Speech
20 January 2009
PUSS Foster speech at the Private Sector Development Strategy launch
Your Excellency, Simon (Maxwell), Barbara (Stocking), Ann (Grant) and our hosts, SABMiller, thank you, sincerely, for your collaboration and participation in this event. Indeed, thanks to all of you here today.
Private Sector Development is an important issue, and one which we are all committed to, but I should also mention another important event happening as we speak, on the other side of the Atlantic, which I suspect could be distracting some people’s attention.
Few of us would have anticipated, even a year ago, that today we would be witnessing the historic inauguration of America’s first black President. A man who has inspired millions of people around the world to believe that 2009 can mark the beginning of a new era in international politics. An era of multilateralism, of liberalism, and of dialogue – even with those who may not share our views.
This is an exciting moment in history, so if Barack Obama steals the limelight this evening, I won’t bear any grudges.
But returning to the subject at hand, we are here to do two things: firstly to launch DFID’s Private Sector Development Strategy and secondly to kick off a series of meetings throughout 2009 about the role that business can and should play in development. I’m particularly pleased that we are working with Business Action for Africa and the Overseas Development Institute on this series of events – two organisations which continue to make a huge contribution to the debate on these issues.
We start the series today with a discussion on a topic which my colleagues in government and I have been grappling with for some time - as I’m sure many of you in this room have: what role can business play in development?
The role of business in development
The role of business in development is not a new addition to the agenda. We know that the private sector is the engine of economic growth, and we know that growth drives development.
Jobs are the best way out of poverty, plain and simple. Nine out of ten jobs in the developing world are in the private sector. We’re not just talking about big corporations, but all those market traders, entrepreneurs and farmers who sell their goods and services in the market economy. Working with business is fundamental to the first Millennium Development Goal – halving income poverty by 2015.
We have seen 500 million lifted out of poverty in this way in the last 30 years. But the impact of private sector development is not limited to MDG 1. The private sector is a crucial source of the tax revenues that enable governments to provide the health, education and other services needed to fulfil all the MDGs. And it is through the market that technology is transferred and growth is sustained.
So when businesses suffer, as we are seeing at the moment, we all suffer – a painful lesson that is currently being brought home to us.
I think the important role that business plays in development is now well understood by most people in the development community. There is, of course, an ongoing conversation about what business can and should do, which must continue to adapt as the context changes around us. And our new private sector development strategy is just one chapter in that discussion.
One thing, though, I believe is clear. It is time to move on from the corporate social responsibility approach that has dominated discussion over the last decade. Supporting development is - and must be – a core part of what businesses do, not an altruistic add-on. Indeed, it is the jobs that businesses’ provide and the goods and services they sell that the poor are so desperately in need of.
It is our responsibility as a coalition of development and business leaders to discuss and debate how the shared interests of businesses, governments and individuals can be met. That debate will need be detailed, targeted and based on robust evidence and accurate data so that we can choose the best policies in the years ahead.
It is for these reasons that today I am delighted to be launching DFID’s private sector development strategy: ‘Prosperity for All: Making Markets Work’ - as well as this series of meetings.
The strategy has three pillars, which I believe put us very much on the right path. Access, Competition and Engagement.
Businesses need access to markets, to finance and to skills. That is true whether we are talking about a multinational corporation or a small farmer. This is why DFID supported the FinScope surveys in South Africa which demonstrated the untapped markets amongst the poor for banking services. Since 2004, over 2 million people have benefited from accounts designed for their needs, 60% of whom had no previous access to financial services.
It is also why we support the Katalyst programme in Bangladesh, which has helped provide access to better information and inputs to an estimated 1 million farmers - helping them generate around $700 million of additional income and creating over 180,000 new jobs.
Competitive markets are also essential for strong businesses. Where inefficient companies are kept in business unfairly through corruption, regulatory barriers to entry or protectionism, it is the entrepreneurs, the job creators and the consumers who lose out.
That’s why, for example, DFID is helping India and Tanzania and other countries in Asia and Africa to implement effective competition policies. Last year we published a Competition Assessment Framework which is helping developing countries to remove critical barriers to competition. DFID is also providing £17 million over three years to the Investment Climate Facility for Africa to support key regulatory reforms across the continent. This work is crucial in the current economic climate, where fear and a short term outlook put past and future gains at risk.
We are also committed to engaging with the business community, and helping government and civil society partners to work effectively with them. Over 60 businesses were at the Prime Minister’s Business Call to Action event last May. Coca Cola, for example, responded to the Call with a research programme investigating the development impact of their distribution system in Africa, and have now opened 500 new independent distribution centres, creating 2500 jobs.
And by August last year, DFID’s Extractive Industries Transparency Initiative had brought together 37 of the world’s largest oil, gas and mining companies in 23 developing countries rich in natural resources to improve transparency and reduce corruption. 10 of these countries have already produced audited EITI reports.
I hope that our strategy and this series of meetings provide an opportunity to make further progress on these issues, and I look forward to this and future discussions.
One final word on the economic realities that face us in 2009. Governments around the world are being forced to focus more sharply on how to maintain and attract investment, and create the best conditions for growth. The 90 million people who could remain in, or be pushed into, extreme poverty by a global slowdown demand that these conditions are created as effectively and as quickly as possible.
It is our responsibility – as businesses, governments, NGOs, and the wider development community – to work together to find the right path out of the economic crisis. DFID’s private sector strategy is clear: we will work with business to strengthen its positive impact on development, and help the poorest and most vulnerable people to lift themselves out of poverty - permanently.
As we do so, we must stay focused on the fundamental values which inspire us all to try and make a difference in the world. Values which will stay the same even as the world around us changes. A desire to help those less fortunate than ourselves; a desire to see social justice on a global scale; and a desire to make the world a better place for us and for our children.
Thank you
