European Economic and Social Committee ACP -EU Private Sector – Engine for Development Brussels October 31, 2014 Ivan Voleš

European Commission requested an exploratory opinion of the EESC on involvement of private sector in the development agenda after 2015 when new sustainable development goals should be agreed by international community. There is a clear shift in the EU approach to private sector and its role in the development. The official development aid cannot bring alone the needed changes and the private sector is considered as the engine of development. Private Sector as an engine of development: EESC opinion

New position of private sector in development Private FDIs surpass the ODA limited by the economic and financial crisis and new fiscal policy of the EU Member States Role of private sector is twofold 1) Private sector of the donor countries as supplier of goods and services financed by ODA, investor in development projects, philantropic and charity activities, public and private partnerships. 2) Local private sector in recipient countries – huge potential of growth and creation of new jobs and the main tool to fight against poverty. Targeted by programmes of PSD financed from many sources – EU, IFI, UN, USAID and also by local programmes Private sector should comit itself to respect principles of sustainable development and its 3 pillars – economic, social and environmental

Conditions for the role of private sector in development Private sector needs favourable conditions to play its role: - recognition of PS as a strategic partner and its involvement in identifying the needs of relevant countries and tools to achieve them - integration of all financing facilities and instruments and development of inovative tools – blending, guarantees, soft loans, interest rates. ODA should serve as a multiplicator of private sector investment - new sources of investment – remittances from imigrants - business friendly environment in recipient countries – transparency, rule of law, independent judiciary, open public procurement, fair tax systems, responsability of administration etc.

Conditions for the role of private sector in development - transfer of EU experience of good governance based on market instruments: free competition, well functioning financial markets, respect of international trading rules, IPR. The local traditions must be respected if they do not lead to corruption and inefficient distribution of income. - ODA shold be especially used to support the innovation in the developing countries – innovative projects, incubators, clusters, technology transfer, education and training in key technologies etc. - investments should be targeted not only to productive sectors but also to networks and services necessary for business activities – financial institutions, insurance, transport, business support services etc.

Elimination of risks of PS in development Private sector is engine of development but there are risks to be eliminated: - creation of new jobs must follow the conventions of ILO - new jobs should comply with principles of Decent Work - CSR role in development should be enhanced by establishing a framework of basic principles - extractive industries should follow strictly the social and environmental standards and report on taxes - indicators should be developed to evaluate the contribution of PS to development

Proposals to enhance PS role Business support organizations should be more involved in the PSD programmes and receive support through institution building programmes and cooperation with partner organizations Education of local entrepreneurs should be supported and new Erasmus for young entrepreneurs should be extended to include developping countries Special attention should be paid to SMEs - support their creation and survival (microcredits, training) - target vulnarable groups (women, enabled, elderly …) and main economic sectors – agriculture, agro industry, crafts, retail trade etc. - assist local SMEs to get involved in the value supply chains - support EU SMEs to participate in development oriented projects

The EESC supports role of Private Sector in development Thank you for your attention For further information please contact