Blog: Private Sector, Not Aid, Driving Development In Africa

Blog: Private Sector, Not Aid, Driving Development In Africa

It’s the private sector, through its flows of capital, technology and knowledge – rather than public aid – that has become a vital force in the development of Africa, according to a blog at HuffingtonPost.com.

Aid accounted for 71 percent of financial flows to the developing world in 1960. Today that figure is 9 percent, according to a recent report by the Center for Strategic and International Studies in partnership with Chevron Corp.

California-based Chevron Corp. is the world’s third-largest energy company by market value, according to a Bloomberg report in gCaptain.com.

Private sector investment in local supply chains helps raise business and manufacturing standards, promotes competition, a stable fiscal and contractual environment, revenue transparency, and rule of law, writes Rhonda Zygocki, executive vice president for policy and planning at Chevron Corp. Private sector investment is also a catalyst for job creation, the rise of a skilled workforce and economic diversification, Zygocki writes.

Multinational companies benefit from engaging with local suppliers that can serve their needs, so it is in their interest to spend the time to qualify them, she says. By doing so, these companies are helping develop local businesses that can produce to international standards and codes of conduct, Zygocki says. “At Chevron, we have seen many of our local suppliers expand from serving us to serving others in our industry as well as other industries. As these local businesses grow, the positive economic ripple effect multiplies.”

Zygocki encourages other corporations to become collaborative members of the African communities where they do business, not just corporate donors. “Our social investment experience has convinced us the private sector can play a valuable role in breaking the cycle of poverty and disease, while supporting economic development at a scale that can be felt at the national level,” she writes.

As an example, she cites Chevron’s experience in Angola. In 2002 at the end of a 27-year civil war, Chevron formed public-private partnerships with organizations like USAID and the U.N. Development Program to help rebuild commercial farming and launch the country’s first microcredit bank. Today, Angola is more peaceful and prosperous with a budding entrepreneurial culture and civil society, Zygocki writes.

Chevron Corp.’s $10 billion Angola LNG plant shipped its first gas cargo in June, according to a Bloomberg report in gCaptain.com. The company has made Angola LNG a linchpin of its goal to raise its worldwide output by 20 percent through the end of 2017 to the equivalent of 3.3 million barrels of crude a day. Chevron is Angola LNG’s largest shareholder with a 36.4 percent stake. Angola produced 1.87 million barrels of oil a day in May, equal to Nigeria, according to Bloomberg data. Chevron and its partners built Angola LNG in part to market gas that would otherwise have been burned off because of the lack of a local demand for the fuel, Bloomberg reports.