Law and regulation in (and of) crisis

What lessons on the governance of corporate responsibility fall from states' varied COVID responses?

COVID has prompted various reflections on how law is used (and abused) during crises*.

This blog-site focuses on the regulation of responsible business conduct, but this post reflects on more general, higher-order questions about the nature of any regulatory undertaking. (I would like to think my 2015 book was doing the same!).

What strikes me most about the COVID-law-regulation nexus is not the patterns we can see about how powerful state and corporate actors 'never waste a crisis' to pursue all manner of agendas calculated to entrench, advance or indeed obscure that power. Many colleagues'* response to the COVID crisis is, in effect, plead at this time for adherence to legal frameworks e.g. for global cooperation. This is perhaps a plea for law's 'regulatory relevance' (Findlay 2017), yet too often insufficiently couched in analysis of how law is used to regulate crisis -- but selectively or in service of non-inclusive agendas.

This brings me to what strikes me most about law and regulation w.r.t COVID.

This is the huge diversity in the regulatory postures or responses of national governments to what is, after all, a pan-global phenomenon, a pandemic of a virus that itself is non-diverse in that it is essentially the same virus everywhere. (The extent to which those responses rely on law-based rather than other forms of regulation is a separate issue).

Haines has written (2019) on how and why regulation does / does not change in the face of crisis. (She happened, incidentally, to be writing on responses to a factory fire tragedy -- a 'regulation of responsible business' issue).

Her concept of 'regulatory character' is related to what strikes me most about regulation + COVID: how legitimate and effective regulation (and related institutions) is typically not simply about the right technical models and frameworks and standards. It is about underlying economic, social and political idiosyncracies. These shape how regulation actually looks and works. Cultural context shapes regulatory design and response. It is 'responsive' at least in that sense (although, as above, power dynamics shape regulation too, of course!).

Some states have regulated COVID social distancing fairly lightly (e.g. without deploying criminal penalties). In those cases, some of those governments have regulated lightly apparently confident that they can rely and draw upon something relative intangible in the national 'character' about voluntary compliance, cooperation, self-regulation, social cohesion and responsibility -- without necessitating sanctions and penalties.

If I am right, these societal characteristics provide what I might call a regulatory 'resource'. This means the regulator's toolbox (including in crisis) does not just comprise various models and approaches with various merits, trade-offs, etc. It also potentially comprises the repository of societal compliance (etc.) characteristics and inclinations. These must be decisive not only in whether any regulatory intervention gains traction or purchase, but also in how one designs the regulatory response (here, to crisis) in the first place.

Elsewhere (e.g. here) I have reflected -- in the context of regulating responsible business conduct -- that existence and degree of a critical mass of ethically-minded consumers is a principal regulatory 'resource' for regulatory design. Indeed without it, it may not matter how sophisticated (etc.) the regulatory regime otherwise appears.

COVID strikes me that I was potentially onto something. That's all! Scholars of responsible business and its regulation ought perhaps pay more attention to regulatory 'character' and cultural context, including -- in strategy terms -- to better identify the nature and extent of regulatory 'resource' that proposed governance models might seek to take advantage.

JF

* = see here (for example) some short essays by ANU Law colleagues on (international) law and the COVID crisis.

[This is the first post after a 6-month hiatus].

Corporate culture: capital vs social capital

Australia is this week absorbing the final report of the Royal Commission into 'misconduct in the banking, superannuation and financial services industry'.

What is at the heart of the disregard shown by retail banks and finance houses for regulation aimed at protecting consumers from the excesses of the pursuit of profit motive?

As ANU's John Braithwaite has said, a core dilemma of regulation is "when to punish and when to persuade" (1992+).

Command and control-style punishment and sanctions are not the only way to regulate. There are many reasons for non-compliance, suggesting that regulators sometimes need to preference dialogue and engagement over knee-jerk automatic punishment. There is a strong case to be made for regulatory designs and institutional approaches that privilege engagement, persuasion, education, capacity-building. Braithwaite's 'responsive regulation' theory would suggest that regulators hold punitive powers in reserve while making overtures to regulatees and seeing how they respond to non-punitive approaches. The regulator then adjusts its own approach. This will be perceived, the theory goes, as more fair and so legitimate. Entities will internalise the regulatory goal, compliance will improve and the regulator can let compliant entities essentially self-regulate, and indeed exceed what is required in pursuit of the social goal underlying the regulation.

What is a lesson from the Royal Commission?

It is that this approach, as influential as it has been, needs to be revisited. Or at least the theory needs to be fully implemented if it is to work. Not surprising, that.

The lesson is that regulators -- even where they have these powers -- appear reluctant to use them, and so err on the side of 'engagement' where sometimes demonstrative penalty seems more appropriate. The issue is whether the regulated entities are responding to signals to change. If they are not, another more intrusive approach is warranted from the regulator.

Standing back, the key word is in the first sentence above: motive.

Incentives matter: we can talk all we want about 'values not just value' and 'engendering a shift in corporate culture'. But when all is said and done, market actors respond to incentives, and clear, credible and consistent signals and actions from regulators about the consequences of non-compliance.

And those consequences sometimes need to be severe.

As Commissioner Hayne wrote, "misconduct will be deterred only if entities believe that misconduct will be detected, denounced and justly punished..." It is not deterred -- for such profitable entities -- by requiring those found to have done wrong to "do no more than pay compensation." It is certainly not deterred by the issue of infringement notices in the hope that the market or consumers will respond to those incidents by withdrawing or conditioning their custom or financing.

Responsive regulation remains a highly appealing theory, if properly implemented. It is bound to fail -- as Braithwaite and his disciples have always said -- if only partially implemented. If all the cuddly dialogic bits are followed, but not the hard and punitive bits. Regulators can and should talk to their regulatees about how to improve compliance. But they are not mere consultants to business. They are regulators. Braithwaite would insist that the regulatee must know that the regulator can escalate things, where fair and appropriate and where there is no response to overtures to comply. They must know and see that the regulator can make life very difficult.

As Braithwaite once wrote, dialogue, engagement and capacity building must take place "in the shadow of the axe".

Australian regulators need to have the axe, even if they need to be smart and fair about when to keep it in the background and pursue a more engaged approach.

This is true from banking conduct in the retail sector, to emerging models on supply chain reporting in the context of modern slavery, on which see earlier posts on this blog.

Jo

Business and human rights: 'the field'

Does focusing on a singular high-profile issue advance or distort efforts to promote responsible business more generally?

Those who write and work on 'business and human rights' (BHR) tend to describe this as an 'emerging' field, although it is not self-evident what the field comprises or ought to comprise.

The question of the proper or ideal parameters of a field seems highly academic. I have argued elsewhere* that there are some downsides to the attempt to frame many wider challenges of sustainable and responsible business in the language and logic of 'human rights'. In an earlier post, for example, I questioned whether the BHR paradigm was an appropriate or useful one for addressing income inequality.**

The question of wide or narrow framing also has some very practical aspects.

