UNLEASHING ENTREPRENEURSHIPMaking Business Work For The Poor

Marta Ruedas, Deputy Regional Director

Regional Bureau for Europe and the CIS (RBEC)

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OVERVIEW

• The Commission and its Objectives

• The Commission’s Report

– Key Messages

– Recommendations

• Implementation

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BACKGROUND AND OBJECTIVES

• UN Secretary-General Kofi Annan convened the Commission of public leaders, thinkers and chief executives

• A six-month effort, not aimed at expansive research, but focused on action-oriented recommendations and concrete initiatives to follow up

• Recognize the importance of the private sector for achieving the Millennium Development Goals by– Unleashing domestic entrepreneurship – Better utilizing private sector capabilities for

development

Who

Task

Objectives

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WHO – COMMISSION CO-CHAIRS, plus…

CO-CHAIRS

The Right Honourable Paul MartinPrime Minister, Canada

Ernesto ZedilloDirector, Yale University Center on GlobalizationFormer President, Mexico

EX–OFFICIO MEMBERS

Mark Malloch Brown (United Kingdom)Administrator, United Nations Development Programme

Maurice Strong (Canada)Special Adviser to the Commission

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PUBLIC LEADERS & THINKERS, andEduardo Aninat (Chile)Former Deputy Managing Director, International Monetary Fund

Jorge Castañeda (Mexico)Former Minister of Foreign Affairs, MexicoDistinguished Professor of Politics & Latin American Studies, New York University

Luisa Diogo (Mozambique)Prime Minister, MozambiqueFormer Minister of Planning and Finance, Mozambique

Peter McPherson (United States)President, Michigan State University

C.K. Prahalad (United States)Harvey C. Fruehauf Professor of Business Administration, University of Michigan Business School

Juan Somavia (Chile)Director-General, International Labour Organization

Hernando de Soto (Peru)President, Institute for Liberty and Democracy, Peru

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CHIEF EXECUTIVESCarleton Fiorina (United States)President and CEO, Hewlett - Packard Company

Rajat Gupta (India)Senior Partner Worldwide, McKinsey & Company

Anne Lauvergeon (France) Chairman of the Executive Board, Areva Group, President and CEO, Cogema

Jannik Lindbaek (Norway)Chairman, Statoil ASA

Alan Patricof (United States)Vice-Chairman and Founder, Apax Partners

Kwame Pianim (Ghana)CEO, New World Investments

Robert Rubin (United States)Director and Chairman, Executive Committee, CitigroupFormer Secretary of the Treasury, United States

Miko Rwayitare (South Africa)President and Executive Chairman, Telecel International

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OVERVIEW

• The Commission and its Objectives

• The Commission’s Report

– Key Messages

– Recommendations

• Implementation

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FIVE KEY MESSAGES1. Why the private sector is so important in alleviating poverty• Strong expansion in sustainable private sector investment is the main driver of

accelerated economic growth, essential for reducing poverty and making rapid progress towards the Millennium Development Goals.

2. Constraints on the private sector in developing countries• Domestic private initiative and entrepreneurship, particularly within the small and

informal sectors, have enormous potential—but they are trapped in disabling business environments.

3. Unleashing the potential of the private sector• Governments need to create an enabling environment for a competitive private sector

to develop. For domestic and foreign players to thrive requires a strong rule of law and a level playing field.

4. Engaging the private sector in development• Private initiative driven by market-based incentives has the demonstrated capacity to

contribute to important development goals. The private sector, properly enabled, can do substantially more by developing and replicating successful models.

5. Recommended actions• To ensure progress towards the MDGs, all stakeholders—governments, development

institutions, the private sector and civil society—need to collaborate more effectively and expand the use of private sector capabilities in meeting development objectives.

