10.oN 36255 repaP 6002 Private sector roles in the partnership age lirpA Frannie Léautier and The nature and scale of development issues require effective partnerships and solutions that involve Djordjija Petkoski different sectors of society. These interconnected and systemic issues are best looked at in a multisectoral setting requiring collaborative solutions, with a deliberate experimentational feature--learning Frannie Léautier is Vice from tinkering--which represents a challenge to the traditional motivational, organizational, and President of the World accountability mechanism long established for different sectors of society, particularly the private sector. Bank Institute. Djordjija Petkoski is the Team Leader for the Business, Competitiveness, and Foremost in the current development debate is mated that malaria reduces GDP growth by ap- Development Team at the issue of the real and growing interconnected- proximately 1 full percentage point per year. WBI.1 ness of people, countries, economies, and ecolo- The most cost-effective interventions gies. The term "globalization" is loosely used to against malaria today are rapid diagnosis and ef- aggregate many of the issues, concerns, and op- fective treatment, the use of insecticide-treated portunities of this growing interconnectedness. bednets, intermittent presumptive treatment for Second is the issue of the scope and effects of pregnant women, and epidemic preparedness. poverty and inequality within and across coun- While insecticide-treated mosquito nets are cost tries. Third is the transference across borders of effective, at US$2.00 to US$5.00 per net, these issues relating to the heightened security con- are not affordable to the more than 3 billion cerns that come from the global consequences people in the world living on an income of less of armed conflict and civil unrest. More recently, than US$2.00 a day. A course of treatment using issues of corruption and good governance, cli- artemisinin-based combination therapy (ACT) mate change, and communicable diseases have at US$0.75 to US$2.50 is not affordable to the been seen as systemic issues that require global more than 1.2 billion people living on less than action in order to be completely contained. US$1.00 a day. Obtaining results in this and other simi- Illustration from the Case of lar areas requires multisectoral partnerships. Communicable Diseases Consider, for example, Sanofi-aventis, the Malaria, a preventable and treatable disease, world's third largest pharmaceutical company kills more than 1 million people--most of them with a commitment to the southern hemisphere, young children in Africa--each year. The disease and a focus on malaria. also takes a high toll on households and health Sanofi-aventis set up an Card Access care systems, impeding development. It is esti- Program (CAP) that targets each malaria patient Private sector roles in the partnership age group through different distribution channels, A Multi-dimensional Approach using a price and distribution policy to improve "A multi-dimensional approach...is required to ad- access to medicines and taking into account the dress [development] problems...the private sector is wide range in incomes and the complex dis- the most important engine of development, but it's also clear that the private sector can't do it on its tribution networks that exist in Africa. Sanofi- own. There are critical things that have to be done aventis had to work in partnership with public by the public sector and that's the principal area where the World Bank interacts...governments and sector entities in health, international organiza- donors need to include the business community in tions, nongovernmental organizations (NGOs), policymaking decisions and use [their] expertise and experience in making the right policy choices and religious organizations, making its malaria for a good business environment". medicines available at a "no profit, no loss" price --World Bank President Paul Wolfowitz, to these organizations. By bringing down all Remarks at the Corporate Council on Africa Dinner, Baltimore, MD, June 23, 2005 of the players' margins, including those of the pharmacists and wholesalers, the price of anti- malarial drugs can be reduced by more than 70 novation, creativity, and caring of the voluntary percent. The program is currently operating in sector, and (iii) efficiency and the ability to reach Cameroon, Gabon, and Madagascar, and is be- the scale of the private sector. ing extended within Sub-Saharan Africa. Adding to the complexity of development issues, the competencies needed to address them The Total Challenge: Reaching the are becoming increasingly dispersed. No sector Millennium Development Goals alone has all the solutions, as highlighted in the The case of malaria is an example of the chal- case of communicable diseases. This is the view lenges the world is facing and how the private of not only the nonprivate sector but also the sector is working with government and the vol- private sector, if it wants to remain sustainable untary sector to generate solutions. Taking the and create new markets. The critical issue for entire set of Millennium Development Goals business and public sector leaders is to define, (MDGs), progress at the global level is encourag- through common