USAID Promotes Public-Private Partnerships in High-Risk Markets

A Publication of the Institute for Social Policy and Understanding

USAID Promotes Public-Private Partnerships in High-Risk Markets

U.S. development aid has long been characterized by public sector funding of socio-economic, political and security projects in the developing and underdeveloped world. Over the past few years, however, the United States Agency for International Development (USAID) has begun a number of programs that are being financed by private capital. Among them, in 2011, USAID launched the Private Capital Group for Africa, aiming to generate more than $500 million in private investments to assist small and medium enterprises (SMEs) in sub-Saharan Africa, and the African Agricultural Capital Fund to invest $25 million specifically in agricultural SMEs in East Africa. Last June, USAID set up two private equity funds through the Pakistan Private Investment Initiative to invest in SMEs and a fund in India to raise private capital for its clean energy sector.

These developments were highlighted in a November press release in which USAID explained the emerging emphasis on partnering with banks and other investors to “unlock” private financing for development projects. This innovative approach to development raises questions about the reasons behind increased public-private partnerships, what is being done to encourage private investment in risky markets and the prospects for such partnerships to become a dominant trend in U.S. development policy.
 
This article was published by World Politics Review on November 27, 2013. To continue reading, click here.
 
Shehzad H. Qazi is a Research Associate at ISPU.