On 16-17 October, the European Commission will be hosting EU Development Days, a two-day forum on international affairs and development cooperation that will see Heads of State, Nobel Prize laureates, business leaders, and development professionals meet to discuss some of the global issue that are at risk of slipping down the international agenda in the wake of the economic crisis. Debating Europe will be covering DevDays, and we will be publishing posts on each of the three main themes of the event: food security (which we’ve already looked at here), inclusive growth (which you can debate here) and how to encourage the private sector to engage in development.

Today’s post will be asking how Europe can help support robust and competitive private sectors in developing countries. Back in June, we published an interview with Andris Piebalgs, European Commissioner for Development, in which we asked him whether European development aid was being spent effectively. It’s an important question (Europe is, after all, the single largest donor of overseas development aid in the world). However, for development to be sustainable it cannot rely on aid alone.

Christos, one of our regular commenters, argued that he would like to see:

Industries being set up in Africa, more fair trade established, and the African nations being able to exploit their natural resources and provide them to the global markets for the benefit of their people first… Invest not with aid and loans, but with factories and jobs in Africa; universities, hospitals and so on… But who would do that now, eh?

Actually, this is already taking place (although the global economic crisis is starting to bite). Whilst there are still enormous economic disparities between Europe and Africa, over the last decade many African countries (just as in other developing regions) have been posting annual growth figures that Europeans can only dream of. Across the whole of Africa, real GDP rose by 4.9 percent a year from 2000 to 2008 (more than double its pace in the eighties and nineties).

Again, this raises some of the questions we’ve been discussing on Debating Europe. How can we best encourage investment and private sector growth? Is our current approach (as William argues) encouraging dependency and wastage? And, at the same time, are we risking “aid fatigue” in Europe as we struggle with austerity ourselves? One of our commenters, Catherine, posed the question: “Can you please explain why our European leaders feel they should be sending aid to countries outside Europe when those in Europe are already starving?

It’s worth pointing out that the United Nations World Food Programme estimates 98 per cent of the world’s hungry live in developing countries (and, in fact, 65 per cent live in just seven countries: India, China, the Democratic Republic of Congo, Bangladesh, Indonesia, Pakistan and Ethiopia). So, whilst starvation and malnutrition undoubtedly do occur in developed countries, the levels are not comparable. However, Catherine’s general sentiment was clearly shared by several of our commenters (Albert, for example, wrote simply: “Finland cannot solve the world’s problems. Sorry.“).

Earlier this week, we took some of these questions to Evan Lieberman, Professor of Politics at Princeton University. Professor Lieberman specialises particularly in the politics and governance issues of Southern Africa, and keeps a blog on African governance and development. We put some of your comments about development aid to him, and asked him to respond.

Rather than “dependency”, Professor Lieberman argues that:

Another way of putting that is to say that there’s not sufficient sense of empowerment among people in Africa. So, it begs the question of what role should aid play.

He believes that aid can undoubtebly be effective in certain areas:

In areas of global public health, I think that there remains a really important role for aid; [with] expensive medicines and technologies, particularly when it comes to pandemic problems like HIV/AIDs, maleria, tuberculosis and so on, I think international aid has a really important role to play. And, if you look at trends in life expectencies and people who are living longer even though they’re HIV positive, it’s quite encouraging and I think we can think about that as a real success story for international aid…

However, he also stresses that aid should lead to sustainable development, and projects that can’t stand on their own two feet over the long-term should not be funded:

I think that more and more, we see projects that are really trying to rigourously evaluate whether certain types of aid projects and development projects are working. And the ones that aren’t: we should stop doing those. We shouldn’t be spending money on projects that don’t have a logical basis for long-term sustainable development without aid.

We also put a comment to Professor Lieberman  that was sent in from Josephine, who argued that: “Before tackling inequalities, you have to tackle corruption [and] tax evasion.”

What do YOU think? How can Europe help support robust and competitive private sectors in developing countries?  Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.

Ahead of the European Development Days forum, the International Development site DevEx (an official partner of EU DevDays) has published an interview with Bernardo Guillamon – manager of the IDB’s Office of Outreach and Partnerships, which is in charge of promoting partnerships between public and private sector organisations and the bank. You can read the interview here.

Image Credits: CC / Flickr – (nz)dave

6 comments Post a commentcomment

  1. avatar
    Nikolai Holmov

    Cynically, my first reaction is to slightly rephrase the question to “How can Europe support robust and competitive private sectors in developing countries….whilst insuring the EU single market remains with the high degree of protectionism it currently has, from what it may create?”

    I rephrase the question as FTA’s with the EU would quite obviously ease import/export issues, e-commerce etc whilst also bringing into the developing nations much needed foreign currency at a domestic as well as government level.

    Active support of and by B2B NGOs would be another reasonable suggestion as well as insuring EU monitoring/embassies/consulates of the EEAS have within them an EU Trade and Industry representative capable of opening doors within the EU and the developing nation’s government. Preferably one who knows who to approach and how to cut threw the incredible bureaucracy that awaits anybody trying to pull down an EU grant. (Believe me I know just how hard it is just to find the right person with the right budget header.)

