The Philippines has been battered by crisis after crisis recently, but a positive storyline coming out of the country is the role business is playing in the wake of Typhoon Haiyan.
One of the most predominant and game-changing concepts in global development today is the burgeoning role of the private sector. For-profit companies, looking to emerging economies for growth, are increasingly engaged in socio-economic development planning and programming. They are partnering with international groups and local governments to coordinate their interventions and maximize impact. They are doing so not only to foster good corporate citizenship, but also to groom future markets and customers — making their involvement more realistic and sustainable.
This significant shift in corporate thinking and tactics is influencing humanitarian relief and disaster response in the typhoon-ravaged Philippines. Haiyan — known locally as Yolanda — pummeled the Visayas region of the country on Nov. 8 last year, affecting some 16 million people and killing more than 6,000. Since then, there are signs that the Philippines and its development partners are building a public-private partnership ecosystem that is functioning to overcome some of the long-standing challenges associated with private sector involvement in development work.
“The direction I want to pursue is clear — to maximize the participation of the private sector, because the government really can’t do this alone. And their response has been so enthusiastic,” Secretary Panfilo “Ping” Lacson, the Philippine government point person for post-Haiyan rehabilitation, said.
Haiyan’s devastation, broadcast across the world on global news networks and through social media channels, elicited an extraordinary response from the international donor community. According to the U.N. Office of the Coordinator for Humanitarian Assistance, total foreign aid donations to Haiyan relief have exceeded $600 million.
While private sector donations are inherently more informal, often in-kind and thus more difficult to track, OCHA reports that private organizations and individuals account for about 25 percent or $150 million of the total pledges. As a means of comparison, the world’s top five traditional public sector donors — the United States, European Union, United Kingdom, Australia and Japan — have committed about $280 million.
The U.S. Chamber of Commerce Foundation, through its Corporate Aid Tracker tool that documents the business community’s support of the relief effort, reports that 216 businesses have pledged $59.1 million.
“So far, the level of private sector commitment to this emergency has been impressive,” said Jun Salipsip, executive director of the American Chamber of Commerce Foundation Philippines, which for more than 25 years has helped raise private money for disaster relief in the country.
The situation in the Philippines mirrors broader trends in global development finance. Specifically, that corporations are stepping up their giving because they see long-term business value in investing in disaster response and sustainable development that goes beyond corporate social responsibility. At the same time, public sector aid budgets, while still representing the largest share of humanitarian and development funding, are being squeezed by government austerity and global humanitarian organizations are being stretched by a range of crises across the world.
“When you are talking about an $8 billion gap in development financing globally, it’s going to take business drive approaches,” explained Reed Aeschliman, deputy mission director for the U.S. Agency for International Development in the Philippines, who, along with other U.S. government officials, coordinated a briefing with corporate members of the American Chamber of Commerce two weeks after Haiyan struck. “CSR is just not enough on the recovery side.”
Historically, humanitarian agencies such as OCHA have been cautious in engaging the private sector. In a 2013 report, OCHA’s humanitarian news and analysis service IRIN referenced a “large degree of mistrust” and a “culture clash” between the humanitarian and private sectors. IRIN also cited several specific obstacles such as poor strategic alignment and a lack of awareness and understanding between the groups.
The message from the Philippines is that if the conditions are right, the dynamics can change.
The appetite and respect for private sector engagement at the United Nations has changed dramatically, Edward Mackle, project manager at the U.N. Global Compact — an initiative that seeks to align business operations and strategies with global development principles, noted. “Ten years ago, we couldn’t have had these discussions.”
Testifying to the United Nations’ shifting view on private sector partnerships, Mackle, along with OCHA’s private sector focal point Karen Smith, were deployed to Manila to help rally and coordinate private sector engagement in the aftermath of Haiyan. It was a monumental first for each of their respective U.N. sections.
“This is a different playing field for us,” Smith admitted. “In most areas where we work, take the [Central African Republic] for instance, this level of private sector engagement doesn’t happen.”
