From the International Cooperation Expo 2019 – in collaboration with Fondazione Aurora:
We are aware that official development assistance is not enough, the private sector should play an important role on pursuing the goals of Agenda 2030.
How should we envisage the role of private investment in fostering the Agenda 2030?
Aksel Jakobsen – State Secretary of International Development, Norwegian Ministry of Foreign Affairs
The first guest argued that we are facing many challenges that can only be solved by the joint forces of private sector, international organizations, governments and civil society. Norway has an ambition to continue to allocate 1% of its GNI on development assistance. In 6 of the 7 past years ODA to the least development countries has declined, while Norway intends to take a different approach, thus focusing more of its aid to countries in development. Today some of Norway’s largest companies have substantial part of their activities in Africa and they intend to keep doing so because according to him, Africa is on the rise. He claimed that African governments must work to attract more international investments through the improvement of tax systems, fair predictable and efficient taxes, which are important to increase revenues and attract investors. Thus, Norway made a commitment to double its tax related development assistance from 2015 to 2020, and now they’re on track to achieve this goal one year ahead of time.
A strong private sector is a strong guarantee for job creation and increased tax revenues and sustainable development. Economic and regulatory reforms including in the ICT sector must be implemented. This will help improve the business environment and help unlock domestic and foreign investments at scale. Norway joined the German G20 initiative contact with Africa because it goes well with the emphasis on commercial Corporation job creation and partnerships supporting and working closely with international finance cooperation and the African Development Bank to establish a platform for a stronger private sector development. Through contact with Africa they give a high priority for jobs for youth.
Norway supports job creation through multi-donor cross funds both from the World Bank and African Development Bank. Norfund received and annual capital allocation this year of 200 million euros to invest in developing countries, coming from the private sector. The company invests strategically in renewable energy, better access to electricity, financial institutions and small and medium size enterprises, for jobs and private sector growth. Its priority area is in Sub-Saharan Africa. He claims it is crucial to support entrepreneurs and private sector investment.
As an open country and supporter of multilateral investments and trade, Norway will continue to work on providing ways for African countries to be able to be part of the multilateral trade system. They encourage the development of the African Free Trade Area, as they argue that deeper regional integration can provide opportunities for inclusive economic growth. The African Development Bank has an important role to play in this respect.
The Secretary encourages the Norway welcome the digital launching for Africa, and is a strong supporter of the digital economy moonshot action plan. As digital technologies can reduce bureaucracy, and increasing efficiency making society less prone to corruption. The Norwegian government has expanded their partnerships to strengthen the Universities in Kenya to facilitate the setup of coding camps for kids across the country. Norway is supporting a project developed by Unicef to develop a platform to gather and disseminate information about digital public goods, one example is the global digital library, launched in Ethiopia last year. Providing free high-quality readings in local languages, by 2020 will be accessible in more than 100 languages, as human capital is the key to development.
In partnership with the private business sector they intend to make ICT training as an integral part of vocational training programs, as access to mobile devices have changed the way of how the youth communicate, social media can be a tremendous force for innovation and entrepreneurship. New technical solutions are allowing groups previously excluded from the marketplace to become entrepreneurs and make valuable contributions to the development of their community. There is a need to connect start-ups in African partner countries so they may realize that we are in this together.
He proposes that there should be a focus on States affected by conflicts and on vulnerable groups such as refugees. Norway is working on several initiatives to assist the private sector in conflict affected countries. He mentioned that a Norwegian company developed a sunbeam lamp, combination of a mobile charger and a solar lamp which gives millions of refugees access to energy in refugee camps. Now there are 2,5 million of lamps sold. He ended by reiterating that the joint forces of government and the private sector are keys to solving the issues we face nowadays, bringing development for Europe and Africa alike. Reaching the SDGs, providing stability and prosperity for all.
Niraj Shah – Program Manager of the GAFSP Private Sector Window
Leader of the Globalizing Franchise and Food Security Programme. The IFC is the private sector financing arm of the World Bank Group. GAFSP originated after the food crisis of 2008, originally the public sector was involved as the main sponsor, but after a couple of years they realized that it would not work to resolve the food security problems in the world if the private sector would not be involved. Thus, they started to involve the private sector, through their governments, mainly Australia, Canada, Japan, Netherlands, the UK and the US.
