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UNDP Private Sector Strategy Promoting Inclusive Market Development

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Title: UNDP Private Sector Strategy Promoting Inclusive Market Development


1
UNDP Private Sector Strategy  Promoting Inclusive
Market Development
  • Without the energy of the private sector,
    without private enterprise, private initiative,
    private savings, private resources, we wont make
    it in terms of stimulating development. …the
    private sector is, indeed, the driving force in
    development...and we need a very strong but
    lean state working with the private sector, not
    to undermine it but to strengthen it.

Kemal Dervis, Closing Statement, GMTM, 3 February
2006
2
Private Sector Strategy of UNDP Three sections
  • Section 1 UNDPs current private sector
    portfolio, rationale for the strategy,
    a new conceptual framework for the design,
    implementation and evaluation of new UNDP
    private sector interventions.
  •  
  • Section 2 Five proposed priority areas for the
    strategy.
  • Section 3 Next steps for the implementation of
    the strategy.

3
Section 1 Background and Approach
  • Foundations for private sector activity are not
    in place in Developing/transition countries.
  • Weak or non existent Rules of market operation
    as well as legal and regulatory institutions
    necessary to support them.
  • Business environments obstruct or penalize
    entrepreneurship and investment instead of
    encourage it.
  • Large enterprises frequently stifle
    entrepreneurial energy and initiative, taking
    advantage of weak institutional environments to
    protect monopolistic or monopsonistic positions,
    ? Favour existing elites ? Reinforce existing
    patterns of inequality and social exclusion.
  •  Main purposes of PSS
  • 1) Addressing the problem of missing
    markets
  • 2) Helping to ensure that markets contribute
    to more inclusive growth processes
  • Bring greater focus depth to UNDP private
    sector interventions, for more direct impact on
    poverty? achievement of MDGs and greater
    synergies with other UNDP practice areas and
    specialist UN agencies.
  •  

4
Continue Background and Approach
  • Addressing needs of the poor as active economic
    agents (entrepreneurs, employees and consumers)
    rather than passive beneficiaries
  • ? New dimension of partnership with large
    companies on Corporate Social Responsibility
  • Provides a framework for UNDP private sector
    interventions at global, regional and country
    office levels in the context of the UNDP Draft
    Strategic Plan for 2008-11.
  • Gives practical direction and substance to the
    Strategic Plans recognition
  • ? PSD and PSE are central
  • Poverty reduction,
  • Achieving corporate objectives of energy and
    environmental service delivery, crisis
    prevention and recovery and democratic
    governance.

5
Continue Background and Approach
  • Markets plays crucial role in meeting the
    challenge of the MDGs.
  • Private sector is the engine of growth in most
    developing developed countries? Contributes to
    the achievement of MDG 1 through.
  • Aggregate income and wealth creation
    (indirectly).
  • Employment creation and the provision of
    affordable goods and services for the poor
    (Directly).
  • Removing constraints to labour force
    participation, enhancing household incomes,
    increasing tax yields, raising standards and
    promoting non-discriminatory and rule based
    systems of exchange.

6
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7
Challenges remain to be addresses
  • At an organisational level, current work (doing
    things for the private sector (PSD) or with
    the private sector (PSE)) is unconvincing and
    lacks larger cohering vision.
  • PSD project portfolio at CO is interpreted as
    evidence of responsiveness to local needs. May
    not constitute the most appropriate or effective
    responses to address those needs? accused of
    being supply-driven
  • International development community views
    single-theme projects characteristic of the UNDP
    PSD portfolio, especially standalone BDS and
    micro-credit projects, are unsustainable,
    ineffective and have a minimal impact in terms of
    poverty reduction.
  • PSE is a relatively new and uncharted territory
    for UNDP and other international organisations?
    Presents challenges in terms of securing genuine
    additionally and ensuring that the benefits of
    particular partnership initiatives have a
    sustainable and systemic impact.
  • UNs engagement in partnerships that have limited
    added value, or involve enterprises that have
    questionable business practices.  

