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A DFID Perspective on the Private Sector

An Interview with Alistair Fernie, Head of the Department for International Development's Private Sector Department

A DFID Perspective on the Private Sector

An Interview with Alistair Fernie, Head of the Department for International Development’s (DFID) Private Sector Department. The interview was conducted by the Business Call to Action.

Alistair Fernie has been head of the Department for International Development’s (DFID) private sector department, based in London, since 5 August 2013.

Prior to that he spent four and a half years in Nairobi as Head of DFID’s Kenya programme (and from 2009-12, its Somalia programme). Previous jobs include head of the development and human rights team at the UK Mission to the United Nations in New York (on loan to the FCO), Head of DFID Afghanistan in Kabul, and Head of DFID’s Middle East and North Africa Department.

Alistair joined DFID in 1997 from Médecins Sans Frontières, with whom he worked in Liberia, Georgia and Rwanda. He has also worked for Amnesty International. He studied Politics, Philosophy and Economics at Balliol College, Oxford University, where he took the top First in Politics. He is married with twins, and runs marathons.

Q: How can the British private sector contribute to development impact?

Economic growth is the best way of raising people’s incomes and reducing poverty in the developing world. The private sector has a vital part to play in generating and sustaining economic growth, as it creates jobs and opportunities for poor men and women to support their families and build more stable futures.

Justine Greening, the international development minister recently said “Britain’s investment in international development isn’t just the right thing to do – it’s the smart thing to do”.

Supporting economic growth and the development of the private sector are top priorities for DFID. We are doing this by helping developing countries to strengthen their business environment, increase their access to markets, improve their infrastructure and give more people access to financial services.

We are keen to support the enthusiasm and innovation of British companies to help achieve these aims particularly in sectors where Britain has real expertise to offer, such as green technologies, financial and business services and a diverse food and drink industry.

Our aid is untied, but we believe the British private sector has a particular contribution to make to economic development in developing countries, which is good for them and good for Britain. I saw this for myself in Kenya, from where I have just returned after four and a half years as head of the DFID Kenya programme.

British firms are investing in transformational innovations (for example, M-pesa), employing thousands of poor people (eg Finlays) and paying lots of tax to the Kenyan government (five of the top ten corporate taxpayers in Kenya have British links).

Q: How does DFID envision creating systemic impact through inclusive business?

A vibrant private sector, characterised by markets that provide opportunities for all, is critical to economic development. As with everyone in society, poor men and women participate in markets as buyers or sellers. However, for many reasons they may be disadvantaged in markets, (eg through lack of information, social exclusion, or access to supplies). Innovation by firms is a key way that market constraints can be addressed. For DFID, an inclusive business has the potential to lead to both a direct impact on poverty and the potential to impact poverty through changes to market systems.

By focusing on a particular sector and understanding how poor people engage in it, an inclusive business approach can help identify and unblock market constraints. For example, Guinness Nigeria aims to increase the security of its supply chain for its three brewing facilities, by modifying their current sourcing model into a more strategic partnership approach involving multiple stakeholders across the entire value chain. If this approach is successful it has the potential to expand the number of people that can be reached and strengthens sustainability, particularly if this new model is taken up or adapted by other market players.

Q: How can DFID spur innovation in public private partnerships?

The following projects show how DFID is working to harness innovation to tackle development problems:

The Business Innovation Facility (BIF) pilot is promoting innovative ways to do business that include poor men and women. The project has been developing or scaling up inclusive businesses, helping them to deliver commercial returns as well as new opportunities for poor people in Malawi, Zambia, Nigeria, India and Bangladesh.

BIF provides practical, hands-on advice and technical expertise, to help companies assess routes to market, develop supply chains, advance their business models and tackle a host of other bottlenecks that companies face.

Hindustan Unilever (HUL) aims to reach one million low income households per year as consumers of its low cost water purification device. For HUL it was clear from the outset that success of their inclusive business model depended on microfinance institutions as its route to market for the product. However, due to a crisis in India’s microfinance industry, the need for alternative models for consumer financing became clear. BIF support helped to identify other channels and HUL is currently in the process of forming new partnerships for scale up.

A new programme we’re just launching is Global Development Innovation Ventures. This aims to find innovative solutions to some of the most pressing development problems. It will engage with innovators all over the world – ideas can come from anywhere including entrepreneurs, social enterprises, non-governmental organisations, corporations, academics, or government agencies. The most promising will be tested using rigorous methods and staged financing; those that offer the best value for money and poverty impacts will be brought to scale using investment capital from both private and public sectors.

Q: How can platforms like BCtA supported by DFID achieve the development goals of donor governments?

Platforms such as BCtA can help raise the profile and champion the role of business in the development debate at the international level. By highlighting innovations and technological advances, it can show that the private sector has the potential to drive sustainable and inclusive growth which can help to improve livelihoods, especially for young people and women.

BCtA can use its broad reach to help share learning more widely from DFID and other donor private sector development programmes.

Together we can help galvanise the private sector and encourage a broader set of actors to engage in inclusive business activities in some of the most important areas, including access to quality education and skills, healthcare, clean water, clean power, telecommunications and transport. And we can continue to explode the myths that making money in developing country markets is always high risk, and that profit and poverty reduction are necessarily in tension. There’s no better way to reduce poverty than inclusive business growth that creates jobs.

Editor’s Note: This blog first appeared on Guardian Sustainable Business and is reproduced with the permission of the author.

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