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

A Countdown forEngaging 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 tradeoffsECDPM Page 2

• Business sector

• Developing country governments

• Donor country governments

• CSOs/NGOs

• Academia

5 Main Actors

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• 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

5 Main Actors

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• 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

5 Main Actors

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4 Main Narratives

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• “Africa Rising”Next investment frontier, risks &

rewards

• Win-win-win in a post-2015 world Development, econ. & comm. diplomacy

• ExploitationLand-grabs, human rights abuse,

neocolonialism

• Jobs-jobs-jobsEconomic transformation, more and better jobs, indust. policy, + value added

4 Main Narratives

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

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Push : Jobs, competition & “new models”

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Pull factors: Learning

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• The private sector is going there anyway…

Push & pull – flows to Africa

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…but largely to mining and minerals…

• Private sector development

• Private sector finance for development

• Private sector investment for development

3 related but distinct agendas

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• Private sector developmentOld agenda: domestic, enterprise growth, value-addition, exports, access to credit, business climate, firm-level skills, industrial policy etc

• Private sector finance for developmentInput side – promote and leverage private sector finance

• Private sector investment for developmentNew agenda: international, partnering with developed country firms, offset risk, link producers & suppliers

3 related but distinct agendas

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• 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

3 Agendas & Assumptions

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• 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

3i) PSD – (Jobs jobs jobs?)

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• 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?

3 ii) Private Sector finance for

Development (Next frontier?)

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• 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?

3 iii) Private Sector Investment for

Development (All 4 narratives!?)

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• 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?

2 Partnership perspectives

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• 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?

2 Partnership perspectives

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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

Business drivers? (regardless of donors!)

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1 Overriding issue

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Politics1 Overriding issue

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Politics• Business environment reforms• Regulatory/tax application• Firm selection for support• Partners and partnership formation• Local impacts?• Policy leverage?

1 Overriding issue

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• “Africa Rising”Maximising benefits vs minimizing harm

Profitability vs development outcomesEligibility criteria vs corp. track record?Time & money of impact evaluation

• Win-win-win in a post-2015 worldScale vs depthBig firms (better jobs?) vs SMEsPublic vs Private risk-burdenOpportunity costs of finance

• ExploitationRegulation vs guidelines

• Jobs-jobs-jobsNational vs local conflictsTied aid, subsidies vs PCD Unfair competition?

Many Impact Tradeoffs

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• 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!!!

Where are we in the narratives?

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New Discussion Paper:

“De-coding Partnerships”

http://www.ecdpm.org/dp161

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Thank you

www.ecdpm.org

Bruce Byiers [email protected]

Twitter: @brucebyiers

www.slideshare.net/ecdpm

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