Fostering Private Sector Partnerships in Small Island Developing States
USG Gyan Chandra Acharya, UN-OHRLLS

USG Gyan Chandra Acharya, UN-OHRLLS

The Commitment – Summer 2014, SIDS Special

By Gyan Chandra Acharya, Under Secretary-General of the United Nations and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS)

Small Island Developing States (SIDS) are recognised as a special case in terms of their environment and small size. Many challenges associated with these islands’situation can be overcome by forging partnerships, both local and international. Sustainable development is possible only with a strong multi-stakeholder approach, where the government, private sector and civil society play their full part. The importance of the private sector is not a new phenomenon in the global discourse on SIDS. Ten years ago, the Mauritius International Meeting on SIDS emphasized this role, calling for a strengthening of business and industry in small islands in an effort to support their development aspirations. A fresh sense of urgency was injected by the international community during the Rio+20 conference, which underscored that sustainable development can only be achieved with a broad alliance of people, governments, civil society and the private sector, working together to secure the future.

 Partnerships are Critical for SIDS

For SIDS, partnerships, including those with the private sector, not only make business sense, but are also a necessity. Partnerships and partners are a natural ally for SIDS in building resilience. The characteristics that make SIDS inherently vulnerable have a direct impact on the islands’ own private sector development and growth. SIDS are small in terms of population, and in most cases also in land mass. Due to their small size, SIDS cannot benefit from economies of scale. As many of them are remote and isolated from the world’s major markets, transport costs to and from and within the SIDS are among the highest in the world. Therefore, many SIDS have geared their economic activities towards tourism, promotion of cultural and natural heritage, fishing and marine resources, financing, and information and communication technology (ICT). In view of the higher transaction costs, their focus should be on high value products and services for international trade, and domestic production of agriculture and industrial products that can contribute to reduce the cost of imports.

The 2013 foreign direct investment (FDI) flows into SIDS continued to recover for the second consecutive year. Many SIDS have undertaken legislative reforms to create better business environments. SIDS have continuously sought ways to strike the right balance, including through the active involvement of public, private, local, and, in many cases, indigenous partnerships. While many factors, including capacity constraints and the impact of the global financial crisis, have come into play in determining overall ease of doing business in SIDS, it is clear that some of these countries need to work hard to improve the number of days they require to start a business.

 Regional Cooperation

SIDS have some of the best examples of regional cooperation and integration in terms of pooling resources. The benefits of a collective approach have contributed to building resilience in SIDS, and have strengthened regional solidarity. This collective approach is also reflected in the regional private sector with the establishment of entities such as the Pacific Islands Private Sector Organization and the Caribbean Export Development Agency. In order to facilitate better partnerships between states, the next natural step is the development of better linkages between different SIDS regions. This can contribute towards a better sharing of experiences including best practices and lessons learned.

At the same time, the relative increase in the size of the market – a direct consequence of a regional approach – could also be beneficial for the private sector. Regional integration and cooperation can play a significant role in alleviating the burden of national approaches to issues such as transport and energy costs. In this regard, initiatives that have grown directly from SIDS, such as the SIDS-DOCK sustainable energy initiative, are prime examples of partnership mechanisms that bring together SIDS in addressing their energy challenges in a collective manner. Such approaches should be supported. SIDS’ open economies leave them vulnerable to external shocks beyond their control. Many SIDS are still emerging from the adverse impacts of the economic crisis that started in 2008. The tourism industry, for example, has experienced a decline in visitor numbers over the past years. As a key SIDS industry sector, this impact on tourism has had a negative impact on the smaller travel operators, prevalent in SIDS, with many of them going out of business.

woman collecting fish dili

Woman collecting fish at sunset in Dili District, Timor-Leste- Martine Perret

However, there are now signs of some recovery and this sector needs to be further nurtured. SIDS are located in disaster-prone regions of the world. Impacts of climate change resulting in the sea level rise, acidification and salinization of aquifers, and frequent and ever more powerful hurricanes and cyclones have been quite devastating. Yet, SIDS have shown themselves to be stoically resilient in rebuilding their lives, livelihood and nations after every setback. The cooperation and partnership of the international community, including the private sector, remains an essential component for SIDS to creating climate-resilient infrastructure and adopting new technology to reduce risks and vulnerabilities.

 Opportunities for Green Growth

Concurrently, further to strengthening the private sector in SIDS, partnerships will also need to be fostered between private sectors, the global private sector and business leaders. The opportunities for partnerships with SIDS are enormous. For SIDS, their which much of their economic and social sustainability are based. Therefore it is paramount that policies and activities that promote SIDS’ economic growth and social sustainability are not followed at the expense and to the detriment of their environment. SIDS are well positioned to show the world how the benefits of green growth can be secured. Strategic private sector partnerships, close work with development partners and public-private partnerships, including important industries such as fisheries, marine resources, renewable energy, transport, ICT, sustainable tourism, agriculture and disaster risk reduction, can set a standard for green growth in action. Best practices from the SIDS experiences can be shared and scaled up in the wider global community.

 The Importance of Policy and Follow-up

 In order for these private sector partnerships to reach their potential, the right policy framework will need to be put in place by both SIDS and the development partners. This will, firstly, act as a catalyst in forging new partnerships, and secondly, enable an environment that will allow these partnerships to maximise the benefits for SIDS. Being small also has certain benefits. SIDS’ small size means that comparatively small expenditures can and do make a significant impact. The right investment, however small, has the potential to make meaningful impacts on the livelihood of many islanders. Strong private sectors in SIDS will lead to increased capacity for various areas such as renewable energy, job creation, competitive and increased exports, transfer of technology, strengthened small and medium enterprises, improving livelihoods and overall economic well-being. It is crucial that the international community supports SIDS and their private sectors in facilitating cooperation that will, in turn, foster the necessary environment for building genuine and durable partnerships – no matter how large or small. The related issue of technology transfer and intellectual property rights are important, and due consideration should be given to the special case of SIDS. Private sector organizations from the South, through South-South cooperation, can also form meaningful partnerships with SIDS. Often the experiences, practices and technology employed in the developing world are better suited and more readily adaptable to SIDS. In any follow-up phase, closer cooperation within and between SIDS regions should be encouraged. The development of a mechanism which utilizes currently existing SIDS regional private sector organizations, inter-governmental organizations and global political and business institutions in the follow-up of these partnerships, could be further explored.

 *A version of this article first appeared in The Commonwealth Ministers Reference Book 2014.

Ambassador Aliioaiga Feturi Elisaia of Samoa

Ambassador Aliioaiga Feturi Elisaia of Samoa

 “SIDS are a diverse group of countries with uniquely different challenges, opportunities and priorities. But whatever their national goals and aspirations are, the common enabler to achieving them is through the power of genuine and durable partnerships. My own country is passionate about partnerships because it speaks to our history as an island nation and our journey in these uncharted waters of globalization. Partnerships for Samoa is not just your ideological North-South dichotomy, it also encompasses SIDS-SIDS, South-South and triangular partnerships. Importantly, it includes partnerships between SIDS as a group and their development partners, as well as private sector partnerships and public/private partnerships. And remember, the private sector is the “engine of growth, and partnerships should not be amonopoly of anyone particular group of partners.”

– Ambassador Ali’ioaiga Feturi Elisaia, Samoa Permanent Representativeto the United Nations