Given a few incentives, private companies can be attracted to invest in poor countries that before were not on their radar. Donor countries are betting on this new avenue of public-private-partnerships (PPPs) to channel funds, technology and business knowledge to the 48 Least Developed Countries (LDCs) – the impact can be huge, but many challenges remain.

“Investing in LDCs is not charity. It’s an opportunity for all,” U.N. Secretary-General Ban Ki-moon said Monday to ministers from donor and recipient countries gathered at the U.N. LDC Summit in Istanbul.

The Dutch Ministry of Foreign Affairs and Philips Lighting, a division of the Netherlands-based multinational Philips Electronics, both contributed 3 million Euros (4.3 million dollars) to ‘Green Light for Africa’, an initiative to develop sustainable distribution chains for solar-powered lamps in Africa. Following the launch of a pilot project in northern Ghana in 2008, the partnership is currently active in Kenya, Tanzania, Mali and Rwanda.

The example, one of many, comes from ‘Partners in Development’, a report published by the German Bertelsmann Foundation, the U.N. Global Compact and the U.N. Development Program (UNDP). The study explores how donor countries are cooperating with companies to attract investment and address development challenges in LDCs.

“Over the past 15 years, we have seen a rising number of initiatives by donor agencies to engage the private sector in developing countries,” says Anna Peters of the Bertelsmann Foundation, lead author of the report. “The budgets are increasing accordingly. Between 1999 and 2009, the German Ministry for Development Cooperation BMZ has invested 500 million Euros (719 million dollars) in its DeveloPPP programme. It has currently more than 1,200 development projects under way with European companies in developing countries, including LDCs. In the United States, the official development agency USAID had more than 1,000 alliances in its Global Development Alliance Programme at the end of 2009. USAID’s own funding has been matched by more than 12 billion dollars from public and private resources.”

Donor countries are supporting companies with grants, loans or guarantees if they start ventures contributing to societal development and growth in developing countries. In return, companies not only provide funds, but also expertise, training and support in kind. They help developing countries and donors to implement and bring projects to scale, and advise governments on the creation of enabling environments.

But often, many investments in Least Developed Countries are not very attractive. “The private sector isn’t investing in the infrastructure sector in LDCs because of market and government failures,” says Gavin McGillivray, head of the private sector department at the UK Department for International Development (DFID). “They are put off by the outdated legal framework, a lack of enforcement, a lack of long-term lending possibilities and the absence of projects that are well structured.”

The solution is obvious, said McGillivray at the 4th Stakeholders Meeting of the Belgian Development Cooperation in Brussels: donor countries should help LDCs to correct these failures.

Apart from advice and capacity building, this also involves actual investment to attract private investors and share the risks. “Together with the aid agencies of the Netherlands, Sweden and Switzerland and the International Finance Corporation of the World Bank, we created the Private Infrastructure Development Group (PIDG),” said McGillivray. “With investments worth 500 million dollars, we have secured private sector investment commitments of 9.4 billion dollars. The projects that were initiated are now already delivering services to 10 million people.”

PIDG facilitated projects include the construction of container ports and hydro and geothermal power plants but also the Seacom fibre optic cable off the East African coast.

Still, not all LDCs profit from such initiatives. “We see that most projects are concentrated in countries like Mozambique or Tanzania, that enjoy political stability, offer a promising domestic market, or have a flourishing agricultural sector,” says Peters.

According to the report, attractive features can be found in countries such as Bangladesh or Cambodia that provide industrial production for developed and emerging markets, particularly in the textile sector. “Public-private projects in these countries aim at improving labour and quality standards throughout supply chains,” says the report. Other countries that offer raw materials such as oil (Angola), crops such as cocoa (Liberia) or cotton (Mali), fish (Uganda), or ingredients for medical products (Madagascar) also appear on donor’s project lists.

