SOMO and Oxfam Novib publication: Private sector development policies and instruments through a conflict lens

A new publication by SOMO and Oxfam Novib (supported by the Knowledge Platform Security and Rule of Law) addresses the knowledge gap regarding how Dutch Private Sector Development (PSD) policies and instruments take into account the context of fragility and conflict. The study focused on whether a “conflict lens” is applied to Dutch Private Sector Development instruments and policies. Do the various PSD instruments include conflict sensitivity requirements from corporate applicants? To what extent do the implementing agencies of PSD instruments assess the potential impacts on conflict by these companies? And what information do they provide to companies on the risks and challenges of operating in these contexts?

Private Sector Development policies and instruments through a conflict lens

Overall, it can be concluded that a “conflict lens” is to some extent (in some cases) already being utilised in Dutch PSD policies and instruments, yet mostly informally and ad hoc. Over the years, we have seen an increase in policy attention being paid to the role of PSD in fragile states, although there has been a lack of policy coherence between the Dutch government’s policy on private sector development and its security and rule of law policy. However, it remains insufficiently clear just how the private sector can contribute to the prevention of conflict and instability. This aspect deserves greater recognition in Dutch policy. The importance of a conflict-sensitive approach is recognised within the new policy framework, which is a positive sign and offers opportunities. In practice, implementing agencies have in some cases paid extra attention to the conflict context when certain PSD instruments have been applied in FCAS. For instance, the Dutch Good Growth Fund (DGGF) requires applicants to identify conflict drivers (such as land acquisition, hiring policies and natural resource use) as part of their context analysis.

The report also offers a number of recommendations for improving current policies and for further research. For instance, the report recommends that a “conflict lens” should be added to all Dutch PSD policies and instruments and be applied in a more consistent way. Conflict sensitivity needs to be formalised and harmonised in the PSD support criteria and a guidance document on conflict sensitivity for implementing agencies of Dutch PSD interventions should be developed, without creating new extensive checklists. Dutch embassies could potentially play a key role here by, for instance, improving the knowledge of embassy staff on how to better support businesses that are planning to, or are already, operating in fragile settings. Moreover, applying the “conflict lens” could then become the missing link between SDG 8 (decent work and economic growth) and SDG 16 (peace, justice and strong institutions). Finally, the recommendation is to conduct an impact study on the application and effectiveness of PSD instruments in fragile and conflict-affected situations (FCAS) that will focus on the amounts of funding spent in FCAS, their economic impact and their (unintended adverse) impacts on beneficiaries, rights holders and stakeholders in a context of conflict and fragility.

According to the Dutch government, strengthening the private sector is essential in order to tackle the societal challenges worldwide. Private sector development (PSD) contributes to employment, economic growth, poverty reduction and social inclusion in developing countries, while simultaneously creating market opportunities for Dutch investors. The new Policy Framework stipulating the Dutch Development Agenda, “Investing in Global Prospects” (2018), has a strong focus on preventing conflicts and combating instability and insecurity as one of the four overarching goals, in which private sector development is assumed to play an increasing role. It is generally agreed, however, that companies never operate isolated from the (conflict) context in which they do business, and that there are serious risks and challenges for those operating in fragile and conflict affected settings. The way companies operate influences the conflict dynamics, either positively or negatively. It is therefore of importance that companies supported by the Dutch government apply a so-called “conflict lens”, which means being sensitive to the conflict context, in an effort to ensure that negative impacts on conflict and on local stakeholders are avoided and positive impacts are maximised.