PRIVATE ACTORS IN THE AID LANDSCAPE

Mapping an emerging segment of Norwegian engagement in Sub Saharan Africa

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AGENDA

• Introduction – Anne Welle-Strand

• Hybrid organizations – Pernille Dehli

• The Business Sector – Erik Kimmestad

• Civil Society Organizations – Erik Kimmestad

• Concluding remarks – Anne Welle- Strand

MOTIVATION

• Five factors: – traditional development aid,

– foreign direct investments and business development,

– remittances,

– financial institutions,

– international regulatory organizations

• How are these five factors contributing to effective aid to developing countries?

FOREIGN DIRECT INVESTMENTS

• The primary engine for development

• ”Doing well” and ”Doing good”?

• Corporate Social Responsibility (CSR):– Common business practice– Organizational construction– The value chain of a firm

Friedman, M. 1970. The Social Responsibility of Business is to Increase its Profits. New York Times, 13.09.1970.Porter, M. E., and Kramer, M.R. 2002. The Competitive Advantage of Corporate Philanthropy. Harvard Business Review 80 (12):56-

69.

Introduction

Hybrid Organizations

Capital flowsMotivational

factorsCooperation

patterns

Business Sector

Capital flowsMotivational

factorsCooperation

patterns

Civil Society Organizations

Capital flowsMotivational

factorsCooperation

patterns

DiscussionConcluding remarks

Private Foundations

Mega foundations

Small private foundations

African Diaspora

NGOs that raise their own funds

Corporate Philanthropy and SR

Corporate foundations

CSR for int'l reputation Global

firms

CSR for license to operate globally and

locally

Hybrid

Investment funds

Initiatives

Triple bottom line business models

New wave corporate foundations

Civil Society Organizations

NGOs that raise their own funds

Semi-government NGOs

Business Sector

Corporate foundations

CSR for int'l reputation Global

firms

Core activities

Hybrid Organizations

Investment funds

Venture philanthropists

Triple-bottom-line business models

Private individuals

Adjusted framework:

World Bank framework:

HYBRID ORGANIZATIONS

An umbrella term for Norwegian organizations that combinesbusiness methods with development objectives

Utilizes the skills and competences of individuals and organizations

As access to capital and competencies are key attributes, partnershipsare needed in order to reach development objectives

HYBRID ORGANIZATIONS:Capital Flows Cooperation Patterns Motivational factors

Varies from large private-public partnerships to small private foundations

Amount spent in Sub Saharan Africa varies

Funds tend to cluster that are recipients of Norwegian Official Development Aid

All want more cooperation

Lack of information is an obstacle –need to establish/join networks

Actors’ perceptions of cooperation with traditional actors vary

Belief in business to have developmental impacts

Aim to get most out of individuals' and organizations' knowledge, experience and skills

THE BUSINESS SECTORAttention is increasingly being given to the role of businesses in developing countries

2009 government White Paper on development policy (nr 10) calls for increasing global capital and value creation in developing countries to fight poverty

FDI to developing countries constitutes almost five times the amount of foreign aid from all OECD countries combined; aid has a lesser role

Capital Flows Cooperation Patterns Motivational factors

Seeks to unite social and capital gains

Corporate philanthropy less relevant forNorwegian companies

Operates generally on a basis of reinvesting revenue with the aim of future gains

Social benefits are generally spin offs from market economics

Partnerships only initiated when operating outside of core area of expertise. Especially in CSR activities

Usually confined to information exchange

CSR understood as value-creation and risk management, not as philanthropy

CSR a tool for obtaining business objectives

Businesses wants to do more, but are kept from doing so due to organizational priorities

Obstacles encountered are often country-specific

THE BUSINESS SECTOR:

CIVIL SOCIETY ORGANIZATIONS:

Claims operational independence is compatible with government dependency for funding

Prospect of government dependency viewed as unproblematic; civil society organizations and the government have coinciding interests

Availability of public funds lessen the need for private funding; unnecessary to cater to private sector demands

Capital Flows Cooperation Patterns Motivational factors

Majority of funds stems from public sources, but increasing importance of funding from private sources.

Private funding is regarded as a mean to increase organizational independence, legitimacy and accountability, as well as raising financial predictability

Experiences regarding knowledge exchange and implementation of projects vary, but are often seen as being problematic.

The actors usually appreciate the value of business operational methods, and realize the potential benefits for their organizations.

Cooperation with private actors is likely to increase

A shared desire to encourage development.

Focus of operations is commonly determined by the organizations’ values, mission or religious belief.

Budgetary restrictions and fear for fragmentation is the main obstacles for doing more

CIVIL SOCIETY ORGANIZATIONS:

NORWEGIAN FDI EXAMPLES

• Pride and Prejudice – Business, Aid and Charity

How is Grameenphone contributing to the overall development of Bangladesh?

Welle-Strand, A. and Molden, L. 2007. Grameenphone and Telenor affecting Bangladeshi Socio-Cultural Development: Pride and Prejudice. Oslo: MICRO, BI Norwegian School of Management, No. 1

Welle-Strand, A. (2008) Pride and Prejudice: Business, Aid and Charity. Telektronikk 2.2008

GRAMEENPHONE STUDY: FINDINGS

• Technology and competence transfers

• Local competence development

• Transfer of sound policies for business and management conduct

• Great level of autonomy

• Social benefits

• Avoiding corruption

• Transparency

THE NEED FOR RESEARCH

Creating Value (s) Norwegian Aquaculture and Hydropower Investments in Chile

•Biased media

•The three winnersThe developing countryThe ”private actors” communityNorway

Welle-Strand,A. Toje, A.(2009) Creating Value(s)? Norwegian Aquaculture and Hydropower Investments in Chile

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