The private sector has a role to play in post-conflict reconstruction and development, but any engagements must be approached with caution. This is one of the core findings of a recently launched paper by the Institute for Security Studies (ISS).
The paper argues that South Africa, with the establishment of the new South African Development Partnership Agency, should consider how to engage business actors in its future post-conflict development activities; but should be wary of the way in which it does this.
Businesses require peace to prosper: conversely, peacebuilding processes also require business investment. Fragile states are in need of economic revitalisation and development; yet struggle to attract investment precisely because they are seen as fragile. Flexible policy innovation is thus needed, along with a policymaking approach that is open to attracting responsible firms to risky places, seeking peacebuilding inputs from business actors, and exploring how to regulate conflict-sensitive business practices.
The SA Development Partnership Agency would have to carefully consider any perceived links between its post-conflict reconstruction and development contributions and any expectations of commercial reward for South African firms once states reach a level of stability
This caution is well founded, given the reputational risk for Pretoria if seen to be promoting commercial interests in the name of building stability in Africa. However, promoting economic revitalisation and investment is part of stabilisation in fragile states, and despite some reticence among policymakers, the private sector clearly has a role to play.
Combined with some uncertainty towards big business within parts of the South African government, this reticence has had unfortunate consequences for the country’s private sector firms seeking to expand in Africa more generally. Private business has generally not enjoyed the levels of diplomatic cover and facilitation that private business from other states has enjoyed. As such, South African private firms have typically done well despite, not because of, diplomatic facilitation.
The paper comes amid growing interest in both the role of economic activity in consolidating peace, and the private sector’s role in development. Institutions such as United Nations (UN) peacekeeping and the African Union previously focused on political and security dimensions of post-conflict recovery. In this approach, the private sector and economic issues are seen as a later stage of recovery, and as the responsibility of development agencies and the World Bank system.
This thinking has however shifted in recent years, with global business leaders now driving some of the debate and activity on getting involved in post-conflict settings. In development circles, traditional donors from the Organisation for Economic Co-operation and Development (OECD) are encouraging greater pragmatism about placing more emphasis on developing the local private sector in recipient countries, as well as engaging with big business to leverage its development impact and link it to national and local development priorities and processes.
The SA Development Partnership Agency would thus be created amid a global development debate that is increasingly emphasising the private sector’s developmental role and its legitimate stake in shaping and implementing the agenda.
Examples of this include the 2014 high-level Global Partnerships for Effective Development Cooperation summit and the 2013 UN high-level panel report on the post-2015 development agenda, which expressly recognised business as a vital development actor. In 2012, the UN’s annual peacebuilding report for the first time expressly called for engaging the private sector in post-conflict processes.
In parallel with Pretoria’s history of diplomatic, developmental and trade-related activities in the rest of Africa, South Africa’s privately owned companies have greatly enlarged their economic activity in Africa since the early 2000s, despite limited support from the government. It would thus be difficult for the SA Development Partnership Agency to have an effective approach in PCRD contexts without the private sector’s engagement.
In 2010, the Presidency announced the ‘Economic Diplomacy Strategic Framework’ to support commercial interests abroad of private and state-owned South African firms. This policy shift incorporates the role of the Department of International Relations and Cooperation and other departments, and provides guidance to government and the business sector on economic developments and markets; pursuing market access for South African products; removing barriers to trade; and supporting development of larger markets in Africa.
The Economic Development Department’s 2010 ‘New Growth Path’ also stated that government’s support for regional growth is both an act of solidarity, and a way to enhance economic opportunities for South African firms. The new paper proposes that these trends lend support to the SA Development Partnership Agency adopting a proactive role not only in relation to local private sector development, but also in terms of what contributions foreign businesses (including South African firms) might be able to make in PCRD contexts.
As noted in the paper, the SA Development Partnership Agency can engage with local, foreign and South African firms to explore scaling up development impacts or incentivising pro-developmental activities; although it will need to carefully consider and explain the mutual benefits of such relationships. Conflict-affected states generally welcome investor interest and development spin-offs from commercial activities. The policy risks would thus be manageable. South Africa could look to Brazil’s Cooperation Agency (ABC) for lessons learnt in this regard.
The SA Development Partnership Agency needs to adopt an approach that will engage in economic development that is conflict sensitive and beneficial both to the recipient societies as well as private business. This will also be in line with Pretoria’s overarching diplomatic policy shift towards increasing prosperity in Africa, while growing its own economic potential.
Yet engaging in coordination of development assistance in conflict-affected regions is always heavily contested and political; even without private sector engagement. In this regard, the merits of the SA Development Partnership Agency engaging business in delivering the PCRD agenda outweigh the risks. This approach will, however, require transparency, reassurance and good faith. The SA Development Partnership Agency should thus follow and develop the emerging trend of involving private business in development cooperation including in areas of fragility, while managing policy risks along the way.
Written by Sibongile Gida, Junior Researcher, Conflict Management and Peacebuilding Division, ISS Pretoria
Republished with permission from ISS Africa. The original article can be found here.