Global Policy Forum

By Maria Livanos Cattaui

Business will be much more than one of the crowd at next week's United Nations conference on financing for development in Monterrey, Mexico. Corporate experts have been invited to feed a stream of advice to governments directly into the conference, with the accent on public-private partnerships.

That alone offers grounds for optimism that Monterrey will achieve more than a cloud of jargon and lofty phrases. Whatever decisions emerge on increasing official development assistance (ODA), greater reliance on private investment will be essential, and that means both domestic and foreign investors.

The World Bank President, James D Wolfensohn, has spearheaded calls on the industrialized world to double financial aid to the poorer countries over the next 15 years. The Bank reckons that the extra $40 to $60 billion a year would be needed to meet the UN target of halving poverty in developing countries by 2015.

Whether the industrialized countries will agree to supply the extra funding wholly or partially in Monterrey is doubtful. But that will not be the only measure of the conference's success. Equally important will be whether governments can find ways to make their aid more effective and put policies in place that will generate increased private investment.

Monterrey will be about every aspect of financing for development - which includes both domestic and foreign direct investment (FDI) and portfolio investment. If the world's poor countries are to break out of the poverty trap, aid must be a catalyst to stimulate business enterprise, economic growth and wealth creation.

A priority for ODA should be development of the human skills and the institutions that are essential to good governance and the ability to compete in a global economy - education, administrative and legal training, medical and other public services.

Often public-private partnerships will be the way to go in building the roads, the power and water supplies, the schools and the clinics that not only improve living standards but also provide the basic infrastructure for profitable business that creates wealth, jobs and justified hope for a better future.

Where is the private money, the lion's share of finance for development, coming from? The onus is on recipient countries to provide an environment in which investors can be confident of good governance, the rule of law, non-discrimination and political stability. Companies are used to taking risks, but these should be commercial and calculable. Before taking the plunge, investors need to know where they stand.

Achieving better coordination between business leaders, official lenders and governments will be a task for the recently formed Investment Advisory Council (IAC) that is meeting in Monterrey to map the business response to the New Partnership for Africa's Development (Nepad) - a help-ourselves initiative by African governments. UN Secretary General Kofi Annan and heads of state and government and senior ministers from 16 African countries are taking part in the meeting with business, among them President Olusegun Obasanjo of Nigeria and President Thabo Mbeki of South Africa, the leading sponsors of Nepad.

The Council itself is a public-private partnership between the UN Conference on Trade and Development and the International Chamber of Commerce to assist the least-developed countries (LDCs) in attracting foreign direct investment. It is focusing on Africa at this meeting because the continent contains most of the world's LDCs.

Even in 2000, when FDI elsewhere was soaring, Africa's share was declining and stood at as little as 1% of the world total. Now Africans themselves are determined to reverse the downward trend - and African business will play its part.

Better than most perhaps, business understands that in today's world, no region or country can be dismissed as too remote to affect the daily lives of people everywhere. Tensions, resentments and upheavals in one part of the world all too easily affect all of us.

The world's poorest regions are the most prone to conflict and instability. Because we live in an increasingly integrated global economy, the world's poor - some 1.2 billion of them subsisting on less than one dollar a day - demand our attention more insistently than ever before.

But the populations of the developing world will never be satisfied with charity. In any case, throwing money indiscriminately into development programmes is at best no more than a palliative and at worst an invitation to corruption. That is why the business contribution to Monterrey is so important. The world's poor must be helped to help themselves.

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