Fast-Tracking a Strong and Responsible Partnership
There’s one thing economists don’t argue about: economic growth is essential for sustained poverty reduction. China is the prime example – in 1981, 84% of China’s population lived under $1.25 per day. By 2008, this proportion had fallen dramatically to 13%. This was principally driven by the tenfold increase in per capita GDP over the period. Tackling poverty and ending aid dependency in Africa requires the same focus on jobs. That’s why since joining the Department for International Development I have ramped up the focus on economic growth and job creation.
This isn’t just the right thing to do, it’s the smart thing. Africa has some of the most impressive growth statistics in the world economy. Its natural resources can – and are – powering the world. These are the emerging markets of the future and we all have an interest in seeing them develop faster. Today’s aid recipients are tomorrow’s trading partners.
So how can we fast-track a strong, positive, responsible relationship – a partnership – between Africa and the private sector? My department is already taking a number of actions to help dismantle barriers to trade, boost investment and improve the business climate. British development money is modernising ports in Kenya and Uganda, upgrading roads from Uganda to Rwanda and slashing start-up costs for businesses in Nigeria. I am also encouraging UK businesses to get involved in the development push. DFID is currently developing new ideas on how we work with businesses interested in responsible investment in developing countries.
But we – and others – need to do more to support Africa’s efforts to be open for business. And in a way that reflects the diversity of Africa’s countries – no one country has the same “private sector” as another. This is an issue I have been considering as co-chair of the Global Partnership for Effective Development Cooperation. The Global Partnership was set up in 2012 to help countries, businesses and organisations work better together to end poverty – now and in a post-2015 framework.
Through the Global Partnership, I think we should develop a comprehensive roadmap for a positive impact of the private sector on development that reflects Africa’s diversity. I believe this roadmap needs three strands:
First, it needs to include commitments to responsible and sustainable business everywhere. In the extractive industry, for example, mining companies should welcome a robust tax system and governments should be building up their capacity to collect taxes so that they can invest that money in services that help everyone. As holders of the G8 Presidency this year, the UK has promoted greater transparency around how natural resources are managed and used. I think we can carry this agenda forward through the Global Partnership.
Second, the roadmap needs Ministers in Africa and elsewhere to commit to policies that support a vibrant private sector. Much of this is about strong institutions and good governance. But businesses also need a sound economic environment and effective public services to be able to invest. Open markets and regulatory environments that strike the right balance between protecting firms and individuals and encouraging trade and investment are also critical. DFID has already started to help countries build their own tax base, root out corruption through greater transparency, as well as providing technical advice so when economic growth does happen, countries are well placed to then reap and reinvest the gains.
Last but not least, this roadmap needs commitments from developing country leaders, donors, businesses, NGOs and others to help strengthen open collaboration and honest dialogue between public and private sectors. Business Action for Africa is a key partner – as well as challenger – in helping identify where new specific partnerships can be forged and leveraged.
The Global Partnership has a diverse membership but we all share a commitment to end poverty. Business will be key to helping us achieve this goal now and in a post-2015 world.