For Swedish aid agency, engaging business is a work in progress

Charlotte Petri Gornitzka, Sida director general at the 2013 World Bank annual meeting. Sida puts behind the old rhetoric that the private sector is the problem, and is now working toward collaboration and more engagement with the private sector. Photo by: Brangelina Clawson / World Bank Group / CC BY-NC-ND

Sweden is on a journey to engage the private sector more in international development — an effort that, while ongoing, is already changing the country’s foreign aid agency, according to its director general.

The Swedish International Development Cooperation Agency has been working not only to fund innovation, social enterprise and business, but it has also fundamentally altered the way it views the private sector’s role in development, Charlotte Petri Gornitzka told Devex last week in New York.

“We don’t want aid to shrink. We think aid is important but we must do aid in collaboration with the private sector to be successful,” she said.

Private sector engagement encompasses everything from encouraging a business to do no harm by avoiding child labor, to collaborating with a company on efforts to end poverty, to helping to funnel pension fund investments into infrastructure and energy projects like Power Africa, the U.S. government initiative that partners with African governments and the private sector to reduce energy poverty.

Like many foreign aid agencies, Sida used to worked in isolation, guided by a rhetoric that it would work with governments but that the “private sector was the problem, not the solution,” Gornitzka said.

That has changed, she stressed, and a new approach — initially called Business for Development — is now being integrated throughout the agency.

What does that process look like? It means equipping embassies with people and knowledge on how to engage with the private sector at the country level and moving beyond partnerships hatched at headquarters that are then exported.

It’s also about changing mindsets about how to engage with the private sector. No longer is it just about working on enabling environments or with corporate foundations as funders, she said.

“One thing I think is so important is that we explore with business the opportunities that they can see for themselves in their core business,” Gornitzka said.

It is important to identify business opportunities that lie in the worldwide pursuit of the Millenium Development Goals and the emerging post-2015 agenda, and see how industry can collaborate, Gornitzka suggested. When a partnership is grounded in business, she said, it is more likely to be a long-term commitment that goes beyond charity and has development benefits.

Take Sida’s partnership with Volvo, for example. As part of its Africa strategy, the carmaker wants to invest in 10 countries but needs skilled labor to do so. The creation of jobs, especially for young people, is part of Sida’s mission. So the Swedish aid agency and multinational company joined forces to address development and business needs together.

There is a new discourse at Sida, but the process has not been without it’s challenges.

“To be fair, it’s taken us a while to disseminate this within the organization, but it’s really an objective we’re working on,” Gornitzka said. “We have started but we need to work harder to get that done.”

Other development agencies like the U.S. Agency for International Development and the U.K. Department for International Development are similarly charting new paths to better engage with the private sector — by adjusting institutional ideologies, changing organizational structures and creating new models for engagement, among other things.

Increasingly, these agencies are joining forces to better engage the private sector — evidenced by Sida’s contribution to Power Africa and the previous week’s public launch of the Global Innovation Fund, through which several donors are committing to fund innovative products, services and business models that tackle development challenges.

Gornitzka said she is committed to fostering a deeper engagement with the private sector in ways that maintain the integrity of Sida and speak to corporate objectives, a shift that has already been a cornerstone of her tenure.

What’s your take on Sida’s efforts to engage the private sector? Share your thoughts by leaving a comment below.

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About the author

  • Adva Saldinger

    Adva Saldinger is an Associate Editor at Devex, where she covers the intersection of business and international development, as well as U.S. foreign aid policy. From partnerships to trade and social entrepreneurship to impact investing, Adva explores the role the private sector and private capital play in development. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.