Private Sector Development: Case Studies

Democratic Republic of Congo: Corporate social responsibility

Watchdog organizations have vehemently denounced several corporations for socially irresponsible actions in the Democratic Republic of Congo (DRC). For example, in 2008, the British government, Global Witness and the United Kingdom national contact point for the OECD Guidelines for Multinational Enterprises denounced the practices of Afrimex, a Belgian company, for failing to ensure that their operations were not contributing to human rights abuses. Among the claims are accusations that Afrimex allowed rebels to fund their activities from the company's supply chain and that measures were not in place to prevent child and forced labor. The British government has called for Afrimex to develop a corporate social responsibility framework that details the company's impact on the conflict and on human rights. In addition, companies like Nokia, LG, Motorola and Samsung use cobalt from DRC to make cellular phone batteries, which may support illegal export practices and unfair mining practices. Although these companies all have espoused commitment to CSR principles, none have specifically addressed the impact of coltan mining on conflict.

However, there is hope that the private sector and the nation's abundance of natural resources can contribute to building and sustaining peace and long-term development. According to the United States Institute of Peace (USIP), there are two main barricades to this: insecurity around mines and disputed contracts for mining concessions. Some have suggested that the private sector could overcome these challenges, and others, by implementing socially responsible principles.

For more information:

Mallen Baker, "Congo: Afrimex Criticised by British Government for Human Rights Questions," Business Respect: CSR Dispatches, Number 136, (September 14, 2008).

Dorina Bekoe and Christina Parajon, "Developing and Managing Congo's Natural Resources," USIPeace Briefing (Washington, D.C.: United States Institute of Peace, July 2007).

Raymond W. Copson, "Democratic Republic of the Congo: Peace Process and Background," Congressional Research Service Report for Congress, (August 14, 2001).

DanWatch, "Wake Up Call: Mobiles Make Congo Suffer," DanWatch (May 30, 2008).

David Francis, Uniting Africa: Building Regional Peace and Security Systems (Burlington: Ashgate Publishing, 2006), 211.

Human Rights Watch, "The Curse of Gold: Democratic Republic of Congo" (New York: Human Rights Watch, June 2005).

Jane Nelson, "Business of Peace: The Private Sector as a Partner in Conflict Prevention and Resolution," (England: The Prince of Wales Business Leaders Forum, International Alert, Council on Economic Priorities, 2000).

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South Sudan: Revenue sharing provisions - Outlook for success

Revenue sharing schemes have been highlighted in the United Nations Global Compact as an avenue for ameliorating some conflict situations, particularly where there is tension between the government, businesses and communities over unequal revenue distributions. However, revenue sharing schemes have largely been left off the agenda, and Jill Shankleman cites Sudan as the only case where revenue sharing was included prominently in a peace agreement. The 2005 Comprehensive Peace Agreement stipulated significant measures for increasing revenue distributions to the South, which was a major source of the conflict. However, as highlighted in a 2006 International Crisis Group report, there were significant challenges in implementing the resource sharing provisions. As of May 2008, disagreements over oil revenue sharing were still raging, and organizations like the Woodrow Wilson International Center for Scholars have warned that peace is on extremely tenuous grounds unless the terms of the peace agreement are met.

For more information:

Alyson J.K. Bailes and Isabel Frommelt (editors), Business and Security: Public-Private Sector Relationships in a New Security Environment (Stockholm: SIPRI, July 8, 2004).

Juliette Bennett, "The Role of the Private Sector: Conflict Prevention and Revenue-sharing Regimes," (paper prepared for the United Nations Global Compact Policy Dialogue: Business in Zones of Conflict, May 2002).

International Crisis Group, "Sudan's Comprehensive Peace Agreement: The Long Road Ahead," Africa Report Number 106 (Nairobi/Brussels: International Crisis Group, March 31, 2006).

Axel Mierke, "Conflict Prevention and Peacebuilding Elements of PSD/SED Programmes," (Eschbord, GTZ, 2006).

