PRESS CONFERENCE ON BUSINESS FINANCING FOR DEVELOPMENT

An awfully good momentum had been started one year ago at the International Conference on Financing for Development, held in Monterrey, Mexico, but if good intentions did not turn into measurable actions, then everyone would lose out, Maria Livanos Cattaui, Secretary-General of the International Chamber of Commerce, said today at a Headquarters press conference sponsored by the Economic and Social Council (ECOSOC).

Addressing correspondents during a break in a day-long dialogue with the business sector and ECOSOC, she said the time was now, when the world economy was difficult, that the partners could put in place the necessary building blocks for development and reap their rewards in a year. 

The dialogue taking place in the Council Chamber today was in preparation for the special high-level meeting with ECOSOC, the Bretton Woods institutions and the World Trade Organization (WTO) on 14 April, for which the theme was “Increased coherence, coordination and cooperation for the implementation of the Monterrey Consensus of the International Conference on Financing for Development at all levels one year after the Conference”. 

The consensus agreed at Monterrey on 22 March 2002 by world leaders and heads of State had established a working agreement on development principles for countries of the North and South and was an occasion for pledges of development assistance that reversed a decade-long period of stagnation and decline.  Joining Ms. Cattaui at the press conference, as members of the contact group that had coordinated the private sector component in Monterrey, were Nick Sullivan, Associate Director of Money Matters Institute, and Paul Underwood, Executive Director of the Business Council for the United Nations. 

Ms. Cattaui said the contact group was presenting proposals today for increasing the scope and spread of private investment in poor countries, in order to establish a framework for resolving national debt crises for the benefit of both creditors and debtor countries.  The coordinating committee of business interlocutors had come to Monterrey with the idea of moving from words to action and advancing, and then, following up, a number of projects.

She said she fully recognized the many questions and challenges surrounding the role of the United Nations today in the maintenance of peace and security.  Business people firmly believed that the United Nations was “absolutely paramount” to development and were convinced of the prudence of a multilateral approach to economic growth, particularly during the present difficult economic period.  Her efforts had been directed towards the developing and least developed countries. 

She said she welcomed the theme of the upcoming high-level meeting, which set out the kind of framework that was essential.  Many proposals and new mechanisms had emerged or were being implemented for developing financing.  Indeed, the most important aspect of the Monterrey Conference had been the recognition of the need to mobilize private sector investment.  That meant local investment, primarily, along with partners on the international sphere.

Mr. Underwood, of the Business Council for the United Nations, said that in any discussion of the root causes of terrorism and political instability, poverty, and especially extreme poverty, was right at the top of the list.  Business had been most concerned about being able to leverage the abilities of the private sector to improve that situation around the world and preserve the globalized economy for businesses and individuals, and to support the United Nations in its efforts to manage governments, private sector, civil society, and international financial institutions to improve that process.

Today, he said he was engaged in briefing the 53 ECOSOC ambassadors on both policy and practice.  He was addressing the impediments to capital flows, which were not going to the poorest, and recommending ways to improve that.  He hoped to move the meeting this afternoon from dialogue to the presentation of concrete proposals, which had been put on the table at Monterrey one year ago, and to report on their progress.  It was all about pushing governments to be accountable and putting in place a process to work together more effectively, in order to achieve concrete outcomes.

He planned to ask governments to establish benchmarks, including, for example:  how many independent balanced non-propaganda information systems that could be used by local and foreign investors had been put in place; how many local micro-impediments had been identified and removed; and what process had governments and multilateral organizations undertaken to support private sector initiatives to benefit the process.

Mr. Sullivan of the Money Matters Institute, a non-profit organization based in Boston, recalled that the group had presented a paper at Monterrey on formulating a way to develop a Western-style venture capital culture in the developing world.  The paper had received a lot of attention and was developing into a fully-fledged proposal to develop an actual venture capital fund.  The primary purpose was to bring together global advisers to help manage hundreds of billions of dollars around the world.

Agreement had been reached in principle on the global money managers for that fund, which would operate in five regions and spark investments in small start-up businesses, he said.  There was presently a lot of private equity in developing countries.  The proposed fund was different in both its scope, which was global, and its focus, which was on small emerging businesses.  Especially now with worldwide unemployment at an all-time high, such a fund could foster job creation and help push local investment into local companies, rather than watch it flow out of a country into other investments.

He was hoping, once the global economy and geopolitical situation stabilized a bit, to develop a workable model that could be replicated and help to develop, not only thriving businesses, but also better capital markets in the developing countries.  Such a model would also show how market principles could work, not only at the macro level, but also at the micro business level.  Hopefully, that would demonstrate the following approach:  “roll up your sleeves, invest in small business and stick it out for five to 10 years and show results”, he said. 

Asked who was responsible for measuring successes and failures,

Mr. Underwood said the responsibility for measuring success lay with both business and those players at the United Nations and international financial institutions. One year after Monterrey was a good time to look at progress on private sector

proposals and define exactly what the business sector needed from governments and financial institutions.  Specific benchmarks, however, would probably not be set today.

To a question about the impact of the situation in Iraq on business’ development financing proposals, Ms. Cattaui said the group hailed from business and not politics.  But, wherever there was instability in the world, there was also economic devastation, and that underpinned her concerns.  Governments had the primary responsibility of creating the necessary political stability.  Even a situation of moderate political instability was often accompanied by a painful economic situation.  That kind of poverty was the kind she was trying to face -- to bring local investment to bear to stop the haemorrhaging of capital and promote external sources of finance.

Unlike the political arena, the business world was not prone to divide itself, she added.  It was “cross-invested” around the world and wished to build that up and not tear it down.  Continued trade and investment links and individual business links were some of the strongest factors towards building a peaceful and viable world.  And, that required a multilateral system and approach.

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