) has boldly signify to the world Ethiopia’s ambition to accelerate its economic growth and reach middle income low carbon country status by 2025.

 The Climate Resilient Green Economy Strategy sets out the green economy opportunities that could help Ethiopia to reach its ambitious growth targets while keeping greenhouse gas emissions low.

 One of the options identified in the CRGE Strategy is introduction of clean transportation
in Ethiopia. This clearly demonstrates the Government and all other stakeholder’s  commitment to advance fuel efficiency standards for passenger and cargo transportation and to promote the purchase of hybrid and electric vehicles to counter the low efficiency of the existing vehicle fleet.

 UNDP’s engagement is provided within the context of its overall support to enhancing
economic growth and specifically helping the emerging private sector. Under the frame work of Public Private Partnership, the Federal Environmental Protection Authority and dVentus Wind Technologies PLC with the financial support of UNDP 12 electric driven taxies
(e-taxies) have been procured and piloted in selected national regional states
of the country.  

An electric vehicle (e-taxi) is designed to use charged batteries on board vehicles that is propelled by one electric motor or more, using electrical energy stored in batteries. It is suitable for transporting both people and goods. Introduction of this green technology has got social, economical and environmental benefits.

 Economical:
Reduces foreign currency spent for fossil fuel. Creates new job opportunity and makes the country benefit from carbon credit.

 Social:  Reduces the burden of health problems caused by emission of pollutant gases from the use of fossil Fuel and the community will get an alternative means of transportation.

 Environmental: Contribute for building green economy by reducing greenhouse gasses emitted from using fossil fuel. (It reduces local air pollution significantly)

Hannah Ryder
Fri, September 27,2013

Ababu

thank you so much for your contribution to this debate.  I was in Ethiopia in September 2012 working with my colleagues to design a private sector engagement programme to ensure it aligned strongly with the Ethiopian Government's Climate Resilient Green Economy strategy.  I also visited dVentus technology who were doing excellent work then as well. Although that programme focused on SME engagement, public private partnerships seemed the right vehicle (excuse the pun) for the transport field.  It is great to hear a practical example of such progress, and I just hope that this can be scaled up more even further.  Is there some monitoring and evaluation taking place of the pilots so that the results can be captured and lessons learnt ready for scaling up?

With thanks,

Hannah   

Ababu ANAGE
Fri, September 27,2013

Dear Hannah,

Thank you very much for your interest on Ethiopia.The  12  electric driven vehicles  are being  piloted  in limited places of the country  with the cardinal objective of  drawing lessons   and  scaling up. The technology is implemented by establishing Green Enterprises  which are governed by the  regulation of SME.  Monitoring and oversight is  given by the local authorities. The new development in the country: the establishment of the Ministry of Environmental Protection and Forestry  which will have sub offices at regional, zonal and district levels  will for sure help to effectively monitor the implementation of green technologies  and scaling  up as well.

Scaling of electric driven vehicles  and other green technologies is very crucial for the attainment the country’s vision of becoming carbon neutral and middle income by 2025.

My Best Regards

Ababu Anage

 

From: notification@unteamworks.org [mailto:notification@unteamworks.org]
Sent: Friday, September 27, 2013 10:23 AM
To: Ababu Anage
Subject: [Teamworks] Hannah Ryder commented on the Discussion "e-3 (16 - 27 September): Private Sector Engagement "

 

Yo

Khaleda Atta
Thu, September 19,2013

Greetings all. Wanted to chime in on the ongoing discussion. Great comments from our friends so far. It's already clear that any debate on what the role of the private sector is in "inclusive' development and growth can be explored on several different dimensions. First off, it's important to understand the investment climate of different regions of the world as each region, and each country has different dimensions that impact the ability of the private sector to operate, making it difficult to tackle the topic at hand broadly. Ultimately it would be necessary to focus the discussion down to specifics to have a solid outcome.

With that said, going back to what Casper initially raised -- we question how the private sector (both domestic and foreign) can contribute to a country's inclusive economic growth, and how that contribution can and should be measured. I would argue that this could be discussed at a minimum on two levels:

  • First, what can the private sector accomplish on their own? and
  • Second, what can governments do to create the enabling environment for the private sector to be able to contribute to inclusive growth, so that their contribution can be measured?

The private sector clearly has a strong role to play, the most obvious and powerful role being their capital, and ability to create jobs. However, without an adequate regulatory and legal environment to support the private sector's needs, it is difficult to have expectations for the private sector to deliver on this front. For one, the private sector in developing countries should focus on "managing for results", just as development organizations and NGOs do, by meauring their outputs and outcomes regularly and reporting on them publicly. The private sector could also focus on re-investing in human capital and innovation, to help the labor market advance.

