As government, corporate, and nonprofit leaders gather in Ethiopia at a major meeting on funding global development efforts, a top United Nations official writes in The Wall Street Journal that investment is supplanting direct aid as the driver in eradicating poverty and building equitable societies in developing countries.
Grete Faremo, formerly Norway's minister for development and now executive director of the U.N. Office for Project Services, notes that in 2013 Africa got $57 billion in foreign direct investment, $15 billion more than it received in official development assistance. "These numbers tell us that private capital, domestic and foreign, is a larger potential source than aid for investing in Africa’s future," she says.
This week's Third International Conference on Financing for Development in Addis Ababa "will call for more development aid, and it should. But it would be an enormous mistake to leave it at that," Ms. Faremo writes. "Instead, the conference should lay the groundwork for a new order, in which aid facilitates sensible private investments and is used to reduce the risk of doing business in developing countries."