Governments at the United Nations are in full swing
designing the next blueprint for global development, the successor to the Millennium
Development Goals (MDGs). The entire process is important, to be sure, but one
particularly notable aspect is that governments are asking corporations to show
how they can help make poverty history, while also making money. This represents
a big shift since 2000, when the U.N. adopted the original MDGs. That time
around, the role of corporations was largely confined to "corporate social
responsibility" and "philanthropy."
What is driving this important change? First and foremost,
governments have recognized that their ability to help the world's poor, hungry,
and sick is quickly diminishing. At the same time, businesses are playing an
increasing role in lifting people out of poverty.
USAID's administrator, Rajiv Shah, frequently notes the
relationship between sustainable development and private profit. He has
declared that in combating poverty, the public sector "need[s] to help
companies find profit opportunities abroad, not photo opportunities."
A number of key global trends make up the background for
this chorus of support for the private sector. Today, foreign direct investment
(FDI) flows into developing countries have surpassed traditional development
assistance -- the rate is now five to one -- and over 90 percent of jobs in the
world are in the private sector. This is a significant change: Not so long ago,
public-sector employment constituted almost half of all employment in certain
regions, including Africa.
Looking to the future, too, global infrastructure and national
security demands will have enormous consequences for development. Trillions of
dollars will be invested in new projects, and companies in the infrastructure
sector will be important partners for governments.
In light of these trends, unless governments strategically
leverage the private sector, the simple fact is that the world likely will not
achieve the forthcoming Sustainable
Development Goals (SDGs), including the goal of
eradicating extreme poverty. Yet despite recent, positive changes to their
relationship, the U.N. and governments still are not utilizing the private
sector as a development tool and partner to the fullest degree possible. It's
not too late to get the relationship between public and private sector actors
sorted out, and the process of creating the SDGs is a good venue in which to start.
To start, governments must stop speaking at private-sector actors and begin to converse
with them as equal partners. Norine
Kennedy, vice president at the U.S. Council for International Business,
recently noted that the private sector is usually engaged at the U.N. in two
ways: Its members are either allowed to make two-minute interventions during
U.N. meetings or to participate in side events. This modus operandi is prevalent
across the board when governments and multilateral organizations try to work
with the private sector. Yet this arrangement is neither effective nor supportive
of the desires of the business community.
The ongoing process to develop the SDGs exemplifies this
problem. In 2012, the U.N. secretary-general announced the formation of a high-level
panel to advise on creating the new global development agenda. Last year, the
group released an initial report to guide the intergovernmental process that is
now underway. While the 26 members of the panel consulted companies and sought
input from businesses, only two members were actual representatives of the private
sector. Instead of this outdated model of engagement, 50 percent of advisory
panels and similar bodies working on strategies for sustainable development should
come from corporations and business associations.
The reasoning is simple. In order to be effective in the
implementation phase, the private sector needs to be part of setting the agenda
in the first place. Only then can the sector be fully and effectively
integrated down the road. Consider the force-multiplying effect of heads of
state and NGO leaders sitting at the same table as the CEOs of leading
corporations -- Coca-Cola, General Electric, Google, Ikea, Toyota -- when a vision
for the future is formed.
Having a seat at the table would also help companies achieve
their primary goals, including increasing profitability. Of course, the U.N.'s
primary responsibility is not to facilitate business, but to serve the public interests
of its member states. However, public interests and private profit can converge when partnerships are set
up collaboratively. As noted by the U.N.'s initiative for private-sector
outreach, the U.N. Global Compact, "Businesses have a
built-in motivation to see development succeed. Quite simply, business does
better when the world does better, and is literally at a loss in a setting of
disease, strife, environmental breakdown, illiteracy, abuse of human rights,
arbitrary government practices and impoverishment."
The innovative potential that exists when governments and
the private sector find common cause is illustrated through the momentous
project that put a man on the moon. The enormous scale of the Apollo program in
the 1960s, as well as the novel technological challenges associated with it,
meant that the U.S. government had to rely heavily on the private sector to
build the hardware and even to operate missions. In short, the public and the
private sector leveraged one another's strengths, and NASA's relationship with
industry was oriented toward a mutually beneficial partnership serving the
greater public interest. Of course, the companies that participated in this
project -- and other major government-industrial partnerships in aerospace,
defense, and security during the Cold War -- reaped great financial benefits. But
this, in turn, laid the foundation for landmark civilian technological spinoffs,
such as the Internet, the development of semiconductors, and the introduction
of GPS technologies.
A similar strategic partnership between public and private
actors is now required. As noted recently by Nigerian CEO and entrepreneur Tony
Elumelu, "A global agenda that intends to address the livelihood of people and
attack extreme poverty is not set up for success if it does not fully engage
the sector of society that controls the most capital, employs the most people,
and fosters the most innovation."
Once it is fully at the table, perhaps the largest
contribution the business community could make to the forthcoming SDGs would be
to improve national infrastructure and security capacity across the developing
world. Today, billions of people are in need of clean water, adequate public
health facilities, sustainable food and energy solutions, and a plan for
societal resiliency against climate change and natural disasters. The market
for these upgrades over the next few decades is upwards of $57 trillion, and the
market for securing these investments is expected to grow to over $105
billion only in the next few years.
What's missing now is a long-term business plan and capital
infusion from both the public and the private sector to get efforts started. Some
financing proposals include the establishment of a new global fund, replenished
by both the public and private sectors, whose coffers could be used to address
the challenges that the SDGs identify. (A similar fund already exists in the
fight against HIV/AIDS.) Another idea includes using traditional development
assistance to fund private-sector-led solutions, including the building of infrastructure.
Both these initiatives would be excellent ways for governments to spend
taxpayers' money and for corporations to spend business-development capital.
It is vital that innovative financing mechanisms be top
priorities in the agenda for the SDGs. In short, they need to be decided upon
now and robustly implemented soon.
The SDGs can set a new tone for how the world approaches
development. And critical in setting that tone is making room for the private
sector in the most meaningful way possible. The designers of the goals need to bring
the private sector to the table and clearly communicate the nexus between the
public interest and private profit. They also need to prepare ways to maximize
the potential of that nexus, so the world can hit the ground running with the
new development goals. If this can all be achieved, there will be winners all
around: governments, the private sector, and -- most importantly -- people
across the globe.
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