Private sector to be more involved in development projects

The European Commission unveiled a plan today (13 May) to boost the role of the private sector in European Union development projects in the world’s poorest countries.

Andris Piebalgs, the European commissioner for development, said that the private sector already provides 90% of jobs in developing countries and has a crucial role to play by “ensuring that businesses find an enabling environment to invest more, and more responsibly, in developing countries to help everyone enjoy the economic opportunities the private sector can bring”.

However, anti-poverty campaigner Oxfam expressed concern that the risks of too much involvement in development by the private sector are being underplayed. “The European Commission highlights social services as an opportunity for private sector engagement, but areas like health and education should not be determined by profit margins,” said Hilary Jeune, Oxfam’s EU policy adviser. “Governments should provide free and public essential services for all, and maintain stringent rules for any business which might risk hindering social and environmental progress.”

Other NGOs share these concerns. “There is currently a dangerous emphasis on using EU power to push for change in developing countries without recognising that narrow investment interests could be promoted ahead of development objectives,” said María José Romero, policy and advocacy manager at the European Network on Debt and Development (Eurodad). “Using public resources to ‘leverage’ private finance is of great concern due to the high risk of profit-making motives outweighing poverty reduction objectives.”

The communication proposes 12 actions. These include improving regulatory business environments in partner countries, supporting business development and increasing access to finance with a focus on micro, small and medium-sized businesses in the formal and informal sector.