Will the Private Sector Become the Engine of the Development?

Everything indicates that the Millennium Development Goals set up to contribute considerably to the decrease of poverty in World by 2015, will be fulfilled. For this reason, both EU and UN look for new targets that should cover new rules for sustainable development and prevent weak points encountered in current goals. One of them was insufficient involvement of private sector in development aid which was rather the domain of public sector and NGOs.

Private sector is the engine of growth, producing goods, providing services and creating jobs. The European Economic and Social Committee deals with the involvement of private sector in development aid in its opinion. It came up with recommendations to the European Commission which is preparing a Communication on role of private sector in development foreseen to be published next spring. According to the EESC, private sector must get involved in the negotiation on new goals to enable the limits for decreasing poverty and make better living conditions in developing countries to be real and sustainable. New concrete and measurable goals should involve areas of water, agriculture, security, foodstuff, energy, transport infrastructure, education, health sector, digital economy, gender and social equality. Companies should engage in the development aid as service and goods providers, as direct provider of development aid on philanthropic basis, in cooperation projects with public sector and NGOs or as investors.

Development aid should focus on continuous improvement of business environment that would allow creating and developing business, decreasing administrative burden, increasing transparency and limiting corruption. Friendly business environment is based on market tools including competitiveness, functioning financial markets, independent justice, enforceability of law and respecting international law and IPR.

The main potential in development represents the micro, small and medium-sized companies who need better access to finance such as micro-financing or subsidized lending of European and international development financial organizations. In the long term, there is also a lack of technical education in developing countries. Donors’ countries usually finance university studies but not the technical ones. There is a great potential for the cooperation of private sector with NGOs such as posting of expert voluntaries that will help within the development of a business or when exchanging information about situation and business opportunities in developing countries. Last but not least, development aid from European and national resources should support involvement of chambers of commerce, sectoral and employers union and social business in transfer of best practices from developed countries to developing ones especially in areas of marketing, supply chain, certification and logistics.

Ivan Voleš
EESC Group I, Rapporteur for opinion on private sector involvement in development aid