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A Countdown for Engaging the Private Sector for Development

Explore the main actors, narratives, and agendas in engaging the private sector for development. Discover the challenges and perspectives in private sector development, finance, and investment for development.

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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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