Experiences

Engaging the Private Sector in the Post-2015 Development Agenda

Last week the Brookings Institution hosted a very informative panel discussion (you can view it hereon increasing the role of the private sector in the global development agenda. The panel discussion, entitled Partnerships, Corporate Social Responsibility and the New Development Agenda, centred around how to ensure that sustainability and accountability are at the heart of corporate strategy. It also looked at how to engage business on sustainable development and how to mobilize companies to more effectively advance global priorities.

The panel consisted of Anne Finucane (Bank of America), Jane Nelson (Harvard University), Daniella Ballou-Aares (U.S. State Department), Mindy Lubber (Ceres), and Vera Songwe (World Bank). I shall begin by providing a short recap of the discussion and the main themes that emerged, and then conclude with some of the my thoughts on the event.

Partnerships and the New Development Agenda

In response to growing recognition that the private sector has an important role to play in combating poverty, promoting shared prosperity and enhancing environmental sustainability, policy-makers are working to define a clear role for the private sector in the Post-2015 Development Agenda. While this is a great start, realizing such an ambitious agenda will require that the private sector become a global development leader in its own right. There has never been a greater need for financial innovation and for banks, financial institutions and investors to develop new products, services, technologies, and even new business models so that they can be a part of the solution in driving more inclusive and sustainable growth. Some examples of private sector-led initiatives that contribute to development include new business models that reach lower-income customers, giving them access to basic products and services, and bond issues for public health programs that accelerate research funding and the distribution of vaccines.

Rebuilding Public Trust

In the aftermath of the global financial crisis the private sector is facing a pretty serious public trust deficit. If the private sector is going to play a leadership role in development, they must work to rebuild this trust. Corporations need to demonstrate how they are improving their risk management systems, government processes, accountability and transparency. While it is essential that these corporations address their governance and risk management issues, it is equally important that they look to the future are not paralyzed by the past. Some necessary steps to rebuild trust include engaging in public dialogue with legislators, regulators and consumers, sharing knowledge and best practices, and developing new products and services.

Opportunities for Financial Innovation and New Models of Partnership

Many of the panellists echoed the sentiment that without significant engagement from the private sector we will not achieve a new set of development goals. The private sector has the resources, finance and expertise to face some of the most costly development challenges including climate change and expanding energy access. Without strong functional collaboration between governments, NGOs, stakeholders and the private sector, we cannot hope to mobilize even a fraction of the funds required to address these problems. In addition, the demand for business to provide financial resources and innovative solutions has become even more pronounced due to declining faith in the aid/NGO community to solve these problems. With government resources becoming progressively constrained and the growing demand to demonstrate value for money spent, the need for new models of partnership in development is becoming increasingly clear. The ‘new models of partnership’ discussed by the panellists mostly involved banks, companies and financial institutions coming up with innovative products and services and NGOs helping to develop standards and evaluation tools. One of the panellists stated that over time having sound development expertise will become a fundamental pillar of risk management strategy. In order to protect their investment, companies who operate in developing countries will make more of an effort to understand what and who they are investing in.

What Gets Measured, Gets Managed

In order to encourage greater participation from the private sector, there needs to be a push for more tangible commitments where results can be seen. Having clearly laid out goals and targets is important because what gets measured, gets managed. Currently, one of the only things we have good measurements for are public aid flows and related activities. Panellist Daniella Ballou-Aares stressed that moving forward it will be critical to find ways to measure the value and impact of the private sector activities.

Final Remarks

While I agreed with many of the points that the panellists made, I found the discussion a little too hypothetical for my taste. Although the panellists expressed a sense of urgency to enhance the role of the private sector in development, there wasn’t much of a discussion surrounding the logistics of how a partnership between development actors and the private sector could be achieved. The discussion also focused more on how a partnership with the private sector could help the international community to achieve their development and sustainability goals, without really a exploring how private sector-led development initiatives could help to improve (or harm) the lives of individuals and communities in developing countries. The discussion left me with more questions than answers: What kind of incentives will it take to encourage the private sector to step up to a leadership role in development? Is it even reasonable to expect that they will take on a leadership role? What steps can the international development community to take to foster a partnership with the private sector? In which sectors can business make the greatest difference to development outcomes? What are some of the ethical implications of business-led approaches to development?