    I also have to say I completely agree with the comments of Professor Lieberman with regards to knowing when to stop funding something that will inevitably fail.

    A credible and transparent accounting and auditing system would also help despite the EU failing internally on that score.

    Workshops developed by the EU, delivered by NGOs are also a possibility.

    Then there is the obvious cases of low hanging fruit of what has worked successfully before and assessing whether it can be successfully transposed to a different location.

    There is also a case relating to understanding why some things failed and whether with a bit of tweaking (rather than reinventing the entire wheel) if they would work somewhere else.

    I could go on (and on and on) but it’s 01.43 in Ukraine and if I do decide to go on (and on) then it’s better done when awake rather than half asleep.

  2. avatar
    eusebio manuel vestias pecurto

    Sim as empresas locais podem a combater a pobresa global os empresários devem tomar uma dicisão e criar grupos de empresas nas areas de agricultora dos texteis e outras areas traz riquesa para o pais e ajuda a combater a pobresa global os empresários europeus não podem estar sempre olhar para o autoritário uma politica de empresas sustentável traz riquesa para um pais

  3. avatar
    Georgi Hrisstof

    Cooperation and consolidation of European companies and concerns and thus increase the level and benefit of the people at risk and needs. Standard business projects without changing its production process and initiatives. Law of contracts only to EU Member poverty. . Length of projects and activities to ten years. Any stock, wrong! . Companies received all rights for such projects and who need to reduce or discontinue their business in the European Union, to develop and implement social programs and compulsory annuities for people living in regions and places where the export or reduce its activity.

