Annexes to COM(2014)263 - Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2014)263 - Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries. |
|---|---|
| document | COM(2014)263  |
| date | May 13, 2014 |
Responsible business practices deserve specific attention and action in certain industries such as mining and logging where opportunities and risks of private investment for development are particularly high. Building on ongoing support to initiatives such as the Extractive Industry Transparency Initiative (EITI), the Kimberley Process, and the EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan, the Commission will step up efforts to improve transparency in the extractive industries (oil, gas and mining) and the forest sector by allowing effective use of information generated by the EITI and disclosed by companies on their payments to governments from the exploitation of natural resources as part of the new EU legislative requirements on country-by-country reporting. Moreover, a Joint Communication on responsible sourcing of minerals from conflict and high-risk areas, and the proposal for a related Regulation, were adopted recently.[13]
Action 10: Promote international CSR guidelines and principles through policy dialogue and development cooperation with partner countries, and enhance market reward for CSR in public procurement and through promotion of sustainable consumption and production.
2.4.2. Scaling up inclusive business and market-based solutions for development
For growth to be inclusive, it has to deliver economic opportunities conducive to sustainable livelihoods, especially for the poor. The private sector can directly contribute to inclusive growth by engaging in economic activities that have an immediate impact on the poor by enhancing their economic opportunities as clients and customers on the demand side, and as producers, distributors or workers on the supply side. Many EU Member States are already working with companies through various partnership programmes on the piloting of such inclusive business models.[14] The Commission can play a complementary role by helping to build an ecosystem of local support institutions for inclusive businesses through its private sector development programmes. It will, moreover, support the replication and scaling-up of successful inclusive business models by strengthening networks and platforms that facilitate private sector dialogue and knowledge sharing, provide transparency about existing support services and funding opportunities, and facilitate partnerships between companies, financing institutions, workers and employers organisations, NGOs, donors and/or governments.
Action 11: Support the replication and scaling-up of successful inclusive business models and innovative, market-based solutions to development problems by strengthening action-oriented private sector platforms and networks that facilitate knowledge sharing, partnerships and match-making between businesses and other actors.
2.4.3. Facilitating public-private partnerships (PPPs) and multi-stakeholder alliances
Partnerships between the public and private sectors for the purpose of delivering a project or a service traditionally provided by the public sector can be an effective means of making the supply of public goods and services to poor people more reliable and affordable, while complementing government resources with private sector investment. The construction sector and the low-carbon and resource-efficient economy are examples where European expertise, through PPPs, can provide innovative solutions in areas such as renewable energy, green buildings, or other infrastructure services such as water and sanitation, waste management and transport.
In this area, the Commission will continue to provide technical assistance to public institutions to reinforce their administrative capacities, and set up legal and regulatory frameworks and guidelines for PPPs, promote public-private dialogue mechanisms to explore opportunities for PPPs and advocate reforms in the legal and regulatory framework, and use financial instruments to leverage private funding for infrastructure projects by reinforcing the private sector lending and equity operations of eligible financing institutions through EU blending facilities. These activities will have to be complemented by efforts aiming at improving expertise, transparency and governance in the public sector to ensure that the profit incentives of private actors coincide with public interests.
Looking beyond classical PPPs in the infrastructure sectors, the Commission will support new forms of partnerships and multi-stakeholder alliances between national or local authorities, enterprises and NGOs for skills development and the provision of basic services, such as access to sustainable and affordable energy, water, health care, and education, as well as in the areas of agriculture and nutrition especially in rural areas, to women and other excluded groups.
2.4.4. Defining the role and responsibility of the private sector on the global development agenda
The Commission Communication ‘A Decent Life for All’[15] considers promoting the drivers of inclusive and sustainable growth, including the provision of essential human development services and decent job creation, as one of five priority areas on which a post-2015 global agenda should be built. This agenda will respond properly to the challenge of achieving inclusive and sustainable growth only if the private sector has a say in formulating it. The Commission, in close coordination with Member States, will engage fully in defining a clear and active role of the private sector in any post-2015 development framework. It also agrees with the recognition in the Rio+20 outcome document that active participation of the private sector can contribute to the achievement of sustainable development and the transformation towards an inclusive green economy. At the same time, the Commission will step up its efforts to fulfil the commitments it made at the Busan High-Level Forum on Aid Effectiveness regarding effective public-private collaboration for development.
Action 12: Endorse the Joint Declaration on public-private cooperation and take an active role in the Partnership for Prosperity that emerged from the Busan Private Sector Building Block.
3. The way forward: tools and modalities for making the private sector a partner in development cooperation
The Commission will use a combination of interventions under its national, regional and thematic programmes to implement and mainstream its approach to private sector development, and to harness the potential of the private sector as a partner in development cooperation. Implementing the approach and priorities outlined above will mean adapting existing approaches and tools, and adding new ones to the portfolio of instruments of EU development cooperation.
3.1. A framework for structured dialogue and joint action with the private sector
Understanding the needs and constraints of a local private sector, and harnessing the potential of the European private sector to engage for development and with businesses in developing countries, requires spaces for private-public interaction and collaboration. At local level, the Commission, through EU Delegations, will encourage inclusive public-private policy dialogue by supporting the functioning of existing or new dialogue mechanisms such as national employment, labour or export councils, and by targeted capacity building of private sector representatives, including chambers of commerce, social partners, and organisations representing micro, small and medium-sized enterprises, female entrepreneurs, and firms and workers in the informal sector, to improve their contribution to such dialogue mechanisms. The Commission will, moreover, use its political dialogue with partner countries to try to increase willingness among governments and local authorities to engage in open discussions with private sector representatives.