In Australia, much of whatever BHR-related momentum exists in government and some business circles is increasingly coming to focus on human trafficking and 'modern slavery' issues (which are not the same thing), mainly relating to larger Australian-listed firms' overseas supply chains. For instance, a parliamentary sub-committee enquiry is afoot to assess the suitability for Australia of a legislative model based on the UK Modern Slavery Act, which includes some basic supply-chain disclosure obligations on bigger businesses.

This trafficking/forced labour focus is not the totality of the BHR conversation in Australia, but it seems to represent an increasingly and, one could argue, disproportionately big chunk of it.

To some extent, this may be true of the BHR phenomenon well beyond Australia, or at least in some circles in the United Kingdom (where many BHR conversations quickly become conversations about the Modern Slavery Act, which while an important development is merely one intervention in one set of problems in one jurisdiction.)

On one hand this elision between 'BHR' and 'trafficking/modern slavery' is to be welcomed:

• trafficking and forced labour issues are objectively important in their own right;
• 'focus' on them is not necessarily something narrow since even seen in isolation this is a big complex problem to face;
• focus on these issues aligns with Australia's reputation for innovation and commitment in addressing human trafficking through criminal law provisions and policy work;
• and a focus on this set of issues can conceivably act as a proxy for BHR issues more generally, including in sensitising business to wider BHR-related issues, increasing the scope for business to be receptive in future to initiatives that go well beyond supply chains and trafficking + forced labour issues.

This last factor is not unimportant: unless you subscribe to the overly-enthusiastic idea that the BHR paradigm has had a 'magic' effect in galvanising business engagement***, one can recognise the value of any initiative (such as one on corporate supply chains and trafficking / forced labour) that reassures yet challenges business to action even if this is action only on one aspect of BHR problems.

[In any event it may be inevitable that any Australian BHR attention focus on such overseas issues: without trivialising BHR issues arising here at home, objectively those prevalent in settings abroad are of far greater scale and seriousness. Trafficking and modern slavery issues abroad also happen to have an influential business leader, so again the special focus relative to other BHR issues may be inevitable. It may also be natural for advocacy, policy-making and business to be content to ride with one (objectively important and complex enough) set of issues: it gives advocates a sense of something happening; it gives policymakers an example of Australia's commitment to human rights; it gives big business a readily understandable and identifiable issue, target or problem-set (whereas acting on 'human rights' generally covers a very wide area of possible activity).]

Yet on the other hand, BHR is about a great deal more than human trafficking and forced or slavery-like labour. Even the sphere where 'labour rights' and internationally protected 'human rights' overlap comprises many more issues than is suggested by a focus just on corporate supply chain human rights dynamics, and then within that on human labour trafficking (etc) within supply chains.

If there is anything to this observation, it may create something of a dilemma for those interested in an overarching BHR advocacy strategy, as well as those (for example, within government agencies) interested in or required to give content to Australia's implementation of the UN Guiding Principles on BHR more generally: does one direct energies to an issue that is attracting at least some attention and interest, hoping that it will not displace other important BHR issues and themes?

'BHR' on one had comprises more than the 'modern slavery' agenda. Yet at the same time BHR (at least understood as a distinct set of claims grounded ultimately in international legal standards with, in that sense, relatively narrow application) is not necessarily equipped or suitable as the framework for tackling and resolving complex issues such as forced labour and associated human movement. 

Jo

* On the idea that some contributors sketch the field of BHR too broadly, see here, pp 6-7.

** On the income inequality question, see here.

*** On this supposed 'magic' transformation see the 'Alchemy of BHR' blogs.

Trumping the responsible business agenda

What would a Trump presidency mean for the responsible and sustainable business agenda? 

Even as we question the limits of expert analysis, it keeps pouring in following Donald Trump's remarkable US presidential election victory, coming as it did with Republican capture of both legislative houses.

Well, here is my small contribution (on the issue that I follow).

Overall I think that it is hard to envisage a Trump administration pushing for governmental and regulatory action on the overall sustainability agenda, and on promoting corporate responsibility and accountability.

For instance, a Business and Human Rights 'National Action Plan' is not something one would imagine near the top of any policy agenda.

Yet there are two related points that might be made:

1. Overstating government

Perhaps we sometimes overstate the relative significance of formal institutional regulatory and policy initiatives to the furtherance of this agenda, or at least to preventing, solving and remedying adverse human rights impacts of business activity where these are a risk or reality.

In this sense, this election result may not derail or detain that agenda as significantly as one might suppose. Human rights promotion, level playing fields for responsible firms, remedial avenues, etc cannot be left to non-governmental actors. But governments cannot do everything. Without promoting an abdication of governmental roles and responsibilities, in the Business and Human Rights / corporate sustainability / responsible business field it may be that we have all focused too heavily on what governments ought to do, relative to alternate or parallel strategies to transform fundamental market and consumer incentives, mindsets, behaviours and patterns in ways that might engender faster and more profound change.

...

2. Under-estimating business

Perhaps we can (or must...) see this outcome as an opportunity to explore further the many vital and vitalised vectors and avenues for corporate, civic and consumer actions (and coalitions thereof) that do not necessarily rely on government to lead or steer.

Indeed the existence of a reluctant or recalcitrant or reclusive government on this score might indeed stimulate all sorts of unexpected enlightened activity in this sphere, often led by business and investors. This may include a greater convergence of the BHR agenda with core commercial ideas about value-creation, productivity, competitiveness and so on.

...

In short, it is not necessarily all bad news.

(There is also the question of whether / how any deceleration and adjustment on global and regional free trade agendas might affect that emerging body of work on the intersections between trade and investment regimes, corporations, and human rights.)

Jo

More generally ...

Its been nearly two months since my last blog-post -- a reflection of just how much information and analysis is 'out there', a volume and pace that does not necessarily make for better-quality decisions.

I can only use the fact of this time-lapse as a metaphor for a point made in some earlier posts about the proliferation of initiatives and normative and reporting frameworks relating to sustainable, responsible and accountable business in society (here is an example).

This flurry of activity is hard to criticise, yet should not be an end in itself, can lead to new indirect definitions of 'compliance' in business & human rights terms, and does not necessarily help us solve the underlying problems.

Business, poverty and signs of confusion

Some skepticism of policy trends promoting the private sector's role in meeting development goals is healthy.

But there is a 'but' here.

The 'but' is that skeptics risk confusing means with ends, in ways that sound stridently pro-poor but which might occlude opportunities to harness (or unleash) private enterprise, in ways that might hold far more development and empowerment potential than the aid schemes of conventional development practitioners ... 

Take the latest Gaurdian Development Digest network's email this week.

There is a post (here) that laments the shift in development aid policy towards helping promote trade, investment and the liberalisation of markets. Whatever its merits, this makes the bizarre suggestion that "globalisation has made a tiny proportion of people better off." OK, the environment has suffered and China's sprawling migrant mega-cities may be awful -- but the author is determined to ignore the evidence that China's development has lifted hundreds of millions of people out of poverty. 'Liberalisation of markets' was integral to that process.

