This document discusses engaging the private sector for development. It provides context around financial crises, aid reductions, and the need for job creation. There are four main narratives around private sector engagement: "Africa Rising" as an investment frontier; win-win partnerships for development, economics and diplomacy; concerns around exploitation; and a focus on job creation through economic transformation. The document outlines different actors involved, including businesses, governments and CSOs. It discusses challenges around private sector development, financing and investment agendas. Ongoing research at ECDPM examines roles for aid in working with the private sector, partnerships between businesses and CSOs, governing global value chains, and political economy issues around incentives.

1. Engaging the Private Sector for
Development
Presentation at the Flemish Parliament
Bruce Byiers
Brussels, 01.02.2016

2. • Objectives
• Context
• Narratives
• Instruments
• Challenges
• On-going ECDPM research
Overview
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3. • Private sector development?
• Private sector engagement for development?
• Private sector financing for development?
Focus here: How to engage the private sector
to promote economic transformation towards
more and better jobs
…from policies to practice
Objective?
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4. Context: Financial crisis, aid
squeeze & “value for money”
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5. Context: Jobs, competition &
“new models”
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6. Pull factors: Learning
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7. Source: DIE, ECDPM, ODI – European Report on Development
Context
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8. • The private sector is going there anyway…
Push & pull – flows to Africa
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…but largely to mining and
minerals…

9. 4Main Narratives
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10. • “Africa Rising”
Next investment frontier, risks & rewards
• Win-win-win in a post-2015 world 
Development, econ. & comm. diplomacy
• Exploitation
Land-grabs, human rights abuse,
neocolonialism
• Jobs-jobs-jobs
Economic transformation, more and better
jobs, indust. policy, + value added
4Main Narratives
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11. • Business – Big/Small, Int’l/Domestic,
Formal/Informal,
Food/extractive/services etc, BoP/impact
inv., constraints, m’kt structure
• Developing country governments –
Presidency, Min. Fin., Commerce, Line
ministries, Tax, agencies
• Donor country governments – aid
agencies, Foreign Ministry, Min.
Industry/Biz, DFIs
• CSOs/NGOs – humanitarian/relief,
market-oriented, FairTrade,
Many actors
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12. ECDPM Page 12

13. • Private Sector Development
… if only developing country businesses were
able to startup and expand
• Private Finance for Development
…if only there was a way to bring in more
finance for investments
• Private Investment for Development
… if only there was a way to encourage more
inwards investment to link with the local
private sector
3Agendas & Assumptions
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14. • Regulatory reform
• Access to finance
• Public-private dialogue
• Value-chain integration
• Business development services, training
• Making markets work for the poor
• Industrial policy
• Innovation policy
Challenges
• Complexity
• The PE of economic reforms
PSD Agenda
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15. • Foundations, investment/pension funds
• Leveraging private finance
• Blending grants, loans & private finance
• Various purposes e.g. infrastructures, equity
funds
Challenges
• Need to be profitable
• Risk management and balancing
• Legal environment
• Capacity to use effectively
• Primarily a lack of finance?
Private Sector finance for
Development (Next frontier?)
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16. • Engaging business interests
• From CSR to "core business model”
• Partnerships - public-private cooperation
models and CSO-business
• DFIs, ODA, non-ODA
• Promoting outwards FDI
• Links to PSD and finance
• Challenges…
Private Sector Investment for
Development (All 4 narratives!?)
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17. • Public-led
• Challenge funds
• Development impact bonds
• Coalition models e.g. GAIN
• Blending mechanisms (fin. & investment)
• What criteria?
• Private-led
• With MNCs - IDH model
• SAGCOT Corridor
• Equity funds
• Business-CSO partnerships
• Fairtrade?
Who’s leading whom?
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18. …but are they CRITERIA? or goals or
objectives:
1. measurable development impact;
2. additionality;
3. market neutrality;
4. shared interest & co-financing;
5. demonstration effect;
6. social, environmental and fiscal
standards.
6 EC Criteria for PSE
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19. …how to put into practice?
1. focus on employment creation and poverty
reduction
2. take a firm-level differentiated approach;
3. create market-based opportunities;
4. follow clear criteria for support;
5. allow for local contexts and fragile
situations;
6. put strong emphasis on results;
7. observe policy coherence in areas affecting
the private sector in developing countries.
7 EC ‘principles’
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20. CSO criteria
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21. SAGCOT
Private led agriculture PPP
Principles there
how do you enforce
inclusivity questioned - large firms too powerful?
Lesotho Queen Mamohato Hospital
Public led health PPP
Difficulty in negotiating along the line
Political interest?
Misadvised?
Better Factories Cambodia - Garments
branded firms EXPECTED to pay
enforcement cost pushed onto suppliers
limited transparency
Beyond aspirations…?
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22. • Maximising benefits vs minimizing harm
• Profitability vs development outcomes?
• Eligibility criteria vs corp. track record?
• Time & money of impact evaluation
• Scale vs depth
• Big firms (better jobs?) vs SMEs
• Public vs Private risk-burden
• Regulation vs guidelines
• National vs local conflicts
• Tied aid, subsidies vs PCD
• Unfair competition?
• Are businesses interested?
Many challenges…
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23. External
• Supply chain security (food, extractives)
• Consumer pressure
• New (risky) markets
• Finance & gov. backing?
• Trade and industrial regulations!!
Internal
• CSR – defensive, charitable, promotional,
strategic, transformational (Visser, 2011)
• Motivate staff?
• Do good?
…depends on sector, size, inwards/outwards
orientation, new/incumbent etc
Are businesses interested?
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24. • Business environment reforms
• Regulatory/tax application
• Firm selection for support
• Partners and partnership formation
• Int’l business vs local business
• EU MS competition?
• Local impacts?
• Policy leverage?
Winners and losers => Politics
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25. • Roles for ODA and non-ODA in
working with the private sector
• MNEs and linkages with SMEs –
local content
• Understanding business-CSO
partnerships?
• Governing global value chains
• Regional value chains and corridors
• PE! Incentives and politics!!!
Ongoing ECDPM research…
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26. Thank you
www.ecdpm.org
Bruce Byiers bby@ecdpm.org
Twitter: @brucebyiers
www.slideshare.net/ecdpm
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