This week in Addis Ababa, world leaders from government, the private sector, and advocacy groups met to hash out how to finance the UN's new Sustainable Development Goals, due to be approved by UN members in September.
Compared to similar meetings in the past, the emphasis has moved from charity to impact. The way development usually works is this: donor countries contribute money to poor countries as grants, and the funds are managed by local governments or charities. Money comes in from outside the country, and is spent on projects which do not necessarily bring lasting benefits. Of course development has evolved with microcredit and grants to empower local entrepreneurs. But we have yet to think widely of the developing world as a customer base for shared value creation, or to focus on a virtuous circle where local economic and social progress means progress for everyone.
In recent years, rich countries have not kept their promises to provide aid to the developing world at a rate of 0.7 per cent of GDP, and although aid has not declined, it has remained flat for some time. Meanwhile, although foreign direct investment has risen, not all of this investment is really beneficial to local communities. The key is to distinguish between "development" and "sustainable development." So the discussion in Addis Ababa revolved around things like how to finance infrastructure, how the public sector and the private sector can partner for best results, and how to change the tax systems that apply to multinational corporations so that they are more beneficial to developing countries.
If the business community adopts, on a large scale, the concept that it should cater not just to shareholders but to all stakeholders (employees, the community, the environment, customers, suppliers), then companies will go out into the world with an approach that really does create long-term value for all. This is the difference between corporate pillage of new territory, the old model we were used to, and raising people out of poverty to be productive citizens able to participate in a healthy exchange of supply and demand. The best thing for business, after all, is increasing demand for products and services.
Technology will play a big part in development, and rightly has been a topic of discussion in Addis Ababa. It will be important for developing countries to have access to the technology that can help with education, infrastructure, health and productivity, the tools needed to lift people out of poverty.
As we gear up for the ambitious new Sustainable Development Goals, the truly exciting thing is that experts say we can achieve something that seemed impossible: eliminating poverty. Now that is a worthwhile ambition.
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