17 Jun 2014
- Dear Mr. Demberel, Member of Parliament and Chairman of the Mongolian National Chamber of Commerce and Industry
- Development Partners and Representatives of Business Community
- Dear Distinguished Guests
It is a pleasure for me to address the Consultation on the Post-2015 Development Agenda with the private sector.
The themes of this meeting, “Engaging with the private sector” and “Strengthening the role of small and medium enterprises in sustainable development” are very pertinent, both for Mongolia, and for the world at large.
Over the last two decades we have witnessed huge achievements, especially in the Asia pacific region. Hundreds of millions of people have been lifted out of extreme poverty, and the income levels of countless millions more above that line have been lifted too.
In recent years, Mongolia’s economy has been among the fastest growing in the Asia-Pacific region. On average it grew at 9 percent per year in 2004-08, and in double digits during the last three years. Its GDP per capita increased nearly ten times since 2000 and Mongolia is now classified as a middle income country.
Nonetheless, 27 percent of the people remain below the national poverty line, income inequality has steadily increased, incidence rate of the spread of tuberculosis is not declining fast enough, and the target of the proportion of people without access to improved sanitation called for in the Millennium Development Goals is unlikely to be met.
These trends convey an important message: economic growth, while critical, is by itself not enough for a country’s development.
The Millennium Development Goals (or, MDGs) that were launched at the start of this century aim to improve the human condition and strengthen national efforts to reduce poverty, achieve universal primary education, promote gender equality, reduce child mortality, improve maternal health, combat diseases, promote protection of the environment, and develop a global partnership for development.
As we move closer to the 2015 timeline of achieving the MDGs, discussions have been on-going on the agenda that could build on and succeed the MDGs. National and thematic consultations were organized in many countries in which more than 1 million people participated.
Last September, the UN Secretary-General Ban Ki-moon and the UNDP Administrator launched the report on the global conversations facilitated by the UN development system on the post-2015 development agenda.
Mongolia was one of the many countries to hold comprehensive national consultations. Nearly 2000 people from different stakeholder groups across the country participated in these consultations.
These conversations covered many important issues. The main feedback was that people want better governance, reduced inequalities in access and opportunities, a stronger emphasis on sustainable development, economic diversification, and enhanced the role of the private sector, especially small businesses.
A second round of consultations have been launched this year with a number of key stakeholders, among them the private sector. While the first round of discussions focused on the potential issues and areas to be included in the Post 2015 agenda, the second round address implementation mechanisms and focus on issues which have not yet been fully explored in the inter-governmental negotiations.
The private sector, especially the SMEs, are a key stakeholder in sustainable development, both globally as well as in Mongolia.
This is because private sector has a critical role to play in fostering inclusive growth. Its business models can be particularly positive for development when, for example, they open up opportunities for local entrepreneurs in their value chains, and commit to skills development for local employees.
This kind of business model helps spread the benefits of growth to greater numbers of people – including those who have hitherto not been able to benefit from their country’s development.
Over 90 percent of companies worldwide are small and medium-sized enterprises. SMEs play a crucial role in creating jobs and employing people from diverse sectors, including the poor.
According to recent data, there are 30-40,000 active SMEs operating in Mongolia. These employ close to half its labour force and contribute 25 percent to the country’s GDP.
As such, they can be major drivers of inclusive growth and sustainable development.
SMEs need to be empowered to become active socio-economic agents for transformational change. This should be done through increasing their access to finance and knowledge and technology transfer. Technology transfer from large-scale business, academic and research institutions and the public sector can be critical. As is improving SME productivity and growth and mainstreaming corporate sustainability in their practice.
The approach goes far beyond traditional concepts of corporate responsibility. Goods and services provided by businesses can be intrinsically very positive for development. The role of information and communication technologies, for example, creates new platforms for education, health, and government services – as well as opening up access to financial services and lowering the cost of doing business. Banking via the cell phone is an obvious spin off, as are e-government, linking up students with their teachers and the wider world, and linking remote health clinics with specialist diagnosis.
Consultations on the Post-2015 Agenda held last year established that business initiatives at the national level, such as the local networks of the UN Global Compact, offer significant opportunities and support for SME engagement. They can help in understanding how local challenges and opportunities may require business model adaptation, and the translation of universal principles to the local context and the reality of SMEs.
Through its involvement in the Business Call to Action, UNDP sees many companies making conscious decisions to purchase locally, thereby helping communities to grow small businesses from the micro level and up and generate new jobs and livelihoods.
There is another aspect that was highlighted in the first round of Post-2015 consultations. That is the emphasis on sustainable development. All types of businesses this century will need to become cleaner and greener, in order to sustain the ecosystems of our planet on which all life depends.
Government policy has a significant role to play, for example, by
- creating a positive enabling environment for growth,
- improving the quality of education so that both the economy and society at large are supplied with the skills they need to function well;
- promoting and attracting investment in critical infrastructure like energy generation and transmission, and generating jobs and incomes; and by
- mobilizing the domestic resources which growth makes possible for further investment into the virtuous cycle of development.
UNDP works alongside government partners and the private sector on inclusive growth and business models. We can help to connect local, national, and global actors, and identify approaches which will create value for businesses and break into markets in ways which directly lift the living standards of the poor.
One does not have to go far to seek a successful example. Mongolia’s Khas Bank started as a UNDP project for which UNDP provided seed funds and necessary technical inputs. It has since successfully transitioned from a microfinance institution to become the fourth largest commercial bank in Mongolia today.
Fiji offers another example. There, UNDP and ANZ Bank worked together to expand commercial banking services. ANZ developed innovative ways of expanding services to new communities and small businesses. To complement that, UNDP supported the provision of financial literacy training, which to date, has benefited more than 15,000 Fijians.
To conclude, Mongolia has many strengths, including its relatively young labour force, its abundant natural resources, and a vibrant private sector. With smart policy choices, Mongolia’s future is bright.
Much of the responsibility for establishing an enabling environment lies with governments. But the private sector, including and especially multi-nationals and large-scale enterprises, can help by leveraging the connections of SMEs with them as suppliers and support employees, customers and neighbors.
I thank the Mongolian Chamber of Commerce for being a successful champion of the private sector for so many years.
At UNDP, we are committed to supporting Mongolia on its journey to inclusive growth, guided by the country’s own priorities and by our mandate to advance human and sustainable development.
I hope that this consultation will be useful in exploring the options for the private sector to align its mission to the Post-2015 vision, foster innovation, find solutions, and allow for transformational partnerships that benefit the society and economy, as well as drive business success.