The confusion and contradiction among these skeptics is illustrated in the same Guardian issue, which carries a post on the challenges to attracting private investment in Africa's energy sector. Without this investment, Africa cannot create jobs, electrify hospitals, light classrooms, etc.

Attracting investment of this sort has huge pro-poor developmental implications.

Aid that helps countries erect regulatory frameworks to enable this, for example, surely cannot be dismissed as 'neoliberal' as if that easy, glib label explains everything we need to know. That is lazy, self-satisfying criticism.

It follows that (for instance) shifting UK aid policy to help improve the investment climate in poorer countries is not simply a self-serving process of diverting aid towards corporate interests.

The contradiction on that one page of the Gaurdian hub suggests that some observers want development, but only by certain means. These means, for them, must not involve any possible benefit to the private sector, local or foreign. Poor people good, companies bad.

This is so short-sighted, condescending and statist that it is hard to know where to begin attacking it.

Development targets are so hard to obtain and the ends of these development goals matter. If the means to achieving them involve opening up markets in ways that foster productivity and growth and opportunity and financing, it should at least be considered. Many development types seem instinctively, almost ideologically, to reject it.

Now, development is of course a process, not just a set of outcomes.

That is, the manner of the process matters. How things are done (participation, inclusion, etc) are as important as the achievements. Otherwise, if only outcomes and targets mattered, we would all be praising Rwanda's development achievements. The reason many right-thinking people do not is because they recognise that these goals are achieved in a political context where people are not free to mobilise to express their disagreement with government policies designed to benefit them ...  

Nevertheless, the ends matter too, at least to those directly affected by stubborn poverty traps.

It follows that if altering the thrust of development practices towards facilitating the prospects for business growth, investment and job-creation holds promise for bringing whole populations out of poverty, the fact that this might create investment opportunities for private business owners is not, on its own, a reason to oppose them.

This must be so unless growth is a zero-sum gain, whereby any gain must necessarily be at someone else's expense. I'm no development economist, but intuitively that seems wrong.

Development policy cannot be reduced to market-creation, and aid spending cannot simply be about opening doors for one's home corporations to find new markets -- but the desire to avoid benefiting private sector firms cannot itself justify opposition to schemes to increase and liberalise trade and investment that might have direct and indirect pro-poor benefits.

In contemporary Africa, policies calculated to improve the business environment are not simply the manifestation of global capitalism vanquishing the interests of the poor. Nor is the UK's shift in aid policy (and others like it) simply designed to promote British industry at the expense of local people in developing countries.

The fact that these new pro-growth aid policies and related economic opportunities will be distorted by powerful, self-interested elites is a manageable risk. Otherwise we accept that 'aid' only comprises hand-outs of the old-fashioned kind, which are also manipulated politically and yet hold no promise of economic self-empowerment.

There are much wider structural issues of trade and investment that affect the prospects of emerging out of poverty: aid to help build local business and attract investment should be balanced with aid to help build the capacity of countries to engage in trade and investment negotiations on better terms.

Jo

See here for previous posts expressing caution with the tilt towards business's role in development.

Africa: the use and abuse of 'innovation'

No-one wants to be heard to oppose 'innovation'.

It is not fashionable to suggest that the search for new approaches, whether in business or policy-making, can perhaps distract us from honest analysis of why conventional approaches are not working.

While the 'innovation!' cry seems everywhere at present, it is not often clear what it means to foster innovation in any field.

This is so, too, in relation to the issues often covered in this blog: the regulation of responsible business in developing societies, and the governance of public-private development cooperation.

Implicit in that call, of course, is a recognition that conventional approaches are not working. 'Old' approaches (for example, to promoting the rule of law in other societies) are often conceptually sound but face enduring barriers in practice. No amount of privileging innovation over implementation might be able to surmount these barriers. Yet the prevailing 'innovation' rhetoric can hold out the false promise that these barriers might be side-stepped altogether.

We hear a lot about the need and/or scope for innovative approaches to unlocking Africa's potential. I'll call this the 'innovation trend'.

In parallel is current rhetoric around Africa as a continent whose poorer and unemployed millions are best understood as would-be innovators and entrepreneurs. I'll call this the 'innovator trend'.

In development policy circles, the rhetoric of the innovation trend is undeniably positive. It supports a perspective that seeks potentially transformative break-throughs and short-cuts. The innovator trend is equally positive: it has an empowering intent that casts the continent's poorer people as having economic and development agency and potential, rather than as mere passive recipients or observers.

First, the 'innovator trend'. The goodwill that accompanies current portraits of the continent as full of latent 'innovators and entrepreneurs' has an unintended dark side. Many millions of Africa's rural and urban poor are not 'innovating' but simply trying to secure less precarious livelihoods; to cast them as incipient entrepreneurs is less condescending and opens the way for (self-)empowering approaches. But it can also represent a denial of the reality of poverty, and of the political context for addressing it.

I wrote on this recently in something published by the Bertha Centre for Social Innovation at the Graduate School of Business at the University of Cape Town, South Africa: here.

Turning to the 'innovation trend', it is becoming rather skewed. By 'innovation' in African development is typically these days meant technological innovation, and increasingly digital / IT tech-based innovation. The field is attended by what I think is unfounded hype about the transformative potential of IT tech-based solutions.

In particular, much of the excitement around at present is based on unsound analogies that take mobile phone sector trends in Africa and, from these, project that the continent's new dawn is not only at hand and handheld, but is less than a finger-length away. This conversation suggests that if only the right technologies and ap's could be designed and scaled-up, in development and growth terms Africa would soon join Asia, and then overtake Scandinavia... This is not helpful even if it is uplifting.

I noted (or rather, ranted) in a previous post that one cannot necessarily 'leapfrog' all development, governance and growth problems in Africa simply by waving the wand of 'innovation'. Nor are there tech-based solutions to the political, policy and governance issues that are inseparable from refashioning whole economies and societies.

Innovation vocabularies in the African development context have a negative dimension. By placing emphasis on hopes for tech-based quick-fixes to enduring developmental challenges that require conventional reform efforts, the turn to 'innovation' rhetoric might in fact represent a form of fatigue.

If so, championing innovation also smacks of a form of desperation in the face of enduring conventional bottlenecks, barriers, deficiencies and dysfunction.

I am not saying that innovation is easy, only that development is hard...

Jo

ps -- here is a previous post, reflecting on how corruption is a form of 'innovation' -- a new way around systems that are not 'working' in the eyes of some who have their own motives. How does a society capture the evident social capital that fosters innovative corruption and harness it for pro-social outcomes?

WEF Africa: leapfrogs and left-behinds

One can seek short-cuts on long-term problems. But for all the excitement about innovation in Africa, one simply cannot 'leapfrog' all problems.

There is much enthusiasm about the scope for technological innovations and related information-sharing platforms to unlock Africa's growth, development and even democratic potential.

Much of this enthusiasm is justified and good. A hot-off-the-press example of this is a recent post by Michael Hastings on why technology-based 'solutions' for health, education, financial services and other issues provide major reasons for optimism about Africa.

That post relates to this week's World Economic Forum (Africa) in Abuja, Nigeria (7-9 May). 

