A marriage between public and private to stimulate development is a sensible step towards reaching Obama’s goal of stimulating growth in Africa.  As discussed at a Center for Strategic and International Studies event on July 24th, there is much for both parties to gain from partnering to achieve this goal.

Development may seem like the terrain of government rather than business, but nothing could be further from the truth; in order to access the vast potential profits in African nations companies basically need to stimulate development.  Take Diageo, for example, which took over a brewery in Ethiopia and was originally importing most of the required barley.  This made production more expensive, so the company initiated an agricultural development project that gave local farmers incentives to grow barley.  The livelihoods of locals improved and the company secured sustainable access to vital raw materials, a significant developmental step taken in the name of good business.  This is just one example; companies from PepsiCo to Boeing are doing much the same thing.

Yet if private companies are already aiding development on their own, the question then becomes why it’s necessary for them to work with public organizations like the United States Agency for International Development (USAID).  The answer is that private companies have much to gain from cooperation with USAID, and vice versa.  USAID provides private companies credibility they might otherwise lack.  Plus, as a government organization, they have access to information private companies lack regarding developing nations’ markets.   In addition, organizations like USAID are interested in long term development, which means they are likely to support projects with long term payoffs.   This contrasts starkly with private shareholders, who tend to be interested in short term profits and usually won’t fund projects that don’t produce large profits until ten years have passed.  On the flip side, USAID and similar organizations can encourage these companies towards endeavors that advance development in particular ways.

In this time of polarized politics, it is good that our leaders recognize how important development is to the US.  It provides national security at home and economic security abroad and, as former Secretary of Defense Robert Gates said, “development is a lot cheaper than sending soldiers.”  That is why Congress is supporting H.R. 6178, which will substantially advance the efficiency of overseas development, and why we hope they will continue to do so; because investing abroad makes America great.