A trainee learns how to sew through a USAID-funded class at the INDEPCO training facility in Haiti. In countries where the U.S. government begins to cut aid funding, there is an enticing opportunity for private sector organizations to step in and provide much needed skills-transfers and training, writes Council on Foreign Relations' Deirdre Photo by: Ben Edwards / USAID

EDITOR’S NOTE: The global economic crisis has forced donors to drastically reduce official development assistance in recent years. Deirdre White, president and CEO of CDC Development Solutions, discusses the limits of foreign aid and how the private sector can help further development goals in this opinion for the Council on Foreign Relations.

Due to years of national economic turmoil, the future of U.S. foreign aid is now uncertain. In May, Congress proposed capping next year’s foreign aid budget at $40.6 billion, which is fifteen to twenty percent less than the current amount of $51.7 billion. The recent sequestration has reduced international assistance programs by another $1.7 billion.

Fortunately, several advances bode well for the future of economic development. First of all, over the next several years, a number of today’s developing countries — including Ghana, Mozambique, and Tanzania — are expected to move into the ranks of the middle income countries, joining states such as Chile, Brazil, and South Africa. With more wealth, these countries should be better equipped to help their underserved citizens. Still, many organizations in these countries, including government agencies, businesses, and nonprofits, require foreign assistance; but more than traditional direct aid investment, these organizations now need elite professional training. Thus, as the U.S. government begins to cut foreign aid spending, there is an enticing opportunity for private sector organizations to step in and provide much needed skills-transfers and training.

Seeking to cultivate this approach to development, the State Department and USAID hosted a Forum on International Corporate Volunteerism last week that recognized the catalytic impact of training programs for organizations and individuals in emerging and frontier markets. Representatives from Amazon, Citibank, IBM, CDC Development Solutions (the organization I work for), spoke at the event, as companies learned how they can use their resources to further global development. Drew O’Brien, the State Department’s special representative for global partnerships, championed the effectiveness of innovative public-private partnerships. In his opening remarks, O’Brien explained “Corporate volunteer programs bring private sector innovation and experience to our diplomatic and development work … At the same time, they help to achieve our foreign policy objectives.”

Jim Scott, senior advisor to the NGO Seed Global Health and a panelist at the event, described how his organization’s Global Health Service Corps (GHSC) is cultivating stronger, more sustainable health systems by training doctors and nurses in underserved areas. This year, GHSC will send thirty-three physicians, nurses, and medical professionals to African countries on year-long assignments. Rather than providing direct medical services in rural areas that do not currently have access, these volunteers will work with government ministries of health and education to train dozens of local practitioners in medicine, psychology, and nursing. This type of program will enhance the knowledge base of current and future generations.

One GHSC volunteer, who will be travelling to Malawi, is a child psychologist. According to Scott, there are no child psychologists currently practicing in that country. Thus, the volunteer plans to work on a strategy to secure the practice of child psychology in Malawi after she leaves, in addition to training local professionals in the practice. It is these types of long-term plans and partnerships that will help emerging and frontier markets overcome many challenges. More than direct funding, developing communities abroad need expertise.

“What would happen if every Fortune 500 company fielded 100 employees per year?” asked Stanley S. Litow, president of the IBM Foundation and vice president of IBM’s Corporate Citizenship efforts, speaking about the long-term potential of the initiatives he oversees. “Collectively, we would deploy 50,000 of the most talented leaders around the world to solve some of the most difficult problems facing society.” IBM, which is celebrating the five-year anniversary of its Corporate Service Corps, the largest program of its kind, recently deployed a team of volunteers to Brazil to work with Casa da Criança, a NGO that serves youth centers across the country. Since 1999, the organization has managed over $19 million in donated products and services; mobilized 2,000 architects, interior designers, and artists; and has worked with nearly 30,000 partner companies.

In four weeks, the IBM team helped train Casa da Criança in a new business approach that integrates digital technologies into their work and will enable the organization to manage their products, services, and partnerships more effectively and efficiently. The NGO expects to enjoy an eight percent gain in productivity and efficiency by using these technologies. This corresponds to $117,000 in annual savings. Over a five-year period, these new practices should save the organization enough money to serve an additional 600 children.

In many African countries as well, business acumen could help jumpstart economic development. The journalist Ben Schiller pointed out in his recent Fast Company article that many entrepreneurs in emerging markets need to develop strong management skills more than they need funding. The private sector is in an ideal position to develop and benefit from training programs that spur economic development in emerging and frontier markets.

At the end of his recent tour in Africa, President Barack Obama remarked, “I believe that the purpose of development should be to build capacity and to help other countries actually to stand on their own feet. Instead of perpetual aid, development has to fuel investment and economic growth so that assistance is no longer necessary.” Innovative programs led by private sector actors, in partnership with NGOs, governments, and individuals can bring the world closer to this vision. As Special Representative O’Brien eloquently described, “We are fortunate to work in a field where there is no such thing as a bad idea. For every problem or issue that’s out there, there are solutions and partners that are waiting.” Now is the time for such partnerships to flourish.

Edited for style and republished with permission from the Council on Foreign Relations. Read the original article.

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