TWG 3 - Private Sector Evaluation
Private sector entities play a central role in the economy and the society. They create wealth, provide employment and generate innovation. In partnership with government, they are increasingly active in infrastructure development and the delivery of public goods and services. Yet, with notable exceptions (aid funded private sector projects in developing countries1; European structural funds; social and environmental impact assessments and regulatory framework reviews) private sector interventions are not routinely subjected to systematic evaluative scrutiny.
Since 2008 the global financial crisis has induced national audit offices, central banks and public policy think tanks and academics to carry out studies of banking sector governance and practices. The crisis has also elicited interest in learning from experience about what works and does not work in schemes designed to promote private sector infrastructure investment, youth employment, entrepreneurship and innovation. But these studies have not always involved all relevant disciplines. Nor have they always been scrutinized with sufficient evaluative rigor.
Thus evaluation of private sector initiatives are currently limited and scattered. They have yet to capture the evaluation mainstream. The TWG on Private Sector Evaluation unites evaluators working in this field within and beyond Europe and promotes interest in evaluation within the private sector, the auditing profession and academic think tanks. It serves as a learning platform for private sector methodologies, practices and processes. The new working group examines what makes private sector evaluation different from evaluating public sector activities, e.g. with respect to the evaluative implications of corporate ethics and business integrity principles; the interface between private sector auditing and evaluation; the soundness of corporate social responsibility reviews and social and environmental assessments, etc.
In order to the focus on key topics and subjects of relevance, the TWG operates with four Sub-groups: the Sub-group for Evaluation of Financial Intermediaries, including SMEs. Financial institutions, namely, play a crucial role in today’s world, also in development cooperation. Vast amounts of donor money from public as well as private sources, including social investments are supporting and strengthening the financial sector in the third world; the Sub-group for Evaluation of Public-Private Partnerships (PPPs) was created in view of specific interest from within the EES, but also bilateral donors see PPPs as an area where evaluation is required, as it is an important sector in developing and transition countries where the private sector meets public interest; the Sub-group on Corporate Self-Evaluation intends to learn more about evaluation-related activities of the private sector, such as: corporate responsibility programmes, mostly incorporating social and environmental responsibility activities, anti-corruption measures and promoting business ethics and transparency; the Sub-group on the Specificity and Dynamics of Private Sector Evaluation has been established in view of a growing debate in the evaluation community on what makes private sector evaluation so specific compared with public sector and what the differences are.
In short, the thematic working group deals with the evaluation of private sector activities from a public interest perspective. But also pays attention to the internal accountability and learning mechanisms in place within private corporations including their use of the new information technologies. Accordingly the TWG helps bring together evaluators, systems analysts and academics interested in assessing the merit, worth and value of private sector operations from a variety of perspectives.
1 Both multilateral and bilateral aid organizations have acquired substantial experience in evaluation of development finance institutions, micro-credit initiatives, small and medium enterprise development, trade facilitation operations, etc. The Evaluation Cooperation Group (ECG) in which the heads of the evaluation departments in MDBs collaborate have developed good practice standards with respect to private sector evaluation.
EES President's Note
At the EES virtual board meeting on 3rd July 2013 questions were raised in respect of the TWG on Public Private Partnership (PPP) evaluation and the sense of the meeting was that it would make sense for the PPP TWG to be folded into the Private Sector TWG. The suggestion was that Mehmet Uzunkaya, who took the initiative of establishing the PPP TWG, would take the lead in PPP work as head of a Sub-group embedded within the Private Sector TWG with Fredrik Korfker as TWG leader. The EES Board felt that the merger would allow greater synergy as well as broader participation regarding the substantive issues involved in PPPs.