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Factsheet - Private sector engagement through triangular co-operation

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Factsheet - Private sector engagement through triangular co-operation

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Factsheet - Private sector engagement through triangular co-operation

  1. 1. FACTSHEET PRIVATE SECTOR ENGAGEMENT THROUGH TRIANGULAR CO-OPERATION INTRODUCTION Triangular co-operation is a modality that helps to achieve the 2030 Agenda and contributes to tackling today’s most pressing economic, environmental and social challenges. Many countries and institutions choose to work trilaterally because they want to make use of the comparative advantages of the different partners involved, strengthen partnerships or scale-up proven solutions to development challenges. Triangular co-operation has shown to be innovative and cost-effective. By transferring ownership to all partners from the outset and involving them at each stage of the project cycle, triangular co-operation furthers deeper understanding of local contexts, offers co-created, sustainable solutions to development challenges and promotes long-term partnerships. The OECD has found that the overall number of triangular co-operation projects implemented globally, and between multiple regions, has increased over time and that the actors involved have diversified. Although governments and international organisations remain the primary actors, the private sector stands out for its increased engagement in triangular co- operation. Not least due to the need of moving from billions to trillions to achieve the ambitious 2030 Agenda for Sustainable Development, we can observe an increasing trend to engage the private sector in development co-operation and in trilateral initiatives. The OECD is collecting information on triangular co-operation projects that countries and organisations have reported on a voluntary basis. The OECD project repository for triangular co- operation currently counts 656 projects, 53 of which involve the private sector (8%). Based on information from these projects, the following three key messages can be identified. KEY MESSAGE 1: TRIANGULAR CO-OPERATION WITH THE PRIVATE SECTOR SPANS LARGELY ACROSS DIFFERENT REGIONS AND OFTEN INVOLVES DIFFERENT TYPES OF STAKEHOLDERS The majority of triangular co-operation projects that involve the private sector are multi-regional (31%), i.e. projects that are implemented among partners from two or more regions – mainly in Africa and Asia- Pacific. Overall, 26% of the projects were in Latin America and the Caribbean (LAC), 19% in Sub-Saharan Africa, 17% in Asia- Pacific, 7% in the MENA region (see Figure 1). This geographic concentration also reflects current trends in the world of social impact investing and entrepreneurial engagement supporting the SDGs, where a significant rise in Figure 1. Regional distribution of private sector engagement in multiregional triangular co-operation projects Note: The above figures are based on data that was voluntarily reported to the OECD. ECIS is a regional signifier comprising countries in the European Union, Eastern Europe, Southern Caucasus, Turkey and Central Asian states. LAC 26% Africa 19% Asia- Pacific 17% MENA 7% Africa 13% Asia-Pacific 12% LAC 3% MENA 1% ECIS 2% Multi- regional 31% Box 1. Te Mato Vai (2013-2017) To upgrade the water supply infrastructure in Rarotango, the governments of the Cook Islands, China and New Zealand partnered with the civil engineering and infrastructure company Opus International Consultants, the Asian Development Bank and the World Health Organisation (WHO). The aim is to deliver high quality and reliable water supply, which is critical for growing tourism and safeguarding public health, also in terms of increasing resilience to droughts on the Cook Islands. The project had a budget of over USD 40 million.
