Our Shared Opportunity: The Private Sector as a Driver of Development

I agree with the suggestion that the US government, and other governments and donors, should make partnerships a core part of their strategies. That doesn't happen anywhere near enough, but could really transform the success of donor efforts to promote development. There's still a lot to work through though, in terms of developing institutional arrangements to drive forward these partnerships, to ensure they are sufficiently transparent, accountable and as impactful as they can be.

This could be tackled more explicitly in the post 2015 framework that is currently being developed, as I argued in my recent blog. However, the high level panel report didn't really propose this directly, although it did call for new kinds of global partnerships. It emphasised the need for corporates to first start undertaking integrated reporting, measuring the wider social, economic and environmental impacts of their operations, to build the trust of governments and donor partners - perhaps implying that this was a pre-requisite before deeper partnerships could be considered. I'd be interested in the views of others on this.


The High Level Report is well worth the read (surprisingly) and I think it does a good job of reflecting the changed world and the changed thinking from 1999-2000 when the MDGs were put together. I think the fact that it references "livelihoods" which I read as (UN speak for SMEs/the private sector) is a very good thing and I think foreshadows an MDG 2.0 goal around the private sector.

Our report talks about the enabling environment and I think that the most imporant thing that can happen is to deepen the work of and around the Doing Business Agenda at the World Bank including investment climate. the UK Government, Business Fights Povery and Zahid himself were strong supporters of continuing and deepening Doing Business during the Spring 2013 review of Doing Busienss that concluded earlier this month at the World Bank in a favorable way (and it could have gone the other way).

Regarding SMEs, one area we need to be aware of is the impact of developed country governments regulatory frameworks on access to finance to SMEs in places like Africa. Dodd Frank and Basel 3 have many important benefits but many banks and DFIs that I speak with are concerned that it has had some "unintended consequences" for SME finance in Africa. That does not mean we should (necessarily) get rid of Dodd Frank and Basel 3 but it does mean we ought to review what impacts they are having and balance investor protection with growth and access to finance--we are interested in looking at this in a systematic way at CSIS in the near future.

Finally, we need to think about what risk sharing instruments and what technical assistance we provide (including capacity building to regulators, courts, credit bureaus) to provide the infrastructure for proper well run banking systems in developing countries. It also means increased attention to small business training...

In defining the private sector, we started with the business community, which has a bottom-line need to engage in developing economies. But we also focused on the important roles of other parts of the private sector: NGOs play a very important role in translating investments and growth to poverty reduction; and the philanthropic sector can do creative funding and financing for issues that may not receive the attention to some businesses, but can have an important long-term impact (my favorite example of this is the role of the Ford and Rockefeller Foundations in spurring the Green Revolution).

But ultimately, when talking with companies, it is important to find ways to connect philanthropic spending to business goals and capabilities. Food companies have great knowledge and resources on food processing and storage. "Partners in Food Solutions" a collaboration between General Mills, Cargill and others, provides technical support to food processors in developing countries - when a company runs into a problem, say in Accra, they are able to email or send a photo of the problem, and receive advice from a food scientist in Minneapolis.

This is just one example, but the long-term success of this model will be based on approaches that are nested within standard business capabilities and operations, and that can lead - at least down the road - to a market opportunity.

I think there are a number of excellent NGOs who have learned how to work strategically with the private sector not only on CSR type activities but also around more "core business" issues. Examples:

International Youth Foundation is great working on youth training initiatives all around the world

CDS Development Solutions has moved from a USAID partners to a 95% private sector funded model focussed on corporate voluntarism and value chain development

Tecnoserve has moved from a largely USAID funded model over the last 10 years to a largely corporate and philanthropy funded model.

Catholic Relief Services is an organization that is still largely US Government funded but has become far more adept at working with and through the private sector (see our event that we did with them last week on our website)

Hi everyone,

I'd like to know if SMEs play a role in what's being discussed. I am very interested in contributing to my SMEs growth as much as in contributing to development in Africa. However I have to say that my experience, as is that of so many I know, is a very lonely one (I'm European).

As is natural, there is a lot of sinergy between big sized companies and public bodies. What about American SMEs? What's their placement in fostering development? Do you see potential?

Thanks and congrats on the good work.

I do also think that private companies have the resources some entrepreneurs might need to reach a greater potential but yet sometimes lack the innovation or entrepreneurship spirit from grassroots organizations. That is where the collaboration is fruitful.

There’s been a lot of talk about “business engagement”. Dan, Johanna and others - can you share some concrete examples of what this looks like in practice? Any examples of where it has worked really well, but also where it hasn’t? Any lessons and advice for others wanting to engage more with the private sector?

Really good point to raise - there are so many countries that are becoming middle income countries (Nigeria just joined the club), and what we heard over and over was that the development discussion is quite outdated - when countries come to the table, they are talking about investment and business as much as about development spending, and we need to find ways to deepen those dialogues and focus on outcomes of poverty reduction and growth.

