Common or conflicting interests: Inputs for a CSO brainstorm on "People Centred Business for Development"

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Bruce Byiers and Anna Rosengren, ECDPM …

Bruce Byiers and Anna Rosengren, ECDPM
CSO meeting on private sector (for) development
Cooperatives Europe
20 September, Brussels

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  • 1. Common or Conflicting Interests? Inputs for a CSO brainstorm on "People Centred Business for Development"European Centre European Centre for Development and Policy Management (ECDPM) September 2012
  • 2. Introduction and Overview •  ECDPM Discussion Paper: "Common or Conflicting Interests? Reflections on the Private Sector (for) Development Agenda” •  Changing Context •  3 broad categories of PS&D agendaECDPM Page 2
  • 3. Donor commitments to Private Sector Development •  Busan 4th High Level Forum on Aid Effectiveness •  EUs Agenda for Change •  G20 Fora •  Aid for Trade •  Individual donors: DfID, SIDA, Danida, USAID, The Netherlands MoFAECDPM Page 3
  • 4. Donor commitments to Private Sector Development •  Busan 4th High Level Forum on Aid Effectiveness •  EUs Agenda for Change •  G20 Fora •  Aid for Trade •  Individual donors: DfID, SIDA, Danida, USAID, The Netherlands MoFAECDPM Page 4
  • 5. Donor approaches... •  UK: "to bring private sector ideas, innovation and investment into the heart of what we do...” •  Dutch: "putting 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 reduction.” •  Danish: "...it is a strategic priority in Danish development cooperation to work for a strong private sector. For Danida, it is important that Danish business participates actively..."ECDPM Page 5
  • 6. Changing context •  Economic crisis! o  Declining aid resources o  Greater need for aid accountability to EU voters o  Need for EU employment •  Increasing engagement of "new players" o  Competition with EU private sector firmsECDPM Page 6
  • 7. Additional: FDI inflows and ODA flows to LDCs, 1990-2010 ($bn)ECDPM Page 7
  • 8. Three indicative categories of Private Sector EngagementECDPM Page 8
  • 9. Category 1: Private Sector Development •  Economic transformation •  Regulatory reforms •  Making credit accessible to firms (DFIs) •  Mixed results •  Endogenous and exogenous conditionsECDPM Page 9
  • 10. Private Sector for Development Category 2: Private Sector Investment for Development •  Less clarity •  Definition of developmental additionality •  From CSR to "core business model" •  Donor methodologies (?) •  How to identify tipping points •  Defining the developmental aspect •  Impact assessmentsECDPM Page 10
  • 11. Private Sector for Development Category 3: Private Sector Finance for Development •  Increased access to private finance (blending) •  Release public debt pressure and shared risk burden •  Challenges - PPPs need to be commercially viable - Risk management and balancing - Legal environment - Capacity - Primarily a lack of finance?ECDPM Page 11
  • 12. Additional: Common or conflicting interests?ECDPM Page 12
  • 13. What is the private sector? Business level: Sectors: International Agricultural smallholders Large domestic Large-scale agricultural producer SMEs Manufacturers/processors Micro-household based Export-led industries Multinational enterprises Extractive sector firms State-owned enterprises Service providers National monopolies Informal traders Associations Business models: Business constraints: "Raw" capitalism Credit access Core business models Business climate Base of pyramid Infrastructure Fair Trade Socially-inclusive business models Capacity and education level Corporate Social Responsibility Business linkages People-centered business Labour regulations Cooperatives World market exclusionECDPM Page 13
  • 14. Common interests(?) •  Private Sector: Image and reputation, CSR, risk absorption, high entrance costs, unfair competition from subsidised firms •  Donors: financial crisis and decreasing ODA, new positive grand narrative •  Developing country: employment creation, raised productivity, inclusive growth, improved business climate, new types of investment, debt burden, interest groups •  NGOs and CSOsECDPM Page 14
  • 15. Conflicting interests •  Tied aid and subsidies •  Risk sharing •  Opportunity costs of finance •  Policy Coherence for Development (PCD) •  Viability versus optimal developmental outcome •  National ownership •  National vs local conflicts •  Impact assessment - how to measureECDPM Page 15
  • 16. How to gauge developmental impact? •  Donor support evaluations •  Firm-level own evaluations •  Some diffuse criteria/measures (e.g. UN, WBCSD, Nestlé, EIB, etc) •  What purpose of such a measure? •  How balance development requirements with "efficient business"? •  What incentives to prove developmental impact?ECDPM Page 16
  • 17. Concluding remarks If development is the ultimate goal, then: •  Potential to find real synergies •  Need to identify the additionality of engaging PS - trade-offs •  Create better tools to measure & identify impact •  Fully engage national and local governments •  Improve stakeholder communication and mutual understanding •  Regulate expectations and understand the mandate and capacity of the otherECDPM Page 17
  • 18. Topics for further analysis and discussion •  Distinction between impacts from "inclusive business" and from subsidised business •  Infrastructure and financing, particularly at the regional level •  Linkages between donor FDI promotion and developing country industrial policy •  Linkages between international investments and the local private sector •  Sharing bilateral donor experiences to improve public-private dialogueECDPM Page 18
  • 19. Topics for further analyse and discussion, cont... •  Lessons on improving the investment climate for new investors •  The role the EC and/or the EEAS could or should play in involving the private sector •  The political trade-offs between tax incentives and aid-assisted investments •  The degree to which we can embrace experiments and failures in using donor-country taxpayer moneyECDPM Page 19
  • 20. Thank you www.ecdpm.org Bruce Byiers bby@ecdpm.orgAnna Rosengren ar@ecdpm.org www.slideshare.net/ecdpm Page 20