At European and global level, the Commission will contribute to the development of a framework for dialogue and effective joint action with the private sector, preferably by reinforcing existing initiatives, including the recently established Policy Forum on Development (PFD)[16], and with a view to enhancing coordination among individual European platforms and programmes. More direct interaction with companies and their sectoral associations will also be sought through sector-level dialogue mechanisms to encourage more private sector engagement and market-based solutions in sustainable agriculture and agribusiness, sustainable energy, infrastructure and social sectors.
3.2. Mobilising private resources for development through blending
The Commission recognises blending, which combines EU grants with loans or equity from other public and private financiers, as an important vehicle for leveraging additional resources for development and increasing the impact of EU aid. Through the EU Platform for Blending in External Cooperation, the Commission is working together with finance institutions on increasing the catalytic effect of blending in crowding in more private financing through greater use of financial instruments such as guarantees, equity and other risk-sharing instruments for infrastructure investments. In this context, the Commission is also exploring options to expand the scope of blending in new areas such as sustainable agriculture and social sectors, and to facilitate more projects with a strong impact on local private sector development like SME access to finance through the creation of dedicated private sector windows in regional blending facilities.
3.3. Harnessing the EU’s political weight in support of inclusive and sustainable growth
A common view expressed during consultations with stakeholders in the preparation of this Communication is that the EU’s political weight represents a comparative advantage that it should harness more fully in support of private sector development objectives. To this end, the Commission will seek to further increase the positive interaction and private sector development impact of EU policies and instruments regarding trade, enterprises, employment and other relevant fields.
Through policy dialogue with partner countries and in multilateral fora, the Commission, in consultation with the European External Action Service, will continue to aim at securing commitments to internationally agreed principles and guidelines regarding responsible business practices in the fields of human and labour rights, environmental standards, as well as anti-corruption and tax-related conduct. It will also explore how best, in the context of its political dialogue, to address issues such as business environment reforms that are crucial for investment, innovation and private sector development, including the rule of law, anti-corruption, public financial management, fiscal reform and the effectiveness and capacity of public institutions.
Finally, the Commission will continue to seek synergies between budget support and direct interventions for achieving private sector development objectives. Budget support, and the associated policy dialogue, can usefully underpin business environment reforms in partner countries by promoting the stability of macroeconomic frameworks, sound public financial management, transparency and oversight of the budget. Furthermore, specific reform contracts and results indicators focusing on private sector development can help achieve business environment reforms.
The political weight of the EU depends on the ability of the Commission and Member States to mobilise their various strengths and capacities and work together with a common strategic vision. Through better donor coordination and joint programming, the EU will speak with one voice, and can better capitalise on the fact that in most partner countries it is one of the largest donors providing support for inclusive and sustainable economic development.
By increasing its investment in developing countries and playing a more active part in development cooperation, the private sector is sending a powerful signal about the important role it can play in contributing to inclusive and sustainable growth in developing countries. The strategy set out in this Communication will enable the Commission to facilitate and speed up the engagement of both local and European businesses for tangible and positive development outcomes on the ground.
[1] See http://ec.europa.eu/europeaid/how/evaluation/evaluation_reports/2013/1317_docs_en.htm.
[2] Consultations on the issues relevant for this Communication were carried out between November 2013 and February 2014 with EU Member States, partner governments, local authorities, European and local private sector representatives, social partners and NGOs.
[3] These interventions are closely related to, and complemented by, activities in the field of trade and development that are outlined in the 2012 Trade, Growth and Development Communication [COM(2012) 22 final].
[4] Regulation No 966/2012 of the European Parliament and of the Council, and Commission Delegated Regulation No 1268/2012 on the rules of application of that regulation.
[5] COM(2012)22 final.
[6] For example, the EIB’s Impact Financing Envelope for the ACP region, set up as a new special window of EUR 500 million under the existing ACP Investment Facility, aims to generate high developmental impact with the overarching objective of poverty reduction by addressing the social and environmental challenges ACP countries are confronted with, including decent job creation, sustainability of small and rural enterprises, climate change mitigation, food security, access to basic resources such as water and energy, as well as economic and social integration of women and young people.
[7] The Green paper on the insurance for natural and man-made disasters [COM(2013) 0213 final] highlights the role of insurance in helping developing countries vulnerable to disasters to establish effective contingency mechanisms.
[8] In line with the 2008 Raw Materials Initiative [COM(2008) 699].
[9] Commission Communication ‘Beyond 2015 — towards a comprehensive and integrated approach to financing poverty eradication and sustainable development’ [COM(2013) 531].
[10] A renewed EU strategy 2011-14 for Corporate Social Responsibility [COM(2011) 681 final].
[11] For instance the Framework Agreement with the Republic of Korea signed on 10.5.2010.
[12] For instance the GSP+ that requires least-developed countries benefiting from the scheme to ratify and respect 27 international conventions, and thus to embed minimum standards on labour, the environment and anti-corruption in their legislation, which businesses have to respect.
[13] JOIN (2014) 8, 28.2.2014 and COM(2014) 111, 5.3.2014.
[14] For instance, the German develoPPP programme, the Austrian economic partnerships programme, SIDA’s Business for Development Programme, or challenge funds set up, among others, by DFID, and the Dutch Ministry of Foreign Affairs.
[15] COM(2013) 92 final.
[16] The PFD has been established by the Commission as a multi-stakeholder dialogue space where local authorities, CSOs and private sector representatives contribute to EU development policies and programmes.