  2. 2. FACTSHEET PRIVATE SECTOR ENGAGEMENT THROUGH TRIANGULAR CO-OPERATION engagements can be observed across Asia and in Africa1 . Besides engaging with multiple regional partners, private sector actors are also involved in joint initiatives with other non-state actors, such as academia, research institutions and philanthropies. Almost half (47%) of the projects that private sector actors are engaged in, include one or more other non-state actors, mostly from civil society (25%). KEY MESSAGE 2: TRIANGULAR CO-OPERATION WITH THE PRIVATE SECTOR MAINLY FOCUSES ON INFRASTRUCTURE DEVELOPMENT AND GOVERNANCE ISSUES The private sector is a natural partner in projects related to infrastructure development (see Box 1). Therefore, it is not surprising that the energy sector (19%), and water supply and sanitation (8%) attract private companies to partner with governments in triangular co-operation projects (see Figure 2). In the energy sector, partners often focus on providing logistical support to enhance access to energy services in areas where it is most lacking. Hence, 80% of energy-related projects were implemented in Africa. Many of these projects relate to harnessing solar energy and laying electrical grids - only one brown project supporting fossil fuels was reported. Government and civil society is the second largest sector (17%) and projects focus on sharing knowledge, best practices and advancing collaboration on drafting policies for an enabling environment for partnerships among governments and the private sector (see Box 2). In the area of business and other services (13%), promoting fair trade (see Box 3) and establishing business opportunities or platforms (see Box 4) are common. It is worth noting that 42% of the projects that the private sector engaged in follow a green agenda. These are concentrated in the sectors of energy (36%), tourism (18%) and water supply and sanitation (14%), which includes the area of waste management. 1 Aspen Network of Development Entrepreneurs (2016), “State of Small & Growing Business Sector: 2016 Impact Report”, Washington D.C. Figure 2. Sectoral focus of private sector actions in triangular co-operation projects Note: Figures are based on data that was voluntarily reported to the OECD Energy 19% Urban Development 4% Government and Civil Society 17% Business and other services 13% Agriculture and Food Security 13% Tourism 9% Water supply and sanitation 8% Other 9% Social infrastructure and services 8% Box 4. Fair Trade Promotion (2009-2013) Six fair trade groups and craft associations from Bangladesh, India, Nepal and Thailand, together with the government of Norway, strengthened the dissemination of fair trade products in both fair trade and mainstream markets through the WFTO Fair Trade System and by engaging in policy advocacy. The budget was between USD 1 and 5 million. Box 3. ANTAD.biz Platform (2015-2019) The National Retail Association of Mexico (ANTAD), together with the governments of Germany and Honduras and Guatemala, contributed to the competitiveness of SME suppliers in the production chain by incorporating best practices in environmental sustainability and expanding the ANTAD.biz platform along with its environmental component. The budget was between USD 500 0000 and USD 1 million. Box 2. Youth Employability (2014-2016) The social entrepreneurship firm Entrena (Dominican Republic), together with the governments of Chile and the United States, contributed to the training of entrepreneurship instructors in two municipalities in the Dominican Republic. The project had a budget below USD 100 000.
  3. 3. FACTSHEET PRIVATE SECTOR ENGAGEMENT THROUGH TRIANGULAR CO-OPERATION KEY MESSAGE 3: THE MAJORITY OF TRIANGULAR CO-OPERATION PROJECTS WITH THE PRIVATE SECTOR ARE NEITHER COSTLY NOR TIME-INTENSIVE Of the projects that were reported in the OECD’s database, 55% had a budget below USD 1 million. Cost sharing among the different countries and actors involved was common among half of the respondents. Interestingly, in triangular co-operation, longer projects do not necessarily equate to larger investments: overall, only 19% of triangular projects lasting more than four years have a budget above USD 5 million. This is similarly applicable to triangular co-operation projects involving the private sector: only 4% of projects have a budget between USD 1 and 5 million (see Table 1). Table 1. Budgets of triangular co-operation projects with private sector engagement compared to the budgets of all reported triangular co-operation projects Budgets of triangular co-operation projects No. of projects with PSE % of projects with PSE No. of projects overall % of projects overall < USD 100 000 8 15% 131 20% Between USD 100 000 and 500 000 8 15% 128 19.5% Between USD 500 000 and 1 000 000 13 25% 106 16.2% Between USD 1 000 000 and 5 000 000 16 31% 112 17.1% Between 5 000 000 and 10 000 000 2 4% 19 2.9% > USD 10 000 000 2 4% 26 4% Total 52 100% 522 100% Note: No budget data was available for 134 projects overall and for one involving the private sector. The private sector does not only provide significant resources that could help scale up triangular co-operation projects in the long term, but it is also a source of creativity with the potential to innovate. In fact, representatives from the private