The aim of the programme is to support projects which are private sector focused. The way that blended finance model works is, according to the IFC (as around the world there could be different understandings) that every dollar of the donor funds is co-invested with IFC’s own money, the idea is to try to de-risk the investment from the DFI’s trying to come up with a balance that makes sense for each project.
The whole point of blended finance was to try to come up with solutions where neither the private sector can come in with only the commercial terms and neither should you be approaching governments for public sector-oriented solutions, as ODA is scarce. Moreover, the idea is to offer temporary subsidy and expectations that will help projects and companies go into sectors or countries that they wouldn’t normally go, but only for a limited period. Focusing that this would be mutually sustainable in a few years and then they should be able to access financing on commercial terms. The idea was to fill a gap and that is exactly what they try to do by following principles of blended finance, the two main ones are: why do you need this kind of support? is it justified? As well as: are you putting money in an entity that will become mutually sustainable?
The IFC is committed to have by 2030, 40% of their commitments on AIDA countries and fragile and conflict affected States. Risky and difficult countries. Many of these new sectors are new for the IFC, places that they have not worked in the past and would not necessarily work with if there was no risk.
The professional presented one example of a project done in Rwanda, a manufacturing facility to manufacture products that will be sold to the World Food Programme and the Government of Rwanda to treat mal nutrition. On the back end there’s a separate financing facility set to fund the farmers to increase their productivity to be able to supply the same facility with their raw materials.
Marco Venturelli – Italian Cooperative Alliance
When talking about investments in Africa, cooperatives are often considered too private from the point of view of the public sector. Social and economic lives cannot be seen as a dichotomy by the public and private sectors. Cooperatives represent the opportunity not only of production but as well as the possibility of sharing the products and profits. Many Italian cooperatives were born from the WWII and remain working until today.
To support the 1st SDG their idea is to create credit cooperatives in order to support financially the creation of cooperatives at a local level for specific sectors as agriculture and construction. They are implementing projects in African and Latin American countries. For the 2nd SDG their goal is aiming at creating cooperatives in the agricultural sector in order to guarantee food safety and agricultural growth as an economic sector. He presented a pineapple produced by a cooperative in Togo, financed by the Italian Credit Cooperative and supported by their cooperative technicians.
They are focus as well on other SDGs among the creation of decent job conditions and reduction of inequalities, by promoting the inclusive nature of jobs and being strongly committed in the actions for the climate, specially trying to fight the water problem worldwide and one of their main points is among the basic principles of the ICA which is the creation of partnerships.
Leonard Mizzi – Head of Unit “Rural Development, Food Security, Nutrition” European Commission
“Africa doesn’t need charity, but needs true partnerships, and Europe needs these partnerships just as much” was a quote by Juncker, head of the European Union. There’s still a need for investments in agriculture, as it is considered extremely complicated. Maybe the pineapple has arrived in Europe but how to make other products reach the international market as well?
Mr. Mizzi argued that the Commission is doing a lot of work on organic and fair trade, but according to their studies, it is possible to lift up small marginal farmers from poverty but in this way we will not reach the SDGs dimension in a global way. The External Investment Plan has to be used to leverage the investment areas in which the private sector doesn’t invest, which are digital, small and micro enterprises, urban, agrobusiness and energy. This part of multi-financial finance will be steering in the next 12 months as a scaling up of this experience to fill the gap of the SDGs agenda for Africa.
It is important to discuss with national governments how strategic jobs can be created. It is a pity, he claimed, that in Africa nowadays there is no strategy for the creation of jobs. It is impossible to use this investment model without a holistic systems approach where there is Ministerial coordination and a vision that captures the main sectors that should be invested on. Regional trade is not sufficiently mentioned and if Africa wants to become a potential big partner for international trade in the next years, it needs to start by investing in intraregional trade. If they don’t create an investment plan in a regional and intraregional way and countries don’t start trading among themselves, it becomes difficult to create the necessary jobs. The EU, UN and other actors need to identify as a global donor community these value chains, which would make a difference to facilitate reaching the SDG goals.
