When heads of state, ministers of finance and leaders of the international development community gather in Addis Ababa this July for the Third Conference on Financing for Development, I hope that the discussion will be grounded in the hard realities facing the least-developed countries struggling to provide basic services to their growing populations.
I also hope that conference participants rise above the popular but misleading narrative that the private sector is the panacea.
Looking to the private sector as the primary source of financing for development is particularly seductive for two reasons: Statistical evidence seems to support the argument, and it provides a rationale for reducing official development assistance at a time when donor nations are struggling with debt and budget crises.
However, placing unrealistic expectations on the private sector to meet basic needs in health, education and public administration clouds a critical debate.
Part of the problem is definition. “Private sector financing” is one of those catch-all terms. It encompasses business spending (foreign and domestic direct investment), remittances from migration in a globalized world, user fees to private providers of public services, and large-scale private philanthropy that has exploded out of the technology revolution.
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