Governments and development agencies must work smarter with business

Written by John Humphrey, Institute of Development Studies on the Globalisation and Development blog.

“UK Secretary of State for International Development Justine Greening often refers to a ‘smarter approach to aid’ – a recent example can be found in her speech to the London Stock Exchange at the beginning of the year, about which I have previously blogged. Part of this development of a ‘smarter approach’ must focus on improving the way in which governments and development agencies work together with businesses to tackle global poverty. If this is not addressed the growing volume of business and development efforts aimed at improving peoples’ lives could fail to have a lasting impact.

Business can fight global poverty – but not on its own

Political, private sector and development leaders broadly agree that business has a big role to play in driving economic growth and innovation, and contributing to the achievement of development objectives. Foreign Direct Investment (FDI) flows to developing economies now account for over half of all FDI flows worldwide and developing countries’ national investment policies are increasingly driven by their development strategies. In this environment, business and development interventions have boomed alongside the demands on business to provide solutions to challenges such as global poverty and climate change. At the Davos Forum at the beginning of this year, UN General Secretary Ban Ki-Moon cited the forthcoming UN Climate Summit in September as businesses opportunity to ‘show what they can do and to work with governments at the highest level to address climate change’.

But at IDS we are concerned that this surge in activity remains piecemeal and small scale, and that there is an urgent need to improve our understanding of what is effective and what will bring about long-term change in terms of business contributions, alongside the efforts of governments, civil society and donors. With the 2015 deadline to agree a new set of Sustainable Development Goals looming large on the horizon, establishing smarter ways of working with business is absolutely critical. Especially in a world where resources, natural and financial, are increasingly constrained and the demand to demonstrate value for money is ever present.”

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