​To harness the private sector to achieve the SDGs, we need real measurement of impact

A partnership between Canadian company, Banro Corporation and the U.S. Agency for International Development was established to help formalize legal, conflict-free artisanal gold mining in the Democratic Republic of Congo. Photo by: USAID / CC BY-NC

One of the most welcome improvements of the recently released Sustainable Development Goals over their predecessor the Millennium Development Goals is the recognized role of the private sector in achieving them. The creators of the goals have rightfully understood that bilateral aid and development projects alone have no chance of achieving the goals. All hands are going to need to be on deck, and that means the multinational companies who invest in developing countries will need to be active partners in all our efforts to achieve the SDGs.

In the global mining sector — where our initiative Mining Shared Value, for example, works to promote local procurement — there is now a huge surge in activity working with the private sector on new initiatives to create meaningful economic and social development. Recently, the World Economic Forum and others released an exciting draft paper examining how mining can potentially contribute (and sometimes hamper) achieving the SDGs. Similar efforts are taking place across other sectors too.

Central to the SDGs and discussions on mining and development is the role of partnership. It is now difficult for us to attend any major mining conference without hours of content devoted to partnership with nongovernmental organizations for projects.

However, though for the most part we are getting to the point where most realize that we need to work with private sector to achieve development, what is missing is effective measurement of those private sector activities and partnerships that actually create meaningful economic and social development.

The reality is that for all the talk of partnership and working with private sector actors, many projects continue to exist without a coherent understanding of how public and private actors can successfully and symbiotically work together to harness each other’s competencies. Regrettably for many people working in development, it seems that any partnership will do.

Raising the bar on measurement

3 examples of current ‘development partnerships’ that do not do a great deal towards achieving the SDGs:

1. Funding from corporations to NGOs for them to provide public services near the corporation’s operations. These partnerships at best are band-aid solutions that treat the symptoms of underdevelopment, not the cause. At worst they can be downright “greenwashing” and undermine governance.

2. Impact investment funds that provide capital to sub-Saharan African businesses, but do not examine the consequences to the economies and communities that surround the recipient firms. For example, investing in particular agricultural firms to help them increase yields may benefit those particular businesses, but can contribute to an oversupply that lowers the prices and incomes for similar firms in the country.

3. Private sector “innovation initiatives” that drive scarce capital and talent to sexy gadgets and programs that, again, treat the symptoms of underdevelopment rather than the cause (if they successfully treat those symptoms at all).

As development practitioners, we need to get to a place where we do not assume that simply because a development initiative involves the private sector, it is a good thing.

To distinguish between good private sector partnerships and bad, we need real measurement.

In our work with the Mining Shared Value initiative of Engineers Without Borders we pressure — and support — the global mining industry to purchase more goods and services in the developing countries and regions where they operate.

This is real harnessing of the private sector. We are working with industry to magnify the potential development benefits of activities core to their business, and not simply using funding from them to build clinics, for example.

Buying locally creates jobs, improves the balance of trade in developing countries, transfers skills and technologies, and helps to formalize economies. In most cases, mining companies spend more money on procurement of goods and services than tax payments and wages combined.

But again, the devil is in the details — which we need to measure. Many companies point out their procurement spending equals hundreds of millions of dollars in-country. But, many of these “locally” procured goods are in fact imported, and create less benefits for host economies than domestically produced ones.

Also, some of these “locally” procured services are in fact services provided by branch operations of foreign owned firms, and so much of the income and learning opportunities flow out of the country.

And so, we are currently starting a project in partnership with German aid agency GIZ, to create a standard reporting framework on how mining companies report on local procurement.

Our goal is to create a reporting framework that helps mining companies provide the necessary details that allow for host governments to better understand how to work with industry to create development out of mining investment. This will allow proper evaluation of initiatives to increase local procurement so they can be managed better.

This is only one initiative, but what is needed is for this kind of measuring and reporting to focus on all private sector activities and partnerships, with no details missed. It is not enough to measure how many jobs come out of a public-private partnership — we need to ask what kinds of jobs are they? Are they unskilled and low wage jobs? Do they provide opportunities for learning and access to new technologies? Are there adverse effects such as the jobs drawing talent from other parts of the economy that need it more?

To realize the SDGs, rigor and pragmatism need to be combined in assessing and evaluating partnerships with the private sector. We cannot continue to justify that all development actors and initiatives as righteously beneficial or instinctually support ideas. Measurement needs to guide our decision making. And these measurement systems need to capture nuances, holding our partnerships to account and pushing us to continue to understand how strengths of private and public sectors can be leveraged to support inclusive development.

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About the author

  • Jeff Geipel

    Jeff Geipel is the founder and venture leader for Mining Shared Value at Engineers Without Borders Canada. Working with a wide variety of partners including mining companies, the World Bank, and host countries, this initiative works to improve the development impacts of mineral extraction in developing countries through increasing local procurement by the global mining industry.