The Role of Business & Multi-Stakeholder Partnerships in Development Djordjija Petkoski

Djordjija Petkoski World Bank Institute

The Role of Business & Multi-Stakeholder Partnerships in

Development

Djordjija PetkoskiHead: Business, Competitiveness & Development

TeamWorld Bank Institute


I. An Unbalanced World: The Big Picture

II. A New Paradigm: The Role of Business in Development

III. Corporate Responsibility (CR)

IV. Multi-Stakeholder Partnerships

V. Examples of Multi-Stakeholder Partnerships

VI. Challenges of Multi-Stakeholder Partnerships


I. An Unbalanced World:

The Big Picture


Is this our World?

Today, across the world:

•1.3 billion people live on less than one dollar a day;

•3 billion live on less than two dollars a day;

•1.3 billion have no access to clean water;

•3 billion have no access to sanitation;

•2 billion have no access to electricity.


Is this our World?

20% of the population in developed nations consume 86% of the world’s goods. The poorest 20% of the world’s population consume 1.3%.


Is this our World?

The amount needed to provide basic health and nutrition to everyone in the world is US $13 billion.Every day more than 16,000 children die from hunger- related causes – one child every five seconds.Amount spent on perfumes in Europe and the US: US $12 billion.


Is this our World?

US $950 billion was needed to put every child into school by the year 2000: it didn’t happen. This amount is less than one percent of what the world spent every year on weapons.


Is this our World?

Every day 8,500 people die and 13,000 others are newly infected with HIV. By 2010, more than 25 million children will be orphaned by AIDS worldwide. In some parts of Africa, one-third of all pregnant woman have HIV/AIDS. In Swaziland, for example, nearly 40% of pregnant women are HIV positive.


Is this our World?

The World Bank estimates that a mild pandemic of Avian Flu would cause at least US $800 billion in global economic damage; economies would need approximately 3 years to recover from such a shock.


II. A New Paradigm: The Role of Business in Development


Business and Development

• Development is not only a business, government, or donor challenge – it is a challenge for all.

• It has become very much about the new role of business in society & development & new forms of multi-sector partnership

• Realign the efficiency of markets with societal expectations

• Limits of voluntarism without a level playing field requires involvement of government and society.


A New Paradigm

• Private sector engagement in development presents a new paradigm for operation - be it in a business, government, NGO, or development institution, such as the WBG.

• It increases opportunities for different stakeholder groups to achieve mutual development goals, as well as encourages comprehensive & systematic thinking about the following:


Drivers of increased private sector involvement in development solutions

• The expanding global wealth & influence of the private sector.

• Many of the traditional development actors in the public & civil society sectors are recognizing the increasing difficulty of tackling certain development challenges in a unilateral manner.

• occasions when the private sector, often in partnership with government, civil society or both, can be better positioned to provide solutions because of its resources (financial and in-kind) & management skills.


Drivers, cont.

• The private sector is increasingly finding competitive benefits in embracing a more proactive & collaborative role in development.

• These benefits include risk mitigation, new market opportunities & increased value-added.


Why Engage the Private Sector? Country/Corporation GDP/Sales ($ million)

1 United States 11,667,510.00

2 Japan 4,623,398.00

3 Germany 2,714,418.00

4 United Kingdom 2,140,898.00

5 France 2,002,582.00

7 China 1,649,329.00

9 Canada 979,764.20

10 India 691,876.30

20 Turkey 301,949.80

21 Austria 290,109.50

22 Wal-Mart Stores 258,681.00

23 Indonesia 257,641.50

24 Saudi Arabia 250,557.30

27 Poland 241,832.50

28 Exxon Mobil 213,199.00

29 South Africa 212,777.30

30 Greece 203,401.00

31 General Motors 195,645.20

32 Finland 186,597.00

35 Ford Motor 164,496.00

Source: Ranking based on corp. revenue data from Fortune Magazine, October 1, 2005; and GDP data from World Bank World Development Indicators (WDI) Report 2005.

