A new agenda for improving public-private dialogue

1. A new agenda for improving public-private dialogue Dr. Sonja Kurz GTZ-Seminar 23 May 2006

2. December 2005: Cairo Conference February 2006: Paris Conference -> www.publicprivatedialogue.org, is a one –stop shop of knowledge and advice on PPD by Worldbank, IFC, DFID, OECD, GTZ research papers, case studies, links useful tools like checklists, handbooks etc.

3. Understanding of PPD Benefits and Risks Cyclical Process of building and improving PPD Charter of Good Practice in using Public Privat Dialogue for Private Sector Development Contents

4. 1. Understanding • Public Private Dialogue or Competitiveness Partnership (World Bank) is defined as a structured dialogue between representatives of the private and the public sector to improve the business and investment climate. • Private sector representatives may use PPDs to communicate their interests, identify problems and propose solutions. • The public sector benefits by realising the requirements of entrepreneurs and deficits in business climate to implement credible and realistic reforms. • PPDs may provide trust and awareness between public and private sector.

5. When done well, PPD can: Facilitate investment climate reforms by supporting champions for reform, creating momentum and accelerating the reform process. Promote better diagnosis ofinvestment climateproblems and design of policy reforms. Governments that listen to the concerns of the private sector are more likely to devise sensible and workable reforms. Make policy reforms easier to implement. When entrepreneurs understand what a government is trying to achieve with a reform package, they are more likely to accept and work with the reforms in practice. Promote transparency and good governance by setting an example of openness and creating pressure of public scrutiny. Build an atmosphere of mutual trust and understanding between public and private sectors, improving social cohesion and civil society. 2. Benefits

6. When done badly, not only can it waste the timeand resources of participants, it can actually worsen the problems it is intended to solve. Notably: If not sufficiently transparent and broad-based, it can reinforce vested interests and create opportunities for rent-seeking behaviour. If it does not make special efforts to include Small and Medium-sized Enterprises (SMEs) and those based in provinces, it can be dominated by big businesses orbusinesses based in a capital city. If poorly planned and unfocused, it can degenerate into a talking shop which leads to disillusionment, disengagement and loss of credibility, giving strength to opponents of reform and slowing down the reform process. If not sufficiently well coordinated with existing institutions or other dialogue mechanisms, duplication of efforts can overburden and confuse participants. Risks

7. 3. Cyclical Process of building and improving PPD Diagnosing the status and potential of PPD Designing and Implementing PPD Monitoring and Evaluation of PPD diagnose the capacity of the public and private sectors to engage in dialogue and the areas in which dialogue can be most fruitful design a dialogue process that gives the best chance for productive interactions between public and private sectors to emerge implement dialogue with an awareness of risk factors that can develop and the ability to identify and address problems as they arise evaluate the effectiveness of dialogue mechanisms, feeding back into the diagnosis phase for designing and implementing improvements

8. The PPD Diamond It maps the strength of four essential elements of PPD on two vertical and two horizontal axes. The dimensions are: Public sector: how strong is the capacity, political will to engage, and leadership? Private sector: how organized is the private sector, to what extent does it have leadership, do entrepreneurs feel a basic sense of security in speaking out to government without fear of retribution? Champion: to what extent are there credible and respected individuals with the expertise, profile and ability to attract the attention of participants and media? Instruments: what is the quality and capacity of support personnel, logistical facilities and seed funds? 3.1 DIAGNOSING THE STATUS AND POTENTIAL OF PPD

9. PPD in BOSNIA AND HERZEGOVINA: Strong sponsor compensates for weakness in government PPD in TURKEY: Committed private and public sector thrive with less need for champion CHAMPION CHAMPION STRONG STRONG PRIVATE SECTOR PUBLIC SECTOR PRIVATE SECTOR PUBLIC SECTOR WEAK WEAK STRONG STRONG STRONG STRONG STRONG STRONG INSTRUMENTS INSTRUMENTS CHAMPION STRONG PRIVATE SECTOR PUBLIC SECTOR WEAK STRONG STRONG PPD in VIETNAM After several years, a balanced situation with no weak links STRONG INSTRUMENTS Dialogue can succeed when the diamond is imbalanced – although it is difficult to survive a weakness in more than two dimensions !

