Significant momentum has been created by multiple trends in the business and development worlds that has brought together public agencies and the business community in finding solutions for global challenges. This momentum is only likely to grow further and will help propel private companies even further into addressing global challenges and governance issues- even those that may be seen as politically sensitive- such as that of addressing conflict and fragility and contributing to meeting SDG 16.
Private enterprise has been recognized by aid agencies, development financing institutions and national security agencies as critical in assisting countries on the path from fragility and conflict to stable, prosperous and inclusive economies. Private enterprises provide jobs, essential goods and services, tax revenues for the government, and assist in strengthening the market institutions that pave the way for further investment and for economic growth. In some fragile or conflict affected countries experiencing, foreign direct investment is greater than aid flows into the country or the national government resources available and overall, the trend over the past 15 years has been to use development assistance to catalyze or leverage resources and investments from the private sector.
However, public financing has fallen short of its stated development aims and while blended finance is seen as the way forward to achieving the SDGs, a new, more finely calibrated and data-driven approach to leveraging private sector interest and resources is needed. In order to help usher in greater and more consistent investment and to ensure relevancy and greatest development impact of the private sector in addressing drivers of fragility and conflict, public agencies and organizations with explicit aims to this end will need to adopt new approaches that build on strengths and address weaknesses of existing instruments.
In this paper we explore some of the challenges in working with the private sector on addressing fragility and conflict- including drivers of violent extremism, and the motivations and concerns of companies in these contexts. We propose data-driven approaches and solutions that can be adopted by the public sector to maximize investments and ensure the greatest impact of private sector resources towards addressing fragility and conflict drivers.
Who should read this paper?
- Development Financing Institutions, particularly departments dealing with structured finance or blended financing in fragile states, conflict contexts;
- Export credit agencies and other organizations underwriting investment risk for companies in emerging markets;
- Multilateral and bilateral aid agencies, particularly departments working on fragile states, conflict contexts, violent extremism and political violence;
- National and regional development banks;
- Private enterprise funds and other development or social impact oriented equity funds;
- UN Agencies and partners supporting the SDGs, particularly 16 and 17.
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