This event also reveals, and champions, considerable business and social innovation in contemporary Africa in order to resolve / avoid infrastructural and developmental bottlenecks, scale-up markets, reach new consumers, provide new services, and so on. Some of the innovation is in terms of new forms of relationships (principally between business and government) for achieving inclusive, sustained and sustainable growth in Africa. Some of these are innovative relationships around innovative technologies, such as increasing government transparency through making more public documents available online.

As said, this is very well and good: may a thousand million centers of energy and daring send ripples of hope and waves of green, inclusive growth through the continent. I do not say this sarcastically. For example, one solution to Africa's energy poverty (and one with considerable other benefits, including in carbon footprint terms) is the growth in off-grid localised generation and distribution networks.

Yet the mini-grid trend is itself indicative of an issue that all the WEF-style discussion of innovation, entrepreneurship, and leapfrogging cannot and should not obscure.

This is that businesses and enterprises of all sizes in Africa are, like its individuals and families, typically compelled to be innovative in many respects because of poor state capacity to provide basic public goods and services. My former Oxford Analytica colleague Hannah Waddilove remarked this week that what can be seen positively as 'entrepreneurship' for example in providing bottled water for retail is also indicative of the failure of state service-provision.

Previous posts have noted that the scope for public-private cooperation in meeting the development agenda is unrealised, as is the untapped potential for private provision of public goods in Africa. However, a theme of these posts has also been that the state still very much matters for long-term sustainable development in Africa, perhaps more than ever.

In this sense, innovation that by-passes state incapacity may be imperative, welcome, or inevitable. Yet it creates a risk that short-cuts and leapfrogs -- valorised as 'innovation' -- might have a long-term negative effect. They might result in undermining the capacity or incentive for the state to respond to, and provide for, its citizens. If we tie progress to innovation that has a primarily commercial orientation but do not 'innovate' to link this in to building more capable, responsive states, many people might be left behind (even more) when the leaping begins.

Jo

See this previous post on 'corruption as innovation' in the context of state incapacity and bottlenecks.

See these pieces on inclusive growth (here), and a post-WEF Davos one on inequality and risk in Africa's growth path (here).

See too a WEF-related post I wrote this week on the 'African Arguments' platform (Royal Africa Society), here.

'Partnering' business for development

In the new fashion for cross-sector cooperation, are we tending to distort the term 'partnership', applying it to things that are either just dialogue, or normal cooperation with regulatory requirements?

And alongside all the promise that lies in the convergence of public and private sector focus on shared development constraints, are there not some concerns?

Convergence and blurring are related ideas, but one has a positive sense and the other a pejorative one.

So policymakers have 'discovered' the private sector as an 'actor' with impacts and interests relevant to development. Duh. But we now risk too rapid a transition in which proper parameters and principles have not yet been worked through.

Scaling-up the private sector's developmental impact was a key theme of last week's inaugural high-level meeting on global partnerships for effective cooperation for development ('GPEDC'), held in Mexico.

This blog is very 'pro' looking for ways to unleash-yet-harness the energies (etc.) of business in support of sustainable development aspirations and imperatives. Yet one overwhelming theme at and message from the GPEDC agenda / outcomes was not really about partnering for development (in the sense of systematically looking for areas and issues where business strategy / self-interest and government policy / duty overlap).

Instead, a major focus was about shifting from external financing of development (donors) to 'domestic resource mobilisation'. That is, taxation of business activity and constraining licit and illicit capital outflows, retaining more value within regions such as sub-Saharan Africa. (See para [4], [20-[24] of the outcomes document). This is a very sound idea (see a previous post on taxing for development in Africa). Especially for heavily indebted donors, and some developing country governments which might become more democratic if they become more reliant on and responsive to local taxpayers.

But a focus on taxation is not 'partnering' with business for development, nor is it public-private development cooperation.

It is a basic function of the state to tax and spend, and a basic obligation of a firm to pay, and to complain or leave if it does not wish to. When regulatees share the regulators' vision and cooperate, this improves compliance and eases regulatory burdens. But tax compliance is not cooperation, it is an obligation. Cooperation comes where business and government enter dialogue about what the taxation envelope might consist of. Even then, this is not a relationship of equals, for a number of reasons on both sides.

It is a basic ideal of development policy to eventually wean a country off external funds to enable it to finance its own development. To do so, one wants to think less about particular partnerships with business here and there (helpful as these can be), and more about creating an environment where business can flourish, so that appropriate social shares can be taken and distributed, building a better and more sustainable, inclusive society in which (in turn) business can flourish more. Virtuous cycles, and so on.

Sure, there is scope for greater cooperation, expertise-sharing, dialogue, etc between the public and private sectors. But these are not necessarily 'partnerships'.

Cooperating to find ways to help developing countries to tax more fairly, consistently and to spend the proceeds on developmental purposes is something to be explored. In previous posts I've repeatedly noted the initially counter-intuitive idea that a major investor might help its host government improve its tax and regulatory capacity. This way business can know what its fiscal exposure is, but also know that its taxes will in fact lead to better infrastructure, a healthier and better educated population (workforce / customers), and so on. Cooperation like that is to be welcomed, and specific partnerships may help deliver it.

But 'partnering for development' should not now mean everything that vaguely relates to business. Some of those things are just 'development'. Hence the 'duh' above: why is it such a revelation to donors that business can make general and specific contributions to development goals, and may in fact be interested in more peaceful, prosperous societies?

The social responsibility of any one corporation is not open-ended. One needs only pause for a minute to know why this is a good thing: business is not accountable in ways that policymakers (in theory) are. Hence the previous post, making the point that business and government may 'partner' but are not true 'partners': governments must lead, serve, respond, take responsibility.

Excitement about 'partnering' should not obscure the state's duties, and the state's capacity shortfalls without which it cannot partner effectively.

Blurring these lines is not in the interests of business, or in the public interest.

Where government functions as it should in Africa (or anywhere), there would perhaps be nothing shocking and anti-progressive about reiterating (with caveats) Milton Friedman's adage that the social responsibility of business is to grow, employ, obey laws, pay tax ... the social responsibility of governments is to finance development by planning, supporting, taxing, spending. There is convergence, there are shared interests and vulnerabilities, but there are separate spheres, and there is value in that. Friedman had some objectionable ideas, but it is too often overlooked that he cherished freedom. Do we want the public and private spheres to blur?

This blog says that the private sector inhabits a public world, and with it various responsibilities. But that does not mean business can or should do it all, or that government can absolve itself of its duties by producing a soup of partners.

In academia, 'multi-disciplinary' scholarship is useful for cross-cutting problems, but by definition relies on people who first have a strong grounding in their individual discipline, and only secondarily have an openness to other forms of knowledge. So it is with development: each sector needs to succeed in its own sphere, while looking out for judicious combinations and efficiencies. Societies need to resolve where those spheres lie, what is private and what is public.

These are big questions of ideology and social-political preference. The current 'business and development' debate can obscure that this is so. Does business want more social responsibility? Do we want business to have more social influence?

