Public Private Dialogue: How Business Promotes Economic Development and Democratic Governance

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The private sector is a key actor in efforts to promote economic growth, reform the business climate and strengthen democratic policymaking worldwide. Dialogue is a key part of the Busan process, which recognizes that the for-profit private sector is a central driver of development and emphasizes the importance of inclusive dialogue for building a policy environment conducive to sustainable development.” Businesses possess the know-how of economic conditions, obstacles and opportunities for growth, while governments have the means to pass business-friendly legislation.

From a democratic point of view, a vibrant private contribution to dialogue expands participation in policymaking by creating space for civic engagement in governance, improves the quality of business representation and supplements the performance of democratic institutions.

Building upon its longstanding experience in the field, CIPE has been invited to participate in the 7th Annual Public Private Dialogue Global Workshop organized by the World Bank, BMZ-The German Federal Ministry for Economic Cooperation and Development, and GIZ in Frankfurt, Germany.

Senior Knowledge Manager Kim Bettcher will moderate a session on long term public private dialogue sustainability and the role of chambers of commerce and business associations. Director of Multiregional Programs Anna Nadgrodkiewicz will make a presentation on a new initiative between the CIPE, the World Bank Institute, and development partners on building an open and collaborative platform for public private dialogue resources.

CIPE has extensive experience in advancing policy dialogue around the world and supports market-oriented reform and private sector development by mobilizing representative business associations and strengthening their capacity to advocate for policy solutions. CIPE also invests in business association development that enables effective dialogue. Some regional success stories in public private dialogue are outlined in more detail below.

Moldova

Moldova’s National Business Agenda Network, comprised of more than 30 business associations and chambers of commerce from across the country, positioned itself as a key stakeholder in policymaking. With CIPE’s support, the Institute for Development and Social Initiatives (IDSI) institutionalized a culture of public private dialogue and encouraged greater transparency and inclusiveness. Noteworthy results from dialogue occurred in the areas of tax collection, state inspections, and customs administration. Legislative changes included a clear definition of agencies in charge of state inspections, the elimination of ad-hoc inspections, and a reduction in the duration of inspections from two months to five days. As a result of this well-organized advocacy, the Moldovan State Tax Service and the International Monetary Fund included the Network’s coordinating council at their inaugural conference to explore the private sector’s perspective on tax reform priorities for the next five years.  Furthermore, the Network advocated for increased transparency and access to information in regards to import-export transactions by publishing all customs requirements and regulations on the Customs Service website. Dialogue also yielded simplification of import-export procedures through the creation of a one stop-shop for customs processing.

Senegal

As Senegal’s largest, most representative and well-organized business association, l’Union Nationale des Commerçants et Industriels du Senegal (UNACOIS) assumed an effective role in the country’s policymaking process by engaging the government in public private dialogue. At regional and cross-regional dialogue sessions jointly organized by UNACOIS and CIPE, UNACOIS members identified the nation’s complex tax code and high tax rates for SME operators as a major cause of informality in the SME sector. With CIPE support, UNACOIS developed an evidence-based policy paper on tax reform, held public-private dialogue meetings with relevant stakeholders, and presented these recommendations to government officials. UNACOIS’ successes are two-fold.  First, the Senegalese government adopted the association’s recommendations to reform the national tax code, Le Code General des Impots du Senegal, which established a more uniform, equitable and proportional tax code for the better integration of the SME sector in the formal economy. Second, UNACOIS worked with the Ministers of Tax and Customs, Commerce and Industry, and the Prime Minister to create a Memorandum of Understanding between UNACOIS and the government of Senegal that established regular, ongoing public private dialogue to address the most pressing SME concerns and tackle the country’s persistent food security challenges.

Pakistan

When CIPE first launched its Pakistan field office in 2006, the country’s chambers and associations were often unwilling to advocate on behalf of their members’ interests. Through CIPE’s capacity building assistance, chambers of commerce have become engaged advocates for improvements to the business environment in Pakistan. In the run-up to Pakistan’s 2013 election, CIPE acted to improve the quality of dialogue between the country’s business community and political parties on the need for economic reform. At a 2012 conference of presidents of chambers of commerce, organized by the Rawalpindi Chamber of Commerce together with CIPE, representatives of all of the major parties presented their views on the country’s economic future and listened to the ideas of business leaders. For the first time ever, Pakistan’s political parties produced economic platforms which were presented to the business community and voters as part of the election campaign. The business community is now working to evaluate progress in implementing these promises. CIPE also supported advocacy work carried out by the Peshawar Women’s Chamber of Commerce to promote women’s entrepreneurship in the Khyber Pakhtunkhwa (KPK) province. As a result, Executive Committee members of the Women’s Chamber were able to secure positions on several government initiative groups, and the State Bank of Pakistan created a focus group to look at developing financial products for women.

Romania

Through the Open Doors Advocacy Campaign (2002-2003), CIPE coordinated three grassroots coalitions representing the tourism, technology, and light manufacturing sectors, which compiled and promoted their policy recommendations in a unified business agenda. The coalitions launched a national advocacy tour of ten cities throughout Romania to garner support for their agenda and expose 1,000 business leaders to advocacy concepts. They followed up with Advocacy Days, during which 300 participants from the business community had an opportunity to meet with government officials and attend public hearings. The Ministry of Small and Medium-Sized Enterprises subsequently approved development of a plan for SME competitiveness and the country’s Labor Code was updated. Bureaucratic red tape was reduced through the implementation of ministerial initiatives. The 3 percent special tourism tax was cancelled and employee taxes for information technology workers were reduced. Reforms advanced by the Open Doors campaign created an estimated 2,850 jobs and over $10 million in economic growth from 2002 to 2003. Wages rose in the information industry by 38 percent, in tourism by 28 percent, and in light manufacturing by 18 percent from 2002 to 2003. This program was funded by USAID.

Montenegro

The Center for Entrepreneurship and Economic Development (CEED) helped establish the Montenegro Business Alliance, in cooperation with CIPE, to unite Montenegro’s business community. The MBA has since become the leading voice of business in Montenegro and is reshaping the policy scene with its annual business agenda campaign. CIPE aided CEED with its strategic plan and coached the MBA in advocacy techniques, including the National Business Agenda process. From 2000 to 2005, CEED and the MBA achieved seven important legislative reforms, including an Enterprise Law and an Accounting Law. The reforms reduced high tax rates, eased new business registration and licensing requirements, raised accounting standards, and simplified bankruptcy procedures. The cost to register a business was cut from $5000 to just $1. Now Montenegro has the lowest corporate and personal tax rates in Europe (9%), the unemployment rate dropped from 30 to 12%, and the grey economy dropped to 15%. This project was supported by USAID.

For further reference, CIPE resources on the topic include:

  • Making the Most of Public-Private Dialogue” outlines the role of advocacy strategy in dialogue, principles of high-quality dialogue, and steps to prepare for dialogue.
  • National Business Agenda Guidebook describes a process for the business community to set legislative and regulatory priorities and clearly communicate them to policymakers.
  • CIPE’s training programs for association executives cover governance, membership development and services, and advocacy techniques.

Teodora Mihaylova is a Research Assistant at CIPE.

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