Synthesis documents

Mechanisms and Processes for Public-Private Sector Dialogue (PPD), Bannock/DFID, 2005

    PPD is a force to counter policy-making by shouting, or by back-room deals involving a select few. The loudest voices rarely speak in the best interests of private sector growth as a whole, or of poverty reduction. Individual deal-making inevitably leads to bad, inconsistent policy and regulation. By contrast, PPD promotes good public and corporate governance. It sets an example of transparency and dynamism. It sheds light on the workings and performance of government institutions. It also improves the quality of the advice government receives from the private sector by diversifying sources and by promoting more evidence-based advocacy. PPD is not a panacea; but it is an important ingredient in strong business enabling environments. Both the public and the private sector still need good information, good analysis, and a sustained commitment to implement change.

    PPD needs a host institution, which generally should be a government body. The host must create a forum where frank discussion and knowledge-sharing is encouraged, a "neutral space". Champions from both the public and the private sector must drive the dialogue, promoting the idea, investing time and effort in it, and giving PPD credibility, expertise and publicity. Backing the right champions is the most important part of outside support to PPD. PPD can overcome other obstacles (government resistance to change, private sector lack of organization/capacity, resource shortages (logistical facilities, funds) - but it can be derailed by bad champions. Civil society organizations, including trade unions, should be participants in PPD; but they should be brought in carefully. They often engage more constructively after the initial phase of PPD, when the issues and reform options are somewhat clarified.

    PPD can and should occur at all levels, central, regional and local. PPD generates the most immediate and practical reforms when it takes place at the lowest level at which business and government interact. Strengthening dialogue between central and local officials often is as important as strengthening dialogue between the public and the private sectors. It is usually more productive to begin with a small band of issues that face the least political resistance to change. Sectoral (industry-specific) dialogue usually is more effective than general dialogue on private sector development. SMEs and local authorities participate most effectively in dialogues on tangible, hands-on matters, such as discussions of administrative processes (registration, tax administration, customs clearances, etc).

    PPD is useful at all four main stages of policy reform: assessing and agreeing problems; designing and legislating solutions; implementing reforms and monitoring/evaluating the impact of reform. The earlier government brings private stakeholders into consultation, the better. Governments and donors tend to forget that the private sector also has a key role in the latter stages of reform. Private participation can speed changes, ensuring rapid uptake of new processes and promoting greater efficiency in new administrative regimes.

    Political will to change matters much more than the legal status of the dialogue. The formality of PPD should respond to the opportunities and constraints posed by the country's political economy, and it should evolve as these factors evolve. Some of the most successful ongoing PPD evolved from informal meetings to more formal structures over time. Timing and intensity, like formality, need to fit the prevailing institutional dynamics between the public and the private sector. In countries where public-private trust is low and collaboration has been limited, it is best to begin with small numbers of participants, keep meetings relatively informal, and focus on a limited number of issues. During the early stages meetings should be relatively frequent, with narrow (but carefully managed) agendas.

    Methods for info gathering
    DFID Policy Division's Investment, Competition and Enabling Environment (ICEE) team commissioned Bannock Consulting Ltd to examine how public-private sector dialogue (PPD) can support investment climate improvement. The research included an inventory of project activities and interviews with donor and selected contractor experts. DFID's and the European Union's experience in private sector development spans many continents, political and social systems. It embraces a wide variety of participants from both the private and the public sector, a range of discussion forums ranging from highly formal/structured to the more informal/ad hoc, and initiatives lasting from only a few hours to multi-year, ongoing processes. According to DFID Enterprise Advisors over £60 million is committed to PPD-related project and programme activity at present.

    Summary of results
    Donors are extremely useful when their resources help dialogue participants to collect and analyse the evidence surrounding a particular issue. Donor resources are well deployed when building local capacity in policy analysis, regulatory impact assessment and other policy-making skills. Donor assistance can help improve the political economy infrastructure that supports dialogue, including open and objective information/communications systems (informed business journalism in particular), and benchmarking of local policy-environments against international good practice. Donors can help break the ice for PPD in countries where public-private trust is low, bringing in trained facilitators, and supporting facilitation skills and techniques development.

    The Paper includes an extensive list of pointers and advice for development agencies, emerging from the research.

    Associated Activities and Documents
    Synthesis documents
    »Toolkits for Business Environment Reform Projects (last update: 2012)