3- Public-private partnerships and solidarity investments

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The third round table touched on public-private partnerships and solidarity investments. The private sector’s involvement in financing for development was illustrated by three complementary experiences.

Lastly, the principle of socially responsible investments and the encouragement of the re-direction of a part of the public savings towards development financing was addressed by Xavier de Bayser, Chairman of the Board of Integral Development Asset Management (IDEAM), a subsidiary of Crédit Agricole dedicated to socially responsible investment. The idea is to divert a portion of the major private financial flows towards profitable development projects. It is based on the traditional practice of “gleaning”: 10% of these resources go to development projects. This idea benefits both sides: the total of its ten percent is directly invested in solidarity-based projects without losses online, investors benefit from their contributions in terms of image and because the project has to be profitable, if only to a small extent, especially over the long term. Mr de Bayser gave some tangible examples, including the Danone Communities fund and yoghurt factories in Bangladesh where micro-finance companies in the area of vegetable seeds have been created.

Jean-François Rial, CEO of Voyageurs du Monde, stressed how important it is to educate the private sector about the economic interest in its financial commitment to major development causes (work to raise awareness). He explained Voyageurs du Monde’s experience in the area of citizen-minded tourism (voluntary contribution in the places where the air-ticket levy doesn’t exist) and how we can convince the private sector to take part in innovative financing initiatives meeting three criteria: (i) there isn’t a negative impact on the market economy (eg. the consumer won’t decide not to take a flight if the price is €2 more), (ii) companies don’t leave to open factories abroad and (iii) competition isn’t distorted (e.g. all airline companies are subject to the same tax).

Erick Maville, Regional Director at the Global Business Coalition on HIV/AIDS, Tuberculosis and Malaria’s European headquarters, presented the GBCs’s activities focusing on the importance of pledges, the use of funds and putting forward projects. He believes that the companies’ commitments to major causes is more important than ever for several reasons. First, consumers’ expectations are changing and they are seeking to give meaning to their purchases. Second, companies are beginning to understand the interest economically and in terms of image, employee motivation and co-investments in meeting these demands. Lastly, the major causes are in the news. Mr Maville then explained some of the GBC’s actions and projects, including its support for the launch of the RED campaign, the implementation of public-private partnerships in Zambia and Kenya and the Partnership with the Millennium Foundation for Development. Companies have legitimate expectations vis-à-vis public authorities when it comes to additionality (regarding the volumes of official development assistance for developed countries) and transparency in the use of funds (for developing countries).

With these three examples, the session showed the major role the private sector plays in development financing. It launched more extensive discussion on what the private sector expects from the public authorities.

The GBC’s recommendation of increasing the participation of the private sector in the Leading Group was appreciated. The GBC underscored the Leading Group’s role in disseminating its best practices and encouraged companies to join the Group. Innovative financing in the private sector provides great potential for growth but the economic benefits of investing in development need to be stressed. They include environment conservation, health, education and poverty and hunger reduction.

22 June 2009

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