Enterprise Introduces a Whiff of Revolution
Thursday, May 28, 2009
By Sarah Murray
In her book Dead Aid,* Dambisa Moyo calls for the end of aid to Africa within five years. Paul Kagame, president of Rwanda – which has halved aid as a percentage of its gross domestic product in the past decade – recently argued in the Financial Times that aid creates instability and dependency while failing to reduce poverty or disease.
Ms Moyo and Mr Kagame are among those questioning traditional models of development. While not all favour the pure for-profit approach, many argue that there is a greater role for market-based approaches to global problems. If such models prevail, the question for big non-governmental organisations (NGOs) and international public sector institutions is how to fit into the new development landscape.
The prospect of long-established institutions such as the World Bank, the United Nations and the International Monetary Fund (IMF) simply disappearing seems remote. And certainly, the idea of ending aid to Africa in five years is an ambitious one.
The global downturn has shown that multilateral institutions remain critical, particularly in a crisis, when they have the ability to direct massive funding flows to not only the developing world but also to mature countries. Iceland, for example, has recently been forced to accept a $10bn bail-out led by the IMF.
Nevertheless, moving rapidly into the donor agencies’ sphere is a group with very different modes of operation. They include social entrepreneurs, NGOs using market-based models and large non-profits such as the Gates Foundation. Multinationals are also recognising that they can help foster economic development while turning a profit.