Makonnen Asmaron – Picini Group
The private sector with its great potential to generate inclusive and sustainable goals provides most of the jobs being an essential creator of stability and prosperity. Picini is a concrete example of how private investment in Africa provides positive opportunities, job creation, social economic environment both in Africa and Europe. They have a non-profit section called “Aperti e Solidari” (Open and Supportive) dedicated to the support of education and health. The way they do business is particular, since many compare them to an NGO rather than a company that focuses on profits. What they try to do is to improve the environment where they live and work. The actors and local companies need to respect the local needs and sharing the ethical values. In Africa the company has a strong presence and in cooperation with local government they operate projects with great development impacts.
These projects create jobs, locally and in Europe. These contracts create wealth that the companies use to finance social activities, sport, education, culture to mitigate the stresses in the communities. Jobs are crucial to prevent crisis and provide better welfare both for Africa and Europe. They are promoting projects with aim of starting business opportunities in rural and urban areas for small entrepreneurs. As for transfer of know-how and skill building there are projects in the fields of construction materials, minerals, agriculture, sewage and environment. In their health projects, apart from building hospitals and health centers, they have created a company with the aim of training local personnel. In South Sudan for instance, started training and employing soldiers to work in the construction area after years of war. They also coordinate activities with private Italian companies for encouraging them to do business in Africa, which would lead to long-term economic prospects.
Paul Horrocks – OECD Head of Private Finance for Sustainable Development
The OECD wants to ensure that their donors can work effectively with the private sector. There is also a role that they can facilitate through protection to use taxpayer money to engage in the private sector. He believes that the capital is out there and can be mobilized. Thus, there is a need to focus on the blended finance in order to achieve that. They need to make the most of blended finance in respect of scale and impact and therefore to coordinate the donors, actors and think tanks. The OECD has a slightly different approach to blended finance than the World Bank as mentioned before, as to mobilizing the private sector in order to deliver development. Under that, they comprise blended finance as in the concession or no-concession of money.
Therefore, what are the new principles developed to help the donors to be more effective and on how they engage in new means of blended finance? First, anchor blended finance with development. Second, crowd-in as opposed to crowd-out, bringing the private sector. Thirdly, aligning not only the public or international organization’s sector in achieving their interests, but as well as the private sector’s interests. Fourthly, risk that needs to be taken as well as the risk that the private sector will be taking. Fifthly, transparency, how to monitor, evaluate and increase transparency so that the private sector continues to understand what needs to be done.
Building inclusive markets to make sure they are using wisely development money. When looking at Italian actors, mainly the agriculture community, he stated that agriculture is not being very effective to mobilize the private sector. As it will be the one that drives jobs and encourages trade. Accordingly, it’s critical that they start looking at best practices, transparency, to engage the private sector in developing countries. There is a need for innovative approaches, scaling up and better instruments to try to achieve that.
Luca Maestripieri – Appointed Director of the Italian Agency for Development and Cooperation
The director began by arguing that if we see figures in investment in Africa we see that Italy is a great investor. The country will succeed in agenda 2030 because it invests in Africa. The Agency has a particular task in this involvement of the private sector. They launched two calls for proposals for the private sector in order to foster the presence of small and medium enterprises in the business of development cooperation.
The call is a fundamental tool for engaging the Italian and European private sectors in the African scenario by giving the opportunity to unlock business potentials through technological innovations. In 2017, they managed to draw results that were both positive and negative: the call was asking for private investments in the ratio 1:1, as one for the agency and one from the private companies, thus they managed to draw a good amount of private investments through this particular call. Another positive result was that they managed to bring private entrepreneurs to countries where traditionally they were not present, like Mozambique, South Sudan, Kenya and Senegal. Start-ups and big companies were part of the calls. On the other hand they didn’t manage to fulfil the whole amount that was offered from private entrepreneurs. These two calls were 5 millions each, so they weren’t able to fulfil the whole grant proposed. As well as the quality of the proposals that they got from some companies were not sufficient for the goals they intended to reach.
I was born in the triple border of Brazil with Paraguay and Argentina, in 1996. Since childhood, I realized that the world we live in is not the same for everyone. Therefore, I am currently in the second year of the B.A. in Global Governance at the University of Rome Tor Vergata to learn how we can change this scenario to provide an environment where individuals can be themselves without fear and with similar opportunities. Personally, I believe we are here to grow and be useful to our community. I hope to spend my life acting to leave this place better than it was when I arrived.