| |
The Case for Private Sector Engagement
|
|
This paper argues that business entry into war-torn areas has become essential to peace: in the long run, only the private sector can provide much-needed jobs and economic growth. The author calls for a partnership between private enterprise and public interest to establish appropriate economic and noneconomic incentives for investment. A longer version of this paper is also available. (PDF, 31KB)
|
|
This is the executive summary of an influential report arguing that business can make a significant contribution to the alleviation of conflict. It identifies the key management challenges, and points to five principles for corporate engagement in conflict prevention and resolution. These include: strategic commitment, risk and impact analysis, dialogue and consultation, partnership and collective action, and evaluation and collective accountability. (PDF, 943KB)
|
|
This paper discusses how different companies and sectors view opportunity and risk in post-conflict settings. Large multinational companies will seize opportunities in post-conflict countries only if these opportunities are commensurate with their size and capabilities. However, in smaller economies, the most active foreign investors will be niche players with a higher tolerance of risk, or regional companies with regional development strategies. The paper focuses on the petroleum and mining industry as well as mobile phones, construction, and commercial banks. These sectors vary in the scale of the investment that they need and the time frame in which they expect to make returns. The paper cites examples from Afghanistan, Bosnia and Herzegovina, Iraq, Somalia, Sierra Leone, and Timor Leste. (PDF, 630KB)
|
|
This presentation gives a senior international businessman’s perspective on investment in conflict-affected areas, particularly Afghanistan and Iraq. The author discusses the factors that Siemens took into account when reviving its business in these two countries. He points to the critical importance of security and infrastructure, and highlights the potential for public-private partnership in areas such as education. The official United Nations press release for this discussion includes a summary of the comments by other speakers, such as U.N. Secretary General Kofi Annan and then World Bank President James Wolfensohn. A full transcript of the discussion is also available.
|
|
The authors in this paper analyze the economic factors that contributed to conflict in Mindanao, southern Philippines. Chapter 4 discusses the role of the private sector in “breaking the links between economics and conflict.” It includes a case study of the town of Datu Paglas, where local business leaders have managed to foster economic development, overcoming a history of violence and lawlessness. (PDF, 496KB)
|
|
The first section of this paper reviews cases where companies have been criticized for their activities in conflict zones, including examples from the extractives, finance, forestry, and dam construction sectors. The second section reviews examples of peace-building initiatives that companies have undertaken in cooperation with governments, civil society, or the United Nations. (PDF, 200KB)
|
|
| This online database, provided by the Business and Human Rights Resource Centre, cites articles on a wide range of human rights issues that pertain to business. It includes subsections on security issues and conflict zones and conflict prevention and resolution. The material comes from the international press and from more specialized publications and Web sites. |
|
The Business Environment: Challenges and Reforms
|
|
High levels of corruption is a major obstacle to business in post-war situations. This study highlights four key factors contributing to corruption: the idea that the requirement for urgent reconstruction justifies a “state of exception” where normal controls need not apply, the weakness of governments in transition, the particular temptations of the construction boom, and lack of oversight and coordination. It outlines nine proposals for reform, and includes case studies from Lebanon, Sierra Leone, and Bosnia and Herzegovina.