Smith and other development leaders cite a few important factors that make the Philippines an effective breeding ground for public-private partnerships.
In most crisis situations, officials and aid workers criticize the lack of coordination between private sector contributions and public sector relief efforts, which can hurt aid delivery and efficiency. In the Philippines, however, the international development community credits what can be described as an accommodating public-private partnership infrastructure buoyed by Manila’s cross-sector business associations such as the Philippine Disaster Recovery Foundation, League of Corporate Foundations and various foreign chambers of commerce, among others. This infrastructure has been vital to connect the Philippine government and international organizations with private sector companies, both local and international.
“PDRF is still evolving, but I think over time the organization and its partners will institutionalize a coordinated private sector response to disasters in our country,” said Rafael Lopa, PDRF advisory board member and executive director of the Philippine Business for Social Progress — a Philippine foundation with more than 230 corporate members.
But in order for this to happen, a country must host a dynamic private sector that has a stake in the future. While the Philippines continues to suffer what most analysts characterize as sluggish foreign direct investment compared with other emerging economies, some of the most well-known American companies and brands have a long legacy in the country and deep-rooted connections.
A few examples. Coca-Cola has been operating in the Philippines for 102 years. Chevron has been doing business in the country for more than 90 years; Proctor & Gamble for 77. All three factor into the top 10 international private contributors to the Haiyan relief effort.
“We are so deeply entrenched in this marketplace that our infrastructure allows us to think differently,” said P&G Philippines Country Communications Manager Clint Navales. “It’s personal for us. Our people are there.”
In late December 2013, USAID, P&G and Coca-Cola announced a formal partnership to help revive economic activity and livelihoods by establishing new sari-sari stores, or small community stores, and rehabilitate damaged or destroyed stores in the worst typhoon-affected areas. Under the agreements, USAID will help convert or build physical structures to house the stores, while both P&G and Coca-Cola will work to provide startup loans, preferential access to supply and training to keep them commercially viable.
“There’s an ecosystem that supports a sari-sari store. Public-private partnership is the only way to build and sustain that ecosystem,” asserted Coca-Cola Philippines Vice President Adel Tamano, who calls USAID “the perfect partner to hold this together.” “This is not our first disaster. We have experience reviving these economies,” he said.
Additionally, nine of the Philippines’ largest and most powerful local companies have pledged to lead reconstruction and rehabilitation in specified areas, namely the Lopez Group of Companies, Ayala Corp., Aboitiz Foundation, PLDT-Smart, SM Group of Companies, Metrobank, International Container Terminal Services Inc., Jollibee-Mang Inasal and Robinsons Land Corp.
Lacson has indicated that the sole incentive for these companies is the “business potential” from participating in the rehabilitation of these communities.
Lopa is quick to highlight that many of these conglomerates have major business interests in the affected region. “What we are trying to figure out is how to challenge these companies to rebuild these economies not through basic CSR, but by connecting development with their core business,” he said.
Despite the progress made three months after Haiyan, reports of unmet pledges, donor fatigue and Philippine government incapacity are already surfacing, further underscoring the need for sustainable private sector engagement.
Disaster officials agree that the success of the massive rebuilding effort will rest on the Philippine government’s ability to generate a cohesive, long-term rehabilitation strategy that includes the private sector early in the decision-making and design process, as opposed to waiting until the agenda and plans are set.
The U.N.’s Smith acknowledged that this is all part of a learning process for a disaster-prone country like the Philippines. “Private sector involvement post-Yolanda has been remarkable, but where this work will really payoff is the Philippines’ next disaster.”
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As director of global advisory and analysis, Pete manages all Devex research and analysis operations worldwide and monitors key trends in the global development business. Prior to joining Devex, Pete was a political and security risk consultant with a focus on Southeast Asia. He has also advised the U.S. government on foreign policy and led projects for the Asian Development Bank and International Finance Corp.