ECOSOC/BWI Meeting: Recommendations for Moving from Words to Actions | EurOrient

ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”


Recommendations for Moving from Words to Actions
From the Coordinating Committee of Business Interlocutors on
Financing for Development
21 March, 2003
United Nations
The ECOSOC Chamber



9:30 a.m. – 10:00 a.m.
10:45 a.m. – 11:30 a.m.
WELCOME ADDRESS & OPENING STATEMENTS
PANEL 2: Enhancing information, analysis and
• Ambassador Gert Rosenthal, President of
communication of country opportunities, risks and
ECOSOC
investment transaction services
• Moeen Qureshi (Chair) Chairman, Emerging
Coordinator:
Markets Partnership, Former Prime-Minister of
• Barbara Samuels, President, Samuels Associates
Pakistan and former Senior Official, World Bank

• Maria Livanos Cattaui, Secretary General,

International Chamber of Commerce
11:30 a.m. – 12:15 p.m.
• Paul Underwood, Executive Director, Business
Panel 3: Improving developing country access to long-
Council for the United Nations
term finance for infrastructure development and domestic

companies
PANEL DISCUSSIONS
Coordinator:
Each panel will commence with suggestions from business
• Crocker Snow, Director, Money Matters Institute
representatives, followed by responses from ECOSOC

delegates, including questions from the audience. Business
12:15 p.m. – 1:00 p.m.
representatives include executives from the Business
PANEL 4: Establishing frameworks for collaboration and
Council of the United Nations, the International Chamber
coordination between the public and private sectors in the
of Commerce, Money Matters Institute, Samuels
implementation of the Monterrey Consensus
Associates, and the World Economic Forum. In addition,
Coordinator:
also attending are: Mr. William Chew, Managing Director,
• Paul Underwood, Executive Director, Business
Corporate & Government Ratings, S&P; Ms. Clare Cowan,
Council for the U.N.
Chief Executive Officer, Venture Exchange Network; Mr.

Frank Fernandez, Chief Economist, Securities Industries
1:00 p.m. – 1:15 p.m.
Association; Mr. James Mutende, Manager (former),
CLOSING SESSION REMARKS
Uganda Commercial Bank; Mr. Ron Nechemia, Chairman,
Moderator/Discussant:
EurOrient Financial Group; Mr. Iqbal Quadir, Founder,
• Moeen Qureshi, Chairman, Emerging Markets
Grameen Phone; and Mr. Robert Sheppard, Managing
Partnership, Former Prime-Minister of Pakistan and
Director, J.R. Sheppard & Co. LLC.
former Senior Official of the World Bank


______________________________________________
10:00 a.m. – 10:45 a.m.
1:15 p.m. – 3:00 pm.
P
LUNCH BREAK
ANEL 1: Identifying and eliminating business
environment impediments to private investment

Coordinator:
3:00 p.m. – 6:00 p.m.
• Maria Livanos Cattaui, Secretary General,
PROGRESS REPORTS ON ONGOING FFD
International Chamber of Commerce (ICC)
BUSINESS PROJECTS: Status of Private Sector

Initiatives to Implement the Monterrey Consensus (see

afternoon agenda and attached project summaries)



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ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”


OPENING STATEMENT FROM BUSINESS INTERLOCUTORS

We welcome the overall theme chosen for the spring ECOSOC/BWI meeting: Increased coherence,
coordination and cooperation for the implementation of the Monterrey Consensus at all levels a year after Monterrey. It sets
out the essential framework for any discussion of how to work towards and implement the principles and
goals embodied in the Monterrey Consensus.

Monterrey saw the emergence of many ideas, projects, and proposals for new mechanisms for financing
development. Key was the recognition of the critical importance of mobilizing private sector investments
from both within developing countries as well as internationally. The Monterrey Consensus states:

Private international capital flows, particularly foreign direct investment, along with international financial stability,
are vital complements to national and international development efforts. (Para 20) We underscore the need to
sustain sufficient and stable private financial flows to developing countries and countries with economies in transition.
(Para 25)

In fact, today and looking forward, the private sector constitutes the dominant share of cross-border
investments in developing countries, accounting for over 75% of total net capital flows for all regions, and
over 100% for those regions experiencing negative net official flows.

