By Dr. Amy Jadesimi, CEO, LADOL
Next week, the OECD Global Forum on Development will convene in Paris to discuss the critical role the private sector must play in achieving the 17 Sustainable Development Goals (SDGs or Global Goals). Private sector funding, innovation, entrepreneurship and sustainable business models can rapidly reorient the global economy towards achieving prosperity through business models that align with the goals.
Here’s what we know: At least USD 12 trillion could be added to the global economy by 2030 if the private sector embraces sustainable business models in the1 four key development areas of energy and materials, health and well-being, food and agriculture, and cities. Embracing sustainable business models in other sectors will push this figure even higher. This level of private sector engagement could create 380 million new jobs, primarily in low income, high growth countries.
Low income, high growth countries (LIHG) are crucial to ongoing and future global stability and prosperity. The United Nations projects that by 2050 Africa will account for more than half of the world’s population growth and 25% the world’s nine billion people, most of which will be under the age of 30. The global propensity to treat Africa as a source of raw materials and short-term high returns must end quickly. The coming population boom will be a global boom, just as the population boom in America led to the country’s sustained prosperity. This prosperity was driven by local entrepreneurs and long-term investors.
Fortunately, the indigenous private sector companies in several African countries already are starting to create businesses and conditions that will enable the global private sector to invest and work locally. This includes a number of countries in sub-Saharan Africa such as Rwanda, Kenya, Nigeria and Ghana that are bustling centres of innovation, largely driven by their local private sector companies. Self-employment is far more likely in Africa than in other more affluent parts of the world.2 Nevertheless, entrepreneurialism in Africa still lags that in Asia. The World Bank estimates that sub-Saharan Africa has only a quarter as many small businesses as Asia relative to its population. This lag is certainly not due to a lack of hard work, nor is it due to a lack of self-reliance. In short, Africa’s human capital is there and it’s ready to be mobilised. To facilitate mobilisation, the various structural issues, some internal and many external, that hold back small- and medium-sized enterprises must be overcome.
However, as the private sector grows in these countries, these problems are being addressed much more quickly than predicted. The Global Goals provide a useful guide through which international investors and international companies can identify gaps in the market that could be addressed by applying sustainable business models. If these foreign actors work with and invest in emerging market entrepreneurs to build these sustainable businesses, the future will suddenly look very bright.
How can this be done? We need to seize the chance to pool our resources, utilise our networks, and apply our experience to develop ways to practically and immediately create, support and grow sustainable businesses in LIHG countries. We should list tangible actions that we and our companies could take to reorient the global economy away from the current zero sum game scenario towards the new economic model that will achieve sustainable mutual prosperity. For example, determining ways to increase local content is just one way to add value to the LIHG economies in which many businesses operate, as well as provide sustainable returns for the multi-national companies that collaborate with the domestic private sector.3
The alternative of maintaining the status quo with high unemployment across the world, unfunded pensions in the West, and creeping instability in the East and the South is untenable.
2.↩ As reported in The Economist in June 2017
3.↩ Local content refers to the resources (labour, materials, parts, etc.) made in-country as opposed to imported.