As the international community gears up for Rio+ 20, and also begins to focus on what is needed to replace the Millennium Development Goals when they expire in 2015, many are starting to ask whether and how the private sector should be involved in a new framework for international development. ODI has developed some initial ideas on what business engagement might look like and is convening business and other stakeholders to take forward this discussion.
Both donors and developing countries are arguing for a greater focus on economic growth and private sector investment in a post-2015 agreement. The newly set up High-level Panel to advice on the design of a new development framework after 2015, which David Cameron co-chairs, highlighted the critical role that economic growth and trade play in reducing poverty. And Andrew Mitchell commenting on the Prime Minister’s role on this panel, referred to ‘harnessing private sector investment as vital for poverty reduction and human development’. The case for leveraging private sector resources to accelerate progress towards development goals is often made, but so far there haven’t been specific proposals or discussions on how (if at all) the private sector could engage more effectively in a new development framework.
It is useful to review previous experience. When the MDGs were agreed, MDG8 on partnerships mentioned the need to deliver some goals together with the private sector (e.g. access to ITC and pharmaceuticals) but businesses were not involved in the goal-setting process. Some initiatives, such as the Business Call to Action, launched after the goals were agreed, sought to engage businesses ex post, inviting companies to make commitments to help deliver some of the goals.
The development landscape has changed significantly since early 2000. A number of businesses have become much more involved in poverty and development debates. As expectations on the role of business in development are on the rise, some of these businesses may, arguably, want to be more involved in the discussions about a new development framework this time round. This also makes sense from the point of view of development communities: leveraging on business resources and expertise where appropriate can help maximise development impact.
So, is there a role for private sector in the process of agreeing a new framework for development after 2015, and, eventually, in the agreement itself? And if so, what could this be? We have developed a set of 3 initial proposals / scenarios, involving varying degrees of business engagement, as set out below:
Scenario 1 Business feeds into the development of the framework to ensure it maximises the contribution they can make to growth and development: under this scenario, firms are consulted in the process of agreeing a new development framework, with a focus on what they would like to see included in the goals, that would best help them contribute towards delivering them. A coalition of business associations articulates the views of interested businesses and feeds into the UN-led process set to agree a new development framework after 2015.
Scenario 2 Business makes pledges and commitments attached to specific goals and donors strengthen partnerships with business to deliver goals: in addition to feeding their views to the UN-led process, firms are invited to make (opt-in) pledges and commitments related to specific goals agreed by governments in the UN-led process. Goals are used as an opportunity to pool efforts and contributions from different relevant actors (including existing pledges) providing some coherence to different isolated initiatives. Although the initiative risks turning into a PR exercise, if focused and with buy-in from relevant actors, it could become an effective mechanism to drive theme/goal- based partnerships. These would take a more long-term and holistic approach to finding joint solutions that maximise the impact of donor spend and the scale and success of business investment.
Scenario 3 Improved reporting on the contribution of business to development goals – a separate framework for business: business and development practitioners see an opportunity in debates about a new development agreement to discuss what makes an inclusive/responsible business and standardise measurement on business contribution to development goals. Currently reporting is varied making meaningful comparisons, even within the same industry, a difficult task. Working groups including industry experts are set up to work out a few topline common indicators across industries, and more detailed industry-specific breakdowns. With calls for integrated reporting, some forward-looking companies include this information in their main financial reports. Some governments adopt this framework as part of their regulation (e.g. requirements for those businesses registered or listed in their countries), or provide positive incentives to companies that report or comply.
Achieving inclusive and sustainable development is undoubtedly a complex challenge, but one that is more likely to be achieved if resources and expertise from different actors are combined and used strategically. Forthcoming discussions about the future of development taking place in Rio+20 and ongoing debates on a new development framework after 2015, once the MDGs expire, provide good opportunities to do so.
Download a copy of ODI’s new paper ‘Beyond 2015: What role for business?‘. For more information on this project or to be part of the consultation and discussions please contact p.lucci@odi.org.uk.
Written by Paula Lucci and Karen Ellis, Overseas Development Institute.
