AFD has always been convinced that development cannot rely on the public sector alone in accomplishing its goals. Even before it first set up its private sector financing subsidiary (Proparco) 40 years ago, AFD drew on the unique selling points of the commercial sector.
By far the leading job-creating sector in emerging countries, the private sector contributes to offering essential services and goods, particularly in terms of infrastructure, health, education and energy. It is a driving force for innovation and technological progress, such as in energy transition, and generates revenue that is crucial to many States. As long as its carbon footprint is kept in check and it takes care to apply good social practices, the private sector is fundamental to developing ambitious and effective development policy.
With this in mind, partnerships with companies in developing, emerging and overseas countries are central to AFD's objectives. More expansive, ambitious and agile than ever before, AFD aims to draw on the synergy between the public and private sectors in financing major transitions that rely on new resources. And in doing so, it has its sights set on a smooth and effective approach to development in which the private sector enjoys pride of place.
The private sector is an incredible lever for development, albeit one that raises legitimate questions, such as in healthcare or education. We need to encourage it while ensuring cohesiveness is maintained between our interests and those of our partner countries.
SDG seeks development
Recent changes in the development and climate change agendas have shifted the goalposts. The Third International Conference on Financing for Development in Addis Ababa in 2015 called on all driving forces to be mobilised. That same year saw COP21 and the Paris Agreement revealing how important companies' and private investors' involvement is in achieving Sustainable Development Goals (SDGs).
By working with the private sector, AFD aims to achieve a range of SDGs: fighting climate change, eliminating poverty, bolstering full employment and decent working conditions, ensuring food safety and security and promoting sustainable farming, ensuring all humans are afforded good healthcare, guaranteeing high-quality education, promoting sustainable industrialisation and fostering innovation.
Ensuring all human beings enjoy access to clean water (SDG °6) is one of the objectives taken up by the private sector with AFD's backing. Poor infrastructure and various malfunctions mean that every year millions of people die as a result of illness related to a lack of water and a lack of sanitary facilities. The private sector's expertise in water, provided as part of AFD's initiatives, has helped supply 2.5 million people with drinkable water every year.
One of the challenges is to redirect private global investment into sustainable projects and to bolster ethical private investment, which translates into investors who generate positive results for the local economy, decent employment, innovation and high social standards. Our goal is to work together to build economic models that help transform the world into a fairer place.
Here for companies
As a demonstration of its willingness to build bridges between the private and public sectors, AFD intends to double its private sector funding by 2020. The ultimate goal is to see 50% of its financing directed to 'non-sovereign' stakeholders, a category encompassing local authorities, NGOs, banks, investment funds and public and private enterprise. This approach marks AFD out as a unique international backer.
To boost our efficiency, we aim to diversify and to prioritise clarity and in-depth understanding of companies' concerns. We want to make business a safer endeavour for private entrepreneurs, by leading initiatives that promote governance, taxation and justice, as well as by developing a stable financial sector that is deeply rooted, diversified and complies with international standards and norms. We will also be tackling professional training in sectors where companies need a qualified workforce.
Through its work, AFD is also committed to promoting projects and expertise to come out of French companies. This forms a crucial component to our 'French offer' abroad, bringing stakeholders with the strongest commitment to sustainable development together.
A win-win situation
We aren't lacking in ideas for projects. We just need to identify which ones are likely to work. When public-sector backers such as AFD work with the private sector, the goal is to bring as many projects and stakeholders as possible to light. Our ultimate objective is to stimulate ever more development. If French companies are prepared to invest more in developing and emerging countries, we can expect to see growth in both France and the overseas economies in question.
By 2020, Proparco aims to create or support the creating of 1.7 million direct or indirect jobs in countries in the southern hemisphere, further 45 innovative projects spearheaded by companies, and give 12 million people access to an essential good or service, while cutting over 15 million tonnes in carbon emissions.