Making Public Private Partnerships work

The second session of the 3 April Development Policy Roundtable, hosted in Brussels by the Friends of Europe, saw Business, Governments and NGOs discuss ingredients of successful public private partnerships (PPP) for development. [the first session considered the role of business in development].

Amongst the discussants there was surprisingly little criticism of PPPs. Instead many listed the factors they felt had made their partnerships successful. Since participants were mainly drawn from larger international companies such as De Beers, Unilever, Cargill and Cadbury Schweppes, discussion of local public private partnerships was limited.

Andrew Bone from De Beers stressed the importance of working in partnership. He presented the partnership of his company with the government of Botswana. He pointed out that during the last 40 years of this agreement, De Beers and the government had both profited. So, for example, no-one in Botswana is today more than 15KM from a health facility. He stressed that it was important that 80% of revenues earned from Southern Africa by De Beers stay in the region.

In his experience, the two scarcest resources were political courage and the management capacity to implement Public Private Partnerships.

Lawrence Carter explained the IFC's role in advising government and the private sector on PPPs. He warned of the need to be sensitive to the political concerns of the government in the partnership. Subsidies were often needed to allow tariffs to change gradually. The injection of foreign investment would not always be popular within a country. Interestingly, bearing in mind his first statement that IFC advises both sides in the PPPs, he finished by stressing that the role of the IFC was how to involve the private sector.

The final speaker from Cargill argued that there is a need to move development efforts from subsistence farming to commercial farming through multi-stakeholder partnerships. As an example, Cargill works with the Ministry of Agriculture in Vietnam and the Dutch government on a project to grow cocoa in place of coffee in the central highlands.

Sean De Cleene of Yara emphasised three qualities needed for successful PPPs:

• political courage;
• management skills - although these can be developed by PPP;
• good corporate governance and the involvement of state owned enterprises. In many countries, 70-80% of business is through state owned enterprises.

In many cases, governments have to rethink subsidies with smart subsidies for PPPs. Planning needs to include good exit strategies and pay particular attention to support for SMEs.

Design for Aids recounted the success of a PPP with H&M fashion in a campaign against AIDS in which 650 stores raised AIDS awareness using celebrities. The partnership has now broadened to include the sourcing of organic cotton T shirts from Lesotho.

Standard Chartered operates a number of public/partnerships supported by NGOs and policy groups. It found that the success factors for PPPs were:

• Overlapping agendas
• Designing programs together
• Using core skills of the business

A representative of the WHO said that their PPPs had worked in the area of technology transfer, eg vaccine production, but failed where there was little political stability and country capacity.

Traidlinks was concerned that the meeting was not able to hear from any SMEs. In their view ,the key concerns are:

• Access to finance requires a policy change in donors and governments.
• There is still little SME assistance
• NGO and donors pay 3-6 times what an SME can pay and so can be responsible for a brain drain from business.

by Chris Addison

What is business doing in development?

In April, Friends of Europe discussed the role of business in development at the second Development Policy Roundtable held in Brussels.

In the first session, three speakers - from the business sector, the European Parliament and the UN - showed the realities of business involvement in development, particularly the need to follow a structured process and to take an holistic view of the value chain when intervening in a country.

Sean De Cleene from Yara International opened by observing that we face a crisis of leadership and imagination in development. To alleviate poverty he stressed that we need to work across sectors and work together. According to De Cleene, there have been four revolutions affecting development:

• Technology - the opportunities of mobile phones and payment technologies;
• Markets - globalization effects;
• Demographics - common problems facing the planet such as food security, climate change and hiv/aids;
• Convergence - the roles of states and corporations are changing, we need to rethink the landscape and look at whole value chains, not just raw materials.

De Cleene believes we should think big. He talked about an international effort to ensure an African green revolution. He pointed out the role his own company plays in the Tanzania partnership where they look at the whole value chain essentially from field to port. While there is much partnership in small initiatives at community levels, this is often not scaled up, as brokerage organisations in countries often don't exist.

Richard Howitt of the European Parliament focused on Corporate Social Responsibility. In his experience, companies adopt CSR for two reasons: to develop future opportunity for business; and to manage their social and environment impact.In his view, each business needs to follow a 5 step plan:

• Screen activities against Millennium Development Goals and become part of this partnership;
• Engage more fully with different actors in development;
• Develop products and process to meet MDGs;
• Become a corporate citizen - add value in the country it is working in, by for example supporting the fair trade sector;
• Take core standards such as the Kyoto protocol, the universal declaration of human rights, and the MDGs, and participate in global reporting initiative.

Christian Thomas of the UNDP pointed out that foreign direct investment is now 5 - 10 times the amount of aid to developing countries. Growth is due to business, but despite this economic growth, one third of the planet (2.7 billion people) still lives on less than 2 dollars per day.