8
Current Private Sector Portfolio of UNDP
  • Two broad categories of interventions
  • Private sector development (PSD)? increasing the
    contribution of micro-, small and medium sized
    enterprises to growth and poverty reduction
  • Private sector engagement (PSE)? fostering
    partnerships with a wide range of companies from
    multi-nationals (northern and southern), to small
    and medium sized enterprises (SMEs) with
    development objectives in mind.
  • ? UNDPs existing PSD portfolio consists mainly
    of grant funded technical assistance programmes
    and projects, including policy advisory and local
    capacity building initiatives.
  • UNDP PS portfolio consists of 530 PSD and PSE
    programmes in more than 100 country offices with
    an annual value of 100 million and growing.
  • Cost sharing private sector partnerships are
    recent phenomenon in the development community?
    UNDP is extremely well positioned in this area
    with a strong and rapidly growing portfolio.

9
Continue
  • Approximately 60 of partnership projects are in
    the area of poverty reduction, then energy and
    environment, democratic governance, crisis
    prevention and recovery and HIV/AIDS? motivated
    by Corporate Social Responsibility objectives
  • UNDP has three major global private sector
    programmes 1) Growing Inclusive Markets (GIM)
    programme, 2) Growing Sustainable Business (GSB)
    programme and 3) Public-Private Partnerships for
    Service Delivery (PPPSD) programme.
  • UNDPs PS interventions are more demand-driven,
    Will develop more explicitly pro-poor focus?
    Requires shifting from single theme projects
    (business development services and micro-credit)
    to more systemic and sustainable impact based
    interventions.

10
Comparative Advantages of UNDP
  • UNDP one of a limited number of donors active in
    the private sector arena? strong commitment to
    target the poor directly.
  • Considerable potential to develop approaches to
    PSD in order to contribute in poverty reduction.
  • A very strong brand appeal based on the MDGs
    and a rapidly growing network of multi-national
    and local partner companies ?Influence the
    development outcomes associated with lead
    companies.
  • A very large geographic footprint, particularly
    in less developed areas of Sub-Saharan Africa,
    North Africa, the Middle East and East Asia?
    20-60 more FOs than the next closest donors.
  • An impartial reputation with the capacity to
    promote open policy dialogue and partnership
    between the private sector, government and civil
    society.
  • Strong convening power and ability to
    coordinate the private sector and development
    efforts of other international organisations and
    donors.

11
Conceptual Framework - Promoting Development of
Inclusive Markets
  • Facilitate the development of Inclusive
    Markets. ?ensure that markets work better for
    the poor as entrepreneurs, wage employees and
    consumers.
  • An analytic focus on the functioning of markets,
    rather than specific kinds of enterprises
    (micro-enterprises, SMEs and large companies) per
    se. ? Types of enterprises and their inter
    linkages comprise highly complex business
    eco-systems.
  • Recognizes that analysis of the functioning and
    development of markets, and identification of
    inclusive market development policies, cannot be
    undertaken in purely economic terms.
  • Markets are deeply embedded in a set of
    non-market, social and political institutions?
    Poor participate in markets is conditioned by
    economic, political, social and cultural factors?
    Decisions to favour pro-poor or inclusive market
    policies involve making explicit political
    choices.

12
Components of Functioning Market
  • Inclusive Markets are defined broadly as
    markets that result in expanded choice and
    opportunity for the poor and produce outcomes
    that benefit the poor.? measurable in terms of
    increased returns on goods sold, improved access
    to labour markets and increased opportunities for
    decent work.
  •  
  • For the poor as consumers? Increased choice and
    affordability for essential goods and services,
    including access to financial services that help
    reduce risks and vulnerability.
  •  
  • Contribute Pro-poor market facilitation
    approaches in the wider international development
    community? promoting the development and
    implementation of more rigorous impact assessment
    procedures? emphasizing on capacity development,
    building upon existing tools and approaches to
    capacity assessments and diagnostics.


13
Contrasting Approaches to the Private Sector and
Development
14
Section II Strategic Priorities
  • Five Key Priorities
  • Priority 1 Establishing the Policy and
    Institutional Infrastructure.
  • Priority 2 - Facilitating Pro-Poor Value Chain
    Integration
  • Priority 3 - Brokering Investments in Pro-Poor
    Goods and Services.
  • Priority4- Fostering Inclusive Entrepreneurship.
  • Priority 5 - Encouraging Corporate Social
    Responsibility in support of Inclusive Market
    Development and the MDGs.

