Your views on private sector engagement in EU aid

A man takes a photo of the European Union flag with his smartphone at the European Parliament in Strasbourg, France. The bloc seeks input from various stakeholders before Feb. 14 on the development of a new communication on its private sector development work. Photo by: European Parliament / CC BY-NC-ND

The European Union, one of the world’s top traditional donors, needs to take a different approach to the way the it supports the role of the private sector in EU development efforts in their partner countries — and more importantly, explain better how this works.

READ:Thoughts? EU seeks input for its private sector development work

In a Devex LinkedIn discussion following the release of an issue paper aimed to help guide the development of the bloc’s private sector work, several aid professionals agreed that while many donors are indeed looking to engaging businesses in their poverty eradication programs, they really must change the way they are involving the private sector. On the eve of the public consultation’s February 14 deadline, what was the feedback from our readers?

One member pointed out that most donor agencies channel their resources toward training and capacity development that almost always ends up as expensive workshops that produce little or no impact.

“I have seen some in the Pacific that cost one dollar per person attending per minute, conducted by people who are largely not from the private sector and given to fellow bureaucrats. It is often a case of the blind leading the blind,” he wrote.

Another reader meanwhile argued that instead of donors such as the European Union injecting funds to get businesses to invest and take part in their development work, the private sector should be encouraged to use a percentage of their earnings to help the EU improve the business environment and assist local businesses in partner countries.

“One of the benefits of this programs is that it would free up the tax development dollars to be spent on other national economic and social development programs,” the netizen explained. “This would put an end to situations like we have in Canada, where the [incumbent] Conservative Party … is using Canadian tax dollars to provide local and national economic development support in association with projects by extractive industries that are developing mining and energy projects in developing countries.

He added: “These companies earn hundreds of millions of dollars every year. They can afford to pay for this type of development assistance programming.”

Another member meanwhile underscored the importance of monitoring and proper targeting, and that donors should not duplicate efforts with foreign consultants that are already helping establish businesses.

“They need to identify through local consultants potential SMEs that have potential but limited by fund for sourcing equipments and machineries to expand their business. If you search very well, you will see a number of entrepreneurs that have prepared their factory shells or bought one or two equipments but lack foreign exchange to complete the plant for production. EU and others should not be investing all of their money on those already in production and exporting but those with definite problems,” he said, which leads to an important point by business coach and strategic financial economic

So what private sector efforts should the European Union support? According to another participant in the discussion, those that “provide a better understanding to what are PPPs — their transaction types, contract vehicles, financing, and realities, as well as drivers, opportunities and challenges.”

This, he added, “would be a basis of a true partnership with responsibilities, value of risk, and sustainability across targeted sectors,” the latter a critical point as the EU develops its private sector development strategy for the coming years.

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About the author

  • Ravelo jennylei

    Jenny Lei Ravelo

    Jenny Lei Ravelo is a Devex Senior Reporter based in Manila. She covers global health, with a particular focus on the World Health Organization, and other development and humanitarian aid trends in Asia Pacific. Prior to Devex, she wrote for ABS-CBN, one of the largest broadcasting networks in the Philippines, and was a copy editor for various international scientific journals. She received her journalism degree from the University of Santo Tomas.