|
|
Somalia is the quintessential failed state, having lacked a national government since 1991. But its private sector has nevertheless been surprisingly innovative. This paper discusses how local companies have coped without a system of governance, citing examples from telecommunications, electricity generation, water systems, and aviation. It also points to gaps in private sector provision, and discusses the potential future role of government intervention. This case study also served as a background reading for an online discussion on how entrepreneurship can flourish in conflict-affected countries. (PDF, 200KB)
|
|
This paper outlines how markets work in post-war Afghanistan, with a particular focus on construction, the carpet market, and raisin exports. It describes the collusion between local businesses and political and military power-holders. Informal social regulation by powerful figures in these networks restricts competition and deters smaller players from entering the market. There is an urgent need for greater accountability and an overall political strategy that limits the power of those who have gained control of the markets through force of arms and illicit activities. (PDF, 218KB)
|
|
In many countries affected by conflict, potential investors are deterred by the legacy of war combined with an unmet need for institutional reform. This paper analyses the situation in Bosnia six years after the conflict ended there, at a time when the country was still at a relatively early stage in its reform program. Both domestic and international businesses suffered from bureaucratic obstacles that were difficult to remove because of continuing political tensions. The full report is available after a free online registration. (PDF, 425KB)
|
|
The “Bulldozer Initiative” was a response to the delayed reform process in post-war Bosnia. In 2002, an internationally-appointed representative to the nation invited business and civic groups to identify 50 reforms that could be “bulldozed” through bureaucratic impediments within 150 days, thus clearing the way for economic development. The initiative met its target, and serves as a successful example of civil mobilization in an otherwise discouraging political setting. (PDF, 3.57MB)
|
|
Part one of this paper compares post-war reconstruction in aid-dependent developing countries, while parts two and three examine case studies in Nicaragua and Mozambique. The paper emphasizes the need for clear sequencing of government reforms, and argues that donors should give priority to funding the rebuilding of civil and economic institutions.
|
|
If conflict-affected states in Africa are to recover, communities must rebuild, the private sector must be revitalized, and states must transform themselves. This paper argues that international aid donors, nongovernmental organizations, and businesses can do much to help or hinder recovery, but that national actors are even more important. (PDF, 256KB)
|
|
International Risk Assessments
|
|
This paper discusses the factors that determine whether a multinational corporation will operate in a conflict zone. It is based on interviews with 25 senior managers in sectors ranging from natural resources to infrastructure, services, retail, and manufacturing. It identifies the following critical factors: the geographic areas affected by the conflict, the severity of the conflict; the nature of the government and opposition, the company’s sector, and the investment structure of the project.
|
|
This guide aims to help companies minimize the negative effects and maximize the positive effects of investing in conflict-affected areas. Its core is a table summarizing key conflict factors and the management decisions needed to address them. The guide includes sections on stakeholder analysis and on impact assessment in relation to human rights, international humanitarian law, labor, and the environment. (PDF, 271KB)
|
|
This guide summarizes the human rights issues that international companies should take into account when deciding whether to invest in “states with bad governments,” including those affected by conflict. It argues that potential investors should, at minimum, respect international sanctions and popular sovereignty. Investors should also consider the possible proximity between the company’s operations and human rights violations. A supplementary guide is also available. (PDF, 398KB)
|
|
This paper reviews multinational corporations’ approach to risk assessment in conflict-affected areas. It argues that most existing risk-assessment tools are primarily concerned with the security risk to the company rather than the risk that the company could aggravate a conflict situation. The paper calls for a new approach to risk analysis and impact assessment that takes into account the latter type of risk. An index to related papers in the Conflict Indicators for Foreign Policy Program is also available. (PDF, 304KB)
|
|
The Conflict Analysis Framework (CAF), a tool that helps organizations identify conditions that lead to the outbreak or escalation of violent conflict, is primarily designed for organizations that provide development assistance to poorer countries, but the principles behind it can also be applied to private sector development projects. This note outlines the most important indicators and variables used in the framework. A more detailed exposition of the framework is also available. (PDF, 95KB)
|
|
Conflict-Sensitive Business Practices
|
|
This brief policy note examines how companies interact with stakeholders in conflict-affected areas. Arguing that many risk-mitigation strategies often actually increase vulnerability, the note offers a checklist of risk indicators that companies can use to assess their strategies for engaging community members and other stakeholders and gauge their degree of risk. (PDF, 24KB)
|
|
This report discusses how governments and international organizations can better assist private sector efforts to promote conflict-sensitive business practices. It assesses the achievements of private sector voluntary initiatives as well as the strengths and weaknesses of current regulatory instruments. It recommends concrete actions governments and international organizations can take to help the private sector develop conflict-sensitive business practices, improve security, manage natural resources, and combat corruption and crime. (PDF, 1.09MB)
|
|
The Voluntary Principles outlined on this Web site are designed to help companies balance the demands of security and human rights in conflict-affected areas. They express the commitment of signatories to best practice in three areas: risk assessment, public security, and private security. The signatories include the U.K., U.S., Norwegian, and Dutch governments, seven nongovernmental organizations, and a selection of petroleum and mining companies. The Web site provides the text of the VPs and links to the Web sites of the signatories.
|
|
This report is designed to help companies assess the impact of their operations in conflict-affected areas and to identify policies that will contribute to peace. It provides a framework for risk analysis, focusing on nine “flashpoint issues”: stakeholder engagement, resettlement, compensation, indigenous peoples, social investment, dealing with armed groups, security arrangements, human rights, and corruption, and transparency. The report is primarily designed for petroleum and mining companies, but its principles also are relevant for other high-impact industries. (PDF, 1.4MB)
|
|
This paper is part of a wider International Peace Academy (IPA) program on Economic Agendas in Civil Wars. It discusses the views of private sector representatives on the links between business and conflict and a range of voluntary and regulatory approaches to promote best practices. (PDF, 100KB)
|
|
The Collaborative for Development Action (CDA) is a consulting agency that has worked extensively with humanitarian agencies in conflict or post-conflict situations. The agency’s Corporate Engagement Project (CEP) addresses the special concerns of multinational corporations in conflict-affected areas. It develops practical management tools to promote positive relationships between companies and localities. The Web site includes articles on best practices and case studies based on fieldwork with mining, petroleum, and construction companies in Papua New Guinea, Cameroon, Myanmar, and Mozambique. A series of CEP issue papers discuss conflict risk mitigation strategies, with sections on operational activities, stakeholder engagement, and corporate culture.
|
|
This paper was published in May 2003, during the early stages of Iraq’s post-war reconstruction program, but the principles it espouses are applicable to commercial operations in other conflict-affected areas. It argues that companies will be better able to “manage risks and rebuild trust as well as profits” if they do the following: involve Iraqis from the outset; carry out integrated risk and impact assessments; manage expectations; adhere to international social and environmental standards; ensure accountability and transparency; implement guidelines for security management; support humanitarian and social programs; and help build legal, judicial, and economic institutions. (PDF, 943KB)
|
|
This report reviews the provisions of voluntary codes, guidelines, and initiatives that address the relationship between business activities and violent conflict. It includes an overview of the debate about the links between business and conflict, and outlines the strategic choices to be made by public and private sector actors. (PDF, 410KB)
|
|
Infrastructure and Basic Services
|
|
This paper identifies key challenges for infrastructure development in post-conflict reconstruction, drawing on case studies from Afghanistan, Bosnia-Herzegovina, Croatia, and Timor Leste. It emphasizes the complex problems associated with poor governance in post-conflict regions. The paper sets the context within which decisions on private sector involvement in infrastructure reconstruction must take place. (PDF, 196KB)
|
|
This paper examines private investment patterns in post-conflict countries. In the first few years after a conflict, countries often lack the capacity to absorb large amounts of aid, and they rarely focus on the need to establish a welcoming investment climate because of the need to address other urgent policy concerns. However, countries can speed up private investment in infrastructure by implementing early reforms and by focusing on the needs of small and medium enterprises. Small-scale private entrepreneurs often play a key role in the absence of fully-functioning states and established public utilities. (PDF, 777KB)
. |
|
This paper looks at previous experience with infrastructure provision in conflict-affected countries, and tries to find lessons that can be gained for future interventions. The paper covers water and sanitation, transport, shelter, communications and energy infrastructure sectors, as well as the reinstatement of public buildings. Considerable emphasis is given to the challenge of balancing the need for early engagement and a quick response with long-term planning, coordination and strategic analysis. It is very important to implement large infrastructure projects methodically and with a clear strategy since such projects have the capacity to do harm as well as good. (PDF, 356KB)
|
|
This case study describes efforts by Sierratel, the state-owned provider of telecommunications services in Sierra Leone, to rebuild the landline network following the country’s civil war, and the rapid expansion of the mobile phone network as a result of investment by three international companies. Mobile phones have brought new social and economic opportunities for local entrepreneurs, but high charges mean that services are too expensive for the poor.