Country/Corporation GDP/Sales ($ million)

37 Hong Kong, China 163,004.70

40 General Electric 134,187.00

41 Malaysia 117,775.80

42 Israel 117,548.40

43 ChevronTexaco 112,937.00

49 ConocoPhillips 99,468.00

50 Colombia 97,383.93

51 Pakistan 96,114.84

52 Citigroup 94,713.00

53 Chile 94,104.94

54 Intl. Business Machines 89,131.00

57 American Intl. Group 81,300.00

60 Hewlett-Packard 73,061.00

62 Peru 68,394.96

63 Verizon Communications 67,752.00

64 Ukraine 65,149.34

65 Home Depot 64,816.00

66 Berkshire Hathaway 63,859.00

67 Altria Group 60,704.00

69 Bangladesh 56,844.49


III. Corporate Responsibility (CR)


Corporate Responsibility (CR)

• CR is the commitment of business to managing & improving the economic, environmental & social implications of its activities at the firm, local, regional & global levels.

• CR can be used as a framework through which business engages in multi-stakeholder partnerships for sustainable development.


Triple Bottom Line

• The concept of the "triple bottom line" expands on the traditional term "the bottom line" to include society and the environment, & provides a useful visual to help explain CR.


Financial Flows to Developing Countries

$ billions

0

50

100

150

200

250

300

350

1990 1992 1994 1996 1998 2000 2002 2004

Total net capital flows

Net private flows

Net official flows

Source: Global Development Finance Report, 2005


IV. Multi-Stakeholder Partnerships


• To better understand the linkages between the economic, environmental, & social impact.

• New forms of partnership across sectors & institutions to build social and technical capacity.

• A need for a viable strategy for business to contribute to capacity building of the government & civil society to deal with these issues.

• Provide incentives to the business for collective actions & scaling up: from individual initiatives to systematic interventions.

A Multi-Stakeholder Approach to Governance


V. Examples


Ethiopian Business Coalition Against HIV/AIDS

• Capacity-building for private sector action against HIV/AIDS in Ethiopia.

• Partners: EBC, WBI, USAID, World Bank departments, IFC Against AIDS, ACTafrica.

• The partnership, launched in 2004, provides relevant knowledge & best practices for EBC member companies & building the skills of EBC so that the EBC can train its members. EBC now offers its members a range of services to help resist the spread of the disease.


BAFF

• Launched in Beijing, October 22-23, 2005. Initiative of business, supported by WBI & the Global Alliance for Improved Nutrition (GAIN).

• Goal: Scale up business efforts to improve nutrition, advocate for action against vitamin & mineral deficiencies, & address barriers to effective cross-sectoral partnerships for improved results.

• Local impact: launch of China BAFF to be chaired by local soy sauce & flour companies. Need to ensure national & regional focus for action.

Business Alliance for Food Fortification (BAFF)


CR & Sustainable Competitiveness in Mexico

• CEMEX, Tecnologico de Monterrey (ITESM), WBI

• Objective: to bridge the skills gaps by helping expand curriculum with the latest technical knowledge. The program focuses on corporate Mexico as well as civil society & government to address issues from a multi-stakeholder perspective.

• later joined by American Chamber of Commerce in Mexico who included their network of companies in the training opportunities.

• Members of the Private Sector Cluster at the World Bank also participated as experts sharing their knowledge & expertise in the topic.


Brazil: Multi-Stakeholder Partnerships for Sustainable Competitiveness

• UNICA (the association of sugar industries in Brazil) & WBI formed a partnership with the purpose of strengthening the competitive position of sugar companies in São Paulo by addressing some fundamental CR issues, such as labor practices & impact on the environment.

• Objectives: to build capacity of local businesses & business associations & contribute to the better understanding of the vital role the private sector can play in development & the significance of productive public-private partnerships.

• the program was made available to MBA & MPA schools in Brazil so that future graduates will be behind the strategic reorientation of

sugar companies.


VI. Challenges of Multi-Stakeholder Partnerships


Challenges

• Monitoring the impact and effectiveness of multi-stakeholder partnerships.

• Scaling-up successful multi-stakeholder partnership initiatives.

• Addressing the importance and urgency of facilitating and fostering the success of multi-stakeholder partnerships to effectively deal with complex global and local development challenges.


The future depends on

what we do in the present.

–Mahatma Gandhi


New challenge for current and future business and public sector leaders: how to capitalize on business opportunities while ensuring sustainability through addressing global development challenges?


Djordjija PetkoskiHead, Business, Competitiveness &

DevelopmentWorld Bank Institute

Thank you

Documents

The Role of Business & Multi-Stakeholder Partnerships in Development Djordjija Petkoski