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UNLEASHING ENTREPRENEURSHIP Making Business Work For The Poor.

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Presentation on theme: "UNLEASHING ENTREPRENEURSHIP Making Business Work For The Poor."— Presentation transcript:

1 UNLEASHING ENTREPRENEURSHIP Making Business Work For The Poor

2 1 WHO – COMMISSION CO-CHAIRS, plus … CO-CHAIRS The Right Honourable Paul Martin Prime Minister, Canada Ernesto Zedillo Director, Yale University Center on Globalization Former President, Mexico EX – OFFICIO MEMBERS Mark Malloch Brown (United Kingdom) Administrator, United Nations Development Programme Maurice Strong (Canada) Special Adviser to the Commission

3 2 … 7 PUBLIC LEADERS & THINKERS, and Eduardo Aninat (Chile) Former Deputy Managing Director, International Monetary Fund Jorge Casta ñ eda (Mexico) Former Minister of Foreign Affairs, Mexico Distinguished Professor of Politics & Latin American Studies, New York University Luisa Diogo (Mozambique) Prime Minister, Mozambique Former Minister of Planning and Finance, Mozambique Peter McPherson (United States) President, Michigan State University C.K. Prahalad (United States) Harvey C. Fruehauf Professor of Business Administration, University of Michigan Business School Juan Somavia (Chile) Director-General, International Labour Organization Hernando de Soto (Peru) President, Institute for Liberty and Democracy, Peru

4 3 … 8 CHIEF EXECUTIVES Carleton Fiorina (United States) President and CEO, Hewlett - Packard Company Rajat Gupta (India) Senior Partner Worldwide, McKinsey & Company Anne Lauvergeon (France) Chairman of the Executive Board, Areva Group, President and CEO, Cogema Jannik Lindbaek (Norway) Chairman, Statoil ASA Alan Patricof (United States) Vice-Chairman and Founder, Apax Partners Kwame Pianim (Ghana) CEO, New World Investments Robert Rubin (United States) Director and Chairman, Executive Committee, Citigroup Former Secretary of the Treasury, United States Miko Rwayitare (South Africa) President and Executive Chairman, Telecel International

5 4 OVERVIEW The Commission and its Objectives The Commission ’ s Report –Key Messages –Recommendations

6 5 FIVE KEY MESSAGES 1. Why the private sector is so important in alleviating poverty Strong expansion in sustainable private sector investment is the main driver of accelerated economic growth, essential for reducing poverty and making rapid progress towards the Millennium Development Goals. 2. Constraints on the private sector in developing countries Domestic private initiative and entrepreneurship, particularly within the small and informal sectors, have enormous potential — but they are trapped in disabling business environments. 3. Unleashing the potential of the private sector Governments need to create an enabling environment for a competitive private sector to develop. For domestic and foreign players to thrive requires a strong rule of law and a level playing field. 4. Engaging the private sector in development Private initiative driven by market-based incentives has the demonstrated capacity to contribute to important development goals. The private sector, properly enabled, can do substantially more by developing and replicating successful models. 5. Recommended actions To ensure progress towards the MDGs, all stakeholders — governments, development institutions, the private sector and civil society — need to collaborate more effectively and expand the use of private sector capabilities in meeting development objectives.

7 6 1. WHY THE PRIVATE SECTOR IS SO IMPORTANT IN ALLEVIATING POVERTY Strong expansion in sustainable private sector investment is the main driver of accelerated economic growth, essential for reducing poverty and making rapid progress towards the Millennium Development Goals.

8 7 MORE PRIVATE INVESTMENT – MORE GROWTH Source:Lawrence Bouton and Mariusz Sumilinski, "Trends in Private Investment in Developing Countries: Statistics for ,", IFC Discussion Paper No. 41 (Washington, D.C.: International Finance Corporation).

9 8 FOUR BILLION PEOPLE AT THE BOTTOM OF THE PYRAMID Source:Prahalad, C.K., and Allen Hammond “ Serving the World ’ s Poor, Profitably. ” Harvard Business Review July-August. >$20,000 $1,500-20,000 <$1, ,500-1,750 4,000 Purchasing power parity in dollars Population in millions Tier 1 Tiers 2-3 Tier 4

10 9 2. CONSTRAINTS ON THE PRIVATE SECTOR IN DEVELOPING COUNTRIES Domestic private initiative and entrepreneurship, particularly within the small and informal sectors, has enormous potential — but it is trapped in a disabling business environment.

11 10 DETERMINANTS OF THE ENABLING ENVIRONMENT Private Sector Growth Domestic macro environment Level playing field Access to financing Access to skills & know- ledge Physical and social Infrastructure Global macro environment Pillars of entrepreneurship – too often missing Foundations of the private sector – not yet in place Rule of Law

12 11 THE BURDENS FACING ENTREPRENEURS IN LOWER INCOME COUNTRIES Note:Low and lower middle-income countries had GDP per capita (purchasing power parity) of less than $2,976 in 2001, upper middle-income countries were between $2,976 and $9,205, and high income countries were above $9,205. Source:World Bank Doing Business in 2004: Understanding Regulation. New York: Oxford University Press. Enterprises in low and lower middle income countries face the longest duration and the highest cost (as a percent of GNI per capita). Low and lower middle Upper middle High

13 12 3. UNLEASHING THE POTENTIAL OF THE PRIVATE SECTOR Governments need to create an enabling environment for a competitive private sector to develop. For domestic and foreign players to thrive requires a strong rule of law and a level playing field.

14 13 4. ENGAGING THE PRIVATE SECTOR IN DEVELOPMENT Private initiative driven by market-based incentives has the demonstrated capacity to contribute to important development goals. The private sector, properly enabled, can do substantially more by developing and replicating successful models.

15 14 ENGAGING THE PRIVATE SECTOR Serving markets at the bottom of the pyramid Forming ecosystems and building networks Fostering public-private partnerships for sustainable development Improving corporate governance Advancing responsible business practices and corporate social responsibility standards

16 15 POSSIBILITIES AT THE BOTTOM OF THE PYRAMID Financial Sector – ICICI Bank, India Retail Sector – Casas Bahia, Brazil Cement Sector – CEMEX, Mexico Cellular Phone Sector – Grameen, Bangladesh – Vodacom, South Africa

17 16 INITIATIVES Public sector- driven UNDP- driven Informality and Regulatory Reforms Business School Network Technology for Microfinance Business Linkages Bottom of the Pyramid Business Development Annual Private Sector Report SME Brokerage Microfinance Private sector- driven Illustrative list of initiatives under consideration


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