Day one: Introduction to the topic: Effective partnerships with the private sector

Welcome!

Sybille Suter welcomed everybody to this years’s face-2-face event dealing with a very important topic: cooperation with the private sector. Sybille was glad to see so many well-known faces, especially form NGO and public sector partners and the colleagues from the SDC coordination offices. In her opening speech she also mentioned the horrifying earthquake in Nepal. In this very sad moment for the SDC staff in Kathmandu and all our Nepali partners, Sybille expressed her deepest sympathy on behalf of the SDC management.

Who visits the enterprise with me?

Introducing to this year’s topic, Peter Beez made clear that “only a few billions of ODA per year are not enough to lift billions of poor out of poverty”. The private sector is therefore essential to have more outreach, scale, sustainability and leverage. The interesting questions are thus how to collaborate and with whom? Development cooperation, Peter said, needs private sector partners with common interests, and potential in innovation. And to successfully collaborate with the private sector, we should try to better understand them, visit enterprise, understand their language or at least find a translator. Last but not least we should not neglect social and environmental concerns when working with the private sector.

Peter mentioned dual VSD as a great example for cooperation with the private sector – it is a very complex kind of collaboration and a political process with social, economic and individual objectives. It shows that we have to change systems and work at all levels (macro, meso and micro) with the right partners. And that these partners are human beings, individuals, persons. And finally we need champions, individuals that take risks for moving ideas into results, so called intrapreneurs.

Peter summarized that it is not the question of whether or not we want to collaborate with the private sector. It is a question of how:

1. Let’s transform and adapt our procedures
2. Let’s increase our skills, individually and collectively.
3. Let us use our creativity to collaborate effectively with the private sector.

Download Peter’s presentation
download the concept paper, for further information on effective collaborations with the private sector (and have a look at the documents linked on the PPDP market stall’s page).

Donors to facilitate change while staying neutral

Rita Stupf then presented the diversity of the private sector from small informal firms up to multinationals. She underlined how important it is to think in systems, understand value chains, stakeholders and their incentives and finally think global while acting local. When talking about stakeholder management, we have to understand the firm’s incentives. Finally, a company should be managed to the benefits of its stakeholders. Therefore the company’s survival is of central importance.

According to Rita, we can in general distinguish two types of CSR concepts with different motivations and instruments for development cooperation:

• Type 1 is rather community development oriented. The firm is usually driven by the need for acceptation by civil society and authorities, image promotion and charity.
• Type 2 focuses more on sustainable supply chain management. The firm’s interest here consists in goals such as risk management (prevent reputation damage), increase of productivity and product diversification.

Rita explained that the role of donors and implementing agencies in collaboration would especially consist in facilitating change while being neutral, non-biased, enabling a stable business environment, and promoting job creation and income (always working on all three levels; strategic, normative and operational management). Successful collaboration between development cooperation and the private sector is based on long term thinking and mutual institutional willingness. Common understanding and agreement on the role of each stakeholder and on joint ambitions, values and goals are therefore of key importance. Download Rita’s presentation

Systemic change through scale & scope

Patrick Struebi then presented Fairtrasa, a practical example how the power of the market can be used to lift thousands of small scale farmers out of poverty. Based on the situation that small scale farmers just have to sell their products at the very moment when these are mature (and often at a very low price) he realized that organic fair trade may improve their access to global markets and higher prices. Doing so, the classic fair trade model has to be adapted to respond to the particular needs of subsistence farmers. Enabling these poor farmers to becoming competitive producer, Fairtrasa itself became one of the largest organic and fair trade fruit exporter from Latin America and a highly scalable business model.

Patrick concluded that mission driven social entrepreneurs (in all sectors: private, public) are ideal partners for development cooperation and for systemic change. Therefore we all should become social intrapreneurs within our organisations! – Patrick shared more of his energy and insight at his market stall. Download Patrick’s presentation

After coffee break all speakers gathered for a lively panel discussion where some key issues were further discussed and they answered questions from the audience.

• Patrick requested everybody to think outside the box and he made clear that social entrepreneurs are mission-driven people. In any country there are social entrepreneurs, the new generation is coming now! But social entrepreneurs of course have to collaborate with and understand other businesses and there cannot be a clear distinction between social and non-social firms. Any company has a social purpose!
• Rita agreed that it’s not useful to just differentiate between the good and the bad guys. We should rather ask who shares common interests with us. Often incentives are not “being social” but to survive in a particular business environment.
• Nevertheless due diligence is important when working with the private sector. Peter also mentioned reputational risks when working with specific companies. Social businesses (such as Ashoka) may act as intermediaries. Furthermore SDC is working step for step to develop new approaches for collaborating with the private sector, not only in employment and income, but also in sectors such as food security. Regarding harmful subsidies, Peter recommends an SDC paper called “development aid and subsidies – an art”.
• Sybille finally remained the panel not to lose out of sight SDC’s poverty reduction goal. She underlined that it’s not just about the size of the company, but about their potential for impact. Working with multinationals can have a significant impact, but long-term systemic change and leverage is also possible with innovative small and medium enterprises.

And what do SDC colleagues take home from this first day? Listen to Lilian Kandikjan and Horacio Moises Morgado: