Today the European Parliament has backed proposals to create new innovative ways to mobilise private capital in the fight against global poverty as part of a broader approach to development.

Today the European Parliament has backed proposals to create new innovative ways to mobilise private capital in the fight against global poverty as part of a broader approach to development.

A report adopted by MEPs highlights the undeniable need for private sector involvement in tackling poverty, based on the assumption that the private sector is the engine of wealth creation and economic growth in all economies.

The report was drafted by European Conservatives and Reformists MEP, Nirj Deva. He said: “For the first time in the history of the European Parliament the private sector has been recognized as a crucial actor for development and wealth creation. The private sector is the key to sustainable growth and poverty eradication, while traditional aid transfers from rich to poor countries have proven insufficient”.

The report is a response to the European Commission’s proposal adopted in 2014 on a stronger role for the private sector in achieving inclusive and sustainable growth in developing countries.
The Millennium Development Goals have been accused of failing to see the underlying causes of poverty, overlooking gender inequalities and human rights. Furthermore, the World Bank measure on poverty claims that one billion people still live on less than $1.25 a day, and more than 800 million people do not have enough food to eat.

Deva points out that the 17 Sustainable Development Goals (SDGs) can be seen in many ways as an attempt to redress past errors and are more comprehensive than their predecessors.

However, these ambitions also come with a correspondingly high price tag- a prohibitive funding gap of $2.5 trillion. Deva claims that such a funding shortfall can only be sustainably met by the private sector: “Going forward will require a massive injection of capital that the already struggling taxpayer is unlikely willing to shoulder”. Furthermore, the SDGs will require the ambition, vision and commitment of trade sector partners, donors, partner countries and civil society if they are to be achieved. Areas where private sector resources could supplement public funds in developing countries include healthcare, education, water and sanitation. The report also emphasises that local small and medium-sized businesses can flourish and become a driving force of the local economy if properly incentivised.

he private sector is also ready to develop inclusive business models incorporating the poor in their value chains as employees, entrepreneurs, retailers or distributors. Deva says: “If we are serious about making a difference on a global scale; if the SDGs are to prove anything more than comforting, but flawed, rhetoric; if we mean to offer the billion people still living in abject poverty the dignity of work for a living wage, then we must seize the opportunity before us.”