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A Countdown for Engaging the Private Sector for Development

A Countdown for Engaging the Private Sector for Development. European Centre for Development and Policy Management (ECDPM) Dr Bruce Byiers. Lisbon 28 April 2014. 5 Main Actors 4 Main Narratives 3 Broad Agendas 2 Distinctly driven models 1 Overriding issue! Many impact tradeoffs.

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A Countdown for Engaging the Private Sector for Development

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  1. A Countdown for Engaging the Private Sector for Development European Centre for Development and Policy Management (ECDPM) Dr Bruce Byiers Lisbon 28 April 2014

  2. 5 Main Actors 4 Main Narratives 3 Broad Agendas 2 Distinctly driven models 1 Overriding issue! Many impacttradeoffs ECDPM

  3. 5 Main Actors • Business sector • Developing country governments • Donor country governments • CSOs/NGOs • Academia ECDPM

  4. 5 Main Actors • Business – Big/Small, Int’l/Domestic, Formal/Informal, Food/extractive/services etc, BoP/impact inv., constraints, m’kt structure • Developing country governments • Donor country governments • CSOs/NGOs • Academia ECDPM

  5. ECDPM

  6. 5 Main Actors • 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, • Academia – business, economics, poverty, trade, behavioural ECDPM

  7. 4 Main Narratives ECDPM

  8. 4 Main Narratives • “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 ECDPM

  9. Push: Crisis, aid squeeze & “value for money” ECDPM

  10. Push : Jobs, competition & “new models” ECDPM

  11. Pull factors: Learning ECDPM

  12. Push & pull – flows to Africa • The private sector is going there anyway… …but largely to mining and minerals… ECDPM

  13. 3 related but distinct agendas • Private sector development • Private sector finance for development • Private sector investment for development ECDPM

  14. 3 related but 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 finance for development Input side – promote and leverage private sector finance • Private sector investment for development New agenda: international, partnering with developed country firms, offset risk, link producers & suppliers ECDPM

  15. 3 Agendas& Assumptions • 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 ECDPM

  16. 3i) PSD – (Jobs jobs jobs?) • Regulatory reform • Access to finance • Public-private dialogue • Value-chain integration • Business development services • Making markets work for the poor • Industrial policy • Innovation policy • Management skills – vocational training etc Challenges • Complexity • The PE of economic reforms ECDPM

  17. 3 ii) Private Sector finance forDevelopment(Next frontier?) • Leveraging private finance • Foundations, investment/pension funds • 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? ECDPM

  18. 3 iii) Private Sector Investmentfor Development (All 4 narratives!?) • Less clarity on agenda and processes • Different underlying approaches/ideology • 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 • Who’s leading whom? ECDPM

  19. 2 Partnership perspectives • Public-perspective Challenge funds Development impact bonds Coalition models e.g. GAIN Blending mechanisms (fin. & investment) • Private-perspective With MNCs - IDH model SAGCOT Corridor Equity funds Business-CSO partnerships Fairtrade? ECDPM

  20. 2 Partnership perspectives • Public-perspective Challenge funds Development impact bonds Coalition models e.g. GAIN Blending mechanisms (fin. & investment) PIDG TradeMark East Africa • Private-perspective With MNCs - IDH model SAGCOT Corridor Equity funds Business-CSO partnerships Fairtrade? Are firms interested anyway? ECDPM

  21. Business drivers? (regardless of donors!) 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 ECDPM

  22. 1 Overriding issue ECDPM

  23. 1 Overriding issue Politics ECDPM

  24. 1 Overriding issue Politics • Business environment reforms • Regulatory/tax application • Firm selection for support • Partners and partnership formation • Local impacts? • Policy leverage? ECDPM

  25. Many Impact Tradeoffs • “Africa Rising” Maximisingbenefits vs minimizing harm Profitability vsdevelopment outcomes Eligibility criteria vs corp. track record? Time & money of impact evaluation • Win-win-win in a post-2015 world Scale vsdepth Big firms (better jobs?) vsSMEs Public vs Private risk-burden Opportunity costs of finance • Exploitation Regulation vsguidelines • Jobs-jobs-jobs National vs local conflicts Tied aid, subsidies vs PCD Unfair competition? ECDPM

  26. Where are we in the narratives? • Private investment a key engine • Roles for ODA and non-ODA in working with the private sector? • MNEs and linkages with SMEs? • How to build on domestic policies/strategies? • What factors for successful public/private/CSO partnerships? • What about beyond global value-chains? Especially informal trade and women? • How to limit harm & maximise benefits? • Expectations and impacts • Incentives and politics!!! ECDPM

  27. New Discussion Paper: “De-coding Partnerships” http://www.ecdpm.org/dp161 ECDPM

  28. Thank you www.ecdpm.org Bruce Byiers bby@ecdpm.org Twitter: @brucebyiers www.slideshare.net/ecdpm

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