The report lists many shortcomings with current PPPs in LDCs. Funding is too prominent, project timelines are too short, donors do not coordinate well, business and development priorities are not aligned well, and performance measurement is weak, according to the study. “It is also striking that donor countries are mainly working with foreign companies,” says Peters. “The German DeveloPPP program is only open for European companies, and I would not know why. There are many LDC companies that could be included.”

Foreign Direct Investment (FDI) to the 48 LDCs has grown rapidly over last decade, with their share of global foreign investment flows having effectively doubled between 2001 and 2010, says the United Nations Conference on Trade and Development (UNCTAD). But according to its report ‘Foreign Direct Investment in Least Developed Countries: Lessons Learned from the Decade 2001-2010 and the Way Forward’, which was published on 2 May, most of this investment was dedicated to natural-resource extraction, with relatively few jobs created.

“Such investment has not tended to ‘fertilise’ LDCs’ economies by forging greater links between foreign businesses and local firms,” says the UNCTAD report. “In addition, it has not succeeded in facilitating the spreading of know-how and technology and helping spur broad-based and sustained economic growth.”

Sending more girls to school may help poor countries get out of the economic slump faster, the NGO Plan International says in a new report. Just a one percent rise in the number of girls attending secondary school boosts a country’s annual per capita income growth by 0.3 percent.

Girls are a formidable future workforce – if they get adequate training. There are over 500 million adolescent girls and young women in developing countries, Plan estimates in its report ‘Girls in the Global Economy: adding it all up’. But many girls do not have the opportunities for good education, and the financial crisis is worsening their situation.

In times of economic hardship, girls in the poorest countries are the first to be pulled out of school, the report says. Some parents consider the education of boys to be more important, and girls often have to start working, or looking after children as their mothers try to improve household income.

“Boys are also affected,” Nikki van der Gaag, co-author of the report acknowledges. “But in a different way,” she tells IPS. “While writing the report, I was surprised to find that there are very little specific data about the situation of boys or girls. Such information is needed to adjust policies.”

The information available suggests that investing more in girls is a good way out of poverty. “Countries with the lowest number of girls in education lie at the bottom of the human development rankings,” van der Gaag says.

Investing in education promises an attractive return. “An extra year of education increases a girl’s income by 10 to 20 percent; it is a significant step in breaking the cycle of poverty,” the report says.

Institutions like the World Bank agree. “Primary education for girls has vastly improved, but we have not seen such a success in the succession from school to secondary education or to productive work,” Guggi Lareya from the World Bank in Brussels says.

“Too many girls get stuck in early motherhood or household chores, and that means an awful lot of missed opportunities. As our president Robert Zoellick already said, investing in girls is not only fair, it is also a smart thing to do, it is smart economics.”

In several countries, working girls and women have been the first to lose their jobs, reversing a worldwide trend of the past 15 years where increasing numbers of women have joined the formal workforce.

In the Philippines, seven out of 10 people laid off are women, according to the local women’s organisation Gabriela. In Indonesia too job losses have been greater for women than for men.

The data presented in the report suggests that decision-makers would be well advised to find ways to stem the massive outflow of female workers and to increase female participation in the labour market.

The report says that in South Asia, 82 percent of men are working as opposed to just 27 percent of women. If the ratio of female to male workers in India increased by just 10 percent, the country’s GDP would increase by 8 percent.

Moreover, “wages of women are well spent,” the authors of the report note. “Women reinvest 90 percent of their income back into the household, where men reinvest only 30 to 40 percent.”

Plan proposes a global 10-point action plan which includes providing girls with education, better jobs, access to land or property, and leadership opportunities. One of the recommendations is to go beyond investing in infrastructure projects as a means of fighting the crisis, to investment in social services like health and education. These enable women to develop their earning potential.

“Donors like the EU should among other things scale up investment in secondary education, help partner countries to improve access for women to the labour market, and ensure decent and equal salaries and working conditions,” says Deepali Sood, head of the Plan EU liaison office.