For its part, the FfD Coordinating Committee of Business Interlocutors put forward a series of specific
proposals aimed at helping mobilize the resources of the private sector for development. However, in the
year that has elapsed since Monterrey, it has become clear that there has been insufficient forward
movement on these various fronts, especially given the continued reduced level of private sector flows to
developing countries (Appendix A).

The business proposals put forward in Monterrey are potentially important contributions, but they can
only be successful with the full and active participation and support of national governments, and their
international and regional organizations. If we are to be successful in implementing the Monterrey
Consensus, business, governments, and their organizations must coordinate and collaborate in four critical
areas:

1) Sharing Accountability for Implementation: All of us across the private and public sectors
must work together in designing, implementing, and financing new initiatives. For business FfD
proposals to be realized, governments must participate actively and explicitly -- developing country
governments must take the political leadership to be pilot countries, and industrialized country
governments must contribute funding and expertise, and in sharing risks. It is also critical that
official financial institutions – the World Bank, the IFC, MIGA, the IMF, and the regional
development banks – all be active in supporting FfD private-public partnerships with expertise and
funding.

2) Overcoming Systemic Impediments: Critical are substantial systemic impediments to the
mobilization of private sector capital that need to be overcome if we are to break the barriers to
capital formation and investment. We must be forceful and relentless in identifying and eliminating
the bottlenecks and inefficiencies. These exist at all levels – national, state, and municipal as well as
regional and global.
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ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”


3) Creating Systemic Enhancements: Often we lack the basic tools to realize investment potential.
Governments and investors need to work together to insure the basic mechanisms for investment
are easily available to all: information, analysis, and communication on country opportunities and
risks, and investment transaction services as well as innovative tools that increase the supply and
effectiveness of finance in developing countries. We must communicate success stories, and
progress against performance benchmarks in a timely credible and easily-accessible manner.

4) Establishing a Framework for Measuring Progress against Consensus: Success in
implementation of the Monterrey Consensus is impossible without a concrete, defined framework
for collaboration, coordination, and coherence. We need to establish a means for communication
across countries, sectors, organizations, and business. We need to establish a routine schedule and
performance benchmarks for monitoring progress specifically on these efforts to mobilize private
sector capital for development.

Our agenda this morning is built around these four areas of cooperation and coordination between
business, governments, and official institutions. We have prepared four sessions that focus on specific
actionable areas for implementation, each session addressing specific impediments, needed systemic
enhancements, and a framework with performance benchmarks for coordination going forward. Each of
the four sessions has an opening statement, with three sections reflecting these points: Section One refers
to the relevant Monterrey Consensus objectives we are trying to implement; Section Two on the
Impediments that need to be overcome to realize these objectives; and Section Three on Proposed
Implementation Steps, including suggested accountabilities for immediate actions. The Coordinator for
each session will begin with a very short statement reflecting the session points, and then ask our business
representatives to briefly elaborate, before turning the floor over to government representatives for their
viewpoints, and to the floor for an open exchange.

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ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”



OBJECTIVES, IMPEDIMENTS, & RECOMMENDED ACTIONS

10:00 a.m. – 10:45 a.m.
PANEL 1: Identifying and eliminating business environment impediments to private investment
1) Objectives of the Monterrey Consensus:

To attract and enhance inflows of productive capital, countries need to continue their efforts to achieve a transparent,
stable and predictable investment climate, with proper contract enforcement and respect for property rights, embedded
in sound macroeconomic policies and institutions that allow businesses, both domestic and international, to operate
efficiently and profitably and with maximum development impact. (Para 21)

Special efforts are required in such priority areas as economic policy and regulatory frameworks for promoting and
protecting investments, including the areas of human resource development, avoidance of double taxation, corporate
governance, accounting standards, and the promotion of a competitive environment. (Para 21)
2) Impediments to Realizing Objectives:
Ø Cumbersome administrative procedures and lack of a stable and predictable investment
environment.
Ø Lack of a mechanism for local and international business partners to consult in a systematic
way with government.
Ø Problems in finding capital for new entrepreneurial ventures.
Ø Inconsistencies and uncertainties in information of investment needs and opportunities.

3) Recommended Actions for Implementation:
Ø Implementation of objective investment guides built on surveys with all partners in countries
concerned.
Ø Setting up of business advisory groups.
Ø Supplying capital for new ventures and infrastructure.


10:45 a.m. – 11:30 a.m.
PANEL 2: Enhancing information, analysis and communication of country opportunities, risks and
investment transaction services
1) Objectives of the Monterrey Consensus:

We encourage public/private initiatives that enhance the ease of access, accuracy, timeliness and coverage of
information on countries and financial markets, which strengthen capacities for risk assessment. (Para 25)

Those public/private initiatives could include the development of consultation mechanisms between international and
regional financial organizations and national Governments with the private sector in both source and recipient
countries as a means of creating business-enabling environments. (Para 24)
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ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”


2) Impediments to Realizing Objectives:
Ø High Research Cost of Accessing Available Assessments (multiple official and private sector
sources)
Ø Gaps in Needed Information for many countries (especially smaller ones)
Ø Concerns of Information Bias and Incomplete Disclosure (business and political vested
interests)
Ø Inadequate Timeliness (compared to market and media speed)
Ø Inadequate Resources of Developing Country Governments (to develop information and
responses to investor information queries)
3) Recommended Actions for Implementation:
Ø Private-Public Partnerships with support of official information providers (multilateral and
government) to improve investor access to developing country investment information
Ø Private-Public Partnerships with support of donors and technology firms to develop policy
consultation mechanisms for developing countries governments to consult cost-effectively
with targeted investors on investment impediments and possible remedies
Ø Donors increase aid to developing governments aimed at improving their capacity to improve
country business-enabling environments (for example, covering the costs of business-
oriented government staff and government web sites that enable governments to
communicate directly with investors in a timely manner, and respond to investment problems)
Ø Expert groups drawn from private and official sectors to develop relevant credible
performance benchmarks, tracking improvements in country business environments


11:30 a.m. – 12:15 p.m.
Panel 3: Improving developing country access to long-term finance for infrastructure development and
domestic companies
1) Objectives of the Monterrey Consensus:
To this end, it is important to provide export credits, co-financing, venture capital and other lending instruments,
risk guarantees, leveraging aid resources, information on investment opportunities, business development services,
forums to facilitate business contacts and cooperation between enterprises of developed and developing countries, as
well as funding for feasibility studies. (Para 22)

To complement national efforts, there is the need for the relevant international and regional institutions as well as
appropriate institutions in source countries to increase their support for private foreign investment in infrastructure
development and other priority areas, including projects to bridge the digital divide, in developing countries and
countries with economies in transition. Additional source country measures should also be devised to encourage and
facilitate investment flows to developing countries. (Para 22)

We will support new public/private sector financing mechanisms, both debt and equity, for developing countries and
countries with economies in transition, to benefit in particular small entrepreneurs and small and medium-size
enterprises and infrastructure. (Para 24)
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ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”

In that spirit, we invite banks and other financial institutions, in developing countries as well as developed countries,
to foster innovative developmental financing approaches. (Para 23) Multilateral financial institutions could provide
further assistance for all those purposes. (Para 25)
2) Impediments to Realizing Objectives:
Ø Unacceptable Risk Levels and Uncertainty
Ø Constrained Capacity of Official Risk-Sharing (through guarantees, co-financing, insurance,
etc)
Ø Costly Process for Official Sector Transactions
Ø Lack of Forums for Creating New Innovative Financing Schemes
3) Recommended Actions for Implementation:
Ø Official Financial Institutions (World Bank, IFC, Regional Development Banks) and Donor
Country Financial Agencies become Active Participants in Ongoing and New FfD Private-
Public Partnerships, Projects, and Forums
Ø UN FfD Secretariat specifies that Rollout FfD Implementation includes Private-Public
Forums and Financial Support for New Innovative Financing and Risk Mitigating Schemes
(for example, exit vehicles, exchange funds, devaluation liquidity facilities, regulatory risk
insurance for capital markets, take-out facilities to extend the tenor of project bonds, etc)
Ø Official Financial Institutions and Donor Country Financial Agencies commit high-level
technical staff to develop new financing vehicles in above Forums, and provide financial
funding for related Projects
Ø Official Financial Institutions Reduce Costs and Time for Private Sector Firms Participating
in their Finance Programs and Projects
Ø Official Financial Institutions Review Official By-Laws to Insure Consistent with Private
Sector Fiduciary Responsibilities (for example, their rights and recovery to debtor are not
impeded)

