EIC President Démarre addresses Global Development Conference
The EIC President, Michel Démarre, presented the private sector's voice at the 4th High-Level Forum on Aid Effectiveness in Busan, Korea.
The Fourth High Level Forum on Aid Effectiveness (HLF-4) took place in Busan, South Korea, from 29 November - 1 December 2011 as a continuation in a series of so-called “Aid Effectiveness” Fora that started in Rome (2003) and continued in Paris (2005) and Accra (2008). South Korea was selected as the conference venue due to the fact that the country progressed within one generation from “third world” status to an OECD Development Assistance Committee-member country. Its per capita GDP grew from 255 US$ in 1970 to more than 20,750 US$ by 2010, and today Korea is helping neighbouring countries in developing Asia with financial and technical assistance.
The 3-day forum, attended by more than 3,000 people from 160 countries, 70 international organization, 300 civic groups and several private sector representatives, was opened on 29 November with a stock-taking session titled “Progress since Paris (Declaration): How Far Have We Come?” and was officially launched with a prestigious opening ceremony to which the Korean President, Lee Myung-bak, the UN-Secretary General, Ban Ki-moon, and the U.S. Secretary of State, Hillary Rodham Clinton attended. In her impressive speech, Mrs. Clinton defended the U.S. position to tie part of its aid and she called upon developing countries to act as “smart shoppers” and to “be wary of donors who are more interested in extracting your resources than building your capacity. Some funding might help fill short-term budget gaps, but what we’ve seen time and again is that these quick fixes will not produce sustaining results”.
EIC President Démarre, who was invited by the organisers to take the seat of the private sector in the Closing Panel of the conference, commended the fact that the international development community had come a long way to incorporate the private sector into the development debate and that the Busan document was finally recognising the important role of the private sector for development. He welcomed explicitly the endeavour of the international development community to “develop innovative financial mechanisms to mobilise private finance for shared development goals” and assured that EIC would be ready to share its know-how and experience on the possibilities to make better use of the modalities for blending concessional loan and grant instruments and developing innovative financial solutions to mobilise private finance for bridging the infrastructure gap.
The 4th High-Level Forum closed with the adoption of the Busan Declaration on “Partnership for Effective Development Co-operation”. However, until the early morning hours of the closing day it was unclear whether the new Global Development Partnership could be adopted because of two fundamental discrepancies between OECD donors and developing countries on the one hand and the new Southern donors on the other hand:
- Firstly, Rwanda on behalf of the African countries and the Civil Society Organisations strongly advocated a statement to end by 2013 all OECD Tied Aid and to rely purely on partner countries’ Country Systems, whereas several OECD donors, and in particular the U.S., underscored that one of the reasons that tied aid had persisted was to get political support from within the national ambit. In her speech, Mrs. Clinton insisted that, whilst the U.S. was trying to untie aid as much as possible, developing countries should recognise the political constraints that the U.S. and others were operating under.
- Secondly, emerging donors, and in particular China and India, were not willing to embrace all of the principles for co-operation agreed upon by OECD-DAC and developing countries in Busan. After it had seemed that in particular China would be walking away from the consensus, their consent was secured only in the last minute by introducing a new second paragraph which acknowledges that “the nature, modalities and responsibilities that apply to South-South co-operation differ from those that apply to North-South co-operation… [and that] the principles, commitments and actions agreed in the outcome document in Busan shall be the reference for South-South partners on a voluntary basis”. Hence, the so-called "Southern donors" agreed to join the global partnership only on vague terms that cast doubt on their willingness to stick by principles set by traditional donors.
The OECD now envisages convening representatives from all stakeholders to create an open platform and to agree on the follow-up activities. EIC has already suggested to the OECD to look into the discrepancies between its Aid and Trade Policies which are preventing many companies from within the OECD industry from becoming more engaged in the developing world. More information on the conference and it sresults can be obtained on the conference website.
EIC President Démarre was also pleased about the adoption of a Joint Declaration on "Expanding and Enhancing Public and Private Sector Co-operation for Broad-Based, Inclusive and Sustainable Growth" which was also co-signed by EIC. He expressed his particular satisfaction that the Joint Declaration had made specific reference to the issue or Transparency in Public Procurement, on the "CoST Initiative" (of which EIC is a member) and on finding joint solutions to promote Public-Private Partnerships, for instance providing "a broad range of instruments, including financial and contractual instruments, with appropriate terms, conditions and risks management which can mitigate the political, economic and financial risks to encourage private investment in developing countries. The valuable tools developed by official agencies and Development Financial Institutions should be further expanded and upgraded to support public and private cooperation for development including Public Private Partnerships".