These things need discussion, not what I call the NDL: the New Disapproving Look. One gets it these days if one suggests that not everything that matters can be solved by some or other public-private dialogue and, of course, a partnership. 'Only connect!' and all will be well? I do not think so.

On a practical level, firms and departments may not be very good at partnering, or sure about it. The NDL and the new high-level rhetoric on engaging companies and investors in development can obscure the extent of ambivalence that still exists, within both bureaucracies and corporate structures, about expanding explicit links.

As with all high-level meetings: they matter, they steer, but they are generally aspirational, not declarative. Greater cooperation is a goal and a process, but it is hardly happening all around us. Policymakers need to show both the public and potential business 'partners' why partnering is more efficient and effective. Intuitively it seems so, and these linkages hold enormous promise for dealing with development bottlenecks and business frustrations. But more proof is needed, that partnering works. 

And in Africa and beyond we must keep an eye out that 'partnering' is not a cover under which the state (realising how few expectations it can deliver on) tries to abdicate its role or responsibility, or a cover under which business (fearing the effects of unmet expectations) tries to partner so as to say 'we tried to partner'.

Jo

Regulating business for peace

Failure by business to implement socially responsible practices also represents a failure of public policy.

Where business falls short, blame is swift but such failures are ultimately regulatory failures, the failure of public policy to reach in to business and open it to the influence of public values, as Parker argued in her excellent Open Corporation (2002).

The pace of business engagement on social and infrastructural development bottlenecks in Africa is welcome. Given business impatience with public sector planning and delivery, and firms' long-term risk exposures and opportunity costs if development imperatives are not met, this enhanced engagement is also somewhat inevitable. Often business is ahead of policymaking in assessing and seeking development gains that align with business interests.

Yet the state still matters in Africa, perhaps more than ever, and excitement about the role of business in development can obscure this.

It is short-sighted to believe that business sustainability efforts can be sustained without relying, ultimately, on the powers of the regulatory state.

A previous post made this case, pointing to recent research by Rory Sullivan and others (here). A related post noted that implicit in the (much-hyped) concept of public-private partnership is a capable state, one not only fit for partnering but able ultimately to steer the development agenda from a basis of duty.

We talk of business 'responsibility' for human rights and other issues, but for governments these are questions of 'duty', a concept of a somewhat higher order.

In this sense, PPPs are not truly equal partnerships. The state must lead, and must bear the ultimate responsibility. Business should not want it any other way, however impatient it might be.

The fact that many of these practices are not subject to mandatory regulation can obscure this fact. Despite all the rhetoric on partnerships and public-private convergence on development issues, governments and business have both legitimacy-features and obligations of a fundamentally different level and kind. Again, despite welcoming the new pragmatism and engagement on public-private cooperation for development, business leaders would not, in the long term, want it any other way, and nor would a democratic society.

I write this because this week I speak on a panel on the social and governmental factors of long-term investment in Africa. The audience wishes to focus on what business can or should do more or less of to find local or national development synergies. All good and well, and the topic of next week's high-level meeting on global partnerships for effective development cooperation (see recent posts). Yet such conversations sometimes tend to gloss over the state, which is inconsistent with the idea of 'long term' thinking. A previous post made this point.

So business-led initiatives on a range of issues from peace to sustainable development are to be welcomed. Many of their issues lie beyond what is likely, possible or desirable for public regulation, or are necessary because regulatory impact is weak. But the state's role cannot be side-stepped.

Consider the various 'business for peace' initiatives. The UN Global Compact launched its one recently, and this week (for example) an international conference takes place in Belgium on 'Business for Peace'. Business-led schemes are, as said, both welcome and somewhat inevitable (if not always satisfying or universally subscribed too). Yet the proliferation of guidelines now available to business on conflict-sensitive practices should not be seen as a substitute for a regulatory or pre-regulatory strategy on the part of policymaking. Public policy can (and often should) promote self-regulation by business on such issues, but this is conditional or supervised, the regulation of self-regulation.

Recently, Anette Hoffmann made the point that whether business is able to adopt and implement conflict-sensitive business practices will depend on much more than the business alone. There is low risk that business 'captures' this regulatory space, retarding more effective public regulation; there is perhaps a greater risk that policymakers see these issues as running themselves, without the need to 'reach in' and stimulate, support, or require these behaviours of private sector actors.

For this reason, my forthcoming book is called 'Regulating Business for Peace' (CUP). The private sector shares with policymaking many of the latter's interests in peace and prosperity. But the process must be influenced, steered, shaped (ie, 'regulated'), even if sometimes only lightly, by the public sector. Africa's development is too hard, too important, and too strongly underpinned by profound duty to be considered a true partnership.

All who are partners are not equal: some partners hold a higher duty than others, and the private sector will be the first to agree that the public sector must lead.

Jo

For a previous post distinguishing 'duty' and 'responsibility' see here.

'Core business' and sustainable development

Next month will mark an important juncture in global debate on engaging the private sector in achieving development goals.

The inaugural high-level meeting on global partnerships for effective development (here) can be seen as part of the long (already well in train) build-up to the 'post-2015' era, where global public policymaking seeks consensus on overarching developmental priorities.

The post-2015 process matters and, like the 2000 Millennium Development Goals, the goals and targets agreed will provide a big steer for thinking and action across ensuing years. Yet this macro-framework is hardly the entire universe of development, and at many other levels, on many issues, policymakers are exploring what roles business can play in meeting development imperatives and aspirations. It is not all one-way outreach from the public to the private sector: some parts of big business are also seeking to influence policymaking, including because of their recognition that developmental problems or possibilities have a direct (especially longer-term) relationship with business ones. The previous post made this point.

There is much that a blog on the intersection of business, society and government could cover (not least around who one means by, or who gets to speak for, 'business' or the private sector). This post reflects on one issue where two big trends meet. Those are the trend on the 'engaging business in meeting global and national development goals' and the one on 'promoting responsible and sustainable business practices'.

Big business will often argue that its best contribution to wider development goals is to flourish at doing its 'core' business. It is short-sighted to dismiss this argument as simply a disingenuous rhetorical device for avoiding wider social responsibilities. In the fundamental activities of procuring, employing, tax-paying, etc, lie far more transformative development potential than the sometimes therapeutic activities of conventional corporate social responsibility / investment activities.

Aside from fair and appropriately used taxes, the best development contributions of big business will almost certainly come from leveraging their core activities. For instance, mining house Anglo-American's procurement budget is 100 times its social investment budget: finding ways to localise some of its supply needs in operating countries holds far more promise of economically empowering local people than exhorting it to devote more funds to social investment programmes.

The global debate next month is important, but more significant will be country-specific mechanisms of conversation and collaboration that find productive linkages between business strategies and national/local development plans, without necessarily privileging some firms or sectors over others. This is one feature of TPI's roadmap this month on engaging business in development.

To leverage the development gains of 'core business' activities to their full, those core activities must meet their full potential in business terms: to harness (developmental) power one must also release or unleash it.