sector are increasingly adopting approaches and business models that focus on profitable solutions to development challenges by targeting new markets and customers. Development partners can support business by identifying unmet societal needs, under-served populations as well as areas in developing countries. This support contributes to increasing the knowledge of local contexts and capacities. At the same time, development partners may facilitate the process of creating enabling conditions, addressing market failures and harnessing creative solutions. More and more, they also provide finance and guarantees to reduce the risk to start operations in new challenging markets2 . According to the data collected in the OECD online project repository, 42% of triangular projects involving the private sector have a life span between 2 and 4 years. In fact, 50% of these last less than 3 years, while only 9% last more than 7 years. This trend is the same for the overall triangular co-operation projects which were reported to the OECD (see Table 2). The vast majority of these projects were initiated in 2014. Table 2. Duration of triangular co-operation projects with private sector engagement (PSE) Duration of triangular co-operation projects No. of projects with PSE % of projects with PSE No. of projects overall % of projects overall Under 12 months 4 8% 89 14% Between 12 and 24 months 9 17% 72 11% Between 25 and 48 months 22 42% 301 46% Between 49 and 84 months 11 21% 96 15% Above 85 months 5 9% 33 5% Total 51 100% 592 100% Note: No data was available for the duration of 64 projects overall and for two involving the private sector. 2 Global Partnership for Effective Development Co-operation (2018), “Effective private sector engagement through development co- operation”, Issue Paper: Background for Consultations, Paris/New York.
  4. 4. FACTSHEET PRIVATE SECTOR ENGAGEMENT THROUGH TRIANGULAR CO-OPERATION CONCLUDING REMARKS Given the need to mobilise enormous investments to achieve the 2030 Agenda, the private sector plays an important role in helping scale up triangular co-operation projects to enhance their reach and, ideally, their impact in the long term. In today’s generation of triangular co-operation, many projects already have a multi-stakeholder nature. Nevertheless, there remain several gaps:  Awareness: There is a need to raise awareness among the private sector for the benefits of engaging with development partners. It is crucial to showcase the impacts of private sector engagement through development co-operation in terms of results for communities and businesses. This can contribute to building trust across sectors by demonstrating accountability for impact 3 . Likewise, some governments have already started working systematically with the private sector in development and triangular co-operation (see Box 5), and these efforts could be expanded.  Communication and dialogue: Creating and maintaining partnerships among the private sector and development actors requires speaking each other’s ‘language’, i.e. understanding objectives and agreeing on common frameworks. Experience of working in triangular co-operation on the ground can lead to a better mutual understanding and foster interest in the type of partnerships that are fit to work in today’s changing development architecture.  Evidence and data: Increasing tracking and documenting initiatives would increase awareness and understanding. Based on triangular co-operation data that was voluntarily reported to the OECD, private sector actors are growing contributors to triangular co-operation projects across the globe and help to drive the achievement of green goals. Yet, this is only a first glimpse at triangular co-operation with the private sector and more evidence and data on the results of these partnerships are needed.  Scaling-up: There is potential to scale up the engagement of the private sector in effective triangular partnerships. For instance, the private sector could contribute seed money to partners that want to ensure a quick start to projects or invest in re-vitalising existing partnerships by leveraging funds and expertise to grow the initiative further.4 3 Global Partnership for Effective. Development Co-operation (2018), “Effective private sector engagement through development co- operation”, Issue Paper: Background for Consultations, Paris/New York, p.23. 4 This factsheet was prepared by Rebecca McKimm and Nadine Piefer from the Foresight, Outreach and Policy Reform Unit of the OECD’s Development Co-operation Directorate. Box 5. UAE’s Technical Co-operation Programme (2017-date) The UAE has been exploring how to involve the private sector through triangular co-operation and has set up the UAE’s Technical Assistance Programme, which aims to share the key lessons from the UAE’s private sector by providing technical co-operation to partner countries and with the private sector as pivotal partner, including through triangular co-operation. Projects are concentrated in the sectors where the UAE has a demonstrated comparative advantage, namely: (a) transport and infrastructure development; (b) energy and sustainability; (c) governance; and (d) services for the finance, trade, telecommunications and tourism sectors.

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