10. Define project brief Investment climate constraints Stakeholder investigation Private sector Intermediaries Public authorities Civil Society Most significant reforms (Field interviews ad focus groups) Stakeholder analysis Design decision 3.2 DIAGNOSTIC PROJECT SEQUENCES

11. A representative sample of businesspeople should be interviewed. It is important to includeall groups which play a significant role in the private sector, from small-scale informal entrepreneurs to foreign multinational corporations. B. Public sector The attitute of the public sector can make or break public private dialogue. Public sectors are rarely homogenous in their willingness or capacity to engage in dialogue – there will often be wide differences between different levels of authority, agencies, departments and regions. There is a need to identify the capability and enthusiasm. A. Private sector Stakeholder

12. C. Intermediary organizations (eg BMOs, Chambers of Commerce etc.)

13. Dialogue between the public and private sectors does not take place in a vacuum. The attitude of civil society towards private sector input into policy-making is a critical success factor. Civil society includes: labor union representatives non-governmental organizations academia media D. Civil society

14. For • LEVERAGE • Build capacity • MOBILIZE • Assign roles and coordinate • PERSUADE • Communicate • CO-OPT • Inform and consult Level of support Against Low Level of influence High 3.3 Stakeholder analysis

15. Modul 1: Identification of key stakeholders Modul 2: Stakeholder Mapping Modul 3: Profile and startegic options Modul 4: Power Modul 5: Interests and level of support Modul 6: Influence and participation Modul 7: Resistance Modul 8: Trustbuilding Modul 9: Exclusion and Empowerment Modul 10: Gender GTZ Stakeholder analysis – 10 Modules

16. The following is based around the “Charter of Good Practice in using Public Private Dialoguefor Private Sector Development” See: www.publicprivatedialogue.org PRINCIPLE I: MANDATE AND INSTITUTIONAL ALIGNMENT A statement of objective is helpful for clarity. A formal or legal mandate can be an important help in some political and economic contexts, but mandates are never sufficient to establish good PPD. Wherever hosted and whenever possible, PPD should be aligned with existing institutions to maximize the institutional potential and minimize friction. The status of a dialogue can change over time Dialogue can start with an informal mission statement and later consider seeking a formal or legal mandate at a future date. 4. DESIGNING, IMPLEMENTING AND MONITORING PPD

17. long DURATION short formal STRUCTURE SCOPE informal narrow wide PRINCIPLEII. STRUCTURE AND PARTICIPATION

18. PPD’s structure should be manageable while flexible, enable participation to be both balanced and effective, and reflect the local private sector context. Too much formality in the structure can be stifling, while too little formality risks drift The structure that works best involves a secretariat and working groups Coordinating secretariat Working group 1 Working group 2 Working group 3 Working group 4 Working group 5 Private sector advocates, associations, government representatives, donors • The most effectivesecretariats are located in a neutral space.

19. PRINCIPLEIII: CHAMPIONS It is difficult to sustain dialogue without champions from both the public and private sectors who invest in the process and drive it forward. • Backing the right champions is the most important part of outside support to PPD. • It is easier for dialogue to survive weakness of champions in the private sector than the public sector. • If champions are too strong, the agenda can become too narrowly focused, or dialogue can come to depend too heavily on individuals. • Champions need to see the bigger picture and understand when they need to take a step back.

20. Focus on hard outputs and the rest are likely to follow • PRINCIPLE IV: FACILITATOR • A facilitator who commands the respect of stakeholders can greatly improve the prospects of PPD. • Preparatory work between meetings is important to maintain momentum • Define the timetable well in advance and stick to it • Pay close attention to logistical details • Facilitators need to work hard, be transparent and responsive • PRINCIPLE V: OUTPUTS • Outputs can take the shape of structure and process outputs, analytical outputs or recommendations. All should contribute to agreed private sector development outcomes.Outputs should be measurable, time bound, visible, tangible and linked to indicators.

21. PRINCIPLEVI: OUTREACH AND COMMUNICATIONS • Enabling communication of a shared vision and understanding through the development of a common language is essential for building trust among stakeholders. • Transparency of process – in particular, an open approach towards the media – is essential for outreach, and also contributes to measurement and evaluation • Communication strategies must be both for participants and for general public • Branding matters; Visual images have power • PRINCIPLE VII: MONITORING & EVALUATION • Monitoring and evaluation is an effective tool to manage the public-private dialogue process and to demonstrate its purpose and performance. • Definition of inputs, outputs, outcomes and impacts will be enhanced with designation of appropriate indicators with periodic review from stakeholders, which will rely on the collection of reliable data. • To this effect, PPDs should develop a baseline assessment to measure their effectiveness in order to enable the partnership to better measure how it is achieving its goals over time and delivering on its envisaged benefits.

