World leaders, together with the international development community, have launched a new, ambitious post-2015 agenda at the 70th UN General Assembly, building on progress made towards the Millennium Development Goals. The U.N. Global Goals have launched at a pivotal moment when, for the first time in history, ending extreme poverty is within reach. They set forth a bold agenda to improve the lives and livelihoods of the 1.2 billion people still living on less than $1.25 per day by tackling the multidimensional nature of poverty, addressing diverse issues like, hunger and agriculture, health, women’s empowerment, energy access, and economic growth.
The number of people living in extreme poverty has been halved since 1990 and the Global Goals aim to end extreme poverty once and for all—but, we acknowledge, no single donor, organization or government can do this alone. Meeting these objectives will require broad-based, collaborative partnerships between host country governments and donor nations, civil society and academic institutions, faith-based organizations and the private sector.
Achieving the Global Goals will require more than foreign assistance alone, a point resoundingly endorsed by development leaders at the Financing for Development Conference in Addis Ababa this past July. The global community must mobilize the resources, expertise, and commitment of host country governments, other domestic actors and the private sector, in addition to channeling Official Development Assistance (ODA) to where it is needed most.
At no other time in history has U.S. foreign aid made up such a small share of global capital flows. ODA currently totals $160 billion per year, while foreign investment in developing countries totals more than $900 billion, and investment by domestic companies in their own economies exceeds $3.7 trillion. This level of private investment is critical to driving economic growth, specifically advancing Sustainable Development Goal (SDG) 8.
The private sector generates 80 percent of capital flows and 90 percent of jobs in developing countries, important drivers of inclusive economic growth—growth that reduces poverty and protects the environment and our most vulnerable populations. With skilled human capital, sophisticated technologies, sizable resources and global reach, companies are well-positioned to be key partners and powerful catalysts for change.
And so, USAID calls on companies large and small, local and multinational to be active partners with the development community in this effort to address the full breadth of SDGs.
Expanding access to affordable, reliable, and sustainable modern energy—SDG 7—for example, is critical to development, and Power Africa brings together African governments, private sector investors and 12 U.S. government agencies to increase clean and efficient energy generation capacity and expand electricity access for 60 million new home and business connections throughout sub-Saharan Africa. The U.S. government’s initial $7 billion commitment is complemented by nearly $32 billion in financial commitments from private-sector partners. Power Africa also enables critical policy reforms, local capacity-building, and legal assistance that support these investments and are necessary to promote innovative solutions that develop, scale and extend technologies for both increased power generation capacity and access to both on- and off-grid energy for millions.
Ending hunger and achieving food security through sustainable agriculture—SDG 2—will require large capital investments but also sustainable supply chains that ensure the long-term availability of key commodities, a critical component of private-sector business models and profit margins. This means companies like Starbucks and Keurig Green Mountain must recognize their important stake in Latin American coffee growth. Through programs like the Coffee Farmer Resilience Initiative, this work has been identified as a part of core business interests. The program has extended critical support to more than 40,000 farmers in the region to fight plant disease, ensure sustainable supply, and protect local incomes.
Partnership is a core tenet of USAID’s mission and work, underpinning the Agency’s mission to move ‘beyond aid’ to harness the business of development for deeper, more sustainable impact. From using cell phones to track Ebola in West Africa to Feed the Future’s transformation of Bangladesh’s agriculture sector, USAID is building partnerships that leverage the combined expertise, assets and resources of the public, private, and social sectors to deliver cost-effective, sustainable and results-oriented solutions.
USAID recognizes that the strongest partnerships are rooted in shared interests and shared value, and seeks to engage the private sector in a number of ways.
- Strengthen business environments. USAID works alongside host country governments and international organizations to strengthen policies that make it easier to start a business, invest and ensure a level playing field for competition so that businesses can help drive economic growth. For example, USAID is supporting the Trade Facilitation Alliance to support the implementation of the WTO’s Trade Facilitation Agreement and create a framework for businesses to partner with governments to deliver trade facilitation reforms that are commercially meaningful and driven by real-world business metrics.
