The Best 'Charity' is Aid for Business

by Developed Africa 8. July 2013 09:00

Really interesting article from the founder of Standard Trust Bank in the Christian Science Monitor. Tony Elumelu writes about the way in which commercial investment has far reaching and long lasting impact in Africa, particularly in terms of job growth.

Experience teaches that connecting the private sector to economic development is the most effective way to build wealth and resources in local economies, and ensure sustainable development. Philanthropists, nonprofits, and nongovernmental organizations can help achieve this self-sufficiency if they harness their resources to create change in the private sector.

Donor funds flowing into Africa annually are many times the $5 million investment that started our bank, but have they created equivalent impact? Philanthropy and development aid can, and should, be components of Africa’s growth strategy. But perhaps it is time to rethink how that capital is deployed and to focus more on sustainable private sector solutions."

Initial investment for business ventures is a new area for development that needs more focus. That is not to say that aid and traditional development do not achieve a huge amount of good in many areas - health, emergency response, education. In fact, Elumelu calls for a hybrid model that seeks cooperation that best utilises the skills of both businesses and non-profits,

Private investors are willing to take risk, but are often wary of taking the full brunt of development risk in emerging regions. Philanthropic dollars can help in many ways, from co-investing with the private sector, to partially subsidizing operations until businesses can achieve profitability and sustainability, or subsidizing management training to help specific businesses gain the skill sets they need for growth."

[Read the whole article here]

Categories: Aid | Business | Development Aid | Donors | Philanthropy

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