Businesses seek upfront role in future development policy

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Business associations in Europe and other advanced countries are seeking to put their imprint on a future global development framework, calling for a strong private-sector role in lifting poor nations out of poverty.

The push by big and small companies ahead of key meetings – including one this week in Indonesia – is part of the jockeying to shape the future of the Millennium Development Goals (MDGs), the eight poverty-fighting targets that are nearing the end of their 15-year run.

“We believe that for the post-2015 goals to contribute to delivering the global development agenda, it will be essential that they help stimulate business of all sizes around the world to grow and flourish in a responsible and sustainable manner,” says a letter sent by entrepreneurs to the United Nations’ high-level panel weighing a future MDG agenda.

The Business and Industry Advisory Committee (BIAC) of the Organisation for Economic Co-operation and Development, the International Chamber of Commerce, and seven other groups signed the letter. Combined, they represent some of the world’s biggest corporations along with smaller firms.

A voice in the next MDGs

Largely left out of the negotiations that created the MDGs in 2000, businesses this time around are working to influence the next anti-poverty framework. The European Union’s own roadmap for the post-2015 development goals, ‘A Decent Life for All’, was similarly based on consultations with businesses as well as civic groups.

“We would like to see a focus on the role that can actually be played by the private sector,” said Jonathan Greenhill, policy manager at BIAC. “What we feel is missing with the MDGs was too much focus of what needs to be done with too little emphasis on how to do it.”

The EU and other major donors agreed at an international conference in 2011 to improve their cooperation on development aid and called for more private-sector involvement to reduce extreme poverty through investment and job-creation.

“That for us in business represented a real turning point because up to then it was all about aid effectiveness, but there [at the conference] it became much broader about development effectiveness and recognition of key partners like business,” Greenhill said in a telephone interview from Paris, where BIAC is based.

“And this is the kind of thinking we would like to see reflected in the MDGs, not just directing aid flows to these countries but about building a better business environment for businesses to thrive, and through that we feel that development will come about,” he said.

Aid groups sceptical

Advocacy groups, however, are wary of mixing human and business development.

At a conference held in the European Parliament on 21 March, MEPs and anti-poverty campaigners acknowledged development financing is under stress because of fiscal crises in traditional donor nations. But they questioned a shift in EU policies to mix loans and grants – known as ‘blending’ – to help foster private-sector growth.

The European Network on Debt and Development (Eurodad), one of the groups represented at the conference, has estimated that international financial support for the private sector will exceed $100 billion (€77 billion), up from $40 billion (€31 billion) in 2010.

Jesse Griffiths, director Eurodad, told EURACTIV that most private investment flows into middle-income countries rather than the poorest nations “where there is a huge infrastructure needs gap”.

“Very little foreign private investment flows to the poorest countries,” he said, adding that there is little alternative to donor aid to address the “huge infrastructure gaps” in the least developed nations.

Ahead of the high-level group meeting at the Indonesian resort island of Bali, Eurodad and seven other aid groups said funnelling money to private companies through blending resources tends to favour multinational corporations and big banks over poverty eradication, and urged policymakers to rethink EU development policies that promote blending to help foster private-sector growth.

In a statement, the Eurodad and its partners “expressed their profound concern and questioned whether these new cooperation mechanisms that promote the private sector address the main objective of EU development cooperation – which is the eradication of poverty and, in the case of Latin America, social cohesion.”

“We ask the European Parliament to apply its prerogative of democratic control and ensure that the use of European public funds for development cooperation are exclusively channelled to social cohesion and the eradication of poverty,” the NGOs said.

Fighting poverty with growth

Like civil society groups, corporations and their trade associations have become more assertive at world gatherings. Last June’s Rio Conference on Sustainable Development was attended by more corporate executives than national leaders – Barack Obama, Angela Merkel and David Cameron were among those who skipped it altogether.

>> Read our Special Report on the Rio+20 conference

BIAC and other business groups want to see the post-2015 framework include targets to improve financing opportunities as well as the legal and investment climates in developing countries.

BIAC also supports building upon the original MDGs to improve education, gender equality, healthcare and environmental sustainability.

Greenhill said private finance is important in achieving these goals and defends the motivation to be involved in the post-2015 framework discussions.

“By improving the business environment in these countries and scaling up the amount of investment and trade that can then take place, this opens up opportunities for investors and for businesses,” he said.

“There is a business case for it, but at the same time that does bring about overall growth and increasing prosperity and development of infrastructure, and for the population there is a development aspect about it.”

Funding could be a challenge for the post-2015 UN anti-poverty framework.

The largest sources of development assistance, the EU, United States and Japan, are all under budgetary stress and poverty-fighting groups fear that foreign aid will be among the first casualties of long-term austerity measures.

The EU is collectively the largest aid donor, providing €53 billion from national governments and EU institutions – or 55% of the world total in 2011.

EU leaders agreed on 8 February to cut overall EU spending for 2014-2020 but reversed earlier plans for deep cuts in the EU's overseas development programmes. The leaders called for spending €58.7 billion over the next seven years to help poorer nations, nearly the same as the previous budget.

  • 27 March: UN high-level panel on the post-2015 framework wraps up a meeting in Bali, Indonesia
  • 2015: Target for achieving the eight original Millennium Development Goals

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