Thus one challenge for contemporary policymaking in Africa, the region covered in this blog, is to implement policies that enable and incentivise private business activity to flourish, while also fostering inclusiveness and distributive equity, and promoting responsible environmental, social and governance (ESG) practices. Unleashing the developmental power of business in many ways simply involves exploring scope for public-private win-wins. Yet at some level it will also raise a host of policy design dilemmas and force governments to confront tricky questions about the overall role of the state in the economy, quite apart from strategies for conditioning unleashed business in appropriate ways that ensure 'people' and 'planet' are accorded value alongside 'profit'.

Those who work in-house on ESG issues are very familiar with trying to bring issues into the 'core' boardroom from the perceived priority periphery. Yet as obvious and familiar as it sounds, what efforts to engage business on development goals have in common with efforts to promote responsible business practices is that their success is likely to depend on how closely they can be aligned with 'core' business processes and thinking.

The challenge for those concerned about longer-term sustainability and equity issues (whether working within or outside major firms) is also to redefine in credible, persuasive terms what issues count as 'core' issues. In mechanical or system terms, gears are what link to the engine: the task of leveraging and redefining 'the core' in ways that maximise developmental gain and minimise social and environmental harms is a profound exercise in gearing.

Jo

See this post from a year ago on the post-2015 process, and subsequent ones on this blog.

Responsible lobbying and responsive government

Will it irritate some readers to assert that serious business leaders are just as interested in inclusive, sustainable growth as responsible public officials?

I find the statement unsurprising. Even if there is still more rhetoric and hyperbole than anything else about public-private action on meeting development goals, in my view no-one has demonstrated why the policy risks of engaging the private sector in resolving development challenges outweigh the potential gains from appropriate collaboration.

And here I think the real question is not collaboration, or having conversations about collaboration. Again, those seem obvious. The real question is what constitutes 'appropriate' forms of both.

Later this post observes an example from my own research that bucks the prevailing view that policymakers talk (or listen) too much to corporate views. It shows that the problem in at least one development sphere is the opposite: they do not seek the views of business, an important stakeholder in peace and prosperity.

I will start again. This longer-than-normal post makes two points. First is the one just made: major social and developmental gains are surely possible where business and government find common ground and can agree (or share) respective roles. Second, realising these gains requires deliberative engagement, but the means by which business and government seek to influence each other matters.

Global business is not representative of all that is virtuous, yet I do not propose to dwell on the first issue. At some level it appears somewhat self-evident. Take the issues that routinely top the list when leading firms make macro-analyses and scenarios about long-term risk or opportunity. I am fairly confident they are also the same issues that do (or should) trouble responsible, future-minded policymakers: inequality and exclusion, insecurity and joblessness, resource scarcity and climatic uncertainty ...

On the assumption, then, that there is lots for business and government to talk about in maximising the developmental impact of core business strategies, and in formulating public policy that harnesses private sector strengths (and fosters responsible business practices), let's turn to the second issue: what is involved in talking?

Corporate lobbying and public-private forums and pathways to explore development synergies are not necessarily the same thing, although both do involve parties trying to steer things in some way.

It is true that not all corporate chiefs are leaders -- just as not all officials pursue the public interest. It is also true that only officials represent the populace, and we must remain aware that 'partnership' between public and private sectors does not imply equal levels of legitimate authority: private economic activity is a highly important sphere of human freedom, but it is after all a public world, the public's world.

But both groups matter for development, unless we believe that governments alone hold all the tools for ending poverty and all the keys to unlocking opportunity and potential. The evidence suggests otherwise. Both groups matter, so it matters that they talk about the things that matter to both.

For business and government to understand and respect each other, and uncover what are the areas and scope for these development / growth 'synergies' [sorry], they clearly need to talk, to 'find' each other. This takes time, and trust. Implicit in that is proximity, regular contact, dialogue. How is this closeness developed or sustained, without damaging the public's trust in the process? How do big business and government discuss common ground without either one distorting or misappropriating the ground itself? How do we convince officials not automatically to distrust corporate motives, or convince corporates that sitting with policymakers can enhance their long-term strategies, not just delay or constrain them? 

Thus this post returns to the topic that the last one ended on: how do we build appropriate forums or channels of communication and influence so that we have the benefits of legitimate and vital private sector perspectives on public policy relating to development, but without subverting broader public interests by basing policy (or its implementation) on the preferences and interests of a narrow class of players?

A recent Economist article (*) on the pervasive effect of corporate lobbying noted how US regulatory authorities devising the Dodd-Frank Act met far more often with banks than with community or consumer groups. Yet my forthcoming book on engaging business in post-conflict peacebuilding reveals an entirely opposite problem: policymakers do not talk with businesspeople about shared interests in peace and prosperity, and about what business can do to contribute (appropriately...) to these goals.

Thus from Haiti to Liberia to the Sudans, I found that peacebuilding authorities meet far more often with civil society groups (many one-person outfits) than with businesspeople. Indeed typically they ignore the private sector altogether, either never considering them 'stakeholders' in the first place, or actively avoiding encounters for fear of being 'tainted'.

I could go on (the book does...). The point is that the lack of a strategy to engage the private sector on issues of mutual interest manifests as a lack of policy frameworks (safe places, platforms, parameters) for these important conversations to take place.

So whereas most of the concern is that business is too influential, on some important development issues it is not being sounded-out nearly enough.

A few other thoughts, briefly:
* Debate on responsible lobbying neglects smaller businesses, which struggle to engage with policymaking in the region I follow, struggle to make their voice heard to governments. Yet they often hold far greater promise of job-creation and local empowerment than most major foreign investment projects. There is much scope for big foreign firms to sit with government and local chambers of commerce on building backward linkages into local economies.

* In many settings, business and officialdom are the same individuals, families. Development policy must arrive at suitable frameworks for principled engagement if it is to influence policies for inclusive growth in such settings as Angola.

* In many places the risk is not that business will 'capture' the state and its regulators by having closer dialogue, it is that the state either neglects business or is predatory and extortionate.

Note that April 2014 is the first high-level meeting of the OECD-DAC global (business-government) partnership for effective development cooperation: see here. See also TPI's roadmap document ahead of this forum, here.

Jo

See the Global Compact's guidelines on responsible corporate engagement in policy debates on the development issue of climate change.

* The Economist 22 Feb 2014, p. 14, discussed in the previous post.

See here for some previous posts on the private sector's role in development.

Business and shaping the business of government

History not having ended, somewhere out there is a perfect equilibrium of state-business-civic relationships and roles, catalysing and manifesting an ideal form of sustainable, inclusive development.

Over dinners here in Oxford I envy science-nerd friends whose research seeks (and often finds) pathways, combinations, formulas to unlock or unblock cells or substances in ways that might dramatically improve life and health. Policy and political economy hold less tangible rewards. I console myself by saying that perhaps we policy folk have a similar vocation: finding judicious and productive formulas of governance and collaboration, to unblock whatever constrains, corrupts or conspires against better social, regulatory and growth models: ideal cooperative forms mapped to suit the unique DNA of particular societies, sectors or supply-chains. 

