In the wake of the destruction following Typhoon Haiyan, reconstruction strategies in the Philippines are starting to gain headwind. Budgets, however, remain limited. In fact, proposals for funds from the Philippines’s Congress are still inconclusive and critically slow to respond to relief efforts.
But there is some good news: the cooperation between private sector and international aid funding has provided a combined supplementary budget to the Philippines government at an estimated $5.8 billion. The Philippine Disaster Recovery Foundation, headed by private sector donors, raised $310 million for the recovery effort.
The World Bank Group has recently adopted a new strategy in ending the problem of world poverty by its goal of 2030: reaching out to the private sector. According to Bank Group estimates, expunging social inequality and closing large infrastructure gaps in developing countries will cost $1 trillion per year through 2020. Currently, official development assistance (ODA) from NGOs and agencies such as the Bank Group reach $125 billion per year.
At a meeting at the United States Chamber of Commerce, President Kim of the World Bank stressed the private sector’s necessary role in global development: “There is no way ODA is going to be anywhere near adequate. If you have high aspirations for poor people in the world, you have no choice but to embrace the private sector.”
The anxieties associated with private sectors invested in low to middle-income countries are astounding thanks to the high risks involved — so high as to turn most investors away from seeing the potentialities of opening up new markets. Private sector investments are responsible for 90% of the world’s economic growth. Focusing money into a developing country’s infrastructure would create new classes of middle-range consumers in the poorest of countries.
The World Bank, IFC (the Bank Group’s private sector arm), and the Multilateral Investment Guarantee Agency will work together to mitigate the risks involved in private sector ventures into global development. The organizations aim to act as financial advisors between public and private sectors of business in developing countries.
– Malika Gumpangkum
Sources: The World Bank Group: Private Sectors, Voice of America, The World Bank Group: Support the Philippines, International Finance Corporation