By Steve Hollingworth
WASHINGTON, DC – Since the current administration was installed in the US White House, conversations about international development often morph into a communal lament. It is an elegy of sorts, even for optimists.
The lament has many verses. It starts with an “America First” approach that has resulted in a major reduction in concessionary foreign aid. While there has been continued funding for emergency aid, especially for geopolitical conflicts and to counter Islamist extremism, support for aid historically used for long-term programs – water sanitation, public health, financial inclusion, and agriculture – has diminished. And concessionary aid that still exists is being implemented slowly.
Meanwhile, donors in the United States are dedicating more resources to domestic causes such as immigration and gun violence, and an estimated $10 billion will be spent on advertising alone in this year’s US presidential campaign. And now, the COVID-19 pandemic has introduced enormous new financial stresses. National and household economies are strained, borders are closed, and nationalist mindsets have hardened.
That brings us to the chorus. Just when sophisticated technology, data, and hybrid financing tools enable us to tackle the world’s most pressing problems – such as global poverty, lack of opportunity for young people, and climate change – the US has stopped singing its part.
Since the fall of the Berlin Wall, 1.9 billion people have been lifted out of abject poverty, leaving 650 million. With tools like digital technology, mobile money, and data analytics, the end of poverty is within our reach – though a farther stretch in the wake of this pandemic.
China’s role in development has led to a turning point in international development. Since the launch of the Belt and Road Initiative in 2013, China has sought to maximize its geopolitical influence through some $1 trillion worth of infrastructure investment in more than 100 countries. Four years later, China announced the launch of the Digital Silk Road, an effort to bring IT infrastructure to BRI countries.
China’s advances in big data, broadband connectivity, e-commerce, and financial integration have many analysts dusting off Cold War analogies to sound the alarm that China is trouncing America. What’s needed is a holistic and aggressive strategy like those the US deployed when it sat at the head of the global table.
When the Soviet Union demonstrated the superiority of its long-distance rocket technology with its launch of its Sputnik 1 satellite in 1957, Americans suddenly feared that the Soviets would weaponize space. But, instead of merely expanding military spending to reclaim US hard power, President Dwight Eisenhower recognized the strategic importance of soft power and channeled public investment to science, technology, and education. America was in a race for more than the stars and planets. It was in a race for hearts and minds, just as it is today.
Many times since then, we have seen what happens when the US puts its weight behind policies to overcome global threats. In 2003, George W. Bush’s administration took on HIV/AIDS with PEPFAR, the largest-ever global health program focused on a single disease. Eleven years later, Barack Obama’s administration responded to the Ebola outbreak in West Africa with a multifaceted approach that helped to end the crisis in 18 months.
The current administration’s approach to overseas development is the US International Development Finance Corporation. But while the DFC, which provides loans and insurance to investors willing to do business in developing countries, may fulfill its limited mission, thoughtful guiding principles are needed to mitigate the risks of shifting political winds and whims. Even then, the DFC alone will not eradicate world poverty. No single response will suffice – not philanthropy, data, digitization, or impact investing. What is needed is a bold plan that conjoins these invaluable resources.
Grameen Foundation, which has helped more than 14 million impoverished people since 2016, has witnessed firsthand the impact that new and reimagined resources have on the poor. Accurate, up-to-date data have enabled Grameen to understand poor people’s needs for financial and agricultural tools, including digital technology, to help lift them from destitution.
Digitization will transform lives. The Internet of Things will allow for the push-and-pull of data to an estimated 38.5 billion devices globally in 2020. It is the reason mobile-quipped Grameen Community Agent Komal in India can bring financial services to her poor, rural neighbors’ doorsteps. And creative financing is the reason Proyecto Mirador, a client of Grameen’s subsidiary TaroWorks, uses clean cookstove technology to reduce the pollution caused by three billion people worldwide cooking on open fires. Its efforts to reduce greenhouse-gas emissions are partially funded through the sale of Gold Standard-registered carbon offsets.
Even now, the world is prepared to break poverty’s grip. If the US doesn’t take its seat at the table, it will be relegated to the children’s corner, its voice unheard and its tantrums ignored. China and others with values far from those of Western democracies will dominate the adult conversation.
Steve Hollingworth is President and CEO of Grameen Foundation.
Copyright: Project Syndicate, 2020.