15
Continue Strategic Priority
  • Priority 1 Establishing the Policy and
    Institutional Infrastructure
  •   Support governments to promote development of
    rule based, non-discriminatory inclusive
    markets? robust and transparent market
    institutions to promote competition? safeguarding
    the rights of poor entrepreneurs, employees and
    consumers.
  • Complement the World Bank, other international
    organizations and donors, focusing on policy
    reforms that benefit the poor directly.
  •  Assist governments to introduce pro-poor market
    reform policies into PRSPs and other strategic
    planning frameworks.
  • Priority 2 - Facilitating Pro-Poor Value Chain
    Integration
  •  Inclusive markets are defined mainly by their
    ability to generate significant employment
    opportunities for the poor as self-employed
    producers or wage employees.
  •   Support development of integrated value chains
    in market sectors (offer prospect of sustainable
    growth, transition to higher valued added and
    better remunerated forms of employment)
  • Priorities for commodity product and services
    markets characterized by a high labour intensity.

16
Priority 3 - Brokering Investments in Pro-Poor
Goods and Services
  • Ability to increase access to important goods
    and services ? contribute tangibly to the
    reduction of income and non-income forms of
    poverty.
  • Facilitate research and development to
    identify a viable bottom-of-the-pyramid
    investment opportunities and business models.
  • Support for development markets for pro-poor
    goods and services, with special emphasis on key
    factor markets.
  • Support for development of innovative
    pro-poor models and implementation of public
    private partnerships in sustainable local
    infrastructure provision.

17
Priority 4 - Fostering Inclusive Entrepreneurship
  •  
  • Inclusive markets require the poor to take
    advantage of new opportunities and become agents
    in their own economic empowerment (Unleashing
    Entrepreneurship).
  •  
  • UNDP, partnership with other UN agencies, DPs
    and private sector, support design and delivery
    of new entrepreneurship development initiatives
  • ? Tailored to local opportunities and delivered
    through the private sector. 
  • Specific efforts will be made to promote womens
    entrepreneurship

18
Priority 5 - Encouraging Corporate Social
Responsibility in support of Inclusive Market
Development and the MDGs
  • Advocate for the use of CSR resources to
    contribute to the development of inclusive
    markets, producing sustainable long-term benefits
    rather than short-term visibility or dependency.
  •  
  • Encourage Corporate partners to align their
    CSR activities more closely to the achievement
    priorities 1-4 (above) as well as achievement of
    MDGs and UNs Development mandate more broadly
  •  
  • Advocate for the alignment of CSR investments
    with national and local development priorities,
    addressed through market mechanism also in
    support of UNDPs own four focus areas as
    expressed in the UNDP Strategic Plan 2008 - 2011.
  •  
  • Support an integrated approach to inclusive
    market development in post-conflict countries?
    aligned with the UN system wide policy for
    Employment Creation, Income Generation and
    Reintegration in Post-Conflict Settings.

19
Section III Next Steps
  • 1) Supporting the Strategic Plan
  • 2) Global Programmes
  • 3) Research and Development
  • 4) Capacity Building
  • 5) Knowledge Management
  • 6) Partnerships
  • 7) Resources

20
1. Supporting the Strategic Plan
  • Contribute directly to development of inclusive
    markets to implement of the UNDP Strategic Plan
    for 2008-2011. (Link between individual
    priorities and Strategic Plan).
  • Require a concerted and well coordinated effort
    at all levels of UNDP.
  • Build on existing programmes ? Strengthen the
    implementation capacity at headquarters, regional
    and CO levels? Significant enhancement of
    existing knowledge management processes on
    inclusive market development aspects

21
2. Global Programmes
  • In order to address priorities 1, 2 and 3, the
    UNDP will continue to implement the GIM, GSB and
    PPPSD programmes.
  • Growing Inclusive Markets (GIM) - Contributes
    directly to priorities 1,2, 3 and 4 by aiming to
    raise awareness and information on how
    businesses, governments civil society can
    create opportunities for the poor through
    market-based approaches.
  • Implemented in two way? kit of diagnostic tools
    and methodologies for developing national
    reports/examine inclusiveness of markets? Launch
    national multi-stakeholder processes to share
    experiences and knowledge of effective business
    models that benefit the poor.

