Check against delivery

The world is at a crossroads. We now have the opportunity in the coming decade to cut world poverty by half, as we committed ourselves to at the Millennium Summit. Billions of people could enjoy the fruits of the global economy. Tens of millions of lives could be saved.

The practical solutions exist. The political framework is established. And the cost is affordable. In my view, it is even a clear long term business case for doing it. All that is needed is commitment and action.

In September this year world’s politicians will meet to assess the progress we have made. How far have we come in implementing the Millennium Development Goals – the MDGs? What challenges remain? How can we develop an effective partnership between all actors? Hopefully, we will agree on the practical steps we need to take to reach the goals.

The MDGs are the world community’s time-bound and quantified targets for addressing extreme poverty in its many dimensions— income poverty, hunger, disease, lack of adequate shelter, and exclusion— while promoting gender equality, education, and environmental sustainability. For the billion-plus people still living in extreme poverty, the MDGs are a life-and-death issue.

To us addressing poverty, human suffering and abuse is a moral imperative. Let us not forget that at the same time, it is a question of self-interest. There are close interlink ages between social and economic development, enjoyment of human rights and global security issues. These effects affect governments, business and financial markets alike. The existence of the interlink ages between poverty, freedom and security is no longer a progressive view held by liberal European governments only – it is the basis for mainstream foreign policy. In short: We are all safer in a world that is not so utterly unfair as at present. This is the basic premise for the proposal for reform of the United Nations that is currently a hot topic in international affairs. In today’s world these issues are also very much concerns for the business community. Apart from its exposure to political instability, terrorism and other emerging threats, the realisation that today’s development countries may be tomorrow’s markets open up interesting perspectives.

In the process of economic growth, the MDGs play two roles. First, the Goals are ends in themselves in that reduced hunger, improved health and education, and access to safe water and sanitation are direct goals for society.

Second, the Goals are also inputs to economic growth and further development. When suitably empowered with human capital, infrastructure, and core human rights in a market-based economy, women and men can secure productive and decent employment through personal initiative. When infrastructure, health, and education are widely available, poor countries can join the global division of labour in ways that promote economic growth, raise living standards and increase technological sophistication.

We cannot reach the MDGs without the support of the private sector. Full stop. The contribution by business cannot be replaced by development assistance or any other government measure, regardless of the magnitude of our programs. As Kofi Annan has stated:

“A large part of the work for development is, after all, about preparing the ground for sufficient private sector activity to provide the jobs and income needed to build a more equitable and prosperous society.”

Long-term poverty reduction will not happen without sustained economic growth, which requires a vibrant private sector.

How can the private sector alleviate poverty? It can do so by contributing to economic growth and empowering poor people and by providing them with a wider choice of goods and services at less cost. The first creates employment and income growth. The second improves quality of life. And greater interaction between those at the base of the pyramid and the private sector creates opportunities for direct involvement in the market economy.

The private sector has potential to contribute to development through its knowledge, expertise, resources and contacts. We need to unleash this potential by establishing linkages between different types of firms in developing countries in order to provide an effective channel for local companies to gain access to markets, financing, skills and know-how.

This means that conditions must be made favourable in order to develop a private sector that will generate value. Without such economic value creation, a country will not be able to finance the increase in wealth needed for the fight against poverty. Hence, the country will continue to be dependent on international aid indefinitely.

Small and medium-sized enterprises can be engines of job creation—seedbeds of innovation and entrepreneurship. But in many poor countries, small and medium-sized enterprises are marginal. Many operate outside the formal legal system, contributing to widespread informality and low productivity. They lack access to financing and long-term capital, the base that companies are built on.

The formalisation of the right to economic assets into secure legal rights with a focus on the poor and the marginalized can play an important role in economic and social development and enhance human security. We often talk about “sleeping” or “dead” capital, which has been proved to be many times what is granted in external aid. Mobilising the country’s own resources by protecting the individual’s formal right to property means in that sense a demand-driven, bottom-up development agenda.

Like with a number of other countries, we believe that the time is now ripe for the international community to develop a results-oriented agenda for legal empowerment of the poor. We are therefore launching a high-level international commission for this purpose.

Without secure rights there will be no investment, no sustainability, and no real choices.

Mr Chairman;

The primary responsibility for achieving growth and equitable development lies with national governments. This responsibility includes creating the conditions that make it possible to secure the needed financial resources for investments.

Those conditions—the state of governance, macroeconomic and microeconomic policies, public finances, the financial system and other basic elements of a country’s economic environment—are largely determined by the actions of domestic policymakers. Their challenge is to capitalise on advances in macroeconomic stability and democracy and to launch reforms that bring about further changes in institutional frameworks that will unleash and foster the potential of the private sector.

