External Finance for Private Sector Development
Appraisals and Issues
Foreign assistance philosophy no longer favours channeling aid almost exclusively to recipients' public sector; 'a bottomless pit'. Increasing preference has been accorded by the donor multilateral development community to the private sector, regarded as the engine of growth, poverty reduction and empowerment. Donors' professed development financing objectives now centre mainly on facilitation of sustainable long-term private capital flows to developing countries to support efforts to diminish aid dependence. The book examines the practices of multilateral and bilateral donors and those of NGOs in private sector development financing, giving special attention to microfinance and micro-enterprises. It also explains the flow of foreign direct investment and why poor countries have often been bypassed, just as a framework is suggested and applied for identifying the fundamentals that drive private capital flows from developed to developing countries. Capital flight from developing countries and policies for its reversal are also examined.