Jill Shankleman, Oil, Profits, and Peace: Does Business Have a Role in Peacemaking? (Washington, D.C.: United States Institute of Peace Press, January 31, 2007).

Woodrow Wilson International Center for Scholars, "Implementing Sudan's Comprehensive Peace Agreement: Prospects and Challenges" (Washington, D.C.: Woodrow Wilson International Center for Scholars, Africa Program, May 2008).

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Afghanistan: The security dilemma

Scholars and practitioners have defined the "security dilemma" in Afghanistan as largely a product of private military companies (PMCs) and private militias, also called illegally armed groups in Afghanistan, that are unaccountable for their collateral impacts on local communities, including widespread reports of human rights abuses. Operations intended to protect one community may have adverse effects on another community, creating a culture of counter-mobilization and retribution. In addition, some militias are using private security companies and contracts to reinforce power over local communities in certain provinces, including Paktya, Kandahar and Ghor, and some of these commanders still maintain ties with armed groups, which undermine the government's legitimacy. PMCs, including DynCorp, have also assumed leadership in training Afghanistan's police force at the behest of the United States government. In addition, an election law outlawed private militia commanders and human rights violators from running for president; but the law was not implemented, and two military commanders were accepted as presidential candidates.

Many argue that the private military companies and private militias - and their unchecked abuses in some cases - in Afghanistan have stymied peace efforts by alienating the Afghan public and failing to produce peace dividends. In 2008, critics charged that PMCs had failed to produce results in the security sector - at a very high cost - and that there has been a shift away from economic development as means of improving security towards de-militarization.

For more information:

Michael Bhatia, Michael Sedra, and Mark Sedra, Afghanistan, Arms and Conflict: Post-9/11 Security and Insurgency (New York: Routledge, 2008).

DynCorp, "Global Integrated Solutions," DynCorp.

Antonio Giustozzi, "Privatizing War and Security in Afghanistan: Future or Dead End?" Economists for Peace and Security, Volume 2, January 2007: 30-34.

Human Rights Watch, "Q&A: Private Military Contractors and the Law," Human Rights Watch.

Christop Kinsey, Corporate Soldiers and International Security: The Rise of Private Military Companies (New York: Routledge, 2006).

Mark Sedra, "Afghanistan: Democracy Before Peace?" FPIF Special Report (September 2004),

Mark Sedra, "Security Sector Reform in Afghanistan and Iraq: Exposing a Concept in Crisis," Journal of Peacebuilding and Development, Volume 3, Number 2, 2007: 1-17.

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Latin America: Water privatization

Despite having the largest per capita allocation of water in the world, water has been a major issue for many small-scale conflicts in Latin American countries, including Brazil, Venezuela, Mexico, Uruguay, Argentina, El Salvador, Bolivia and Peru. Poor management, pollution and increased population densities in cities have severely impacted water accessibility and created unequal distribution policies that have left millions without potable water. Structural adjustment programs have arguably worsened the problem by increasing poverty levels and horizontal inequalities between the wealth elite and the poor.

Compounding these issues is the privatization (or commoditization) of water services, which is cited by scholars and practitioners as a major source of conflict in Latin America. Historically, water service was provided as a function of the state and was viewed as a necessary public investment by the government. However, in the last decade, multinational water service companies have assumed control over much of Latin America's water management, and much of this privatization has been supported, if not led, by international financial institutions (IFIs), including through concessions granted by the World Bank and the Inter-American Development Bank (IDB), an in some cases, water privatization has been a prerequisite for loans from the IFIs. Adverse effects of this water privatization include: rate increases, shut-offs for customers that could not pay higher fees, reduced water quality, and rampant corruption through non-transparent systems. The Cochabamba Water War in Bolivia is widely cited as the most prominent conflict over water privatization. In 2002, after months of peaceful resistance, residents of the Cochabamba Valley forcefully expelled a multinational company that controlled the local water supply

In response to these negative effects and strong opposition by the public, scholars and civil society organizations are now promoting a shift in ideologies towards the idea of water as a human right for everyone, which includes sustainable, democratic and responsible management at the local level.

