Secretary-General Warns Conflict, Instability Scare Away Much-Needed Investment, Often When Fragile Countries Need It Most; Businesses Succeed When Societies Do

30 November 2011

Secretary-General Warns Conflict, Instability Scare Away Much-Needed Investment, Often When Fragile Countries Need It Most; Businesses Succeed When Societies Do

30 November 2011
Department of Public Information • News and Media Division • New York

Secretary-General Warns Conflict, Instability Scare Away Much-Needed Investment,

Often When Fragile Countries Need It Most; Businesses Succeed When Societies Do

Following are UN Secretary-General Ban Ki-moon’s remarks, as delivered, to the Private Sector Forum at the Fourth High-Level Forum on Aid Effectiveness, in Busan, Republic of Korea, 30 November:

I am delighted to welcome you to this Private Sector Forum.  One of the main lessons I have learned the last five years as Secretary-General is that the United Nations cannot function properly without the support of the business community and civil society.  We need to have tripartite support — the Governments, the business communities and the civil society.

So I thank you for being with us here today in Busan.  Thank you for joining with us in this important effort to ensure that aid gets where it is needed, and is then spent wisely and to the purpose of the money and in an accountable way.

Development cooperation stands at a crossroads.  This is an era of financial austerity.  There is growing uncertainty about aid — both quantity and quality.  At the same time, new Powers have emerged, changing not only the global economic and political landscape, but the aid and investment picture as well.  Amid these dramatic currents and changes, there is a widespread consensus that the private sector has a critical role to play to fill all these gaps.  There is clearly a gap, discrepancies between demand and supply.

Business is a primary driver of jobs and innovation.  The world will achieve sustainable development only if sufficient private investment enables broad-based growth.  This is fundamental.  And it is why I wanted to speak out today about the importance of our partnership.

The past decade has seen rising private-sector interest in the world’s least developed countries.  Foreign direct investment last year was $574 billion, more than four times the level of official development assistance.  The highest record was last year when the donor countries gave $130 billion to developing countries.  For the first time, developing and transition economies attracted more than half of those funds — a welcome improvement over the years in which investment bypassed too many of those in greatest need.

Investment by developing economies also reached record highs.  These flows went mostly to other developing countries — a sign of deepening and widening South-South cooperation.  There is a widely shared perception that this money only flows from North to South but these days this money is flowing between South and South, and even South to North.  This is an interconnected world.  Even the goals of private investment are shifting.  Until recently, a primary objective was to reduce costs.  Today, investment is about building markets.

So where do we go from now?  We go to the places that need it most, with interventions that work, and strategies that promise the greatest value for money.

Earlier this month, I visited Bangladesh, Thailand and Indonesia.  I went to highlight success stories in advancing global health — particularly women’s and children’s health.  I saw rural clinics in Bangladesh and Kalimantan, an island of Indonesia, reducing infant mortality and maternal deaths in childbirth.  In Thailand, I saw the benefits and effects of universal health care.

I came away with two lessons.  Simple solutions can save lives — for example, training midwives in rural areas, or helping to provide such basics as fresh water and inexpensive vaccines.  And second:  countries do not need to wait to become rich before they provide all these sanitation and health services to people.   Thailand, for example, started moving towards its programme for universal health coverage when per capita national income was only at $400.   Thailand is a middle-income country but they started a long time ago.  So, you don’t have to wait to be rich to provide these health services to people.

It was immensely encouraging to see some of the world’s poorest countries making these investments in human capital and becoming models for others.  It was also encouraging because these successes showcase the true potential of aid.

Governments have to set the stage, with the right regulatory frameworks and incentives.  But the private sector and civil society can help deliver.  Soft-drink manufacturers are helping to distribute clean water.  Pharmaceutical companies are reducing the cost of medicines and vaccines.  Cellular-phone companies are helping put women in remote areas in touch with doctors and nurses to get the care they need.  These days even in very rural countries, the nurses, health clinic people, they are all using cellular phones to inform the patients.

The private sector can truly be the backbone of growth.  Yet let us remember:  growth, investment and business activity must also be sustainable and responsible, and uphold the highest standards of business ethics.  These are the principles embodied in the United Nations Global Compact.  More than 6,000 companies in around 140 countries are engaged in this initiative.  They recognize that business must look beyond short-term financial gains to deliver long-term value.  More and more business leaders accept that principles and profits go hand in hand.

Corporate sustainability is going mainstream.  This has led to a fundamental shift in the way businesses engage in development.  Today’s poor are tomorrow’s prospering markets.  Growth rates in developing countries are often higher than in mature economies.  From multinational corporations to small cooperatives, experience shows that pro-poor business models can meet the needs of business and society alike.  Moreover, we have learned — painfully at times — that conflict and instability simply scare away much-needed investment, often when fragile countries need it most.

Businesses succeed when societies themselves succeed.  When countries are affected by violence and the absence of the rule of law, business can and must be a messenger of peace.  Business decisions related to investment, employment, relations with local communities, and protection for local environments can help a country overcome conflict — or can make tensions even worse.

I strongly encourage companies to make all possible efforts to implement responsible, conflict-sensitive business practices.  By supporting human rights, breaking cycles of violence, and stimulating economic activity, businesses can help create the conditions in which their operations thrive.

The past 15 years have seen a rise in collaboration between donor agencies and companies.  Such cooperation allows both partners to combine their individual strengths.  Businesses can mobilize capital, products and skills.  Donor agencies can mobilize knowledge and networks.  Together, we can leverage small investments into major impacts.  We can deliver essential services and critical goods.  We can bring the efficiency of business to aid delivery.

New partnerships and approaches are uniting the public sector, business and civil society.  The time has come to expand these efforts, to strengthen our global partnership.  Let us provide more opportunities for the least developed countries, including access to markets.  Let us build social enterprises.

I urge you to join the other businesses that are already part of two new United Nations initiatives:  First, Every Woman, Every Child, which promotes women’s and children’s health.  And second, Sustainable Energy for All.  The United Nations has an ambitious plan to provide access to all the people who lack electricity — 1.4 billion people around the world by 2030.  We will double the efficiency of energy.  We will double the efficiency of renewable energy in the global energy mix.  Work with us to combat climate change, including next month at the negotiations in Durban.

Bring your best ideas to the private sector forum at next June’s critically important Rio + 20 summit meeting on sustainable development.  And of course, please engage in the Global Compact.

Years of experience have shown us what works and what does not work.  We know how to achieve the Millennium Development Goals.  Now is the time for all of us to bring these solutions and innovations to scale.  Now is the time for business to help make aid more effective.  Now is the time to work even more closely together to realize our shared goal of a more peaceful and prosperous world.

Thank you again for being here today, and I count on your strong commitment and leadership, working together with the United Nations, to make this world better for all.  Thank you very much.

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For information media • not an official record
For information media. Not an official record.