Oxfam and the private sector

Oxfam believes that the private sector plays a central role in development, having an impact on or contributing to poverty reduction in many different ways. Where there is a healthy, vibrant, thriving and responsible private sector, there are greater possibilities for sustainable development and economic growth that can lead to poverty reduction.

By enabling poor people to access employment, goods, services and credit, as well as improving incomes through access to markets, businesses make their most important contributions to development that benefits poor people. These contributions have a real impact on poverty reduction when companies integrate their social and environmental responsibilities into their core business operations and decision-making processes. When this happens, businesses have the potential to:

• create jobs that offer decent and fair working conditions
• make goods and services accessible to and affordable for poor people
• enable poor producers to access markets
• enhance poor people’s skills and access to technology
• generate revenues that contribute to spending on basic services, and
• promote respect for human rights and protection of the environment in their operations and supply chains.

On the other hand, failure to integrate social and environmental responsibilities can contribute to deepening poverty. For example:

• jobs may be created but if employment rights are abused, poverty is exacerbated
• the wealth generated in local value chains may not be captured by poor communities
• private-sector delivery of basic services may compound inequalities and inaccessibility to these services, particularly where it is not regulated effectively
• technology may not be transferred – only the low-skilled, low-value activities are outsourced to poor people
• aggressive marketing and predatory pricing can compound poverty – poor people often pay more per volume for goods that they may not be able to afford 
• where regulation is weak, the environmental costs of business may be carried by poor people whose livelihoods and health are most directly affected
• weak bargaining power of some governments means that the potential tax earnings from foreign direct investment are often lost. Similarly, regulation that would protect the environment, workers, and consumers may be waived to attract investment

Oxfam believes forward-looking companies will support a regulatory framework for corporate behaviour in order to ensure respect for human rights, protection of the environment, and development that helps poor people.