  4. avatar
    James Getabu

    The problems of poverty have been discussed for decades in international, regional conferences, seminars, workshops and still there is no lasting solution yet found to mitigate the causes of poverty particularly in the developing countries, which are hard hit by the monster poverty whereby many households survive on one dollar or less per day and there is plenty of fertile land and water flowing across and even sweeping these poor creatures away at no body’s mercy.
    We talk on improvement of agriculture, removal of business red tapes, green economy in order to increase the income for better life without considering the roll of bad politics, markets for our products or services. The developing countries have a lot of natural resources, which need be tapped for the better of the local people and regional development. First we need to weigh the impacts of external factors towards the local development and also the available internal development polices in respective countries. In many decades developing countries have been used as business markets for western countries or currency recycling destinations by industrialised countries through giving loans with high interest rates, which does not benefit the people, intended to assist. How can countries develop while servicing loans still, which were received 20 years ago either in terms of food aid during emergency period or military goods but later converted into development loans, which is the reality even today.
    The worst example is when the developing countries were forced to adopt the Structural Adjustment Program in the 90s, which the IMF forced the developing countries to adopt in order to cut administration costs through working force retrenchment, privatisation, liberation, which turned out to be a monster to development in these countries and still haunting the weak economies of many countries particularly in the Sub-Saharan Africa today. The lack of effective skilled manpower after the introduction of SAP lead to corruption, lack of accountability, weak control, sanctioning, and breakdown of formal Institutions, which formerly functioned before the introduction of the Structural adjustment program, which killed the local markets in the developing countries but opened new markets for the western countries products contributing to the closer of local industries in the south as they were not able to stand the competition of products, which were and are cheaply manufactured or sub-sidised in the Western countries. The practical example being the closer of cotton industries, which affected the local cotton growers as the locally produced cotton had no market any more because of the cheap clothes from the western countries, which saturated the local markets at cheaper prices and the consumers turned to them and the locally quality clothes were and are abandoned even today.
    More so the second hand clothes, which are collected to be recycled in the western countries, make their way to the African markets and have taken away thousands of jobs starting from the local cotton farmer, retailer, to the government being denied revenues in terms of income taxes. These clothes and shoes, which are considered waste in western countries, have killed the primary sources of income in Africa and hardly these local people will free themselves from this economic slavery caused by the Western countries products in terms of business and waste dumping but some cartels make millions of dollars at the expense of the African poor farmer. The clothes collected on humanitarian grounds by non-profit organisations in Europe end up sold in the sub-Saharan Markets, however, these clothes were meant to help people freely but end up in the Market for sale killing the agricultural sector and production.
    I am of the opinion that the second hand waste of any form coming from the western countries under the terms of assistance, need to be controlled as some of these products have turned out to be to a milking cow well a major problem to the environment in the south and the people in these countries as there are no technologies to recycle these waste and all land in illegal disposal landfills, which have turned out to be killer through spreading of various diseases, which the local people have no means and resources to control. The push factors of skilled youths from the south is pure economic problem, however, some countries are experiencing ethnic tensions due to competition or unfair distribution of national resources across ethnic groups.
    The dream of sustainable development is far from reality unless the home made policies in Africa are implemented fully and protected through political willingness and the point of looking to the western countries for food donations or loans with hidden conditions to stop and those international organisations partnering with African governments to work transparently and reduce the costs of conferences and seminars instead channel those resources to projects at the micro level where need is mostly needed. It has been realised that half of the planned budgets remains in the western countries. The human resource going to Africa is too expensive to maintain and in simple terms only a drop of the money reaches the needy people. The bureaucracy involved in development projects is for the interest of the money lender but not the receiver as all decisions are made top-down and hardly the local people are involved from the primary level of such projects only to realise there is something going on in their areas, when guzzling cars driven in. For any project to succeed the local people’s TK is of value because they will be the sole implementers of the project and beneficiary.
    What we are experiencing today is neo-colonialism, which has affected the main income sectors in developing countries and hardly to push it out, if these countries continue depending on loans, which takes back more than the figures given in the dream to be self-reliant is far from reality in the near future. The African governments need to define the terms of business with the money lenders or donors from the western countries, Asia and the African leaders need to create trust in their home institutions and stop exporting currency to distance places and then the same currency is being offered to them to borrow again in form of loans with high interest instead need follow the Malawian concept of development and management.
    The management and exploitation of the natural resources available in Sub-Saharan Africa in Particular needs functioning institutions and above all African people to create trust among themselves and give competent people tasks to perform other than sourcing incompetent manpower on ethnic lines, which are used by self-made looters for personal gains under the protection of their god fathers but not for regional community development. We can eradicate the poverty monster easily through fair distribution of national resources and distance ourselves from clan, lineage politics, which has isolated and locked out many regions from receiving development resources leading to regional youth regroupings to fight in order to force the mighty to listen to their problems but in the process damages are made and mistrust created. Why Africa is still considered to be poor by the rest of the world and yet it has all the natural resources and supposed to be economically powerful and even feed the whole world with food but their leaders continue begging for food from other continents at this century with powerful technology available to produce food even on rocks?. The African continent needs leaders who are thinkers and reformers to change the business as usual at the cost on development and make its manpower to deliver but not to enrich themselves at the expense of the masses. Ethnicity and egocentrism has blocked or made development in most African countries to slow down as the national officeholders have become the chiefs of their ethnic groups but not national leaders having the whole nation in heart. The use of protectionism by officeholders in order to stay in office through job appointments rewarding their lineage people for political support is the worst enemy to sustainable development as the resources are channelled to one community and other regions punished and pushed away from development due to political differences. The on going political party groupings in a country like Kenya currently is not healthy for the people and the economy of that country as development is concern because the business markets are sensitive on political issues. The progress, which have been made up to now are likely to slow down and the business people to stay on the edge to watch the next move in the process the economy, which had picked up after the 2007/2008 problems is likely to slow again and the common Kenyan will suffer due to high inflation and more people to remain jobless until the general election. This type of politics is seen still in some countries in Africa but some countries have moved away from it and are making progress in development and trust is back to those countries and have realised only homemade implementable policies can enable them develop their regions like the case of Malawi and avoid the external pressure from donors and let those still struggling to come to such level to borrow leaf from such countries and be above ethnic politics, avoid dependence on food loans and remember the country is bigger than an individual interests or ethnic group. African countries need investors but not loaners, which have drained the economies of these countries for the last decades leading to international migration in search of green pastures under the cover of political victimisation. Millions of dollars are used every month to feed refugees from Africa in Europe and the same amount of money can change the lives of thousands of people in Africa, if channelled as investment but not loans. The continent is blessed with a lot of resources but is the poorest in the world today. The African don’t deserve development Aid from the western countries but partners in business and open markets for goods produced in Africa. The imbalance in trade is the major setback for the African economies and this need to be reversed to realise positive development.
    It has been identified much of the resources are wasted in conferences or feasibility studies and nothing happens after the conclusion of such exercises or it takes years before action is taken and much of the results obtained are over taken by events and become irrelevant at the time of implementation. If there is genuine gesture in development from the western countries for the African people, the transfer of technology is necessary and the locally tailored manpower must be a priority through relevant education.
    The models developed in the western countries hardly see the light in the south as the population lack the know-how to implement such models and most initiated projects turn out to be white elephants and the blame is focused on culture and laziness but which is not the case. It is only through engaging the local population directly development projects can benefit the majority instead of government institutions at the macro-level. The traditional livelihoods needs to be integrated into the market economy and the governments must come up with policies protecting the local traders or farmers from middle men, who take away the profits of the farmers without adding any value to the products traded by these cartels.
    In conclusion the on-going scramble of natural resources from Africa is not positive development but pure economic colonialism. The Africans must decide for the prices of the goods produced in the continent and must have a say on the goods coming from the western countries. The export of raw materials to the western countries must be stopped and such products to be processed locally before being exported and this will add value to the products and generate high profits for the farmers in particular.

  5. avatar
    andrea livingston-prince

    Thank you for the opportunity to weigh in. I am compelled to remind us that LAC actually requires that we aptly consider the Caribbean. This statement is deemed important because oftentimes the Caribbean countries are ignored.

    That said, my only response is that I must request that national culture play a greater role in the design, implementation and evaluation of these initiatives. Apply greater leverage to use of local experts can repair this gap in numerous instances.

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