Thursday, 27 August 2015 00:00

Statement to the roundtable 4 on creating enabling environment at all levels Private finance

Statement to the roundtable 4 on creating enabling environment at all levels Private finance
3rd International Financing for Development Conference (7-8 July 2015) Addis Ababa, Ethiopia

Private finance and business activities have increased in scope and volume, but investments often leave behind the poorest people and countries. Investments that do reach low income countries tend to be concentrated in economic infrastructure, extractive industries or are agricultural investments leading to displacement of large populations.

Business enterprises should thus align with the aim of achieving a combined economic, social and environmental impact hence ensure sustainable development. In this context, we stress that corporate accountability begins with private companies contributing their fair share in taxes to public resource mobilization.

The central role that private finance has been given in the current discussions for development financing remains an area of concern. This is particularly with regard to the utilization of Aid as a catalyst and blended finance for crowding in private sector. Evidence of private sector participation in key social sectors including health and education show reduced accessibility to the essential services. Blending finances does not show reduction in pricing or increase in accessibility among the poor population.

Creating enabling environment for business only makes sense when it also includes creating an enabling environment for CSOs who are the main watch dogs in the context of development results, environmental and as well as labor rights. Governments must thus put in place the right policy and regulatory framework that guarantees enabling environment for CSOs.

Creating an enabling environment for the private sector must include important components that deliver development effectiveness results. These must include democratic ownership, inclusive partnership, transparency and accountability and development results. The foregoing only can happen in an environment where there is respect of human rights, strong and effective institutions as well as strong political leadership.
Where PPP is promoted as a policy option for financing development, key measures should be put in place including feasibility studies and auditing criteria that include sufficient safeguards to ensure affordability, quality and inclusion of citizens.

The legal, policy and institutional framework must thus lead to corporate reporting on their development results. An enabling environment framework therefore must provide clear guidelines on a country-by-country reporting basis for all large companies following the UN Guiding Principles on Business and Human Rights.

Reliance on the UN Global Compact principles has proved inadequate and inappropriate to respond to women’s human right abuses, especially from transnational corporations. Mandatory rules and accountability mechanism to ensure private sector compliance with internationally agreed social and environmental standards, and all human rights can help ensure it delivers positive sustainable development outcomes.
The important role of the domestic private sector cannot be over emphasized in Africa. It must be supported through the creation of an enabling environment relevant to their niche and stage of development. Governments must facilitate their access to resources and capacity development. We must build their capacity to deliver on sustainable development objectives without additional transaction cost.

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