For more information:

Maude Barlow and Tony Clarke, "The Struggle for Latin America's Water," (New York: North American Congress on Latin America, July 2004).

Elizabeth Peredo Beltran, "Water, Privatization and Conflict: Women from the Cochabamba Valley," (Heinrich Boll Foundation North America, 2004).

Jose Esteban Castro, "Water Struggles, Citizenship and Governance in Latin America," Development, Volume 51, 2008: 72-76.

Carmelo Ruiz Marrero, "Water Privatization in Latin America," International Relations Center Americas Program, (October 18, 2005).

Susan Spronk, "Roots of Resistance to Urban Water Privatization in Bolivia: The "New Working Class," the Crisis of Neoliberalism, and Public Services" (Toronto: paper prepared for the annual meeting of the Canadian Political Science Association, June 3, 2006).

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Nicaragua: Post-conflict liberalization undermining peace

Following decades of violent conflict, a solid peace agreement between the Nicaraguan government and the armed opposition group the Contras and the first free and fair elections, signaled that peace had finally come to the country. The international community, led by the World Bank, International Monetary Fund (IMF), and the United States Agency for International Development (USAID), quickly implemented economic stabilization and structural adjustment policies intended to produce rapid economic development. The leading Chamorro party, who had won the election over the incumbent Sandinista party, firmly supported these liberalization reforms, which included privatization of most state-owned enterprises, relaxed trade barriers and the elimination of price controls and subsidies.

Although some success was attributed to liberalization reforms, including reduced inflation and fiscal stability, the social impacts were largely negative. Massive lay-offs of public servants and cuts in social spending created large horizontal inequalities and critically high unemployment rates. In addition, the government had failed to implement economic reintegration packages for former combatants, in part because of pressure from the international community to reduce spending, which left little opportunity or incentive for former fighters to sustain peace. Within several years of the war's end, rampant criminal and gang violence had taken hold throughout Nicaragua, as well as politically motivated killings and kidnappings of Contras and Sandinistas. Even while economic growth appears to be growing, confidence in the ability of the state to produce positive economic dividends for citizens, not just the wealthy elite, and to ensure security, has led many to caution that nearly twenty years after the peace agreement, conflict may be on the horizon in Nicaragua.

For more information:

50 Years is Enough, "IMF Loan Conditions for Nicaragua Require Privatization Measures that Would Enrich Corporations at the Expense of People" (Washington, D.C.: 50 Years is Enough, December 4, 2002).

Center for Global Development, "Distributional Impact of Privatization," Center for Global Development (February 24, 2003).

Roland Paris, At War's End: Building Peace After Civil Conflict (Cambridge: Cambridge University of Peace, 2004).

Lara Roemer, Samantha Drews, Noah Siegel, and Wesley King, "Gender and Globalization in Nicaragua: How Privatization Has Led to the Creation of Autonomous Economic Movements and New Applications of Political Agency" (Chicago: paper presented at the annual meeting of the Midwest Political Science Association, September 10, 2008).

United Nations Conference on Trade and Development, "World Investment Report 2008: Transnational Corporations and the Infrastructure Challenge: Country Fact Sheet: Nicaragua," (Geneva: UNCTAD, 2008).

World Bank, "1988-1999 Privatization Transaction Data: Nicaragua," (Washington, D.C.: World Bank, Development Economics Prospects Group, April 9, 2001).

    The news, reports, and analyses herein are selected due to there relevance to issues of peacebuilding, or their significance to policymakers and practitioners. The content prepared by HPCR International is meant to summarize main points of the current debates and does not necessarily reflect the views of HPCR International or the Program of Humanitarian Policy and Conflict Research. In addition, HPCR International and contributing partners are not responsible for the content of external publications and internet sites linked to this portal.