And conversely, in the United States we have a mindset to change - so many of the images of developing countries are of disease, despair and poverty that it becomes hard for the popular imagination to see these countries, families and households as consumers. There is money in middle-income countries and in poor countries, and there are markets. They can and will be accessed, but what it takes to be successful will look different over the next ten years than it did 50 or even 20 years ago.

The private sector has supply chain buying power, technology and the ability to make investments that dwarf all assistance or philanthropic grants. At the same time, there are many public goods and public policy challanges that if addressed could unlock investment, create jobs for a broad base of people and reduce poverty.

It is clear that civil society groups, donors, and local governments have important roles to play in supporting privaate sector lead development. Training small holder farmers is not an energy companies "core business" but may need to do so to ensure social license to operate, ensuring that property rights are clearly delineated and that security is provided are among many of the important roles government provide. Donors have expertise, funding and relationships and tacit knowledge about making change happen in many developing countries.

Definitely - this works in a number of ways, but let me highlight two.

First, big companies need small entrepreneurs to create and innovate. They need to connect and engage. This happens all over the world, as entrepreneurs and small businesses are agile and much more willing to take risks to create new technologies and approaches, which adds value across the chain.

Second, in developing countries local content requirements, or a focus on reduced costs by using local employees leads companies to strive to train and employ local workers. SMEs and entrepreneurs can play an important role helping companies achieve these goals, while also building their businesses.

But SMEs need support and often training or coaching to meet standards and adapt technologies for industrial application, so collaboration is really important.

Hi Andrea

On your questions of language - I hear 'shared value' being increasingly used. Also we shouldn't forget the impact of 'shared risk' - and this an area where public private partnerships can really give business reassurance.

And of course joint investment - is always more attractive!


Thanks Dan - it's always a question for me WHO to approach within a corporation - do you go towards the CSR piece? Someone in another business unit? The Foundation?


Today you feature Chevron's Niger Delta Partnership Initiative. NDPI takes Chevron 10+ years of learning about working across sectors and how to work with local governments, non-profits and donors such as USAID.

I think the on-going decade long plus multisector partnership around West African Cocoa bringing together small holders farmers, research institutions, goverments, bilateral donors, multilateral donors and philanthropy is a great example of the different assets that folks bring to the table. Small holders grow disease resistant cocoa, they care for their crops in ways that increase productivity at a time when there is an increasing market for cocoa as middle classes grow in Asia and elsewhere.

I think of the multi-sector partnership around youth and vocational training around Latin America started by Entra 21 which as reached over 100,000 young people bringnng bilateral donors, NGOs, multilateral and local governments such as municipalities in Colombia that have brought scale and brought young people into the private sector labor market. IYF has taken the Entra 21 model global and is seeking to traing and reach hundred of thousands of young people and get them into the labor market turning the demographic challenge into a demographic dividend

These are long term, many sector projects that take the long view. Patience and focus.

I think this is a great point well made.

There is an innovative approach that I came across from Shell Nigeria. With the passing of the Nigeria Local Content Act 2010 in Nigeria, Shell have taken the leap and have created a Nigeria Local Content Development team that seeks out entrepreneurs as partners and works with them to develop local grass-root organisations to fulfil roles played by international operators.

This provides a good example of how private companies with resources can collaborate with grass-root organisations to develop innovation and entrepreneurship.

Dan, Johanna - thanks so much for joining today’s discussion, and thanks to all those who posted a comment! We’ll leave this discussion open, so please do feel free to continue the conversation!

Be sure to check out the blog series we are running all this week with CSIS!

Thanks Zahid! It has been a pleasure! We are so pleased to be sharing our thoughts and ideas on Business Fights Poverty.

Thanks for a great conversation. For those interested, see our Devex Impact article on the CSIS Shared Prosperity report: http://bit.ly/17A5hEZ, and our exclusive interview with Carly Fiorina on PPPs; http://bit.ly/1aKtOGf.

Thanks again its been great. We could not have done this without our great partner Chevron. Please take a look at our website (csis.org) for background, events and information.

I believe the private sector is a major driver to development cause they can handle day to day issues as they come in their innovative way to mitigate all challenges that may arise in doing business, they are also a major tooll in that they orm the greater base for government's revenue through taxes and pay as you earn as they employee highly qualified and highly paid professionals, as well a creating jobs for the vulnerable base of the pyramid individauls.

When we talk about involvement of or partnering with the private sector, there is always a cool voice that says 'it is easier said than done'. Having taken for granted that the companies have their rights of seeking profits in their own rights, we will have to think about how to engender philosophical re-thinking in the corporate culture and organization. To exemplify, Corporate Philosophy Division , if it were, which will think deeply into the raison de tat of the company in society and bring recognizance of a human way including what is value.. In order to bring idealism to the front seat, we will have to return to the basics of human being instead of meddling with management tools and ideas.