Development-oriented & commercial instruments to engage the private sector

5th Informal Donor Dialogue meeting

ECDPM, Economic Transformation & Trade ProgrammeBrussels, 20th of October, 2015

Private Sector (for) Development

Outline• Background of the study• Context• Introduction• Analytical approach• Public support instruments• Similar challenges• Differences• Opportunities• Conclusion• Questions for the discussion

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• Private sector key for development

• Public instruments: development cooperation vs. other public instruments

• ECDPM mapping in the context of PS4D→ Unique overview of both development AND commercially-oriented public support instruments

Background of the study

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• Developing countries promote their own development

• Donors increasingly engage with PS4D• Simultaneously, donors support their private

sector to internationalise• pure development cooperation vs. economic

diplomacy

•But there are trade-offs and challenges! ... •… and at the same time opportunities of

commercially-oriented instruments

Context

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• Growing donor driven PS4D agenda

• Private sector interest- Support to access new markets in foreign countries- Risk mitigation

• Donor interests- mobilise European businesses so to make development

more effective- access to foreign markets- economic exchange- benefits of businesses operating in market competition

Introduction

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• DCED categories of partnerships and engagement with the private sector- Match-making mechanisms- Funding mechanisms- Technical support programmes

- Proposed categories for development & commercially-oriented instruments:1. Matchmaking/business facilitation2. Financial support/cost sharing3. Technical assistance/advisory services

Analytical approach

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Public support instruments

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Development-oriented

Commercial

Matchmaking BCtA, GIF, Finnpartnership,NL MF

COSME, SME Internationalisation Portal, Clusters

Financial support

DFIs, AECF, GIF, DeveloPPP.de, IDH/DGGF,Danida BE

ECAs, COSME, H2020 SME

Technical assistance

BCtA, DeveloPPP.de, Finnpartnership

Export helpdesk, H2020 SME,EU MS’ support programmes

• Financial:○ Accountability to taxpayers○ Financial know-how and capabilities

• Transparency:○ Results and development impact and their

measurement○ Data availability and access for public

• Practical:○ Targeting the ‘right’ companies○ Distortionary/driving biz out the market○ Instruments design as private sector is diverse

• Sustainability:○ Implementation and monitoring○ Standards to avoid harmful investments○ Achieving sustainable and responsible business

conduct

Similar challenges

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• Objectives and motivations to work together

• Underlying criteria at times• Geographical focus • Development instruments’ challenges

○ tied aid?○ additionality/attribution of results○ scaling-up○ pressure to disburse funds?

• Commercial instruments’ challenges○ sustainability → doing no harm to

development (social, human & environmental rights)

○ limited positive impact on development

Differences

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• Better data publicly available and accessible

→ to inform about objectives, progress,outcomes and impact

• Criteria and principles of sustainability→ Need for more coherent application across instruments

• Harnessing opportunities to better learn from each other’s sustainability criterias

• Reform of ECAs• Unification of private sector support in one

ministry?

Opportunities

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• Challenges and opportunities are similar

• Main differences: objectives, criteria and targeted countries

• Increased synergy and coherence feasible

• Private sector support could be more development-friendly through:

○more coherent sustainability criteria○better evaluation and learning opportunities ○increasing transparency

Conclusion

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• How to best combine development objectives with economic diplomacy interests?

• What are the key distinctions that need to be made between these different types and their role and objective? How best to foster synergy and avoid duplication?

• What are the key lessons from public instruments to support private sector, between those with development objectives and those with commercial interests?

• What kind of criteria and evaluations are required to build on the synergies between both sets of instruments?

• Is there an added value to acting at a European level to link commercial and development-focused instruments?

Questions for the discussion

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Thank youwww.ecdpm.org

www.slideshare.net/ecdpm

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