1. Economic
Transformation and the
Role of the Private
Sector
Anna Rosengren
25th October 2013, ECDPM, Maastricht

2. I. Outline of presentation
• Context
• Which private sector?
• 3 agendas in 1
• Implications and issues for development
policy
• What are we currently doing at ECDPM?
ECDPM
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3. 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?
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4. “We want to engage the private
sector…”
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5. “...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
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6. Push factors: Fiscal crisis, job
cuts, aid squeeze & “value for
money”
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7. Push factors: competition &
“new models”
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8. Pull factors: Learning from the
private sector
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9. …and the private sector is
“doing development” anyway….!
• The private sector is going there anyway…
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10. So who is this “private sector”?
And what are the implications of
“engaging” with it?
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11. ECDPM
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12. Three distinct agendas
• Private sector development
Old agenda: domestic, enterprise growth,
value-addition, exports, access to credit,
business climate, firm-level skills, industrial
policy etc.
• 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
sector finance
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13. 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
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14. 1. Private Sector Development:
Issues
•
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”?
•
Mixed results
•
Endogenous and exogenous firm conditions
•
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How prioritise & implement reg. reforms?
The PE of economic reforms
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15. 2. Private Sector Investment for
Development
•
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
aspect/additionality/opportunity costs?
•
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What do firms say?
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16. 3. Private Sector finance for
Development
•
About inputs – bringing in private finance for
development ends
•
Blending grants and loans & private sector finance
•
Public-Private Partnerships
•
Challenges
- PPPs need to be commercially viable
- Risk management and balancing
- Legal environment
- Capacity to use effectively
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17. If development is the ultimate
goal, then:
•
•
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
•
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Potential to find real synergies
Regulate expectations and understand the
mandate and capacity of the other
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18. What are we currently working
on?
•
Informal donor sessions
•
Cluster
•
Private sector approaches to nutrition
•
Development corridors
•
Emerging economies impact on African
Agriculture
ECDPM
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19. 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”
private sector?
3. What is the link between this agenda and
your programme/theme?
4. What are the key opportunities for the
future?
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20. Thank you
www.ecdpm.org
Anna Rosengren
ar@ecdpm.org
www.slideshare.net/ecdpm
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21. Common or conflicting interests?
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22. Common interests (or at least nonconflictive)
•
•
•
•
ECDPM
Private Sector: Image and reputation, supply
chains, competition, consumer markets, “do
good”
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,
interest groups,
NGOs and CSOs: people centered business….
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23. Debate: Conflicting interests
•
The corporation as a “psychopath”
•
Profitability vs optimal developmental
outcome (people vs profits!)
•
•
Risk-sharing balance
•
Opportunity costs of finance
•
National ownership
•
National vs local conflicts
•
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Tied aid, subsidies, PCD!
Impact assessments
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