It’s not often that we in Sri Lanka reflect on the role of the private sector in international development. At a recent seminar that I was speaking at, I was pushed to think about this in a way that made sense to an international audience.
It was the seminar on ‘Advancing Good Governance in International Development’ held in Oxford, United Kingdom, organized annually by Linklaters LLP law firm, Camfed International, Oxford University’s Department for International Development, and the Skoll Centre for Social Entrepreneurship at the Saïd Business School. The seminar, held at the prestigious Rhodes House, brings together thought leaders and practitioners from the academic, donor, microfinance, NGO, social entrepreneurial, government and private sector communities.
I made three points during my talk in the opening plenary session.
1.Private sector and SDGs
The first was that the private sector in the global south can play a key role in achieving the new global development goals, and there is opportunity for increased private sector engagement with the SDGs as part of a broader move towards inclusive business. I observed that, across the Asian region, the private sector appears to be much more interested in the Sustainable Development Goals (SDGs) agenda than the earlier Millennium Development Goals (MDGs) agenda, recognizing that dealing with SDG issues matter for business now more then ever before. He argued that savvy businesses are recognising that they have a key role to play – not just for feel good, cosmetic, CSR reasons – but because it matters for the economy and prosperity as a whole, and that has an impact on business. The strong interest among the Sri Lankan corporates at UNDP’s Foresight and Innovation for SDGs (‘2030Now’) held in Colombo last month was evidence of this shift here at home.
2. Heightened interest in good quality institutions
The second point was specifically on SDG Goal 16 (which was the session’s focus) on governance and institutions for development. I argued that, increasingly the private sector in Sri Lanka has begun to care about institutional quality and governance, recognizing that without these growth won’t be sustainable or of good quality.
The role of institutional quality in economic growth – in good economic growth – is now more widely acknowledged than before. Especially for countries like ours in the middle income transition, we need better quality institutions for better quality growth (as put forward by economist Dani Rodrik). Poor governance and extractive, low trust institutions (as also argued by my former macro Professor Wendy Carlin) and are no longer fit for purpose. That’s why many of our business and businesses leaders are interested in this. But often we find that businesses are unsure of how to tackle this alone, but are keen to work with others and be part of coalitions and collaborations.
Corruption, bribery, leaks, tax evasion – all these are a loss of resources – and in countries that have tight fiscal space as well as declining aid, these matter more than ever before. The leakages of resources hurts state capacity to deliver public services, and this ultimately affects business.
Getting the private sector involved is key. Imagine if the ideals of good governance in society can be propagated via businesses? Imagine the catalytic impact. It’ll do what governments or donors would takes years to do; businesses can get it out there quicker and wider.
3. The need for ‘agile institutions’
The third point I made was that while Goal 16 mentions ‘transparent’, ‘strong’ and ‘inclusive’ institutions, there is a need to build agile institutions; institutions that remain relevant. Often institutional quality, institutional strengthening is seen at a conceptual macro level. But institutions need to relevant. I argued that the requirements around institutions are constantly evolving – the ability of public services and governments to deliver is changing, trust in institutions may change, the structure of the economy and the nature of economic activities is changing. So how can we create mechanisms to keep institutions agile? Are the mechanisms for refining – continuously – the institutions in place? Are we listening to what people and businesses need of institutions and want them to be and do? And if we are listening, what are we doing with what we hear? How are we using that information to keep enhancing institutional quality through feedback loops? For institutions to be robust, we need them to stay continually relevant, reforming and refining along with societal and economic changes and along with what people and businesses want of them.
In all of this, one of the key challenges developing countries face is that with so much pressure to deliver development, how do we make people care about institutions? They can’t eat good quality institutions, can they? So how do we make people, and indeed businesses, care? I think that’s a fundamental problem. How do we help them see the connection between good institutions, good governance, and sustained prosperity and inclusive growth? How do we make it relevant to them?
More summary notes of our session are available here, and it draws out key areas relevant to the private sector, including:
It was noted that Goal 16 issues – such as rule of law, anti- corruption, and peace – underpin the basic business model of any private company. Thus, prioritizing progress with Goal 16 issues will allow private companies to thrive financially, become more inclusive, and contribute to broader economic development. Businesses should seek partnerships in implementing Goal 16.
The universality of Goal 16 requires different ways of thinking. Unlike the Millennium Development Goals, the SDGs apply to both developed and developing countries. This necessitates that the developed world take a hard look at its own governance and institutions. For example, addressing development in Africa requires tackling tax havens in Europe. It also requires Western donors to closely examine the effect of their aid expenditures. We must shift from viewing development as something done to the Global South, to viewing development as a collective process of global transformation.