Private sector must invest in developing countries

24 Feb 2012

Washington—The world has changed tremendously in recent years, paving the way for new partnerships in development and a new role for the private sector, UNDP Assistant Administrator Sigrid Kaag said here Friday.
 
“The entire geopolitical and multilateral landscapes have changed phenomenally. We speak of emerging partners and emerging donors, but we have to recognize that they have arrived,” Kaag, told a panel discussion at the Center for Strategic and International Studies.
 
 “Without private-sector investment in developing countries, there will be no meaningful growth. We need the private sector to share its expertise, give us access to knowledge, innovations, and tested business models, and share them with developing economies. Knowledge-sharing can make a phenomenal difference at low cost. Development partners such as UNDP work trilaterally. We span the public to the private and try to make resources available and accessible.”
 
The Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) now comprises Chile, Israel, and other new members that no longer need traditional aid themselves, she said, adding that Brazil, India, and China “seek to be partners in the development debate and want to influence policies.”
 
Development aid provided by new donors, not members of the OECD DAC, is meanwhile now measured in the tens of billions of dollars.
 
“We are living in a very different world, in which UNDP is just one of the players. It is tremendously healthy for the system. Competition is good, comparisons are good. UNDP has to continue proving its relevance through performance, innovation, and new ideas. This is where the opportunities and partnerships come in.”
UNDP has “tremendous development experience and the majority of our staff are nationals of these countries,” Kaag said.
 
The agency draws on it international legitimacy and global reach to promote trilateral cooperation and private-sector engagement, fostering inclusive markets with jobs and services for the poor, predictable economic bases, good governance, and democratic governments.
 
Middle-income countries such as Turkey want “only for cutting-edge knowledge and tested expertise. They do not need a large-scale presence from any particular partner or donor,” Kaag said. “They want to compete in the 21st century. They want their children to develop 21st century skills.”
 
“As we have witnessed on the example of the Arab Spring, an educated youth with irrelevant skills can be very dangerous and destabilizing. Having irrelevant skills demoralizes and alienates citizens.”
 
UNDP has signed partnership agreements with Brazil, China, Turkey, Mexico, and South Africa, committing to work together to support other developing countries to meet development challenges.  

An international hub for engaging the private sector in development was launched last year by UNDP in Instabul. The center builds on Turkey's convening power to support global and local efforts that deliver both commercial success and improve social, economic and environmental conditions.
 
UNDP’s Growing Inclusive Markets initiative comprises 28 business schools in developing countries along with other partners to build and share knowledge related to private-sector effectiveness among low-income populations and to develop capacity.
 
UNDP also hosts a multi-partner initiative, the Business Call to Action(BCtA), which challenges companies to develop innovative business models with both commercial and development outcomes.
 
Launched in 2008, BCtA aims to accelerate progress toward the anti-poverty Millennium Development Goals (MDGs) by challenging companies to develop inclusive business models that offer the potential for both commercial success and development impact.
 
BCtA initiatives to date include a pledge to provide access to banking services for more than 40 million people, promote improved nutrition for 8 million children, and enhance access to energy for 7.1 million low-income households.
 
“The evidence of our success is when a country doesn’t need a UN development partner anymore. At the end of the day, we always need to have a long-term exit strategy,” Kaag said.