Fiona Bruce MP represented Trade Out of Poverty at last week’s OECD Policy Dialogue on Aid for Trade as a panellist on a session entitled “How to Engage the Private Sector”.
Debapriya Bhattacharya from the Centre for Policy Dialogue emphasised that ‘connectivity’ is a major barrier for LDCs joining the global market, a concept that encompasses everything from transport to energy and lack of financial architecture. Virginia Brown from USAID seconded the need to upgrade all aspects of business infrastructure in developing economies in order to allow local suppliers to fully participate in global value chains.
Fiona stated that sharing is key to remedying the infrastructural and skills deficits of developing nations saying, “We must join the dots between government, NGOs and the private sector. Everybody has something to give in International Development and the private sector could do far more to share personnel, skills and investment with their peers in the developing world.”
Fiona suggested business parks founded by consortia of SMEs as a means of sharing services and financing and encouraging private sector involvement. She noted, however, “that it is vital that development is not an addition to business, but is incorporated at the heart of business plans to ensure a combined approach to business and social objectives.”
Technology is an area that needs specific attention in terms of skill sharing – there is a current technology deficiency in developing nations that must be addresses at all levels, not just in big businesses or select sectors.
Ajesh Patel from Invesco Zambia, added a voice from within the private sector, beginning by saying how vital it is to get businesses more involved in the dialogue – there were under 10 private sector representatives present at the conference. Mr Patel focussed on the importance of formalising trade in the developing world as the current outdated and lengthy procedures are a disincentive to private investment – companies must pay 17 different taxes when exporting from Zambia to the DRC, which cancels out the competitiveness of the product. Trade must be formalised for countries to benefit from market access.
A delegate from the World Economic Forum told the audience that the most pressing barriers to exports are identifying markets, trade finance, access to imports, while the most pressing barriers to imports are procedures, cost of transportation, access and costs of logistical services. “Remoteness” in every sense is decreasing the competitiveness of LDCs. We could encourage further private sector involvement by changing the name of “Aid for Trade” to “Invest for Trade”.
Perception is especially important during this time of economic crisis – Fiona emphasised that governments must continue to combat the negative perception of aid within the general public by promoting aid for trade and investment in developing business sectors as win-win for both economies.
For more information about Aid for Trade: http://www.oecd.org/dac/aidfortrade/