interests and values, appropri- ing. However, there are worrisome discrepancies ate and realistic boundaries of their roles. when one compares regions and countries. For example, Africa is off track on all seven MDGs. Balancing the Responsibilities-- Globalization of trade, advancements in The Role of Government technology, and increased mobility have forced The public sector has the option of playing a all sectors to recognize that the implications of stronger role in engaging other sectors.When no poverty are no longer borne only by a certain other sector is actively pursuing partnerships,the segment of a country's population but by the government can initiate legislative reform, create entire international community. This includes incentives, or play a leadership role in facilitat- governments, citizens, businesses, and other ing the negotiation of strategic alliances with the stakeholders. private and civil society sectors. The interconnected markets and political There is a significant opportunity for the systems now allow, and sometimes require, these public sector to harness business enthusiasm stakeholders to partner in new ways to be able for corporate social responsibility (CSR) to help to address the challenges of poverty. If effectively achieve its goal of reducing poverty. However, used over time, such approaches would evolve although the private sector and civil society sec- into a new form of organization that builds on tors can play a major role in sustainable devel- the capabilities of the three sectors: (i) breadth opment, they cannot take on the responsibilities of accountability of the public sector; (ii) in- of the government. There is the danger that in- creased participation in sustainable develop- a prominent role for business in their national ment by these sectors will create a disincentive sustainability strategies. for governments to develop appropriate institu- tions, enabling infrastructure and legislation and What's In It for the Civil Society? increased reliance on nongovernmental sectors Civil society has a solid interest in entering into for the provision of certain services. multisectoral partnerships, and other sectors Governments are starting to view partner- have a solid interest in engaging civil society for ships with other sectors and engagement of the the following reasons: (i) to share expertise and private sector as cost-effective ways to enhance leverage different core competencies; (ii) to le- their sustainable development strategies. They verage financial and technical resources; (iii) to are beginning to develop policies that encour- gain increased organizational and management age CSR in businesses, as well as support the capacity; (iv) to increase knowledge and expand engagement of the private sector in sustainable research; and (v) to increase reach, influence, development goals. Mechanisms for doing so and credibility. can include rule of law; efforts to reduce corrup- In some cases, civil society's activities and tion; and strengthening governance institutions, campaigns have created barriers, alienating and regulations, and competition. For example, the creating mistrust and uneasiness among other U.K. has created a Sustainable Development sectors. For example, civil society has played a Commission reporting directly to the Prime large role in uncovering and publicizing corpo- Minister; France and the Netherlands have pro- rate malpractices around the world, such as the duced legislation mandating corporations to re- exposure of sweatshops in Nike-owned factories port on their social and environmental impacts in Southeast Asia.This type of activity has placed in addition to their financial information; and pressure on the private sector to take responsi- several countries, such as Canada, have included bility for the negative results of its operations, which required rebuilding trust on both sides. Requirements for Success Yet, many examples are emerging of successful partnerships between civil society organizations For partnerships to succeed, the three sectors (CSOs) and other sectors, such as the alliance of business, government, and NGOs need to ensure that: between the Rainforest Alliance and Chiquita · There is sufficient time allocated for the Brands International to assure the sustainabil- partners to take stock of where things are, ity of the company's farms, and the strategic as this will create a common understand- ing of the challenges and the starting partnership between Unilever and Oxfam GB to point assess the impacts of investment by a multina- · Identify opportunities to get systemic change tional company upon people living in poverty in · Engage in dialogue for deeper under- standing of each other and discovery of Indonesia.2 These changes in corporate behavior news ways of doing things and attitude reflect the power that civil society · Apply a common vision in their respective workplaces as they develop their under- can leverage. standing, to be better able to test hypoth- eses and shift practices · Admit mistakes and learn from failure The Role of Development Partners and trials, to develop a culture of learning The World Bank Group and most other develop- and experimenting · Engage other strategic stakeholders, such ment partners interact primarily with govern- as the worker