On the other hand, governments should also commit to creating a business-friendly environment by not only creating the appropriate legal and regulatory environment to support businesses, but also act swiftly with enforcemnt of those laws and regulations.

Ultimately, private sector and governent need to work hand-in-hand as partners in development, bringing the discussion back to the importance of public-private partnerships and the necessity for public-private dialogue as other colleagues of mentioned. Several successful models can be used to exemplify this, such as the PPD successes achieved so far in Nepal. Happy to share this and other country examples if the group wants to explore this further.

Casper Sonesson
Wed, September 25,2013

Greetings Khaleda and thanks for your insightful post. It would indeed be great to hear more about the PPD experiences in Nepal and what the successes and challenges of these have been. And based on this, what could the Global Partnership do to further promote and support these types of PPD experiences, in your view? Look forward to hearing from you.

Kazi Shofiqul Azam
Wed, September 18,2013

 

Private Sector Engagement

 The Busan Partnership for Effective Development Cooperation, a Fourth High Level Forum on Aid Effectiveness held in 2011 in Busan, South Korea, focused on private sector role in development policy implementation. The Busan Declaration acknowledges the roles of private sector as a growth engine based on accelerating innovations, mobilizing local resources, creating jobs and providing better healthcare and standard of living in developing countries.

 The private sector engagement in the development process is integral to achieve a pro-poor and sustainable economic growth. It plays a vital role in improving the living conditions and the quality of life of the people. This is particularly critical when the government is faced with an increasingly complex development agenda, and when available resources are becoming increasingly constrained. The private sector, as the primary engine of economic growth, can play a direct role in poverty reduction. Greater levels of private sector participation especially in the development of physical infrastructure can release scarce resources from national budgets for critical public investments in employment creation, income generation as well as providing basic social services such as education, health care and water and sanitation.

 

The Government of Bangladesh has taken a number of steps to create an enabling environment for this sector so that it can play its due role as an effective economic agent. The Government has started reinvigorating Public Private Partnership (PPP) initiative to scale up investment within the economy. The areas that are receiving priority under this initiative include Power and Energy, Transport, Information Technology, Air Transport and Tourism Industry, Education and Research, Health and Family Welfare, Housing, etc. The present Government has declared its commitment to take ICT to the doorsteps of the mass people by involving the private sector.

Bangladesh Economy is on an accelerated growth path, with the private sector playing a lead role. In manufacturing and productive sector, the demand of private investment is growing. Implementation of private-sector led growth strategies, undertaking pragmatic reforms and enhancing the supportive role of the regulatory agencies and institutions are the prime agenda of the Government. The Board of Investment (BOI) acts as the major designated state sector agency for providing counseling to all private enterprises-local and foreign.

 The private sector is an important part of efforts to improve development outcomes and stretch limited official development assistance and philanthropic dollars. Therefore, the donor community should collaborate more actively and closely with businesses at the operational and policy levels, both domestically and globally. There is great potential to jointly develop innovative new financing mechanisms, technologies and business models that will deliver more inclusive green growth in developing countries.

 The Role of SMEs

Small and Medium Enterprises (SMEs) have a significant contribution to the economy. The SMEs would be able to play a robust role in the development of our economy if appropriate policy support is provided to this sector. Considering the contribution made by this sector, the government is committed to support the small producers and traders of this sector by providing necessary assistance and protection to them. A considerable amount of money has been provided to a number of entities from the refinancing fund managed by the Bangladesh Bank for small and medium enterprises. Each bank and non-bank financial institution has opened a desk dedicated for providing refinancing facility to women entrepreneurs. In order to involve more women in the economic activities, special training programs have been arranged for them in association with the development partners.

 Establishment of labor intensive industries and development of SMEs through channeling credits are playing significant role in generating employment. It has been possible to remove seasonal unemployment in rural areas by implementing targeted programs for the ultra-poor. Fast growing private sector has played an important role in creating employment opportunities in the past years.

For effective private sector engagement in the development process, a congenial environment should be created. Development of entrepreneurship, new business creation and development of inter-sectoral linkages should be given top priority. The government should define a secure and pragmatic policy for the development of SMEs in the country. Provision should be made to develop separate and specialized institutions in three areas: (a) finance, (b) technology, and (c) skill development, in addition to rationalizing existing policies and institutions. The concept of public private partnership (PPP) in the sphere of development and growth of SMEs can be explored. An enabling economic environment comprising of sound macroeconomic and structural policies, good infrastructure, fair policy of competition, and efficiently functioning financial institutions need to be created and strengthened.