12:15 p.m. – 1:00 p.m.
PANEL 4: Establishing frameworks for collaboration and coordination between the public and private
sectors in the implementation of the Monterrey Consensus
1) Impediments to Realizing Objectives:
Ø Difficulty in Overall Communication between FfD Official Sector Entities and Private Sector
Entities
Ø Lack of Monitoring Mechanisms to Measure and Report Progress for FfD Projects
Ø Lack of Funding to Support Technical Business FfD Support and Investor Outreach
2) Recommended Actions for Implementation:
(a) UN FfD Secretariat coordinates with Business Interlocutors to define Framework needed
for collaboration and cooperation between Business and Official Sector
Ø Establish periodic reviews of projects -- quarterly meetings at UN with meaningful
participation from governments and business
Ø Set up mechanism for ongoing communication -- need to have names and contact info
on both business and government sides; email progress reports, etc.)
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ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”

Ø Target expert groups targeted on critical problems and results– no results without
collaborative work in partnership; BCUN and ICC can serve as platforms for expert
groups and investor outreach
(b) Business Interlocutors coordinate with Official Sector in monitoring Performance
Benchmarks to Track Progress on Private-Public Partnerships, based on Accountabilities,
and Identify Problem Areas (like millennium goal tracking but specific focus on FfD
objective of mobilizing private sector capital for development)
Ø Level of support from developing country governments (for example, number of
governments creating investment roadmaps, setting up policy consultation
mechanisms, improving business environment with reduction of bureaucratic
impediments, etc)
Ø Levels of private sector capital (subcomponents could be also established to measure
specific outcomes, such as number of infrastructure projects, SMEs receiving support,
domestic capital financings, etc)
Ø Levels of support from official institutions, including regional development banks
(subcomponents could be amount of support from official institutions in co financing,
guarantees, etc.)
Ø Level of support from donor countries (for example, funding provided to private-
public partnership FfD projects)
(c) Official Sector Provides Financial Support for Business Technical FfD Support and
Investor Outreach Activities (see above)
Ø Business Focus Inherently Limited to Economically Viable Investments In Political
Environment Perceived as Being Predictable
Ø Credible Official Support and FfD Outreach Program Critical for Enlisting Private
Sector in FfD Projects and Investments (from within developing and developed
countries)
Ø Leadership Needed by Donor Countries, Regional Development Banks, and
International Financial Institutions with Financial Assistance for Technical Business
Support and Expert Forums with Business Sector (for example, research on business
impediments, how to increase private sector financing of power, SMEs, etc)


3:00 p.m. – 6:00 p.m.
Progress Reports on Ongoing FfD Business Projects:
Status of Private Sector Initiatives to Implement the Monterrey Consensus

Chairs:
• Maria Livanos Cattaui, Secretary General, International Chamber of Commerce
• Paul Underwood, Executive Director, Business Council for the United Nations
1. GLOBAL HORIZON FUND PROGRAM
Ø Sponsored by State Street Global Advisors and the Money Matters Institute
In cooperation with The United Nations
2. THE INVESTMENT ADVISORY COUNCIL (IAC)
Ø Sponsored by the ICC jointly with UNCTAD
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ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”


3. INVESTMENT GUIDES

Ø Sponsored by the ICC in coordination with UNCTAD
4. THE NEPAD BUSINESS GROUP (NBG)
Ø Sponsored by the ICC

5. POLICY ACTION GROUP ON VENTURE CAPITAL

Ø Sponsored by Venture Exchange Network
6. EXPERTS GROUP ON PUBLIC/PRIVATE RISK SHARING IN CAPITAL MARKET FINANCING
OF DEVELOPING COUNTRY INFRASTRUCTURE PROJECTS
Ø Sponsored by the BCUN and the Global Clearinghouse with support from the United Nations

7. SOVEREIGN DEBT RESTRUCTURING AND CRISIS PREVENTION

Ø Sponsored by the Securities Industry Association
8. GOVERNMENT – INVESTOR NETWORKS
Ø Sponsored by Samuels Associates with support from the Ford Foundation, Norwegian Government, and
Swiss Government
9. GLOBAL GOVERNANCE INITIATIVE TO MONITOR EFFORT ON UN MILLENNIUM
DEVELOPMENT GOALS
Ø Sponsored by WEF
10. AFRICA COMPETITIVENESS REPORT 2003-2004
Ø Sponsored by WEF
11. THE GLOBAL INFORMATION CLEARINGHOUSE WEB PORTAL
Ø Sponsored by Samuels Associates with support from Ford Foundation, Norwegian Government, and UN

12. CLOSING DISCUSSION: How can Government and Business Collaborate to Accelerate Progress in
Implementing the Monterrey Consensus?

