Decent job creation, social equity,integration into regional and global value chains, effective regional markets, diversification away from overreliance on natural resources, conducive trade and economic policies both on national and regional levels. Private sector is paramount to this!
Suddenly it’s all about the private sector
So this isn’t necessairly a new story, just one of donors trying to fit into something that is happening anywayAlso a story
So, when we are talking about engaging with the private sector, who do we mean?Business level:International,Large domestic,SMEs,Micro-household based,Multinational enterprises.State-owned enterprises,National monopolies,Informal traders,AssociationsBusiness models:"Raw" capitalism,Core business models,Base of pyramid/social businesses,Fair Trade ,Corporate Social Responsibility,People-centered business,Cooperatives Sectors:Agricultural smallholders,Large-scale agricultural producer,Manufacturers/processors,Export-led industries.Extractive sector firms.Service providersBusiness constraints:Credit access,Infrastructure, Capacity and education level , Business linkages , Labour regulations, Market exclusion, Business climate
The latter two can feed the first but not necessarily for finance…
Securing supply chains, competition with subsidised firms from BRICS, reputational risk among western consumers, expanding consumer markets in developing countries, and a desire to “do good”.
ECDPM Economic Transformation and the role of the Private Sector
Transformation and the
Role of the Private
25th October 2013, ECDPM, Maastricht
I. Outline of presentation
• Which private sector?
• 3 agendas in 1
• Implications and issues for development
• What are we currently doing at ECDPM?
Economic transformation, governance,
integration and trade for inclusive growth
• Until at least the mid-1990s, Africa had “inclusive,
sustainable, pro-poor, shared stagnation”.
• Growth necessary but not sufficient condition for
long-term development and poverty reduction.
• Need to be accompanied by economic
transformation where inclusive, sustainable, propoor, shared growth is key objective
• So what does mean? And how is it achieved?
“We want to engage the private
“...and help our own…”
• UK: “bring private sector ideas, innovation
and investment into the heart of what we
• NL: “Dutch interests first, more so than in
the past....PPPs, business instruments and
economic diplomacy can lead to gains in
both commercial profit and poverty
• DK: ”… strategic priority in Danish
development cooperation to work for a
strong private sector…important that Danish
business participates actively..."
Push factors: Fiscal crisis, job
cuts, aid squeeze & “value for
Three distinct agendas
• Private sector development
Old agenda: domestic, enterprise growth,
value-addition, exports, access to credit,
business climate, firm-level skills, industrial
• Private sector investment for development
New agenda: international, partnering with
developed country firms, offset risk, link
producers & suppliers
• Private sector finance for development
Input side – promote and leverage private
Assumptions – development
would happen if only…..
Private Sector Development
… developing country businesses were able to
startup and expand
Private Investment for Development
… there was a way to encourage more inwards
investment to link with the local private sector
Private Finance for Development
…there was a way to bring in more finance for
public investments and the private sector
1. Private Sector Development:
How to promote economic transformation, trade
and value-chain integration?
How to make credit accessible to firms?
What role for FDI and industrial policy?
How to make it “inclusive”?
Endogenous and exogenous firm conditions
How prioritise & implement reg. reforms?
The PE of economic reforms
2. Private Sector Investment for
Less clarity on agenda and processes
What donor tools available? DFIs, ODA, non-ODA
What about tied aid/PCD?
From CSR to "core business model”
Defining the developmental
What do firms say?
3. Private Sector finance for
About inputs – bringing in private finance for
Blending grants and loans & private sector finance
- PPPs need to be commercially viable
- Risk management and balancing
- Legal environment
- Capacity to use effectively
If development is the ultimate
Need to identify the additionality of engaging
Create better tools to measure & identify impact
Fully engage national and local governments
Improve stakeholder communication and
Potential to find real synergies
Regulate expectations and understand the
mandate and capacity of the other
What are we currently working
Informal donor sessions
Private sector approaches to nutrition
Emerging economies impact on African
Questions for discussion
1. Do you agree with the distinction between
the three “agendas”?
2. What challenges are there to working on
this agenda? Is there a “good” versus “bad”
3. What is the link between this agenda and
4. What are the key opportunities for the
Common or conflicting interests?
Common interests (or at least nonconflictive)
Private Sector: Image and reputation, supply
chains, competition, consumer markets, “do
Donors: financial crisis and decreasing ODA, value
for money, new positive grand narrative
Partner governments: employment creation,
raised productivity, inclusive growth, improved
business climate, new types of investment,
NGOs and CSOs: people centered business….
Debate: Conflicting interests
The corporation as a “psychopath”
Profitability vs optimal developmental
outcome (people vs profits!)
Opportunity costs of finance
National vs local conflicts
Tied aid, subsidies, PCD!