Greater Business-Government Alignment is a Win-Win for Global Development

See below for a guest post from MFAN Principal Jennifer Potter, CEO of the Initiative for Global Development.

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Last October, USAID Administrator Raj Shah delivered a major speech, entitled “Embracing Enlightened Capitalism,” in which he did two important things. First, he described how the agency is implementing many of the big ideas President Obama rolled out in the Presidential Policy Directive on Global Development in September 2010, especially related to elevating broad-based economic growth as a top priority and leveraging the private sector as part of a more comprehensive development strategy. Second, he took on squarely some of the challenges that exist for business and government to work together more strategically on development.

As he outlined, much has changed in the evolution of foreign assistance over the past 50 years and much has also changed with the corporate community – something the Initiative for Global Development (IGD) and our network of global business leaders see daily in our work to drive large-scale poverty reduction through vital business growth and investment in the developing world. Both companies and development agencies see the tremendous upside for driving increased business and social impact through greater alignment.

At a CSIS/Chevron Forum event on July 24, Business for Better Development, an IGD project co-chaired by Chevron and IBM, launched a working paper entitled “The Business Case for Development: How Companies Can Drive Sustainable Development – and How Governments and Donors Can Leverage Their Impact.”  The paper outlines a two-sided opportunity that offers a win-win for global development: the opportunity for companies to succeed in frontier markets by incorporating business models that deliver development impact, and the opportunity for donors and governments to leverage the power of business to achieve large-scale, long-term impact.

For example, PepsiCo has partnered with USAID, the World Food Programme (WFP) and the Ethiopian government to increase the volume and quality of chickpeas produced by local farmers. WFP, in turn, is developing a chickpea-based ready-to-use nutrition supplement that is essential for early childhood development and can be used in WFP feeding programs. Through the Enterprise EthioPEA program, PepsiCo will establish a local source of chickpeas, Ethiopian farmers will gain new markets for their products, USAID will secure a business partner that can help build out a Feed the Future value chain, and WFP will add a new supplemental food to their child nutrition programs.

Donors can increase effectiveness and extend their resources by identifying how to leverage corporate strategies that are well aligned with development priorities. The paper makes the following recommendations to help development agencies tip the balance to induce more business investment with greater development impact.

  • Identify high-potential corporate partners and integrate sustainable outcomes from the outset
  • Provide meaningful opportunities for companies to engage throughout the project lifespan
  • Address investment constraints with targeted tools, such as capacity building, development finance, and procurement
  • Create incentives that encourage and reward engagement with business

The good news is that much of this work is underway. USAID is deploying its first group of Field Investment Officers this year to help drive increased engagement with the private sector in key missions, including several in Africa. And several “next generation” development opportunities – such as the MCC’s second compact with Ghana, which is focused on increasing investment in the power sector, the administration’s Partnership for Growth initiative, which seeks to provide a more coordinated, government-wide approach to addressing growth and investment constraints in four countries, and Feed the Future, with its newly identified priority value chains in Africa – provide the occasion to apply new approaches that acknowledge the potential for governments and businesses to generate the ingredients of sustainable growth together that neither are likely to accomplish alone. We look forward to working with our colleagues in business and in government to further this important evolution and to catalyze increased investment and development impact.

Jennifer Potter is CEO of the Initiative for Global Development (IGD). IGD engages global business leaders to reduce poverty through strategic, catalytic investment in the developing world, with a current focus on Africa. The IGD  network is comprised of CEOs and other business leaders from African, South Asian, U.S., and European companies who are recognized sector leaders and share a commitment to poverty reduction.

 

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