Blog post
Dominic Lucas, Economic Development, and Communications Intern.
Foreign aid should be redirected to a variety of sectors of the economy to help sustainable development across the continent. In particular, small and medium enterprises need funds and support that can help them to develop their communities. Furthermore, evidence from the past has shown that countries have developed better with less foreign assistance, namely China. Despite the good it has done, foreign aid has made Africa dependent on 'free money,' reducing their potential in self-sufficiency and sustainable development. In fact, around US$50 billion is extracted from the continent annually in various forms, but many foreign investors continue to make a profit through different forms of foreign aid. Rather than being handed this 'free money,' foreign aid needs to be directed to sectors that will eventually help the continent to become self-reliant and experience long-term sustainable development.
Local small and medium enterprises are the backbone of the global economy contributing from 60% to 95% of GDP. These small, medium and growing businesses need to receive the support to become profitable, allowing them to build a purpose and help drive sustainable growth in their communities. Providing local SME's with the funds and training to grow will increase job creation, increase household incomes, and improve the well-being of the people in their communities. To achieve this, donors have begun to accelerate the allocation of foreign aid to specific innovative programs that will improve SME's operations through training, etc., strengthening entrepreneurial growth ecosystems, and increasing transparency and access to data across the entire ecosystem. Sustained successes within productivsers have shown to increase the ease of doing business locally and at the same time will attract (foreign) investment directly into these sectors and businesses, and potential commercial partners who can support local growth through integration within their value chain. Despite emerging successes and case studies, we are nowhere near solving how to maximise impacts of business growth in any one nation. Once we can shift foreign aid to fully supporting local SMEs through well-designed and targeted responses with the right implementation partners that given cost-effective and value-added outcomes, we will see long-lasting development that will create positive social impacts from the grassroots and up in Africa.
Local small and medium enterprises are the backbone of the global economy contributing from 60% to 95% of GDP. These small, medium and growing businesses need to receive the support to become profitable, allowing them to build a purpose and help drive sustainable growth in their communities. Providing local SME's with the funds and training to grow will increase job creation, increase household incomes, and improve the well-being of the people in their communities. To achieve this, donors have begun to accelerate the allocation of foreign aid to specific innovative programs that will improve SME's operations through training, etc., strengthening inclusive and entrepreneurial growth ecosystems, and increasing transparency and access to data across the entire ecosystem.
Sustained successes within productive sectors have been shown to increase the ease of doing business locally and at the same time will attract (foreign) investment directly into these sectors and businesses, and potential commercial partners who can support local growth through integration within their value chain. Despite emerging successes and best practice case studies, we are nowhere near solving how to maximise impacts of business growth in any one nation. Once we can shift foreign aid to fully supporting local SMEs through well-designed and targeted responses with the right multisectoral implementation partners that deliver cost-effective and value added outcomes, we will see long-lasting development that will create positive social impacts from the grass roots and up in Africa.
The need to rapidly identify, share and scale best practices is paramount: We are in an era of constrained resources and unprecedented economic impacts and uncertainty for recovery amid increasing threats of emerging and ongoing infectious diseases which threaten to destabilize economic, social and health systems globally for years to come, more so across African nations, further depleting the socioeconomic gains achieved over past decades.
Additionally, business and entrepreneurial growth can only result in significant and maximised SDG impacts when non-politicized foreign aid is deployed towards rapidly improving the continent's infrastructure to meet the growth potential and needs of transformative industries and sectors, and access to essential clean and sustainable energy. A suggested resource that sums this up is the podcast by Infosys Knowledge Institute. The podcast discusses the exponential benefits that can be reaped within the education system, healthcare, and sustained business development across Africa. This will be key to the future of development in Africa.
One of MWGs primary goals is to support the growth of entrepreneurial growth ecosystems and businesses to innovate, profit, reposition, and deliver purpose. We believe that SME's need to be at the forefront, driving a positive impact in their communities to enable long-lasting and sustainable development. Working with other like-minded organizations, We aim to help communities across the continent see lasting change driven by their very own businesses. Follows on LinkedIn and join our mailing list to receive our updates on research and lessons from our case studies on supporting growth and impacts of the entrepreneurial ecosystem in the US, LAC, and Africa.