Aid & the Private Sector


A year ago this month, I attended my first public-lecture at the London School of Economics (LSE) titled “Wealth Creation in Developing Countries”. Being at Cambridge, one is spoilt by the number of quality speakers and lectures in our midst, but for a more political view and closer to policy – LSE is a great choice.  For more information, you can check out the ever-changing and lively LSE line up here: LSE Public Events

At the October 12, 2010 UK Secretary of State Andrew Mitchell announced that UK Department for International Development / UKaid will work together with the private sector on international development. He set out a vision “for a world where development is embedded through inclusive economic growth, where wealth creation is the route out of poverty and where the private sector is the catalyst.” A copy of his speech can be found in PDF Here.

The next obvious question is How? Development is complex, and building inclusive economic growth is not easy as we see the ever-widening gap between the rich and the poor in many fast-developing economies.

January 2, 2011 announcement of the DFID private sector department open for development & business.

We had the pleasure to host the Head of the new DFID Private Sector Department. Mr. Gavin McGilivray in Cambridge last night October 13, 2011 to explain to us the answer to that exact question, How? and to talk us through the DFID private sector strategy. (the link will take you to the PDF strategy report). He spoke as part of the Gates Scholar Society Distinguished Lecture Series.

Gavin covered 9 themes of the strategy in 30 minutes with 30 minutes of Q&A. Summary of main points under HOW DFID plans to work with the private sector:

– recognition that working in partnership is key

– getting more private sector DNA into DFID: to listen to business and to recruit business-minds

– importance of evidence : emphasis on transparency and documenting results

– value for money

– measuring impact of DFID work

And the two core principles driving the approach:

1) Dedication to poverty reduction: UK International Development Act stipulates by law, all activities conducted must aim to reduce poverty

2) UK aid is untied: DFID aid is tied to poverty reduction only, not to promoting UK trade or other commercial or political ends

Perhaps it is my conviction that business can be an innovator and a catalyst in social change that led me to enter the lecture with an existing bias. However, I exited the lecture wondering about the entrepreneurs in developing countries whom I have met: poverty is not a conducive environment for business, for all the entrepreneurs’ passion and convictions, any progress in lowering barriers and risks for small businesses can be welcomed.  Traditionally, barriers have decreased with the passage of time of slow-changing government policies or in areas of interested by multi-nationals only. So what if now small, medium-enterprise (SME) barriers are lowered by “non-traditional” aid programs? Lower-away!


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