as stakeholder, or the poor as stakeholders, or future generations as ments, and can use these relationships to encour- stakeholders age the engagement of all relevant stakeholders · Build capacities to demonstrate dynamism for change and competence, and track in development partnerships. Public sector expe- record of results rience in engaging private sector actors in devel- Four Key Development Cornerstones results tracking, periodic evaluations, and infor- Development challenges require that four key mation dissemination; (vi) communication of things be properly addressed: results; (vii) institutional innovation to respond · Vision: a new story that holds people to evolving needs;, and (viii) adequate external together and keeps them going in a com- and domestic financing. mon direction · Strategy: a community of people with Unlike commercial arrangements, partner- a common understanding of the issues, what we have termed in this paper as ships for development are not created primarily "partnership" for financial benefits but mostly to share risks, · Process: a change in the debate on the issues in order to innovate, improve, and pool resources, and generate mutual benefits as shape new ways of doing things opposed to shifting responsibilities. They are · Outcome: a new form of organization The Business and Development that builds on public sector breadth and voluntary cooperation agreements, aiming for Discussion Papers encourage debate capacity, voluntary sector values, and the achievement of common targets by sharing business sector efficiency. regarding the different forms of expertise, resources, responsibilities, and risks. private sector action for development As such, they require new thinking from all ac- and the sharing of best practices. opment efforts is limited for many countries. A tors and have implications for the need to de- The series is one initiative of the Business, Competitiveness and further constraint is that partnerships require a velop new capacity. This has resulted in capacity Development Program of the World lot of time and resource investment. With many development organizations increasingly moving Bank Institute. Authors are committed conflicting priorities for scarce government re- toward institutional development and process to fostering sustainable and equitable sources, this poses a significant barrier to the for- building and to longer-term approaches. While development and effective multi- mation and nurturing of these partnerships. many agree that partnerships indeed have be- sectoral partnerships. Inefficient institutional capacity and human come an imperative and are the new paradigm For information on the Business, behavior remain the main obstacles to partner- to achieve sustainable development, it is also Competitiveness and Development ships.3 The World Bank and other donor organi- important to recognize that they are not easy Program, and additional copies of zations have the potential to be active mediators to build, operate, and sustain. The assumptions, this issue, please contact Djordjija among private firms, the public sector, and civil tools, and frameworks that leaders have used to Petkoski, Program Leader at society by assisting in the creation of an enabling make decisions over the past decade appear in- dpetkoski@worldbank.org or visit environment for successful partnerships in a po- adequate. It is also imperative for leaders of all http://www.developmentandbusi ness.org/. litically neutral territory. In addition to external walks of life to develop new capabilities if they capacity development, development organiza- expect to be successful and to maintain rel- Series Editors: Michael Jarvis tions are focusing on their internal capacity. For evance.5 and Mehmet Can Atacik example, the World Bank has recently launched training for its staff to provide them with tools to Design: James Quigley engage more productively in multisectoral part- Notes Disclaimer: The views published are nerships. 1. The authors would like to thank Mehmet Can Atacik and those of the authors and should not The Shanghai Poverty Reduction Michael Jarvis for their contributions to this paper. 2. http://www.oxfam.org.uk/what_we_do/issues/liveli be attributed to the World Bank or Conference, organized as part of the Scaling Up hoods/downloads/unilever_summ.pdf any affiliated organizations. Nor Poverty Reduction Initiative4 to create south-to- 3. Kemal Dervis, UNDP Administrator, 10th International do any of the conclusions represent south learning opportunities, showed that ef- Business Forum,Business and MDGs:Fighting Poverty-- official policy of the World Bank fective and sustainable partnerships require (i) A Business Opportunity, New York, September 11­13, or of its Executive Directors and the 2005. countries they represent. continual political commitment and leadership; 4. http://www.reducingpoverty.org (ii) programs conceived in a participatory man- 5. Klaus Schwab, Founder and Executive Chairman of the This paper was printed on stock ner that address the most pressing needs of large World Economic Forum, World Economic Forum 2006, containing at least 40% post- numbers of people; (iii) government account- Davos. consumer waste. ability; (iv) appropriate sequencing of reforms and attention to their political economy; (v)