Historically, he recounted how business has gone through three stages of involvement with development:

1. Philanthropy: Initially businesses contributed through philanthropy. This was primarily risk-free but the business benefit was not clear. The other problem is that development initiatives take 15-20 years, whereas donations are often not sustainable over the same timescale.
2. CSR: Here the risks are higher - some core business assets are committed with a CSR unit managing the reporting.
3. Core business in development: This is a high risk. Here the business looks at how business contributes to MDGs. Some companies have seen the opportunity to reach untapped markets of 2.7 billion people.

In the light of this, he felt the whole development community needs a new approach. According to Thomas, business can:

• Improve livelihoods through selling basic goods and service to poor but this does not empower them;
• Sell economic tools, e.g. telecoms and microcredit productivity agents;
• Buy from the poor.

The first and third options need engagement from entrepreneurs. UNDP supports these interventions by supporting entrepreneurs. He finished with the story of the business entrepreneur behind Camelbert, a dairy business working with nomadic traders in Mauritania, that has now expanded worldwide.

The following discussions highlighted the need for the Development Committee of the European Parliament to look at new instruments to support farmers, with an emphasis on production in poor countries, in particular new instruments to support small to medium enterprises (SMEs).

There was a call for businesses to adhere to international law before engaging in developing countries and concern at the level of tax avoidance in developing countries which runs at 255 billion dollars.

At the same time, a number of examples such as the Malawi Business Coalition for aids, showed that the private sector is an active partner in the sustainable delivery of a number of projects.

According to a representative of DG Development of the European Commission, business should follow three steps:

1. Coherence - must adhere to MDGs and not undermine;
2. Capacity building - trade at regional level;
3. Finance - think innovative sources, remittances, climate change payments.

Ericsson, the telecoms business, was perhaps alone in saying that a partnership approach takes too long. 80% of their business expansion has been in emerging markets. Initial risk taking needs to be shared with the public sector but the private sector can then commercialize.

There was also some concrete discussion on how this group could take the issue forward, focusing around:

• The need to consider a specific global alliance on the green revolution for Africa;
• The need to have case studies of public private partnerships to examine best practice.

Story by Chris Addison

Living up to the expectations of the Lisbon Treaty?

Brussels, 26 February 2008. The second panel of the Friends of Europe Development Policy Forum roundtable covered a range of issues, emphasizing not so much how signatories would abide by the Lisbon Treaty but how they could live up to its expectations. We heard about the Lisbon "double hat", an African based Commissioner, a need to merge DG Development and EuropeAid, and a treaty which just describes what already happens.

Jean De Ruyt, Belgian Ambassador to the EU, emphasized that many aspects of the Lisbon Treaty still needed to be clarified. Of key importance to him was the creation of the "double hatted" high representative who would have responsibilities for both CFSP and External Assistance. This would ensure consistency between development aid and foreign policy. Moreover, the issues written into the Treaty such as the link between security and development, the central aim for eradication of poverty, a neutral and non-discriminatory approach, meant that it would be a question of living up to treaty rather than abiding by it.

Mr. Hany El Banna of Islamic Relief Worldwide gave a perspective from outside Europe. He felt that it was important for Europe to ensure that the external assistance planning takes into account the increasing cultural diversity in Europe. He highlighted the changing ethnic diversity of Europe in the next 20 years suggesting that a Development Commisioner would be needed no matter how EU aid was administered. Moreover, this person should perhaps be based, or at least spend much time, in developing countries.

Dirk Messner, director of the German Development Institute (DIE) concluded that the Lisbon Treaty has not weakened development policy but has actually stated existing goals morfe clearly. He pointed to the interdependence of the world in addressing global issues such as climate adaptation with integrated development policies. He also felt it was not convincing to have two EU organizations, one dealing with ACP countries the other dealing on a different basis with the rest of the world. There still seem to be two options for the emerging external service, one including development administration the other keeping it apart. The key role for the Treaty in his view is its ability to provide a framework for the 27 Member States to work within a European framework where different actors share the lead.

Klaus Rudischhauser, Director for ACP General Affairs in DG Development, emphasized that a discussion on the Treaty at this stage was rather speculative. However, he observed that the treaty is not a danger for development policy but instead puts down on paper what is already happening. He also stressed that development issues are already considered in tandem with foreign policy. Finally, he pointed to joint discussions with DG Defence on security issues. The MDGs are still at the centre of the treaty and the partnership focus of development cooperation is continued under the Cotonou Agreement until 2020.

by Chris Addison

See also the Euforic newsfeeds on EU cooperation.

Is EU development aid entering a new era in the wake of the Lisbon Treaty?