Thanks for the interesting post and proposal for the post-MDG agenda. There are seemingly two aspects here: one relating to business involvement in defining the post-MDG agenda, and one more generally on understanding business impacts on development.
On the first, your proposals seem quite sensible and I wonder if you have any understanding from the business side on their willingness to engage on this, who the willing would be from the vast business community, and the degree to which they represent the rest of the business community? At ECDPM we are also working to understand private sector experience of working with donors programmes and this would be another interesting context of engagement to examine. It would also be a good test of how to get beyond the rhetoric (from both sides) of engaging the private sector in development.
On the issue of reporting, in a forthcoming discussion paper overviewing some of the main issues as we see them, we also arrives at this point that evaluations can simply be self-serving, and even if not necessarily so, would in any case benefit from greater systematisation. I like the idea of using the post-MDG agenda to bring that about. Again, I would be interested to know if this is something being considered by the private sector also, or remains a proposal yet to be discussed?
As a last point, we have also been discussing some of the broader issues of private sector engagement over at our own blog, ECDPM Talking Points, so any views beyond this good contribution would also be most welcome!
Posted by Bruce Byiers, Policy Officer ECDPM | June 22, 2012, 2:43 pmIndeed a very interesting post, the role of the private sector will truly play a fundamental role in the outlining of the international development cooperation strategies post-2015, as rightly pointed out by Karen Ellis and Paula Lucci. The report is a timely reminder of the need to further the “private sector involvement consensus” into actual dialogues on how this could be done on an aggregate level, so to ensure maximum development output.
However, in addition to the previous comment, prior to outlining any cooperation strategy, it seems vital to take a step back and better try to define and comprehend the different components in the wide private sector development agenda. This could both provide a better understanding of potential aligning interests and incentives (or where and when these diverge), and potentially lead to the highly needed improvement of reporting and impact assessments. In general, public and private actors come from fairly different angels, and before a common ground can be found, they need to be better inform of each others’ starting points, perceptions, goals etc.
Moreover, the private sector has up until quite recently been acting on their own in their pro-development activities, and there is still a need to assess what type and degree of public support that could effectively add an additional beneficial outcome. Where and in which project can public funding actually make an impact that the private sector could not have achieved on their own?
The suggested proposal is nevertheless very valid since 2015 is approaching rapidly. If the suggested process can be combined with further encounters between the stakeholders, and thus lead to improved in-depth knowledge, then it might be a good way of ensuring sustainable and efficient private sector engagement.
Posted by Anna Rosengren - ECDPM | June 22, 2012, 3:45 pmRe the point raised in the third par by Anna,
We definitely need public sector support to broaden visions and approaches where private sector understanding of development may be fragmented, not necessarily inclusive, sustainable or ecologically wise. Thinking in value chains or clusters, to name another issue, is not always the most developed feature in average private sector acting. Not that I see public sector to be all that enlightened on such matters, but public funding will be indispensable to ensure the necessary research capacity will be available, that piloting can be financed, that poor-practice and best-practice are well documented and publicly available: public sector funding will enable the learning society.
Competition may be a great driver for many things, but not necessarily the best guarantee for knowledge management and transparency, for inclusiveness and environmental wit: for an environment of global learning.
Alas, not yet.
Posted by Hans Determeyer - BEST-AC - Tanzania | June 28, 2012, 7:42 pmI like the article “Business Goals for Development …”, and of the three proposed scenarios I like the first one best: “Business feeds into the development of the framework …”; i.e. to get the business community involved as early as possible. We need to find out what bottlenecks are holding back private investment in the developing countries, and what incentives would be important, so that the official development aid can concentrate on reducing the former and increasing the latter.
During my long career as a development worker, mainly with FAO and the World Bank, I worked with the governments of the developing countries, but in the end I arrived at the opinion that only the private sector can sustainably provide the many jobs that the poor in the developing countries want. I barked up the wrong tree; I think the Chinese are doing better than we.
POSTED BY MIKAEL GRUT, FORMER SENIOR FORESTRY SPECIALIST, WORLD BANK
Posted by Mikael Grut | June 29, 2012, 6:10 pm