This Week in Europe, 11 February 2000
Executive Director of the Caribbean Council for Europe
Within the next few years Governments in the European Union (EU) and the 71 African Caribbean and Pacific states (the ACP) will learn whether the trust they have just agreed to place in the private sector, to provide much needed additional velocity in development, has been well founded.
Unlike any Treaty before it, the new twenty-year post Lomé arrangement, finalised on February 3 in Brussels and to be signed in Fiji at the end of May, places significant emphasis on achieving the delivery of development through non-government players. In this sense the Treaty is an unusual hybrid. Agreed and negotiated by Governments, it recognises the supremacy of Government in determining the path of development. However, it then goes on to cede much of the responsibility for delivery to the private sector and in certain cases, to other social partners.
The text of the new arrangement, which shortly will see the public light of day, is the creature of nearly two years of negotiation. Whereas its predecessor, the Lomé Convention, virtually excluded the practical involvement of anyone other than government, the new arrangement proposes the empowerment of the private sector and its provision with EU concessionary finance.
The new Treaty is divided into a number of parts. Broadly speaking there is a framework agreement consisting of articles that establish the principles that will apply. These cover matters such as governance and a jointly agreed ACP/EU philosophy of development. The framework agreement is followed by an array of annexes, protocols and declarations mainly on trade that give substance to the wide-ranging new relationship between the ACP and the EU.
Scattered throughout the text are references to the private sector as a major player in the objectives and philosophy of EU/ACP development. From the outset the overall framework agreement makes clear that "substantial economic growth, developing the private sector, increasing employment and improving access to productive resources" are central to the new arrangement. The text then indicates that while Government shall determine the development strategy for economies and societies, all partners in society shall be able to participate. Non-state actors, the document suggests will be involved in consultations, provided with financial resources and involved in the implementation of programmes. They will also be provided with support for capacity building in order to ensure they are ‘well organised and representative’.
The new Treaty then becomes more specific on the subject of the private sector. There are articles on investment and private sector development, which recognise explicitly that in future, EU development co-operation will support a wide range of private sector activity. This includes everything from leveraging and catalysing private savings in order to finance private enterprise, through the strengthening of intermediary organisations such as chambers of commerce, to enhancing export activity and encouraging EU-ACP business partnerships. Elsewhere, other articles make clear how and in what ways the private sector will be eligible for EU development funds. There is also a whole chapter on investment and private sector development, which includes language that establishes a clear basis for permanent dialogue between the EU, ACP Governments and the private sector.
This is all welcome, overdue and necessary, but it is also an enormous gamble for all concerned. Although the new EU/ACP partnership agreement is much more like other association arrangements signed between the EU and other parts of the world, there are significant differences in the EU/ACP relationship that may militate against effective delivery.
It is far from clear whether all ACP nations are yet prepared to develop programmes in conjunction with the private sector or for that matter whether those involved in Europe in the daily delivery of aid are prepared to ensure that the new processes are facilitated. It is also uncertain whether many of those involved in development in EU member states, the European Commission (EC) or in NGO's are convinced about or understand the role or complexity of the private sector. Few officials in the EC can relate to the dynamics and speed with which business operates or how this will mesh with consensual and consultative process of development assistance. Nor is it clear how Governments in the Caribbean will seek to direct the likely range of programmes that the new arrangement envisages with the private sector or whether business associations can deliver complex programmes.
So far most bureaucracies whether in Europe or in the ACP, have had little taste for working with the private sector. Equally, few in business have been prepared to spend time in the labyrinthine process of development assistance. This is disturbing.
As this column has noted before, if Government and the private sector cannot find mechanisms to create real and bipartisan dialogue on development then the whole basis for economic transformation of the ACP, in order that it might within twenty years be globally competitive, will be still born. In other words there is a real danger that unless clear new mechanisms for working with the private sector are put in place immediately there will be, in a matter of years, mutual recriminations between the EU, the ACP and the private sector.
In the text of the new agreement, reference is made to using the recently formed ACP Business Forum: a body on which a number of Caribbean regional and sectoral private sector associations are represented. This organisation is identified in the new Treaty as being the vehicle for facilitating the development of dialogue and the delivery of private sector programmes. In the EC's Development Directorate there is now a unit specifically dedicated to develop private sector programmes but it is far from clear how this small but creative group will relate to the geographic directorate who up to now have delivered and with ACP governments controlled all programmes.
Although the ink is hardly dry on the new agreement it is not too early for both government and the private sector to begin to consider together how the new arrangement will work in practice. If the private sector means what it has been saying up to now about wanting a role in development it should seek meetings in the region and Brussels to understand now how the ideas contained in the new agreement are to be delivered. If it does not, what small short-term advantage negotiators have provided will be squandered and the World Trade Organisation (WTO) process of levelling will erode very quickly what is now on offer to the ACP private sector.