22. PRINCIPLE VIII: SUB-NATIONAL • Public-private dialogue is desirable at all levels of decision-making down to the most local possible level, especially as this is likely to be more practically capable of involving micro-entrepreneurs, SMEs and other local stakeholders. • Top down and buttom up • Local dialogue can contribute to effective implementation of national policies. • PRINCIPLE IX: SECTOR-SPECIFIC • Sector-specific or issue-specific public-private dialogues should be encouraged because they provide more focus, greater incentive to collaborate, and more opportunity for action. • The choice of sectors to involve in dialogue can be controversial. • Dialogue works best with the sectors most willing to invest time and resources • Rent-seeking activity is more of a risk in sector-specific dialogue. • Transparency is very important.

23. PRINCIPLE X: INTERNATIONAL ROLE • Broad and inclusive public-private dialogue can effectively represent and promote national and regional interests of both public and private actors in international negotiations and international dialogue processes. • PRINCIPLE XI: POST-CONFLICT • Public-private dialogue is particularly valuable in post-conflict and crisis environments – including post-natural disaster – to consolidate peace and rebuild the economy through private sector development. • Social and cultural elements are important • Trust is a prerequisite for PPD, more than under normal circumstances

24. PRINCIPLE XII: DEVELOPMENT PARTNERS • Public-private dialogue initiatives can benefit from the input and support of donors (development partners) when their role is determined by the specific local context, when it is informed and demand driven, and when it is based on partnership, coordination and additionality. • Development partners can encourage conditions for dialogue, and initiate,promote, support (stakeholder analysis) , fund and facilitate dialogue. • Capacity building and disseminating international best practice are two areas where development partners can play a particular role. • The role should be as neutral as possible, maximizing the local ownership and capacity, the development of trust and the maintenance of a conducive and transparent environment. • Development partners should consider social, economic and political context, exit strategies and sustainability issues. • They should coordinate among themselves to avoid duplicating their efforts and maximize the availability of funds when partnership are found to be worth supporting.

25. GTZ provided support to the consultation process in Vietnam prior to the passing of the Investment Law and Enterprise Law in 2005 in a number of important ways: It directly supported dialogue meetings between government and key private sector associations, exposing participants to international best practice techniques in moderation, discussion and use of the internet. It supported a Regulatory Impact Assessment carried out by the Prime Minister’s Research Commission. This included business test panels and consultation workshops held throughout the country. It used the media to publicise consultation, which increased the transparency of the process, helped to overcome reluctance and apathy on the part of businesspeople to make comments in public, and built support for the new laws. It published high-quality research studies (illustrated) on issues relevant to the two proposed laws. These became the neutral evidence base which could be discussed at consultation meetings. Case study: GTZ’s role in Vietnam’s Investment Law and Enterprise Law

26. Inputs from GTZ Inputs from GTZ Inputs from GTZ

27. Key Results Obtained • Domestic business associations become more proactive and more professional in public consultation • Results of policy dialogues with support from GTZ were documented into formal appeals and many recommendations were reflected in the laws when they were passed in Nov. 2005 • Critical issues were widely discussed by the public with support of the local mass media • Business associations are becoming more and more aware of the importance of actively taking part in PPD • GTZ’s inputs and approach to PPD have set an example and a model for other PPD activities in Vietnam • New tools and mechanisms in public consultation and PPD are introduced and increasingly adopted by Vietnamese partners

28. Key Factors for Success • It is important to emphasize the ownership of national stakeholders • Make the local stakeholders aware of the benefits of involving in the policy dialogues with the Government • Keep the participants informed about how their proposal and requests have been addressed by the Government • Do not just complain, but suggest solutions also • Collective voices are important • Technical advice to consultation process is important • Good advice on business law contents is important. However, more important is how it is communicated • Identify the right dialogue partners • Use the press and other media • Build trust between the private and the public sector

29. Thank you for your attention!