|
|
This paper documents the critical role of private sector investment in expanding Afghanistan’s telephone network between 2002 and 2004. By the end of the second quarter of 2004, the country was estimated to have some 170,000 mobile phone subscribers. Diaspora investors have played a particularly important role. For more on the important role of information technology in conflict-affected countries, see this online discussion. (PDF, 347KB)
|
|
This paper describes an innovative public-private partnership in a region in eastern Tajikistan that had seen little economic development since the end of the country’s civil war in 1997. The project was initiated by the Aga Khan Fund for Economic Development, which set up the Pamir power project with help from the International Finance Corporation, and later benefited from World Bank funding. The project is seen as a model of collaboration between public and private partners. A shorter World Bank summary of the project is also available. (PDF, 85KB)
|
|
This paper considers the challenges of restoring the water, transport, energy, and telecommunications infrastructure in 13 war-affected economies in Africa. These tasks are often beyond the financial capacities of the governments. Yet, they can only attract private investment in infrastructure once the countries are at peace and policy reforms are in place. (PDF, 212KB)
|
|
|
This paper reviews both the positive and negative impacts of the private financial sector on nations affected by conflict. Firms can become entangled in conflict scenarios as a result of long-standing investment in formerly peaceful countries, or through investment in projects that generate local grievances. Equally, the financial sector can play a key role in post-conflict reconstruction, for example, by funding key infrastructure projects. The paper explores various voluntary initiatives and public-private partnerships that can help firms reduce their exposure to the risks of conflict while making a positive contribution to conflict alleviation. (PDF, 1.4MB)
|
|
This paper draws lessons from the involvement of the World Bank’s Multilateral Investment Guarantee Agency (MIGA) in the reconstruction of Bosnia and Herzegovina. Political risk insurance (PRI) provided by MIGA and other public sector agencies can serve as a catalyst to facilitate post-conflict foreign investment. PRI is of most value when investors can identify a turning point in a country’s fortunes. If the risk is too high, they will simply go elsewhere; if stability has already been achieved, there is less need for insurance. A MIGA brochure outlining its services to foreign investors in conflict-affected countries is also available, and cites examples from Mozambique, Bosnia, and Guatemala. (PDF, 410KB)
|
|
Microfinance is becoming one of the main sources of credit for small and medium enterprises, which in turn are likely to be among the main drivers of local economic development in post-conflict environments. This Web site gives references and commentaries on 16 case studies in countries ranging from Timor Leste to Cambodia, Liberia, Kosovo, Eritrea, Angola, Mozambique, Nepal, and the Democratic Republic of Congo.
|
|
The informal sector is often one of the main sources of financial services in conflict-affected countries. This paper provides a case study of money exchange dealers, or hawaldars, in Afghanistan, who have long provided a reliable, convenient, and inexpensive means of transferring funds in and out of the country. It considers the options for appropriate future regulation of the exchange dealers. (PDF, 695KB)
|
|
There is little prospect for a fast, post-conflict economic recovery without a well-functioning financial system. Drawing on a wide range of examples, this paper discusses the conditions for success. It argues that it is essential to revive the commercial financial system, but this can be problematic if, for example, nontransparent privatization leads to the capture of key institutions by powerful elites. (PDF, 169KB)
|
|
This paper examines a variety of links between the financial sector and conflict. Those who wage war often resort to commercial borrowing, and the availability of finance can help decide who wins. In the aftermath of conflict, economies often have weak regulatory authorities, and many private banks are owned by powerful political actors. Addressing such problems is all the more urgent because of the risk of massive economic shocks that can destabilize fragile societies. (PDF, 86KB)
|
|
Papers
Web Sites
Case Studies