In my opinion, the highlight of the event was the panellists themselves. I was so pleased to see five dynamic female leaders on the panel and I really enjoyed how they emphasized the importance of women’s economic and social empowerment. The panellists did an excellent job of affirming the necessity of engaging the private sector as a partner in development, and what can be achieved if we are successful in doing so. I believe that the private sector offers many lessons and best practices that could help to improve development impact, and that the development community would have much to gain by working more closely with them. I hope that the international community will move towards formulating a tangible, realistic action plan to realize such a partnership.

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Commentary

Open Data In Development: Finding its feet

On October 28, the North-South Institute hosted the Ottawa event for Global Transparency Week. This was one of 18 high-profile events taking place around the globe focused on open data, transparency, accountability and good governance. For those who don’t know, open data for development is all about making information and data more freely available to encourage feedback, transparency, information sharing, and most importantly accountability.

Although its a relatively new phenomenon, I find the drive towards open data absolutely fascinating and feel it has the potential to revolutionize the development field. That being said, this movement also has the potential to culminate in a whole lot of nothing unless 1) we ensure the participation of all stakeholders and 2) there is a clearer articulation of the desired outcomes, and how increased transparency will lead to accountability.

During the event, the panelists discussed the importance of open data and transparency in relation to Canada’s development objectives, the changing open government narrative, challenges in delivering on transparency, and lessons learned from the International Aid Transparency Initiative (IATI) experience. The IATI Standard is a publishing framework that was developed following the 2008 High-Level Forum on Aid Effectiveness in Accra, Ghana. It is a multi-stakeholder initiative that has become the standard to which donors, developing country governments and NGOs are supposed to publish information on their aid spending and activities.

It is important to note that successfully publishing to the IATI standard requires a huge commitment on the part of donors and NGOs. They are required to meet a very extensive set of criteria which at the bare minimum requires publishing on aid activities in a timely manner, and in a variety of useful formats that can be easily accessed, compared and utilized.

While this may sound like a simple feat, if you actually take a look at an IATI data file you will quickly discover that it is not.

Organizations are also required to report on a number of ‘value added’ fields including project documents, impact assessments, and precise geographic information. Providing a diverse assortment of data is a necessary component of the IATI standard, as it is crucial to respond to the needs and interests of different data users.

However, as mentioned previously, two things need to happen if we really want to see the see the concrete benefits of publishing to the IATI standard. Firstly, while many donors have committed to becoming IATI compliant, there are still many development agencies, NGOs, and CSOs that have failed to follow suit. The irony is that these were the very organizations that campaigned for the government to commit to IATI in the first place. In order to see the transformative benefits of aid transparency in both developed and developing countries, all development organizations that are receiving funding from the government, providing aid, or conducting projects in developing countries should also be publishing to the IATI standard.

The hesitation of many small NGOs and CSOs is warranted. With minimal budgets and limited IT capacity these organizations question the feasibility of publishing to IATI and feel as though they are on an unequal playing field. Despite this, there are ways for NGOs and CSOs circumvent these roadblocks, and take on the IATI commitment without taking on excessive risk. Donor agencies can follow the example set by the UK in which all NGOs and CSOs receiving public resources are mandated to comply with the IATI standard, but are also provided with technical support as well as additional funding to help cover the costs involved.

The second area for concern, and in my opinion the most pressing, is the need to unpack what we mean by “transparency” (i.e. transparency to whom, to what end); and how transparency leads to “accountability”. One of the panelists expressed fear that when donors limit their focus to increasing the quality and quantity of their aid data, they risk getting caught up in the disclosure of information and losing sight of what is really important about that information.

Donors need to move away from focusing exclusively on transparency, and towards increased accountability both at home and abroad.

There should be more of an effort to evaluate whether IATI and other open data initiatives are realizing the ultimate goal of better coordinated aid, improved resource allocation, and greater participation and empowerment of citizens in developing countries who are the ultimate beneficiaries of these efforts. In this respect, there is little evidence whether these investments are having the desired impacts.

There is much work that needs to be done to generate a clearer picture of how open aid data will interface with state and citizen actors to bring about this desired accountability. One thing we know for certain is that there is considerable traction surrounding open data [Ed: particularly within governments], which is at an important starting point. Hopefully these concerns will be properly addressed so that we can achieve the ultimate goals of aid transparency; harmonization and co-ordination between donors, and real partnerships with recipient countries.

For more highlights from the event, be sure to check out the full report – available here

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