Brussels, 26 February 2007. Giles Merritt of Friends of Europe opened the first Development Policy Forum by questioning whether the stronger common foreign and security policy spelled out in the Lisbon treaty sidelines development aid. He reviewed progress to reach development aid targets of 0.7% of GDP in the EU members and questioned whether the Lisbon treaty would be able to reverse the decline in aid expenditure by member states.

Gareth Thomas, Parliamentary Under-Secretary of State at the UK Department for International Development (DFID), began by praising the EUs recent achievements in development aid. He highlighted the effectiveness of EC interventions in India where EU aid had ensured that 11 million more children were now in school. The EU has been a global leader on climate change, and could be a still stronger force. The Lisbon treaty presents opportunities, it has clear strategic priorities, and it represents a European consensus on development.

In this regard, Thomas emphasized three elements of the Treaty;

• the focus on reduction/eradication of poverty;
• the statement of humanitarian principles;
• the need for the EU to improve coherence across foreign policy.

Following from the Treaty he saw a need to develop a stronger voice for development policy and its implementation. This needs a Commisioner for development who integrates the development aid cycles for ACP countries together with Asia and Latin America. He confirmed to Mr. Merritt that this would mean merging DG Development and EuropeAid. The EU delegations would also need a stronger policy capacity.

Elmar Brok of the European Parliament began by emphasizing the scale of EU effects on developing countries. The EU is responsible for 20% of world trade, therefore any attempts at fair trade will have more effect than development aid. Even so the EU and Member States collectively spend 47 billion euros each year on development aid, some 100 euros per citizen. He feels that the EU is presently a global payer not player. The Lisbon treaty gives a chance to address this lack of visibility through a one voice policy. The proposed external service should be linked to the Commission with a Commissioner for development. There is a strong need to evaluate the method of assistance. There is also a need to explain to citizens why development policy improves security and how migration issues can be addressed through development aid. He emphasized the need for new architecture in EU development assistance and pointed to the success of his own group in linking the European Parliament with national parliaments on development issues.

Patrick Child, Head of Cabinet of the EU Commissioner for External Relations, opened by stating that internal architecture is not the main problem. Instead the core issue is that member states need to live up to their political commitment to the MDGs. There is also a need for greater coherence and burden sharing between the commission and national programmes. Further, development policy objectives need to be linked with trade, agriculture and climate change policies. There should also be some realism about the capacity of a high representative to spend time on development policy and foreign relations. At present, 90% of their time would be spent on Kosovo, the Middle East and Darfur.

Simon Stocker, Director of Eurostep, added that he felt there were three elements missing from the Treaty. First, there needs to be a single policy for development for all countries and this should include the ACP countries. Second, there needs to be a Commissioner as a voice for development. Finally, citizen perceptions related to development need to be addressed. The public currently feel that policies are dictated by self interest. There is therefore a need for more transparency in development aid. He raised the challenge of increasing development budgets to the 0.7% of GDP through public awareness.

by Chris Addison

See also the Euforic newsfeeds on EU cooperation.

Europe's Global Role at 50

Brussels, 4 October. How far and how fast will Europe's global role expand? This was the first question posed at the Friends of Europe VIP policy roundtable.

Europe's role
Security considerations are taking the EU into the Middle East and Africa, and on economic engagement with China, India and Brazil. The discussion considered the outlook for Europe's global influence in areas as diverse as security and peacekeeping, development aid, trade policy and climate change.

George Soros discussed the launch of the European Council on Foreign Relations, which aims to mobilise political will as well studying the issues. Karel De Gucht, Belgian Minister of Foreign Affairs, gave a very positive view of the past and future emphasising the EU's leading role in addressing climate change, development aid and peacebuilding. Daniel Cohn-Bendit disputed this and stressed that EU action was hindered by "opting out" and that few joint EU positions exist in reality. Etienne Davignon emphasised that now there are 27 members, the opt outs could be tolerated to continue the majority view.

A new service for external relations?
Robert Cooper, Director-General for External and Politico-Military Affairs, Council of the EU General Secretariat, emphasised that there would never be common foreign policy without military capacity and institutions to deliver it. He questioned whether security and development really should be in different departments; surely there is an opportunity at the European level to address this. The idea of a common external service which is mentioned in the new treaty was also emphasised by Deheane of the Constitutional Committee.

No external without stronger internal relations
The Latvian and former Latvian presidents commented that Europe still fails to define itself in a process of self determination. Solidarity is needed for unity and this is needed for external power and influence. The CFSP has to be faced, having started with the comparative easy areas of cooperation on coal and steel we can't continue to ignore the need to address a common foreign and security policy.

Mabel van Oranje made a final point that two thirds of people want a CFSP and Europe needs to act now. In 2020 only 1% of the world's population will be European, in 2030 not 1 in the G8 will be European: Either other people decide our fate and we become a theme park to visit or we act now to ensure our experience is valued and drawn upon in the future.

See this interview with Mabel van Oranje.

by Chris Addison