Engaging the Private Sector in  International Cooperation European Centre for Development and Policy           Management ...
Common or Conflicting            Interests?         Reflections on the Private         Sector (for) Development           ...
ECDPM   Page 3
Push: Crisis, aid squeeze &        “value for money”ECDPM                                 Page 4
Push: job cuts, competition &        “new models”ECDPM                                   Page 5
Pull: Learning from the private        sectorECDPM                                     Page 6
“We want to engage the private        sector”ECDPM                                Page 7
“...and help our own…”        •  UK: “bring private sector ideas, innovation           and investment into the heart of wh...
ECDPM   Page 9
“Many ways to skin a cat”        Business level:                          Sectors:             International              ...
3 categories of Private Sector        EngagementECDPM                                    Page 11
If only…..        Private Sector Development        … developing country businesses were able to        startup and expand...
Private Sector Development        Category 1: Private Sector Development         •    Economic transformation         •   ...
Private sector characterisation                           High Rent                    Competitive        Exports         ...
Private Sector for Development         Category 2: Private Sector Investment for                       Development        ...
Private Sector for Development          Category 3: Private Sector Finance for                      Development           ...
Common or conflicting interests?ECDPM                                      Page 17
Common interests(?)        •    Private Sector: Image and reputation, CSR,             risk absorption, high entrance cost...
Conflicting interests        •  Tied aid and subsidies        •  Risk-sharing balance        •  Opportunity costs of finan...
How to gauge developmental impact?        •  Donor support evaluations        •  Firm-level own evaluations        •  Some...
Concluding remarks        If development is the ultimate goal, then:        •    Potential to find synergies        •    N...
Thank you      www.ecdpm.orgBruce Byiers bby@ecdpm.org www.slideshare.net/ecdpm                             Page 22
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Engaging the private sector in international cooperation

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Bruce Byiers, ECDPM
Drivers to engage the private sector in development
Human Security Finland
10 October 2012, Brussels

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Engaging the private sector in international cooperation

  1. 1. Engaging the Private Sector in International Cooperation European Centre for Development and Policy Management (ECDPM) October 2012 www.ecdpm.org/dp131
  2. 2. Common or Conflicting Interests? Reflections on the Private Sector (for) Development Agenda www.ecdpm.org/dp131ECDPM Page 2
  3. 3. ECDPM Page 3
  4. 4. Push: Crisis, aid squeeze & “value for money”ECDPM Page 4
  5. 5. Push: job cuts, competition & “new models”ECDPM Page 5
  6. 6. Pull: Learning from the private sectorECDPM Page 6
  7. 7. “We want to engage the private sector”ECDPM Page 7
  8. 8. “...and help our own…” •  UK: “bring private sector ideas, innovation and investment into the heart of what we do...” •  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 reduction.” •  DK: ”… strategic priority in Danish development cooperation to work for a strong private sector…important that Danish business participates actively..."ECDPM Page 8
  9. 9. ECDPM Page 9
  10. 10. “Many ways to skin a cat” 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 Infrastructure Base of pyramid/social businesses Fair Trade Capacity and education level Corporate Social Responsibility Business linkages People-centered business Labour regulations Cooperatives Market exclusion Business climateECDPM Page 10
  11. 11. 3 categories of Private Sector EngagementECDPM Page 11
  12. 12. 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 sectorECDPM Page 12
  13. 13. Private Sector Development Category 1: Private Sector Development •  Economic transformation •  Regulatory reforms •  Making credit accessible to firms •  Industrial policy Mixed results •  Endogenous and exogenous conditions •  The political economy of economic transformationsECDPM Page 13
  14. 14. Private sector characterisation High Rent Competitive Exports Rentiers Magicians Domestic Powerbrokers Workhorses Source: Pritchett, 2012, OECD Conference, Paris 28 Feb 2012ECDPM Page 14
  15. 15. Private Sector for Development Category 2: Private Sector Investment for Development •  Less clarity on agenda and processes •  Definition of developmental additionality •  From CSR to "core business model" •  What donor tools available? •  How to identify tipping points – trade-offs •  Defining the developmental aspect? •  What do firms say?ECDPM Page 15
  16. 16. Private Sector for Development Category 3: Private Sector Finance for Development •  Blending to bring in further private finance •  Release public debt pressure and shared risk burden •  Various purposes e.g. PPPs or increasing finance access •  Challenges - PPPs need to be commercially viable - Risk management and balancing - Legal environment - Capacity to use effectivelyECDPM - Primarily a lack of finance? Page 16
  17. 17. Common or conflicting interests?ECDPM Page 17
  18. 18. 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 •  Partner governments: employment creation, raised productivity, inclusive growth, improved business climate, new types of investment, debt burden, interest groups, rents(?) •  NGOs and CSO’s: people centredECDPM business…. Page 18
  19. 19. Conflicting interests •  Tied aid and subsidies •  Risk-sharing balance •  Opportunity costs of finance •  Policy Coherence for Development (PCD) •  Profitability vs optimal developmental outcome •  National ownership •  National vs local conflicts •  Impact assessmentsECDPM Page 19
  20. 20. How to gauge developmental impact? •  Donor support evaluations •  Firm-level own evaluations •  Some diffuse criteria/measures (e.g. UN, WBCSD, EIB, individual co.s etc) •  What purpose of such a measure? •  How balance development requirements with "efficient business"? •  What incentives to prove developmental impact?ECDPM Page 20
  21. 21. Concluding remarks If development is the ultimate goal, then: •  Potential to find synergies •  Need to identify the trade-offs and cut-offs •  Agree on better ways to measure & identify impact •  Improve PS-donor-gov-CSO communication and mutual understanding •  Regulate expectations and understand the mandate and capacity of the otherECDPM Page 21
  22. 22. Thank you www.ecdpm.orgBruce Byiers bby@ecdpm.org www.slideshare.net/ecdpm Page 22

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