April 15, 2013--The private sector could play a key role in ending extreme poverty by 2030 by gathering high quality data and evidence of entrepreneurial impact in developing countries, speakers said at a conference organized by IFC and the Bill & Melinda Gates Foundation ahead of the World Bank-IMF Spring Meetings.
World Bank Group President Jim Yong Kim and IFC CEO Jin-Yong Cai of the Bank Group’s private sector arm called the private sector an invaluable ally in a plan to reduce global extreme poverty to 3% by 2030, and foster income growth of the bottom 40% of the population in every country. Those targets will be proposed to the World Bank’s Board of Governors this weekend.
“There is no way that we’ll get there without a robust private sector that is creating the jobs that are critical to lifting people out of poverty,” said Dr. Kim at The Private Sector and Ending Poverty conference.
“The extent to which we commit to working with the private sector to foster growth will determine how ambitious we can be for the poorest people in the world.”
The event, attended by a cross-section of private sector companies, academics, think tanks, and foundations, was watched in Pakistan, Ghana, Albania, Venezuela and Colombia, among other countries, and followed on Twitter with #Results4Impact and #wblive.
Cai, whose organization finances entrepreneurs in developing countries, said jobs are the surest path out of poverty. “Increasing the impact of the private sector is critical in achieving our development goals.” Measuring results is the way to do this, he said.
“There is an old saying: ‘what gets measured gets done.’ We believe that is the key to success.”
An estimated 600 million more jobs are needed are needed in the next decade to keep up with population growth, most of it in developing countries. About 90% of jobs in developing countries are created by the private sector and private companies generate tax revenues, support growth, and contribute to local communities.
Cai said IFC’s system for tracking results depends on regular and reliable data provided by IFC’s private sector clients. But many companies consider data collection burdensome and expensive, and of not much value to them. “How does collecting data about the number of farmers or SMEs [small and medium sized enterprises] you are reaching benefit companies? How can this data help firms stay profitable? I hope today’s discussions will help reach a shared understanding of results. This is where we need to start,” said Cai.
The conference aimed at conveying the business case for measuring development results – and the private sector’s interest in helping to reduce poverty and increase the number of people able to participate in the economy, not as philanthropy but as a core aspect of their business.
In Colombia, increasing the size of the middle class from the current 25% to 47% would double the country’s economic consumption, said Bruce Mac Master, director of Colombia’s Department for Social Prosperity, tasked with reducing inequality and promoting human development. Among a range of interventions, the agency is working with the private sector on job training for youth while also offering young people more opportunities for education in general.
“If you really increase the middle class, you would not only be able to compete against other countries –if you do that you would have a really bigger economy,” Mac Master said.