This week's post reflects on aspects of the just-published special report on 'Companies and the State' in The Economist of 22 February.

First, the lead article states that relations between business and government are becoming "increasingly antagonistic". That may be true in richer OECD countries (on which the report focuses). However, in contrast to any trend of antagonism, arguably in development policy circles and among leading multinationals there exists increasing pragmatism, mutual outreach and cooperation in pursuit of shared objectives (see for example this previous post).

Yet there is a long way to go in convincing policymakers and executives of the propriety and utility, respectively, of looking for appropriate, productive ways to harness the private sector's strengths in pursuit of greater public goods. This post on the lack of meat to back up recent rhetoric on cooperating with business makes the point, as does last week's post on policymakers' mindsets towards a business role in public health provision. In this sense, the Economist is right to conclude its report by saying that governments and business alike "should acknowledge the fact that they are partners not enemies".

Second, the report dwells on shortcomings of taxation strategies. In poorer countries, development policy will increasingly focus on taxation issues both in terms of financing development (governments) and as a strategy to foster more responsive government (donors). See here.

Third, the report calls (as that newspaper is wont to do) for less complex and convoluted regulation in order to stimulate productivity. This post argued that in stimulating business' capacity for virtue on social, enviro and governance issues in settings with low-capacity regulators, regulation that is based on broad principles rather than detailed codes may be preferable.  

Finally, the report considers the sometimes pervasive influence on government of corporate or sector lobbying. In many mid-income or developing settings, the same imbalances exist: parts of the business community either have too much access to government or too little. One challenge in feeling the way towards the ideal sustainable development equilibrium is to institutionalise effective, inclusive, responsive feedback loops between the public and private sectors, so that 'lobbying' is not a dirty word but a transparent, regulated part of the business of governing.

This is surely because in the social science of responsible business and responsive government, the microscope reveals that from cellular to system-level, the vital, fragile, organic and mysterious substance is trust: see here.

Jo

The Economist report is here.

Private sector, public goods: 'healthy partnerships'

The provision, financing and regulation of healthcare will be crucial if the best-case predictions of 'Africa Rising' are to be realised. Private providers may have a major role.

One key variable is whether public policy is open-minded enough to catalyse this potential -- beyond just the excitable rhetoric on public-private partnerships discussed in a previous post.

While some familiar patterns and problems persists, at least two broad shifts are underway in many settings. Many governments are ill-prepared for the first one, which is largely a function of demographic and economic trends: some long-term shift in aggregate disease burden towards non-communicable 'lifestyle' and diet-related diseases (such as Type-II Diabetes) associated with the 'new urban middle classes'.

The other broad shift is an increasing role for private funders and providers, not just in meeting the needs of high-income earners, but in mass low-cost, high volume goods and services, such as micro-insurance. As is true at many levels across the continent, considerable scope remains for innovative partnering, such as in Nigeria where the government piggy-backed on Coca-Cola's well-developed distribution networks to augment its own very poor distribution capacity in relation to spreading public awareness about HIV. There are public policy risks to such interactions, partner-picking and 'co-branding', but they are generally navigable.

Again as with so many things in sub-Saharan Africa's 40+ countries, there will be plenty of unevenness, with big variations within countries and as between different countries. One risk remains a growing quality gap between private and public healthcare, although some research (McKinsey) suggests that low-income groups in some countries make considerably more use of private, for-profit health services than is often assumed.

This is enough from me on the private sector and public health in Africa, since here in Oxford is a far more qualified commentator on the topic, Dr Serufusa Sikkide, whose recent blog post notes how being pro- the private sector's role in African healthcare is not necessarily an abdication of public-minded values and goals.

Implicit in Serufusa's post is that the most important shift in healthcare in Africa -- perhaps in its development more generally -- could be the mindset shift that looks to harness appropriate private sector contributions to the state's provision of public goods.

Jo

See here for a collection of some previous posts on related themes, and a recent FT article on a recurrent theme of this blog: the wider trend of engaging the private sector in development.

There is a lot of material on this topic. The issue of service-provision is somewhat distinct from public-private cooperation on healthcare goods, that is pharmaceutical products. There is a lot going on in that sphere.

See the IFC's 'Healthy Partnerships' report (2011) on how governments can engage the private sector to improve healthcare in Africa, and see here too (2012).

See here for the McKinsey report 'Healthcare in Africa: a vital role for the private sector', although now over 5 years old, and overview reports from well-known thinktanks, the reports linked here: WEF, CGD and CSIS

Finally, see here for some thoughtful contributions on the trade-offs potentially involved in increasing public engagement with the private sector in healthcare provision, albeit in South Africa, whose healthcare landscape is not analogous to most countries further north.

Inequality as risk: Davos 2014

What should business do about inequality?

Global patterns in income disparity between richest and poorest topped the agenda for global business and government leaders at Davos last week.

Expert respondents to the World Economic Forum's 2014 Global Risks report cited income inequality as the risk most likely, over the coming decade, to cause significant global disruptions, volatility and harm.

Many of the statements and media reports from Davos pointed out the (fairly obvious) 'business case' for paying attention to growing inequality: that at least for serious, longer-view businesspeople it is not merely a moral social issue but also a core strategic commercial  issue.

This is so both in terms of social and political risks, and opportunities to expand and deepen consumer markets. Very unequal societies exhibit distorted and uneven growth patterns, especially in terms of more broad-based demand. Especially for consumer-focused firms, the issue thus belongs not just to sustainability or CSR policy but to hard business strategy. In addition, as is clearly evident in parts of Africa today, as inequality becomes more tangible and visible it places governments under pressure. They respond by rolling out the sort of knee-jerk populist taxation and other policies that are anathema to business planning, rather than pursuing sustainable programmes to distribute some appropriate portion of wealth and to support those, especially the less privileged, who may seek opportunities to improve their economic status.

Conventional views would hold that the business of business in society is to help the economy grow, including by employing and taxpaying. It is then for government to redistribute some of the proceeds of growth in order to reduce any inequality that results. Beyond this basic role-division is the concept that if it is concerned about (the consequences of) insufficient action to address inequality, business can collectively lobby government to apportion taxed funds to doing so.

But what about a less conventional role -- business helping African governments not only to tax more effectively, consistently and fairly, but also to spend the proceeds more effectively in addressing social ills like income inequality?

At first glance it is assumed that businesses are not interested in having a more effective taxman. Yet in previous posts (especially here last May, also here) I have discussed the initially counter-intuitive idea that businesses can help strengthen their own regulator. Either by sector or in some other collective, representative grouping, firms with longer-term horizons in the region can and should explore ways to help governments build the capacity to assess, plan and execute social policy. Even a single firm (for example, the dominant mining firm in a single-commodity country) can do so: although this increases the risk of the firm 'capturing' the state, other institutions can be brought in to triangulate the relationship. These sorts of partnerships would at least give more meat to the rhetoric that public-private partnerships (PPPs) will transform Africa's economic and social development.

Last week's post on 'Africapitalism' reflected on the role of business in Africa in promoting inclusive growth -- not just calling for governments to ensure it.