‘Girls in the Global Economy’ is the third annual report of Plan International on the situation of girls. The organisation plans to continue the series until 2015, when the Millennium Development Goals should in theory have eliminated gender disparity at all levels of education, and improved the share of women in wage employment.

“EU policies continue to undermine the economic, social and human development of developing countries” despite repeated commitments in treaties and declarations, a group of European NGOs said in a report published Wednesday.

Efforts are being made to prevent this and there is some progress, they noted, but “there is plenty room for improvement.”

The report was released in Brussels by Concord, the European NGO Confederation for Relief and Development. Its 18 international networks and 22 national associations from the European Union member states represent more than 1600 European NGOs.

EU ways are sometimes too complex even for its own bureaucracy. That seems to be the case with ‘Policy Coherence for Development’ (PCD), an EU commitment not to let other policies undermine development cooperation.

The European Commission, the executive branch of the European Union, said last month that PCD is difficult to put into practice, and proposed to concentrate on five priority issues. The five are climate change, food security, migration, intellectual property rights and security and peace-building.

It is “remarkable” that the issue of trade is not among the five priorities, Concord said in its report ‘Spotlight on Policy Coherence’. Blatant cases like subsidised export of EU beef, pork and dairy products to Africa had ruined livestock holders and breeders who were supported by the same EU, the report says.

“You have to name the beast, otherwise you give the impression of a cover- up,” says Rob van Drimmelen, secretary-general of Aprodev, a coalition of 17 European development organisations and a member of Concord. “Trade absolutely has to be included.”

But trade is not the only area where policies conflict with EU development objectives. Concord criticises EU member states that are “increasingly using development aid to control migration flows and reduce irregular migration.”

Development aid often serves European needs rather than those of the receiving country, the report says. As example, it mentions that eight million euros were earmarked from the 10th European Development Fund for “management of migration flows” by Mauritania. Earlier in 2006 the EU announced the release of 2.45 million euros to help Mauritania tackle migration. Since then, thousands of African migrants trying to reach the Canary islands via Mauritania have been arrested and forcibly returned to Mali and Senegal.

The pressure for migration from Africa itself arises partially from other European policies, the report argues. “EU trade, agriculture and fisheries policies that aim primarily at meeting demands from Europe “might have pushed small farmers, fishermen and other entrepreneurs to embark on a migration journey they had probably never before considered.”

The authors of the Concord report see many reasons for lack of progress on policy coherence.

“There is no obligation to be coherent,” Aprodev’s van Drimmelen says. “The EU has only to ‘take into account’ the effects of other policies on development. That is as much as saying that you can sin, as long as you confess your sins.”

Representatives of the European Commission say progress is being made. “We have for instance increased the PCD-degree of the Common Agricultural Policy by reducing export subsidies and reducing other trade distorting effects,” says Francoise Moreau, acting director of the Directorate General for Development.

“This is an ongoing effort. At the same time, we try to promote positive effects between different policies. In the research policy area, we are helping developing countries to access European research programmes.”

Moreau says trade has not been removed as a focus of PCD efforts. “We have defined five challenges to enable a more dynamic approach. When we look at food security, trade policy is involved, as is agricultural policy and even energy policy. We do not want to reduce the scope of PCD.”

“Our core aim regarding developing countries is to improve market access, making sure that trade stimulates growth and reduces poverty,” says Silvia Formentini of the Directorate General for Development. The European Commission, Formentini says, also remains committed to a “strong development outcome” of the Doha round of international trade negotiations.

Concord has demanded greater transparency and accountability from the EU. A “hierarchy of values” should be clearly spelt out, with pro-poor and sustainable development policies forming the basis for EU policy, it says.

Broad-based consultations and democratic debates as an integral part of policymaking processes could ensure that the rights and interests of people living in developing countries are taken into account, the report says.

The EU, it says, needs clear benchmarks to assess whether another priority should override development considerations. A complaints mechanism could improve accountability and coherence.

