CARE UK's City Hall event: The changing face of development - the role of the private sector

On Tuesday last week the Secretary of State at DFID addressed an audience at LSE, where he signalled once again the Government’s firm belief that it is “business which holds the key to tackling global poverty.” Andrew Mitchell’s pitch was clear cut - “aid is a means to an end, not an end in itself” he claimed, “it is the private sector that creates the jobs, goods and services that the world’s poorest people so desperately need to lift themselves out of poverty. We will help them achieve this.” Announcing the launch of a new private sector department, the Secretary of State committed to new resources and for “DFID to learn from business.”

24 hours on from the LSE lecture and to City Hall where, with the help of an energetic Alastair Stewart chairing, CARE International UK hosted a prestigious panel of experts drawn from government, business, civil society and academia to examine Mitchell’s statement. The event was conceived to commemorate CARE’s 25th anniversary year of operating in the UK, a year during which our message has been focused on the ‘changing face of development’ over the last quarter of a century.

The role of the private sector in development has been given increasing attention by CARE UK itself since the mid 1990’s, and today our innovative partnerships with businesses in particular have ensured the organisation has evidenced experience of where the private sector can make a difference to poverty alleviation - both positively and negatively. As the recent round of MDG review meetings in New York confirmed, the case for engaging the private sector in development is now well made, but have DFID set out their new stall in such a way that will appropriately maximise the opportunities from a development perspective?

Last week’s panellists were sold on the argument, but perhaps the devil will be in the detail when it comes to Mitchell’s announcement that ‘wealth creation’ is an important driver for economic growth and prosperity. CARE Rwanda’s Assistant Country Director Josephine Ulimwengu made clear in her panel address that ‘wealth creation’ does not directly alleviate poverty on its own. In fact, economic growth that is not inclusive for those living in poverty will have the reverse effect, and do more harm than good.

International and national companies are morally, socially, environmentally and now commercially persuaded of the need to improve the responsibilities of their operations. The Panel offered examples of good practice in this area - microfinance schemes, supply chain initiatives, technical innovations - but also threw caution over a reliance on corporate responsibility being too much of a way out for many companies (green-washing in other words) rather than a genuine way in to addressing social issues, and their underlying causes.

These debates will continue and, at CARE UK, we are glad that the issues of corporate responsibility, economic growth and inclusive business models are under the microscope. The voices of many sectors were heard at our panel event, and let’s hope that more public involvement in this agenda is fostered from such gatherings. DFID have laid out their agenda, and it is one from which there is much to be gained in terms of development outcomes. An approach that encourages, enables and develops enterprise in developing countries should be welcomed, provided the private sector is also challenged on ensuring its responsibilities and its practices are consistent in providing positive social outcomes, and that business itself is in it for the long term.

CARE UK’s event confirmed from all quarters that profit motives are king when it comes to business ‘drivers’ for engaging in development. That is not up for debate, nor should it be - what is, is just how far business can go to ensure genuine commitment to a triple bottom line objective and to delivering on social returns on investment as well as financial ones. We know the two can be linked, and increasingly, they are.

Tim Bishop is Head of Private Sector Engagement at CARE International UK.

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Comment by Phil on October 19, 2010 at 15:32
I attended this meeting arranged by CARE which was an excellent initiative if a little too simplistic as to the important players necessary to make a difference and the manner in which the objectives could be achieved. It is difficut to blame anyone on the night because the big picture thinking was not explored and maybe with an audience of 220 of which only 28 or so were private sector then it is understandable. Indeed of the private sector present most were from banks, lawyers, telecoms etc and whilst there is an obvious and vital contribution that they can all make it is not the starting point in improving trade/aid relationships. We have to reconcile a spend of £6bn per annum by DFID a large chunk of which goes via EU development policy committments and euros 60 billion by EU and up to £100 billion in worldwide development funding. The big society, big questions to be asked is where on earth does this money go - how much on consultants, duplicated committees and boards who often spend far more in administering small pots of financial assistance than is commensurate by the oversight overhead. Far more collaboration is required between the agencies and DFID and CARE and others should push for this.

It is easy to lose sight of the huge sums of money largely uncoordinated and dished out via budget support without proper impact assessment. I will not repeat many of the issues I have raised in a parallel thread on this site from last week following the LSE speech by Andrew Mitchell. However, to create the framework for business the public sector has to be responsible for generating the infrastructure to enable poor communities to have the capacity to work with the private sector to generate necessary income streams. PPPs can work but in small holder farmer communities where government is not working (for whatever reason) needs firm intervention from development agencies to ensure that these communities are getting a fair share of available funds for capacity development. There is a continuing culture which development agencies are permitting to evolve where the private sector is held up as not doing enough for poor farmers when in fact the income from the commodity is spread to thinly over too many farmers. Development agencies are getting away with not doing their job properly and giving money out without a real understanding of how they can work with business to make aid more effective. They continue with their pet ideals and niche market nonsense ignoring the unintended consequences of beating comapnies into closed supply chains which will benefit a handful of farmers.

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