USAID’s Private Sector Curt Courtship

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By: admin

As the new Development Finance Corporation absorbs its credit guarantee arm and its first leader with a health care investing background promises transformation, AID proper is spotlighting its 50-page private sector involvement strategy as a breakthrough in its own right despite lingering business and financial community doubts. At the outset it acknowledges that donor agencies alone cannot realize the UN’s Sustainability Goals, and that complex conflicts and disasters demand original humanitarian response. The outreach across all programs and project cycles fits with the ultimate aim of self-reliance through market-based solutions and systems to enable country graduation, according to the Administrator. The document cites existing collaborations like the thousands of companies in the Global Alliance and dedicated food and power initiatives accounting for tens of billions of dollars. Joint work applies across infrastructure and thematic sectors like democracy and governance and has been successful in housing and payment pilots in tough locations Afghanistan and Haiti. Partnerships can be formal or informal but depend on mutual trust often lacking with preconceptions about commercial and foreign policy interests. When AID was created fifty years ago private capital was just one-quarter of total low and middle-income economy flows versus 85% today, even though fragile states are bypassed altogether. Over the next decade consumer spending in these place will grow three times faster than in advanced economies, as one-quarter of funds worldwide are managed with environmental and social screens. The private sector creates 90% of developing world jobs and spearheads technology transfer and supply chain integration. It joined with the Agency to promote Digital Principles with over 50 multinational firm signatories, and can help close the women-led business gap estimated at $300 billion annually. In this fashion the government can offer networks, policy expertise and convening power to harness innovation and scale and produce shared knowledge and concept applications. Other financial tools beyond credit authority are available As in Africa and Central America with agricultural lending and resource pooling feasibility studies and test cases can introduce lasting changes, the strategy emphasizes.

While recognizing the importance of due diligence it pledges to honor intellectual property and proprietary information, and avoid potential market distortions. The paper charges all missions abroad and headquarters units with preparing action plans and measuring results, and setting a longer-term evidence and learning agenda. An appendix lists “myths’’ that should be put to rest, including that profit motive is anathema, and that procurement rules bar separate commercial communication. Traditionally the focus was associated with economic growth, but the intent now is to encompass all activities. Despite the bottom-line ambitions in the outline, critics point out that President Trump’s overall aid priorities are for massive cuts and ties to domestic political imperatives. In the Ukraine saga military support has been in the headlines overshadowing an active financial market development program over decades since post-communist independence. Efforts there were often plagued by local corruption and lack of capacity that emerging market investors were quick to highlight as obstacles to be subject to combined crackdown. Privatization through the dormant stock exchange could be a vehicle for engagement proof, but union will be on hold pending the outcome of the simultaneous impeachment ceremony.

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