22
Continue Global Programmes
  • Growing Sustainable Business (GSB) - GSB
    programme contributes directly to priorities 2, 3
    and 5 ? Central role to play in the achievement
    of the strategy objectives.
  • Focus increasingly on facilitating linkages with
    capital providers to promote sector wide
    development initiatives at regional and country
    levels? Seek more formal collaboration with the
    Global Compact Office and GC regional resource
    people in order to support effective use of the
    Global Compact local networks.

23
Continue Global Programmes
  • Public Private Partnerships for Local Service
    Delivery (PPPSD)? Contributes directly to the
    achievement of priority 3 in the area of local
    infrastructure services.
  • Assist CO and UNCT in promoting enabling policy,
    regulatory and institutional environments for
    public-private partnerships for local service
    delivery and building the capacity of key local
    partners, including local governments, local
    businesses and communities.
  • Two main instruments country level initiatives
    selected on a demand-driven basis (including
    joint initiatives with other UN Agencies,
    partners programmes and facilities)? Global
    Learning Network which fosters the identification
    and exchange of experiences and lessons learned
    on local level pro-poor partnerships for service
    delivery.
  • Development of new knowledge products and
    capacity development tools ?support of pro-poor
    multi-stakeholders partnerships for local service
    delivery.

24
3. Research and Development
  • Encourage support new in-house research and
    development initiatives, targeted at important
    knowledge gaps pertinent to the strategy.
    Examples include
  • UNCDFs SWAPs for financial services and local
    development? further research is required to
    identify effective methodologies for the
    development and implementation of sector
    assessments, nationally owned strategy and action
    plans and investment modalities for pro-poor
    private sector development (priority 1).
  • ILO-UNDP Joint Programme on Employment and
    Poverty reduction and the GIM programme?further
    research is required to develop practical
    methodologies for the identification of viable
    employment-intensive sectors and investment
    opportunities.

25
4. Capacity Building
  • Support for the establishment of a global private
    sector Community of Practice (CoP). ? Active
    functioning of CoPs at regional level to provide
    platform for technical training, exchange of
    experience and best practices.

26
5. Knowledge Management
  • CoP will organise global conferences and
    workshops to showcase best practices in inclusive
    market development, CSR and to highlight/discuss
    key research findings.
  • Establishing and managing a moderated private
    sector and development network, building on the
    existing SEMFIN network.
  • Network will manage a website and act as a
    central repository for key information sources,
    applied research publications, technical reports
    and data sets. Website will provide pro-poor
    equivalent of the World Bank PSD Rapid Response
    website.
  • Explore of establishing both the network and the
    website as a joint UN agency initiative.

27
6. Partnerships
  • Require closer cooperation with World Bank and
    other specialist UN Agencies operating in the
    private sector arena i.e. UNIDO, ILO, UNCTAD, FAO
    and IFAD.
  • Play a more active role in other key
    international donor fora with an interest in
    inclusive market development.
  • Corporate membership in DCED is another priority
    ? expect to yield considerable benefits? E.g.
    access to a multi-donor experience and knowledge
    sources, ability to contribute to (and influence)
    on going debates in inclusive market development
    and resources for cost sharing, joint programming
    and resource mobilisation with other
    participating agencies

28
7. Resources
  • Comprehensive assessment will be undertaken of
    existing competencies and capacity needs, at
    different levels of the agency.
  • In addition to regionally based sector advisers,
    limited additional capacity is likely to be
    required at HQ level, particularly to service
    priorities 1, 2 and 5.
  • An improved balance of core to non-core posts may
    also be required in order to ensure greater
    continuity.
  • A detailed memorandum of resource requirement
    will be drafted subsequent to agreement on
    strategy.

29
Links between Strategy Priority Areas and UNDP
Draft Strategic Plan for 2008-2011
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