Memorandum submitted by Dr Valerie Curtis,
Director, The Hygiene Centre, London School of Hygiene and Tropical
Medicine
The evidence below is based on many years' experience
of working with the private sector to develop hygiene promotion
programmes, as well as sanitation and household water treatment
solutions for developing countries.
1. What can the private sector do to alleviate
poverty?
1.1 The private sector provides the key
to sustainable poverty alleviation. There should be little argument
that the private sector provides the economic growth that brings
the poor into the wage economy and allows them a route out of
poverty. Further, taxes paid by private industry provide for public
spending. However, the development sector tends to be suspicious
of the private sector, and some actors lump all companies together
as exploitative and unethical, when this may only fairly apply
to a few MNCs.
1.2 Private sector development is the only
sustainable means of poverty reduction because it is driven by
profit. External support is unsustainable, and often used to support
undemocratic governments. In a properly regulated economy private
sector development is under democratic control.
1.3 The Oxfam/Unilever Indonesia study which
can be found at: http://www.oxfam.org.uk/what—we—do/issues/livelihoods/downloads/unilever.pdf
is an excellent example of a start being made at tracing the footprint
of an MNC's impact on poverty both upstream and downstream.
1.4 I submit that DFID and donors
should support much more work of this type to:
— Develop the methodology for studies
of the impact of business on poverty
— Provide evidence for the impact of
the private sector on poverty in developing countries
— Encourage companies to evaluate their
own impact on poverty
— Raise the level of the debate from
its current simplistic and polarized state.
1.5 I submit that DFID and donors
should carry out a review of the potential of `Business Models
for Doing Good' across all sectors of investment and disseminate
the results widely.
2. What can donors do to facilitate the private
sector in alleviating poverty?
2.1 Reduce suspicion. Ill-informed
and ideological hostility displayed by many in the donor and NGO
sector towards the private sector is unhelpful. Whilst healthy
skepticism is appropriate, simplistic blanket rejection of the
profit motive is not. It may be helpful to make a distinction
between industries that produce goods that provide for real human
needs and those that encourage wasteful consumption through the
promotion of goods that serve only as badges of status. For a
discussion of this see Wilkinson (4).
2.2 I submit that Donors need to
change the attitudes of their staff towards working with the private
sector. More staff who have experience of industry and speak its
language should be recruited. The results of further studies as
suggested above should be shared with staff.
2.3 Support level playing fields.
Corruption and lack of enforcement of regulations makes the environment
for doing business in poor countries too risky for substantial
investment. Often only large companies such as MNCs have the clout
to ensure that they are given fair treatment by the legal system.
This skews the balance of investment away from indigenous medium
and small scale business.
2.4 I submit that it should be a
priority for donors in every sector to find every opportunity
to enhance the functioning of the legal and regulatory institutions,
and the enforcement of property rights, including intellectual
property.
2.5 Invest in R&D for merit goods.
Consumers in developing countries can be offered the chance
to lead better lives by acquiring products and services that can
enhance their health or wellbeing. Such merit goods might include
products to enable handwashing with less water, cheaper soap formulations,
cheap means of water purification, ultra-affordable sanitation
solutions, hygiene solutions for hospitals, primary health care
facilities, schools and offices. Products have to be affordable,
desirable, effective and capable of being profitably commercialized.
This requires investment and skills, both in short supply in developing
countries.
2.6 I submit that donors should develop
and make widely available the means to support R&D for merit
goods. Inputs could include prize offers, establishment of, and
investment in, social venture capital funds, innovation skills
training, business skill training, offers to guarantee sales,
offers to assist in marketing such products, assistance in dealing
with the public sector, filing patents, meeting legislative requirements,
etc. Support to the banking sector to enhance confidence in lending
to new business and in microfinance can improve the business environment.
2.7 Invest in global public private partnerships.
In some cases there is a compelling win-win collaboration where
both the private and the public sector stand to gain by working
together. The box below sets out the example of the global PPP
for handwashing.
2.8 I submit that donors should invest
further in such promising initiatives, scaling up and out to more
countries.
2.9 I submit that donors need to
revise their attitudes to supporting activities that involve industry
and recognize that the profit motive can be a force for good.
2.10 I submit that donors should
look for more opportunities where public and private interests
coincide, for example in the provision of goods and services for
sanitation and household water treatment.
April 2006
REFERENCES:
1. Curtis V, Cairncross S. Effect of washing
hands with soap on diarrhoea risk in the community: a systematic
review. Lancet Infectious Diseases 2003;3:275-281.
2. Rabie T, Curtis V. Evidence that handwashing
prevents respiratory tract infection: a systematic review. Tropical
Medicine and International Health 2006;11(3):1-10.
3. Scott B, Curtis V, Rabie T. Protecting
children from diarrhoea and acute respiratory infections: the
role of handwashing promotion in water and sanitation programmes.
WHO Regional Health Forum 2003;7(1):42-47.
4. Wilkinson RG. The impact of inequality:
how to make sick societies healthier. London: Routledge; 2005.
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