Kazi Shofiqul Azam

Additional Secretary

Economic Relation Division

 

 

Hannah Ryder
Wed, September 18,2013
I should also mention that I'm very interested in views/thoughts on the second question above - essentially asking what ways can businesses change their practices to become more positive for development... Most of us have heard of the concept of "shared value" which goes beyond CSR and there are more concepts emerging. Many of these were advocated during the rio+20 conference last year. But is there more that needs to be done in particular areas of business (encouraging good corporate tax behaviours, for example? Or stronger sustainability/poverty-focused business models in particular sectors)? And what can the Partnership promote that other forums haven't, as yet.... I'm just conscious that there are so many other forums out there - what special role can the Partnership play in this area, if at all? Looking forward to hearing your ideas/views! Hannah
Casper Sonesson
Wed, September 25,2013

Thanks Hanna, these are great questions you raise. I would like to come in with a couple of quick ideas here on what the Global Partnership could do to further promote concepts such as shared value or inclusive business approaches and how to take these to scale.

- On the policy side, there was a recent paper presented at the G20 on "inclusive business policies" with recommendations for donors and governments on how to further stimulate inclusive business (See attached). Some further work could be done here to gain a deeper understanding of what policies can help to drive and incentivize inclusive business approaches and how to formulate such policies. In particular, this paper includes a section on "modes of public-private interaction in the inclusive business policy making space", which it would be interesting if the Global Partnership could pick up on. Perhaps some further case studies of such mechanisms could be developed (which might include examples such as the P4D Forum we heard about in the Maldives!).

Related to this, I would also like to highlight a recent report UNDP produced on inclusive business in Africa - "Realizing Africa's Wealth: Building Inclusive Businesses for Shared Prosperity". It looks at the supportive "ecosystems" needed (inclusing policy, capacity, information, partnerships) to undertake and scale inclusive business approaches.

 

A second, and more ambitious thought on this, could be whether the Global Partnership could come up with a recommendation for a specific target to be included in the post-2015 agenda / goals around a "percentage of private investments (domestic and FDI) that qualify as inclusive / sustainable business activities that contribute to shared value". More thought around the specifics of such a target and how feasible it would be to measure this would be needed, including what criteria or principles would be needed to define such inclusive business / shared value approaches. Perhaps the Global Partnership could explore this further?

It would be great to hear some reactions on these ideas!

Casper

Attachment(s) G20_Policy_Note_on_Inclusive_Business_Policies_G20_Summit_September_2013.pdf
Hannah Ryder
Wed, September 18,2013
Good evening - let me first say thanks to Casper and to Hussain for kicking off this e-debate. It's great to be part of this and to read some very practical experience from Hussain. I wonder if there are many other countries that have established a similar a platform to "Partnering for Development" like the Maldives did and whether they have led to change? It seems obvious that dialogue between governments and businesses is important, but it might take different forms. Here in the UK the Confederation of Business and Industry represents business and interacts with governments. Do such confederations work elsewhere? Or is a platform always better in a low-income/middle-income context? It would be great to better understand this. Thanks! Hannah
Hussain Jinan
Thu, September 19,2013

Thank you and to give you a quick response, although Maldives is an upper MIC - the trade or private sector is not fully developed to lead as responsible business or be engaged in development. What we have observed is that in LI or MIC, there is always a weak legislative system and most of the times it’s about monopoly and lack of an active consumer awareness because of the limited options available as means of comparison or lack of market competiveness. 

The chambers or confederations or associations, most of the times become the vehicle or the voice for the leading bigger corporation to flourish in the market and with limited space made available for SME growth. These kinds of platforms help in bringing them to one table to discuss on common issues and understanding them to form partnerships at the beginning in a very small scale but later the private sector adopting the model themselves.

 

In LI and MIC challenges lies in productivity and an unskilled market as a result of which long term investments on such developments seems to be a mandate of the government according to the upcoming or growing enterprises or private sector. It also depends on how strong your legislative agenda for private sector engagement or sme development is in place with robust frameworks which are enforced by the government and understood by the private sector by making them as responsible business or sustainable business models and not to look into these as a part of CSR.

