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Business as Development Tool

Suvendrini Kakuchi

BUSAN, South Korea, Nov 30 2011 (IPS) - The idea of business as an effective development tool is gaining ground at Busan where hundreds of experts are gathered to charter a new chapter in global aid amidst growing political and economic uncertainty among donors.

Touting the merits of working with the private sector, Northern governments and top-level aid agencies are joining hands with corporations operating in developing countries to promote inclusive partnerships to fight poverty.

Ben Knapen, minister of international cooperation, the Netherlands, said it is time to “rethink traditional roles of aid.” He said inclusive partnerships as a viable sharing of the experience and knowledge of donors and civil societies with the technology and management skills of the private sector.

German minister for development co-operation Dirk Niebal pointed out that “aid needs results” and this is the reason that making use of the private sector is crucial.

Niebal referred to the development of safe and clean cooking stoves, the innovation of a small business initiative that has transformed 100 million poor households around the world.

The project created jobs, protected the environment and addressed health problems suffered by more than 1.9 million people – mostly women and children – through inhalation of poisonous smoke from makeshift stoves.

Busan, South Korea’s bustling port city, is itself a showpiece of business growth that has, in just half a century, changed the country into the world’s 14th largest economy.

Korean companies, leading producers and exporters of high quality goods, are fuelling domestic and overseas employment. Korea is also a new donor with more than half of its four billion dollar overseas aid in 2010 extended to Asia.

The Korean model is inspiring both donors and aid recipients at the Fourth High Level Forum on Aid Effectiveness. Saifa Hage, from the ministry of planning, Liberia, told IPS that working with the private sector for development is crucial.

“The public-private partnership is all about job creation and growth. Busan represents a story of how enterprising business can move countries away from aid,” he said.

Forging liaisons with the private sector in development is, however, still an emerging concept.

Case studies indicate that while business models can contribute to uplifting the poor by developing small and medium enterprises in their communities, issues such as setting out clear social and ecological goals, resource protection and project timelines for results are still vague.

“Partnering is not easy. It is about expectations and missions that can differ. The involvement of the community also marks a sophisticated approach in established corporate models,” explained Prof. Rob van Tulder, from the Rotterdam School of Management.

Businesses gathered at a session on the theme, show cased experiences of ongoing projects with local communities.

Daniel Gad, who established Omega Farms, a project with the support of Dutch public funds and covering 10,000 smallholders in Ethiopia – where he was born – provides livelihoods and promotes sustainable agriculture.

For example, barley produced by the farmers is sold to the Heineken beer company in the Netherlands.

“As a member of the diaspora, I was keen to invest in Ethiopia despite the economic and political problems. Working in a partnership with donors and local civil society organisations has been successful, given the availability of starting capital and other support,” he said.

Anna Peter from the Btertelsmann Foundation, Germany, says more than 12,000 business partnerships with local governments and donors have been started in the least developed countries, proving that patience and risk-taking can give poor communities a chance to enter the global market and earn incomes.

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