How to win the argument on the private sector; seeing like a liberal, and a lifecycle approach to supporting aid agencies

November 28, 2014 8 By Duncan Green

Had a great day at Oxfam Australia last week, immersed in a series of conversations that were dotted with ‘synaptic moments’, when different bits of thinking come lightbulbtogether in your head and a lightbulb goes on. Three examples:

Whose private sector is it anyway? The drumbeat of private sector rhetoric is deafening in Australia’s aid sector. This seems to worry NGOs, who somehow feel marginalized by the new language. That’s bonkers – about half our long term development programming is directly engaging with the private sector; the trouble is we’ve given it a naff NGO name instead – livelihoods.

When it comes to the key driver of poverty reduction – jobs – the kinds of private sector we work with – small farmers, informal economy, SMEs, are far more important than multinationals, which only generate about 3% of world jobs. So how about renaming our livelihoods work as ‘private sector engagement’? Given how much we spend on livelihoods private sector, I think there’s a fair chance that we can show that we give greater priority to the private sector than the donors who are berating us about it – wouldn’t that be sweet?

Obviously, the big companies that are usually equated with the term ‘private sector’ matter too – but there it’s more about obeying the law, paying taxes, whether they are promoting social cohesion or division; instability or stability etc. For those that are based in the North, there’s an important ‘do no harm’ principle for our foreign investors. And our work on extractives, food companies etc reflects that too.

Do they know they’re the private sector?

Do they know they’re the private sector?

I think we could also use private sector language much more to explain how change happens, and in some cases it actually sheds extra light. People largely get what Venture Capitalists do, so if we describe a ‘small bets’ approach of trying lots of different approaches and sifting out what works, then calling it a VC model, as we did in Tanzania, can help explain it as well as prise extra dosh from donors who are also looking to hang some more private sector language on their work.

Thinking about markets can also be really helpful to the way we talk about aid programmes. Markets are designed to produce variation and failure, as well as success. That’s what Joseph Schumpeter captured in his great phrase ‘creative destruction’. To allow that creative destruction to take place unhindered, capitalism has generated all mechanisms such as bankruptcy and insurance.

In contrast, parts of the aid industry appear to seek a zero failure rate – that’s a model much closer to Josef Stalin than Milton Friedman. So when someone bangs on about the need to ‘be more private sector’, one response could be ‘absolutely – that’s why we need to get rid of linear plans, and think about experimentation, failing faster, and getting better at spotting and backing success, even when it’s accidental.’

I’d be interested in you reactions to this rant – it’s a highly symbolic debate that is not going to go away.

Seeing like a liberal: NGOs working in countries with conservative or right-wing liberal governments often fail to ask themselves which parts of their ‘repertoire’ are Hague and Joliecompatible with those kinds of values. So we’re surprised (or sceptical) when right wing governments champion women’s rights, or David Cameron criticises Tony Abbott for not being a true conservative on climate change (i.e. wanting to conserve the planet). To this I would add support for defending ‘civil society space’ when, as in many countries, it is being closed down by government.

Grey Panthers meet Windows of Opportunity: Imagine my joy when two hobbyhorses met and made passionate love together. Grey Panthers is the idea that the best campaigners may well be retired captains of industry; ‘old men in a hurry’ keen to do something good. So why do we persist in equating campaigns with students and youth? But it gets more interesting when you stand back and consider life paths – it turns out that people that there are some common ‘critical junctures’, when people make big decisions in their lives – typically going to university, having your first child and retiring.

From an NGO point of view, you should try and adapt your asks to those life cycles – when people are time rich, ask them to campaign, when they are time poor, ask for their money. We do that at the first critical point – all those stalls at freshers’ fairs trying to sign up student activists. But do we do anything at the other two? I fear we just see retirees as sources of donations and legacies, rather than people with time and networks to spare.

A more subtle, holistic version would acknowledge that people’s lives follow different courses, and give them options to choose the balance of cash v activism that fits their particular trajectory. Anyone got a decent timeline or graphic on these ideas?

By the time you read this, I’ll be on the plane back from Australia and PNG – great two weeks, and a huge thanks to all at DFAT, Latrobe and Oxfam who set it up. More Aussie reflections next week.