Almost three months after the terrorist attacks on India’s commercial hub of Mumbai, which soured relations between India and Pakistan, the prospect for renewed cooperation between the nuclear-armed neighbours looks dim, two eminent analysts from the region conceded at a policy dialogue here.

“Relations between India and Pakistan are at a critical stage,” Dipankar Bannerjee, director of the Institute of Peace and Conflict Studies in New Delhi, said Tuesday at the dialogue organised by the European Policy Centre and supported by the Sasakawa Peace Foundation.

“The target of the Mumbai attack was India, but also Pakistan,” Bannerjee, a retired major general in the Indian army, told the audience. “The immediate objective was to set off an Indian-Pakistan war. That purpose has been defeated.”

However, Bannerjee added that India and Pakistan will have to go a long way to rebuild the trust that is needed for the two South Asian neighbours to work together.

Last week brought a glimpse of hope. The highest official in the Pakistan interior ministry, Rehman Malik, admitted that the attacks on Mumbai were partly planned in Pakistan. He announced that suspects from the banned militant group Lashkar-e-Taiba have been held and may be prosecuted.

“That is a courageous statement and a reversal from previous denials,” Bannerjee commented. “Now, Pakistan will have to complete the investigation, punish all the people that were involved in the attacks and dismantle all terrorist facilities in the country. Pakistan will need support from India and from the international community for that.”

However difficult normalisation between India and Pakistan may look, the climate in the South Asian region is propitious for a new beginning, Bannerjee thinks.

“Look at the results of the elections in Bangladesh. Now there is a secular party in power, whereas the Islamist parties are reduced to a few seats,” Bnnerjee said. ”Or take the elections in Kashmir: a lot of people went to vote, expressing their desire for change.”

According to Bannerjee, India and Pakistan need to continue their dialogue, improve trade relations and cross-border people movements and strengthen regional cooperation.

“We are at a critical stage in economic history, while the war in Afghanistan and in the border regions in Pakistan needs to be overcome as well. We will need enormous political will for that, and a major international effort is needed, but main job has to be done in India and Pakistan,” Bannerjee said

Talat Masood, an independent military and political analyst in Islamabad, sounded less optimistic. “The Mumbai attacks illustrated the fragility of India-Pakistan relations,‘’ he said, speaking after Bannerjee. “Our optimistic assessment before was wrong.”

Masood, a retired Pakistan army lieutenant general, fears that the rapprochement efforts of the last five years are likely to fall entirely apart given that even before the attacks on Mumbai, the dialogue between the two countries had deteriorated.

“In Pakistan, the transition from dictatorship to democracy meant a great distraction from the peace process. And India was too much preoccupied with its international agenda. It did not bother much anymore about regional problems. That was a great mistake,” he said.

For Masood, the biggest drawback in the composite dialogue was the lack of success in the territorial disputes around Kashmir, Siachen and Sir Creek. “If those problems had been handled, that would have transformed the relations.”

Masood sees as a setback the abandonment of plans for a gas pipeline from Iran to India through Pakistan, due to pressure from the United States. “Both countries need the energy, and the pipeline would also have increased the mutual dependence between India and Pakistan.”

Masood appeared extremely unhappy with the Indian accusations that the Pakistan government or government agencies played a role in the attacks on Mumbai, the Indian announcement that all options were open – including military action – to deal with Pakistan, and Indian “attempts to isolate Pakistan”.

“That is poor strategy. Pakistan is facing its greatest challenge with radicalism. The country needs the support of the region and of the international community. If you try to isolate Pakistan, you play into the hands of the militants,” Masood said.

According to Masood, relations between India and Pakistan can only improve in a sustainable way if a solution to the Kashmir problem is found. “It all depends on the political will: if you want it, you can do it. The process has to be really started, it can lead to a solution. But is the will there? Currently, I cannot see it.”