CPDE Key Messages on Private Sector Engagement in Development
The private sector is on the ascent. Over the past few years, international, regional and national policies, conferences and agreements have shown that donor countries are increasingly keen to target the private sector in the context of sustainable development. The agreement of the UN Sustainable Development Goals (SDGs), pushed even further this narrative with governments buying in to IFI’s moto that to meet the investment needs of the SDGs, the global community will need to move the discussion from “Billions” in ODA to “Trillions” in investments of all kinds, including private finance. And thus, growing percentages of public official development assistance being directed to support private investments in developing countries through blending, for example.
Yet the impacts of private sector engagement in development to reduce poverty and inequality are to be proven. While, cases on the detrimental impacts of private sector activities and projects especially on the poor and marginalized sections of society continue to reproduce on the ground.
The private sector will not automatically undertake activities that are aimed at achieving the SDGs, so the development cooperation community should monitor that the private sector operates by the same development effectiveness principles that other development actors abide, including civil society and trade unions.
In this context, CSOs call on all development actors to, including Development Finance Institutions to:
· Built Private Sector Engagement Principles and Guidelines based on a common understanding of expectations and minimum set of standards that adhere with Development Effectiveness Principles and the Sustainable Development Goals. As well as with guidelines and binding regulations underpinned by ILO core labour standards, such as the UN guiding principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises or the OECD Guidelines on Due Diligence;
· Defend and expand fundamental rights and freedoms, including freedom of expression, association, and assembly, as well as the right to information, and the broader array of individual rights and freedoms for all people; including contributing to social dialogue;
· Recognise and protect communities' development rights and stop unsustainable projects that harm their land, livelihood and environment
o Ensure right to self-determination and genuine free-prior-informed-consent (FPIC) and meaningful involvement of communities, especially for Indigenous Peoples and CSOs in the planning, design, implementation and monitoring of PS-driven development projects;
o Ensure effective means of redress and grievance mechanisms that are accessible to all citizens;
· Ensure an enabling environment that strengthens the participation of Civil Society Organisations and Trade Unions in bargaining and influencing the policy landscape on Private Sector Engagement;
· With increasing prominence of Private Sector in financial mechanisms such as blended finance and frameworks of development, ensure the State plays a key role in ensuring a people’s-centred development;
· Ensure a democratic representation of all development actors, including civil society and trade unions;
· Put centrality on building partnerships at country-level, as well as inclusive national consultations, to mobilize and fuel national economic development including strengthening local MSMEs;
· When engaging the private sector, put emphasis on country ownership, technology and knowledge transfer and decent work for local people;
Transparency and accountability:
· Make sure mechanisms are in place to ensure transparency and accountability from private sector actors at local, national, regional and global level. And that financing development is corruption-free and committed to development cooperation;
· Transparency must also address sharing of risk and liability of profit/losses;
· Ensure that development cooperation initiatives involving the private sector contain a risk analysis on social, economic and environmental levels, highlighting risks identification, mitigation and avoidance, including grievance mechanisms in place (due diligence procedure);
· Ensure eligibility criteria for private investors and companies involved in blended finance initiatives based on fundamental worker and human rights, with red lines to exclude those who systematically violate international standards, and a framework to prioritize those with a record of contributing to knowledge transfers and domestic revenue bases and mature relations with labour, communities and governments.
· Ensure infrastructure/services/goods are additional, accessible and affordable for all and without discrimination;
· Ensure the jobs created are of quality and are sustainable (based on international labour standards), particularly on: freedom of association and collective bargaining; fair wages; social protection; occupational health and safety provisions;
· Ensure income generated at country level contributes to the domestic country system, including taxes and social contributions;