Brussels, 12/12/2014 (Agence Europe) - The private sector, which is increasingly active in the field of development, can play a pivotal role in the fight against poverty - a role which needs to be reinforced in order to implement the future sustainable development objectives, the Council of the EU stressed on Friday 12 December. Private sector financing also needs to be stimulated, the Twenty-Eight stress in conclusions adopted without debate in Brussels on Friday 12 December, on the sidelines of the meeting of the Foreign Affairs Council in its Development format (EUROPE 11215).
These conclusions add to the ones adopted in June of this year on the communication of the Commission entitled “A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries” (EUROPE 11106).
The Council stresses that the private sector has a vital role to play in the new global partnership envisaged for post-2015 in talks underway at the UN. It therefore calls upon the European Commission to ensure that the strategic framework it is proposing to reinforce the effectiveness of EU support to developing the private sector is taken into account in the programming of EU development aid for the period 2014-2020.
Aware of the difficulties of encouraging the private sector to make funds available for development, it recommends the use of innovative financial instruments to catalyse additional funding. These could be solidarity funds, mechanisms bringing together several donors, micro-donations or a combination of public and private funds, for example. The Council stresses that mixed funding is an “an important tool to stimulate economic growth, innovation and job creation”. It urges the Commission, the member states and the European financing institutions to facilitate access to capital, long-term funding and financial services for micro-enterprises and SMEs and to make it easier for SMEs to access technology and the markets. Particular attention should be paid to sectors likely to benefit the poorer members of society and create jobs in sustainable agriculture, sustainable agri-food industries, sustainable energy and the de-carbonised economy.
The Council pledges its support to efforts to promote corporate social responsibility, which will be one of the priorities of the EU's aid in the framework of the European instrument for democracy and human rights for the period 2014-2020.
NGOs sceptical. The governments of the EU are essentially giving the green light to the use of public money to draw down private funds, is how the major development NGOs (ActionAid, Eurodad and Oxfam), which are fairly sceptical, sum up the situation. Whilst recognising the important role businesses can play in cutting poverty, they argue that by making the private sector central to the development policy, the ministers have failed to acknowledge its limitations. What Europe should be doing is investing more in small-scale family farming and in SMEs which generate the jobs needed to get people out of poverty, they stress.
“Development ministers seemed charmed by the prospects of private finance flows and have failed to provide guarantees that ensure businesses will play by the rules and that their investment will benefit the poorest in society”, Oxfam laments.
“Smallholder farmers are the real backbone of the private sector in Africa and the potential driving force behind lasting development”, said Laura Sullivan of ActionAid. (AN)