The Agenda 2030 called for a fresh approach to trade, investment and the private sector as key components in sustainable development, and attracting long-term investment from the European private sector in partner countries is one important element. Yet the European business community in partner countries often lacks an umbrella network to exchange information, expand partnerships and engage with government authorities and development partners. This was the case in Tanzania – until 2015, when the EU Delegation, in collaboration with Member States and the European private sector, set up a Business Group. It serves as a platform for interaction and exchange on issues from work permits to the enabling environment for business and the investment climate. We hear about its conceptualization, its role within the domestic environment and its economic and social impact from Rodrigo Romero van Cutsem, Programme Officer at the EU Delegation to Tanzania, who was instrumental in setting it up.
Origins
“The European Union Business Group [EUBG] is the result of a change in mindset,” said Romero van Cutsem. “We know we need to engage with the private sector to leverage the impact of EU aid in partner countries. Many partner countries now have a different strategy focusing on economic development, so the private sector plays a big role. As a development partner we need to adapt to these changes, to this evolving context, and therefore need to put in place different instruments and modalities. The EUBG is one of these platforms, one of these tools which allow us to understand the context, how it is evolving and how we can integrate and be part of it.”
Disseminating information to the EU business community (EU members plus Switzerland and Norway) is one important function of the EUBG, keeping them up to date on national legislation and policy change. Gathering information is another. “We work with the government of our host country to discuss and be part of the policy framework and regulation,” said Romero van Cutsem. “But we realised that we were missing something - we needed to have better access to the economic reality in Tanzania to understand policies’ impact on the business community and the real economy. We were looking to increase our economic intelligence, and the private sector is definitely a source of information.”
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Policy context
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Private Sector Impact
The past decades have shown that economic growth doesn’t automatically lead to sustainability and inclusiveness. They depend on multiple factors coming together, including a country's economic development plan, its policy, regulatory and institutional environments, the quality of its economic and social infrastructure, the responsiveness of private public dialogue, the availability of skilled workforce, the presence of financial services and financial inclusion, the connectivity of its physical and digital infrastructure, its natural resources endowment, its value chain participation and much more.
These are all issues which the EUBG is positioned to engage on as a representative of the private sector operating in Tanzania. The EUBG can feed into the EEIP and the Fund with local expertise, and access to an extensive network and capital.
“The private sector is an engine of growth. As such, it contributes by injecting capital in different key sectors of the economy, providing new technologies for the development of new activities, creating employment for both low and high skilled people, and contributing to government revenue collection through different taxes,” said Romero van Cutsem. “Creating jobs which include social benefits is a sustainable way of taking people out of poverty. And the focus should particularly be on the young people. The private sector is a stakeholder with the potential to generate the required employment.”
The European Commission funded a European Investment study in Tanzania, which provides facts and figures on the impact of the European business community there. “EU companies contributed €4.5 billion euros in Foreign Direct Investment from 2011-15. And around 95,000 jobs have been created by European companies – that’s direct jobs, with the potential for another half a million indirect jobs,” said Romero van Cutsem.
“We have estimated that 1,000 companies from 15-20 European countries operate in 20 different sectors in Tanzania. And this is information which allows us to give further visibility and provide another perception of the EU. It’s not only the EU and Member States as political partner, but it’s also a business community. It’s providing investment, creating employment, and paying taxes [$1.1 billion in 2014],” said Romero van Cutsem. “All these factors contribute to sustainable development.”
The European private sector also promotes local content and local capacity. One brewery company, Serengeti Breweries Limited, has put in place a local farmers' programme which supports and coordinates the production of barley, maize and sorghum for brewing. The programme gives farmers high-quality seeds free of charge, and supports them with soil testing, fertiliser, credit access, training, purchase contracts, and mechanization. Currently 60% of total raw materials are locally sourced, and the firm is striving to achieve over 70% local sourcing by 2017. For more details, see here.
“We believe the EUBG in Tanzania is an instrument that facilitates or can help the implementation of a European Economic Diplomacy,” said Romero van Cutsem. That is, “a framework which will allow us to improve our economic pillar as a partner of Tanzania and African countries and developing countries.”
“It’s a story which can be told and shared, and we hope this will be one of the best practices which help in the implementation and expansion of European economic diplomacy around the world.”
Replicating the Group – lessons learned
“I would definitely invite colleagues to think about it and assess if locally it can be appreciated by different stakeholders,” said Romero van Cutsem. “It’s something to help them, to support them in exchanging best practices and lessons learned. It’s an instrument which can really provide us with valuable information and change the dialogue we have with different stakeholders, including the local private sector, other donors, and partners in particular with the government.”
So how did the Delegation to Tanzania go about setting it up?
“We went through a whole process of conceptualizing the idea of a business group,” said Romero van Cutsem. This began with an online survey to understand the private sector’s needs and willingness to come together.
“It was a challenging task; as the EU Delegation we have a few contacts in the business community. We needed to identify those who had the commitment, but also already had the power to expand and communicate the idea further in their own business world,” said Romero van Cutsem.
These became the Group’s champions – representatives of the business community ready to commit to the idea and engage with others. “It took some time to convince them. We managed first of all to have two business people with whom we initiated the process, and slowly we had more and more lined up. Then we had this champions’ group with whom we developed the whole concept, strategy, paperwork, and from there it took off.”
With a critical mass in place, they then went through the legal process of establishing the Group as an independent non-profit organisation, sustained by the fees of its members. It has a board of directors to drive it forward, “with whom we’re in direct and constant contact to create a symbiotic partnership between EU as a donor, development partner, political partner, with a specific economic group.”
The EU Delegation also worked closely with Member States present in Tanzania. “It’s important they feel involved, and it’s in their interest, it is beneficial for everybody. If you know you have a good idea and you know how to sell it, it usually receives positive feedback from partners and other stakeholders,” said Romero van Cutsem.
The EUBG is now a member of the European Business Organisation Worldwide Network (EBOWN), as well as a member of the Tanzania private Sector Foundation, giving EU businesspeople the opportunity to interact with local colleagues.
Similar business groups exist in other African countries such as Uganda, Ethiopia and Ghana, while South Africa and Ivory Coast have full-fledged European Chambers of Commerce.
“It can absolutely be replicated if there is the need for it, and with a little bit of support,” said Romero van Cutsem. “Patience and energy, that’s what I’d suggest to colleagues.”
Further reading:
To learn about a variety of other areas of development cooperation in Tanzania, visit the Delegation’s website.
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