Low or compromised state capacity in Africa impairs the state's ability to tax fairly and consistently, and to deploy and distribute those resources. In such settings it is perhaps not enough for firms to argue that they pay their dues and nothing more can thus be expected of them. It would be good (socially valuable) of business instead to look for ways to help the state make better use of taxed funds, including to promote programmes to boost incomes and income-generating capacity for lower earners and the poor. It would be smart and strategic for business to do so, too.

Jo

See an earlier post on PPPs, and on corporate responsibility and taxation -- including the view that strategic firms might help strengthen their tax authority: here.

The WEF's 2014 Global Risks report is here.

See for example this organisation dedicated to the role of business in addressing inequality.

Postscript: see Tobias Webb's post last week, also on Davos, and also on practical ways for business to help tackle inequality as part of a strategic approach.

The politics of the private sector's role in development

This blog largely shares the evident current enthusiasm for exploring more imaginatively, as a matter of public policy, the potential explicit developmental contributions of the private sector.

By this I mean not the process of using aid to develop a more functional local private sector (for the development cascade that may bring), but harnessing the potential contributions of especially big business to the achievement of development goals, as well as including business voices -- as and where appropriate -- in debates about what those goals should be and how they should be achieved.

Many posts to date on this blog deal with the issues arising in such encounters and relationships. A major theme of those posts is that far from being enthusiastic about such engagements, many policymakers either overlook their potential or, if they consider the business community, are unduly ambivalent about exploring working together on issues of mutual interest.

There is, nevertheless, a wave of at least official policy interest from OECD aid donors in these issues.

(There is alot of material being produced. Perhaps the most comprehensive and reflective survey of global bilateral approaches is a Canadian one from January this year, Investing in the Business of Development (here)).

Thus having argued in many previous posts that the problem is arguably too little attention by policymakers to the potential 'synergies' and shared goals, I use my blogger's prerogative to suggest that in many respects there exists in parallel a contrary problem: an approach that sees engaging the private sector as a development panacea, without applying the same caution and critical thinking that is applied to donor-government relations.

Indeed one thing particularly commending the 2013 report referenced above is that it rightly expresses skepticism about this new policy orientation as a development 'silver bullet', arguing that many current advocates assume that from harnessing business's interest and attributes, a 'win-win-win-win' situation must result for communities, companies, donor and recipient governments.

Such assumptions (and the enthusiasm they engender) pay too little attention to just how political, as with 'regular' development, pro-development interactions with business will be at both the general and project-specific level; in pointing out the obviously huge shared public and private sector interests in peace and prosperity, they can tend to gloss over how politicised is the question of who one means by 'the private sector' (who gets a seat at debates to shape the post-2015 development agenda? Which companies does a donor agency engage or neglect? And so on).

Thus current enthusiasm for orienting development policy in search of alignments with business tends to underplay how political, indeed ideological, will be the questions merely of choice -- choosing development partners from among the diverse 'private sector' (for working with on goals, or for discussing those goals), and indeed choosing the overall policy of building such relationships. Such choices go directly to large questions about the role of business in society generally, or the role of the state vs business in providing public goods.

In previous posts I have lamented the narrow-mindedness of most public policy for not thinking imaginatively enough about engaging with business (and vice versa). This reticence does, however, reflect very real awareness of the policy dilemmas involved and often well-founded reservations about explicitly tying-in business to development projects and policies.

Still, I'll conclude in a tone that continues the lament: yes, the decision to engage business, and then the process of doing so, is full of policy minefields and trade-offs and problems; but these are not that different from the problems and dilemmas encountered in dealing with governments and other familiar development actors. The challenges of our century are too big and inter-connected to be left to public policymaking alone, quite apart from the reality of the huge de facto development impact (for better or worse) that business activity has. One needs as many 'wins' as one can reasonably find. Public and aid policy in Africa should embrace embracing the private sector, and figure it out as we go.

Jo

Public-private partnerships in Africa: presumptions

The dismissal last week of Malawi's entire cabinet (following a procurement fraud scandal) is easily dismissed as yet another corruption headline. But it also provides a hook for a little-mentioned aspect of public-private partnerships (PPPs) -- among the most fashionable concepts and phrases in current African economic and social development.

Although there is a strong scent of doubtful panacea about PPP-talk and often little precision offered on what exactly such relationships entail, there are many obvious advantages to seeking to crowd-in private sector funding and other support for government schemes. (This blog favours greater engagement with the private sector by governments in pursuit of public goals; see for example the previous post, here).

When PPPs are idealised, societies can see big business become more directly involved (than the indirect means of taxpaying) in the co-provision of public goods; for its part, business can envisage greater influence over the roll-out of infrastructure and other projects, reassured -- by the state's involvement in the project -- about its long-term prospects and return-on-investment.

Yet less ink is usually spent on what these relationships require, beyond viable co-financing arrangements, to work.

In particular, current PPP enthusiasm tends to presume that the public sector ministry or department can in fact deliver as a partner. The Malawi story highlights familiar accountability, transparency and integrity problems with many government departments in that sub-region, but the issue will also be one of sheer capacity and the available skills-base.

The issue is important to debates on promoting pro-developmental business in Africa because PPPs assume a class of public servants and regulators capable not only of delivering utilitarian projects but of conceiving and overseeing PPPs that strive to meet public interest (social, environmental and governance) criteria as well as commercial attractiveness ones.

I think that the issue I mean to address is this: 'We often assume that the difficulty is getting business to take the wider issue of public goods seriously; but many firms accept the merits or imperatives of development goals and are often waiting for a government lead and direction; so, what do hopes for scaled-up public-private relationships in pursuit of developmental goals assume about the quality of public servants, rather than just the motivational posture of private firms?'

It would be interesting to see survey data on whether the majority of today's non-migratory young graduates in major African countries prefer a public sector job to a business/corporate one.

It is often assumed that private sector roles attract the more dynamic, enterprising and capable cohorts, while supposedly more secure but lower-paid government jobs attract those who are more risk-averse, have public service motivations, and so on.

In less-developed African countries, as business-government interactions increase around PPP models, one question that will arise more starkly is the potential drain of government talent into corporate teams. Firms may face dilemmas since their instinct to 'poach' an individual may clash with their sense that more will get done on their PPP if the talented individual remains in government. One idea is for the private sector partner to sponsor government counterparts -- as if seconding them -- to ensure these remain in government; this sounds like a recipe for corporate capture of government agencies but, if not too naïve, holds the promise that PPPs can deliver projects without stripping departments of their best staff.

The Malawi scheme was not particularly sophisticated, but does reveal a degree of entrepreneurialism within government agencies that in commercial life would be rewarded, in relevant appropriate circumstances (see this reflection on the upsides of 'corruption as innovation' here). Yet the Malawi conduct is not the sort of 'initiative' and 'innovation' that PPPs require of public servants if PPPs are to make meaningful impact, as a model, on African growth and development.

See a previous post on 'revolving doors' and the private sector's responsibility for public sector integrity as Africa rises.

Jo