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 impact tradeoffs ECDPMPage 2

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

4. 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 ECDPMPage 4

5. ECDPMPage 5

6. 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 ECDPMPage 6

7. 4 Main Narratives ECDPMPage 7

8. “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 4 Main Narratives ECDPMPage 8

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

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

11. Pull factors: Learning ECDPMPage 11

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

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

14. 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 3 related but distinct agendas ECDPMPage 14

15. 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 ECDPMPage 15

16. 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 3 i) PSD – (Jobs jobs jobs?) ECDPMPage 16

17. 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?) Page 17ECDPM

18. 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!?) Page 18ECDPM

19. 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 ECDPMPage 19

20. 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 ECDPMPage 20

21. 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!) ECDPMPage 21

22. 1 Overriding issue ECDPMPage 22

23. Politics 1 Overriding issue ECDPMPage 23

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

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

26. 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? ECDPMPage 26

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

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