The benefits of an enhanced investment climate can be far-reaching: in Uganda, which underwent widespread investment climate reforms, GDP grew by around seven per cent per year in the period 1993-2002, reducing the share of the population living below the poverty line from 56 per cent in 1992 to 35 per cent in 2000. In Tanzania, an improvement in the investment climate is behind the country’s fastest growth in 15 years. In Mozambique, investment climate improvements resulted in a doubling of private investment as a share of GDP between 1998 and 2002.

Partnerships between the public and private sector will be essential. A larger proportion of public aid will be spent on creating favourable conditions for partnership between the public and private sector.

Mr Chairman,

Private sector development is a main priority of Norwegian development policy (as stated in the white paper Fighting Poverty Together. A Comprehensive Development Policy, Report No. 35 (2003–2004) to the Storting.) This makes Norwegian business and industry natural partners for Norwegian development co-operation. Norwegian companies and trade organisations have experience, values and approaches that can be useful to private sector players in developing countries. Co-operation with Norwegian business and industry has also shown that there is considerable motivation to contribute to private sector development in many circles.

In 1998, we presented the first coherent Norwegian strategy for support for private sector development in developing countries. The strategy lays the foundation for greater Norwegian focus on private sector development. The overall objectives are to create economic growth by stimulating private sector development, promote investment, and strengthen trade with and among developing countries. The strategy emphasises the close relationship between development assistance policy and policies in other areas such as debt, trade, investment, agriculture, environment and energy. We are currently intensifying our focus on trade and private sector development within our development co-operation. Assistance to improve the operating parameters for private sector development, NORFUND’s venture capital for private sector development and trade-related assistance are important elements of this. It also includes improving co-ordination of our own support schemes for private sector development as well as strengthening international donor co-ordination and harmonisation.

Business must demonstrate excellence in management, and excellence in treating their own employees when they invest in developing countries. We must show that we are not only rich in capital, but also in humanitarian tradition. A Norwegian company abroad should be an ambassador for good management practices, labour rights, sustainable development and a future-oriented view of business as a cornerstone of the local community. More often than not, we see companies go abroad, invest - and withdraw. We need to change this trend. To provide local content where possible is an important contribution. And in sum, a consistent profile on these issues will represent a comparative advantage in many markets.

Mr Chairman,

We call on the business community to identify actions it can take in support of the MDGs, not only financially, but also in terms of developing innovative business models and new partnerships with each other, with donors, with national governments and with civil society, including trade unions. Actions can be supported to extend infrastructure services, housing and other basic services to poor people, promote good governance and transparency, support small enterprise development and youth employment, tackle HIV and AIDS and, not least, to tell the positive stories of their own investment experiences.

This means businesses have to move beyond yesterday’s CSR-strategies that focus on philanthropy, and take a closer look at how they do business. In the last decade there has been increasing evidence that pioneering companies that actively manage their impacts on sustainable development have better financial performance. The private sector needs to make a genuine commitment to sustainable development—with a sharp focus on corporate governance and transparency.

A Business’ primary contribution to development is to be a business, i.e. to produce goods and services and provide jobs. However, businesses should not focus just on the economic value they add, but also on the environmental and social value they add—and destroy. In some cases it makes sense for businesses to shoulder additional responsibility when national authorities cannot or will not do so. The objective of such activities must be to contribute to building robust communities that are able to stand on their own. This will in turn reduce political risk and may increase long term profit.

The issues that confront the corporate sector in development are not all that simple. I thus appreciate very much that you exchange experiences in settings like these. Nordic companies have a good record for being in the forefront on sustainability issues. You can only benefit from taking a progressive stance also on the wider CSR-agenda, like all of you present today have done.

On the Global Compact initiative in particular, Norway continues to be a strong supporter financially and politically. The criticism by some that the voluntary nature of the initiative is not enough is in my view misguided. The Global Compact has had, with very limited resources, a significant catalytic impact on businesses worldwide. One should never underestimate the power of ideas. Judged by what it is, a tiny office in New York that has set out to combine some very important global norms with UN convening power and private sector dynamism, the Global Compact has been a huge success.

The part of the Global Compact initiative that has the most potential to create a real difference is the local and regional Networks. Hence, the continued involvement of the companies present here, is highly appreciated by the Ministry of Foreign Affairs, and indeed by the Norwegian Government.

Mr Chairman,

The Millennium Development Goals are too important to fail. It is time to put them on the fast track they require and deserve. The year 2005 should inaugurate a decade of bold action. We all need to take action and work together. The MDGs can be reached and they must be reached, and business should do its part. It is in our joint self-interest. Let us all step up to the challenge.

Thank you.