The United Nations Foundation and Devex (Development Expertise) ran a campaign in December 2011 to devise innovative ways to finance international development. A variety of ways to raise funds and to help countries take charge of their own development were explored. The idea that particularly appealed to me was the public-private partnership. Don’t just give money, invest. Investing provides knowledge and jobs. In turn, jobs pay salaries which will be spent locally thus stimulating the economy. An additional benefit is that it will have a positive impact on people’s pride and confidence. The challenge, however, is the economic and financial risks of investing in developing countries. Any investment may be lost. Then again, money given directly to charity gives you a nice and fuzzy feeling, a tax benefit, but in the end you equally have nothing to show for it. Providing the same tax benefit for investment as for charitable giving may perhaps take away some of the hesitation associated with political, economic and financial instability.

It might just work, although the way Kenya seems to go about this may not be the best example. With a third of the population facing famine due to insufficient food production they leased large amounts of agricultural land to foreign governments in return for the building of a port so close to the border with Somalia that it is safe to say that no captain in his right mind will be sailing into that port voluntarily.  Makes me wonder who is the beneficiary of this or am I being a little too cynical?

So, now that we have established how it doesn’t work, let’s focus on how it may work. Anyone interested in a good investment opportunity?

Dr Natalie Schoon, CFA