- Co-invest in public-private partnerships. Donors and businesses can together generate “shared value” for companies and USAID. USAID’s flagship partnership model, the Global Development Alliance, offers an open door to the private sector to partner where business interests align with the development targets. The Water & Development Alliance (WADA),brings together The Coca-Cola Company, the Global Environment & Technology Foundation (GETF), and USAID. Now in its tenth year, the program is working to improve water supply for more than 600,000 people and place more than 440,000 hectares of watersheds under sustainable management.
- Catalyze private investment. USAID’s Development Credit Authority build upon private-sector transactions, local market knowledge, and available U.S. Government tools to engage investors and prove commercial viability in underserved markets to encourage investment in critical development sectors such as energy generation, food security, health, and access to credit.
- Spur entrepreneurship and impact investing in the developing world. The last decade has seen an explosion of new entrepreneurs seeking to scale market-based solutions for people living at the base of the pyramid. At the same time, the impact investing sector, in which investors seek to deploy capital that generates both financial and social returns, has seen rapid growth. Through our Partnering to Accelerate Entrepreneurship (PACE) initiative, USAID works with more than 20 incubators, accelerators, and seed-stage impact investors to bridge the gap between early-stage enterprise development and investable opportunities for impact investors.
- Engage in policy dialogue. Around important development issues that also impact business, USAID seeks to develop multi-stakeholder alliances that bring together governments, civil society, and the private sector to address policy barriers to change and take collective action to addressing them. The Business Call to Action is a unique multilateral alliance between key donor governments, in collaboration with global institutions such as the International Finance Corporation and UN Global Compact, which challenges companies to develop inclusive business models that offer potential for both commercial success and development impact. More than 100 companies have responded to the call, making commitments to engage low-income and underserved consumers, producers, suppliers, and distributors.
The private sector must join longstanding partners – host country governments, donors, NGOs, civil society organizations – in these types of multi-sector partnerships that recognize the strengths of diverse stakeholders in addressing policy, financing and structural barriers to development. The New Alliance for Food Security exemplifies this multi-stakeholder approach, building a shared commitment amongst African leadership, private sector partners, and donors to achieve sustained and inclusive agricultural growth and raise 50 million people out of poverty. To date, the Alliance has catalyzed more than $10 billion in commitments from more than 200 international and African companies to drive implementation of effective food security policies, increase responsible private investment in agriculture and expand potential for rapid and sustainable agricultural growth.
We recognize that USAID’s strengths often lie not only in its role as a funder, but also its ability to facilitate dialogue, build coalitions, be a thought leader, and leverage the strengths of nontraditional partners. In the last decade alone, USAID has established more than 1,500 partnerships with more than 3,500 different organizations. These alliances work in diverse ways to transform lives and economies through inclusive and sustainable growth. That is only possible with the help of private sector partners that recognize it is in their own interest to be willing partners in taking on today’s global challenges while meeting consumer needs and building profits
To achieve these ends, private investment can—and must—be complementary to ODA and the work of longstanding NGO and civil society partners. The resources, flexibility, and innovation of business can help the development community take a more holistic approach by addressing issues of trade, investment, and commercial relationships, as well as achieve sustainable development results.
Together, we must explore opportunities for collaboration, share new ideas and work side-by-side to develop and adopt new solutions and innovative approaches to reducing poverty while also creating business value. The private sector must join this global effort — alongside host country governments, donors, nonprofits, and academics, among others—in multi-sector partnerships that recognize the strengths of diverse stakeholders in addressing policy, financing, and structural barriers to development. Together, we can form a robust comprehensive and affective approach that will reduce poverty, foster inclusive economic growth, and ensure we achieve the ambitious agenda set forth by The Global Goals.
Photo from Global Goals.
Ricardo Michel is the director of the Center for Transformational Partnerships in the U.S. Global Development Lab at USAID, responsible for the overall strategic direction to best use local and global public-private partnerships for accelerated sustainable development.