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WHY THE PRIVATE SECTOR IS SO IMPORTANT IN ALLEVIATING POVERTY

0

2

4

6

8

10

12

14

16

< 3% 3-5% > 5Growth rates, 1970-98

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70

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MORE PRIVATE INVESTMENT – MORE GROWTH

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COMPONENTS OF THE PRIVATE SECTOR – SEEN AS AN ECOSYTEM

Microenterprises

Cooperatives

Domestic private sector ecosystem

MultinationalCorporations

Large Domestic Enterprises

Small-MediumEnterprises

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Widespread informality

Fewcompetitive

small and medium

enterprises

Microenterprises

Cooperatives

Domestic private sector ecosystem

MultinationalCorporations

Large Domestic Enterprises

Small-MediumEnterprises

CONSTRAINTS ON THE PRIVATE SECTOR

Lack of competitive pressure

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INFORMALITY THRIVES IN POORER COUNTRIES

Estimated share of nonagriculturalworkforce that is informal

80

70

50

40

38

30

Sub-Saharan Africa

India, Indonesia, Pakistan, Philippines

Brazil, Thailand, Turkey

Mexico

Chile

Portugal

Source: World Bank and International Labour Organization

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SMEs BECOME MORE IMPORTANT AND INFORMALITY LESS IMPORTANT AS COUNTRY GDP INCREASES

Source: Meghana Ayyagari, Thorsten Beck, and Asli Kunt, Small and Medium Enterprises across the Globe: A New Database (2003)

Percentage of GDP

37 30 36

1639

51

4731

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Low-incomecountries

Middle-incomecountries

High-incomecountries

Informalactivity

Small andmediumenterpriseactivity

Remainingactivity

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RECOMMENDED ACTIONS

To ensure progress towards the MDGs, all stakeholders—governments, development institutions, the private sector and civil society—need to collaborate more effectively and expand the use of private sector capabilities in meeting development objectives.

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FRAMEWORK FOR ACTION

1. In the Public Sphere – Promoting reforms of laws, regulations and other barriers of growth

2. In the Public-Private Sphere – Facilitating cooperation and partnerships between public and private players to enhance access to such key factors as financing, skills and basic services

3. In the Private Sphere – Encouraging the development of business models that can be scaled up and copied and that are commercially

sustainable

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OVERVIEW

• The Commission and its Objectives

• The Commission’s Report

– Key Messages

– Recommendations

• Implementation

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BRINGING THE REPORT TO LIFE

Dissemination

Initiatives

Implementation

• Global• Regional• Country-specific

• Public sector-driven• Private sector-driven• UNDP-driven

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DISSEMINATION

Global

Country-specific

• G-8 Economic Summit• UNCTAD XI• UN Global Compact Leaders’ Summit• Commonwealth Business Council• World Resources Institute• World Economic Forum 2005

• NEPAD/WEF Africa World Economic Summit

• African Union Summit • APEC Economic Leaders' Meeting

and CEO Summit

• Country launches, e.g. Albania, Brazil, Bulgaria, China, India, Macedonia, Mozambique, Turkey

• Rwanda Investment Conference

Regional

Illustrative list of events

JuneJuneJuneNovemberDecemberJanuary

June

JulyNovember

All 2004

May

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INITIATIVES

Publicsector-driven

UNDP-driven

• Informality and Regulatory Reforms• Business School Network

• Technology for Microfinance • Business Linkages• Bottom of the Pyramid Business

Development

• Annual Private Sector Report• SME Brokerage• Microfinance

Private sector-driven

Illustrative list of initiatives under consideration

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IN SUMMARY, THE REPORT:• Formally puts the UN on record on the important role of the private

sector

• Examines the issues from the viewpoint of the domestic private sector first and then looks outward

• Includes the informal sector – and the poor as such – as a key element of the private sector

• Emphasizes the critical nature of the linkages amongst all of the components of the eco-system, from microenterprises to MNCs

• Focuses centrally on the rule of law and the need for a level playing field

• Highlights many developmental activities of private players that are below the radar screen but offer great promise for sustainable market-based replication

• Ends with a comprehensive program of action that cuts across all of the quadrants of developmental interventions for private sector development

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IN CLOSING

• The main message from the Secretary General when he accepted the Report on March 1, 2004, was a Call to Action for the main stakeholders in the development coalition to join the UN in helping to bring to life the Commission's Recommendations

• Thank you for your time and attention