(Please see attached appendices for summaries of each project)
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ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”


APPENDICES: TABLE OF CONTENTS


APPENDIX A: GLOBAL HORIZON FUND PROGRAM

APPENDIX B: BUSINESS ENVIRONMENT IMPEDIMENTS TO INVESTMENT

APPENDIX C: POLICY ACTION GROUP ON VENTURE CAPITAL

APPENDIX D: EXPERTS GROUP ON PUBLIC/PRIVATE RISK SHARING IN CAPITAL
MARKET FINANCING OF DEVELOPING COUNTRY INFRASTRUCTURE
PROJECTS

APPENDIX E: ENHANCING FINANCIAL CRISIS PREVENTION AND RESOLUTION

APPENDIX F: GOVERNMENT – INVESTOR NETWORKS: FACILITATING
IDENTIFICATION OF INVESTMENT IMPEDIMENTS AND REMEDIES

APPENDIX G: GLOBAL GOVERNANCE INITIATIVE

APPENDIX H: AFRICA COMPETITIVENESS REPORT 2003-2004

APPENDIX I: THE GLOBAL INFORMATION CLEARINGHOUSE WEB PORTAL
FACILITATING INVESTOR ACCESS TO INFORMATION ON DEVELOPING
COUNTRIES

APPENDIX J: GRAPH – NET PRIVATE FLOWS AS PERCENT OF TOTAL CAPITAL FLOW

APPENDIX K: GRAPH – TOTAL NET CAPITAL FLOW, DEVELOPING COUNTRIES


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ECOSOC/BWI Meeting: “Increased coherence, coordination and cooperation for the implementation of
the Monterrey Consensus at all levels a year after Monterrey”

APPENDIX A

GLOBAL HORIZON FUND PROGRAM
Sponsored by State Street Global Advisors and the Money Matters Institute


BACKGROUND: Small entrepreneurial companies are a primary source of innovation, jobs and wealth
creation in the West. Such startups typically acquire their initial seed money as private equity, including
venture capital, based on high risk and high reward. This has developed into an institutionalized form of
financing readily available only in mature economies characterized by established capital markets, rule of
law and openness to foreign investment. Such financing slowly has spread to some developing countries.
A major boost for the goal of global economic development lies in fostering the culture of venture capital
more widely to provide needed financing for those generating new economic activity in less developed
countries.

CORE CONCEPT: The Global Horizon Fund (GHF) program will be established as a linked series of
4-5 private equity funds, each for a different region of the world. The regional funds will be dedicated to
direct equity investments in early stage and emerging growth companies, buyouts and privatizations. The
program will operate with the principals of a proposal presented at the United Nation’s “Financing for
Development” conference in Monterrey, Mexico in March 2002, utilizing the standards and procedures of
the for-profit private sector.

CAPITALIZATION: State Street Global Advisors, the global investment management arm of the State
Street Corp., will seek capital commitments of up to $1 billion from a combination of private sources such
as corporate and institutional funds with interest in the Fund objectives and target countries and public
sources including regional development banks and multilateral agencies that are dedicated to assisting
private sector initiatives regionally and globally.

MANAGEMENT: The GHFund will be administered by State Street Global Advisors as fund manager,
the GHF “founders” (Crocker Snow Jr., president of the Money Matters Institute of Boston, Hani
Findakly, president of Potomac Capital of Washington DC and Joseph W. Bartlett, partner of Morrison &
Forrester and chairman of VC Experts Inc. of New York) and an experienced board of experts in
international finance and equity investment in developing countries. Local fund managers will be selected
for target regions and countries.

GOALS: The GHF program board and its managers will be dedicated to identifying worthy and
promising investment opportunities in start-up, early stage and emerging growth companies in a range of
developing countries with the ultimate objective of job and wealth creation. The survival and success of
these investments will serve to enhance economic and social development, demonstrate the viability of
venture capital finance in developing countries, and, through creative public-private exit strategies such as
“exchange funds”, achieve profits for the GHF program investors that equal industry standards.

For more information, contact Mr. Crocker Snow at crockersnowjr@earthlink.net




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