Hannah Ryder
Fri, September 27,2013

Thanks for your reply Hussain.  I wonder how/if the Partnership could add value on the responsible business issue you raise in MICs? I was at a launch of the new Business For Africa report a few days ago which had a number of large multinational businesses talking about their contributions to development - not as CSR but as responsible, sustainable business models - as you rightly say.  What struck me was that just a few years ago - working on the issue of green growth - this language was not at all in the common vocabulary of most of these firms, but here we were and there had been rapid change.  Perhaps if the Partnership can do some awareness raising of this specifically with large/medium MIC firms this could make a rapid change.  Of course governments need to act as well - but I also realised that much of the pressure for change had come from consumers and a realisation from the firms themselves that these issues of poverty and enviornmental degradation do and will continue to affect their bottom lines...

On the chambers/confederations - I wonder how a trend towards bigger corporations can be addressed? In the UK my experience of working with businesses on environmental regulation was that if the confederations were organised by sector they tended to capture more SMEs - especially for example in the paper or brick industries there were many more smaller businesses.  Are cooperatives another platform that can be useful for smaller/more informal businesses? 

I was in another discussion a few days ago where it was mentioned that a new partnership platform/hub is being created in Mozambique for business to engage more with governments.  It would be interesting to know how this might differ/be similar to traditional chambers/confederations and how best-practice might be ensured so that the problem you identify might be avoided.

What do you think?

Thanks again for your contributions!

Hussain Jinan
Tue, September 17,2013
Perceptions and the methodologies which we as donor agencies or government or CSO use to engage private sector has most of the time been the key issues for failures in creating robust partnerships. Most of the times, we conceptualize the projects and approach the private sector for partnership but ultimately what we have in mind is that they are the targeted end market for these products. During the course, private sectors do understand that they are not a partner but they are the markets who are supposed to take this on at the end of the project period. What we also don’t really understand is that if it is private sector engagement it shouldn’t be projects as there is always an end for the project but it needs to be treated as a sustainable business, which would sustain itself and run even after its support duration. Understanding these issues, what UNDP Maldives thought was to come up with a multi stakeholder forum – which would have private sector, government, UN, CSO and SMEs to discuss about their issues and also act as the forum where networking could be made for engagements. Quiet often the issue had been in creating trust and better communication for building partnerships and through the “Partnering 4 Development” (P4D) forum, that is exactly what we planned to aim at and even after conducting 3 forums in different regions, we are still working on building the two key points of trust and better communication. The goal here is to build a platform enabling better communication and networking while creating trust – leading to sustained relationships and partnerships. The relationships between private sector and communities have, in previous instances in the past, fallen apart due to mistrust, confusion and miscommunication – the networking within the forum is geared towards strengthening links and building relationships with one another. This platform also help in understanding the various issues the private sector are facing, the areas they are looking for partnership or the areas where they want government to focus in developing for strengthening the private sector. Hence it would be difficult to say which sector/market/commodities could be relevant, but from our country context – tourism has been an area which ultimately gets linked with all sector and is a market that is looking to engage with communities for promoting themselves to reach out and for cheaper value chain interventions. Hence the P4D had its participants as resort heads who talk about their issues at the policy level, ground level and at production level. With these rich discussions we are always able to create projects or activities and bring them onboard for implementation as it all boil down to one point of what is the win-win situation for the partner. With this initiative we are also trying to make even our colleagues from other unit and agencies understand that creating various platforms (through different projects) for private sector engagement is not the solution as there would be fatigue with introduction of such different platforms as we start rolling out various models and with the current ongoing practice of UNDP to engage more private sector in the name of sustainability and discussing/information dissemination or stakeholder engagements. But it is all about how you create one such platform, which is owned by the government and which over the time period has created a reputation for recognizing the efforts of private sector and be that mapping platform or information dissemination network which can be reliable and supported by everyone. We are still working on this effort as it has yet been difficult convince everyone to come onboard as one for this initiative. In order for developing SMEs we would also need to see how can their voice be heard in a market where the bigger corporations are taking over the smaller ones and a constant tussle for visibility or market penetration is made. Most of the times, we tend to engage with multinational corporations in our initiatives or as our partners and hence creating them the publicity, but it’s on very less occasion we try to showcase the work of the SMEs and the contribution they make to a wider audience. The normally tendency for our engagement has been to look at SMEs as potential beneficiaries and not as key stakeholders. I am not sure whether I have been able to answer to the queries. Thanks Jinan
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Date Created Fri, September 13,2013
Created By Reinout van Santen
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Cross posted in Global Partnership for Effective Development Cooperation Community
Reinout van Santen
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