Development & Aid, Economy & Trade, Global, Global Geopolitics, Global Governance, Headlines, IPS UN: Inside the Glasshouse, Poverty & SDGs

DEVELOPMENT: Investing in a Better World

Wolfgang Kerler

UNITED NATIONS, Dec 18 2008 (IPS) - Developing countries will be able to share best practices for development more efficiently via the newly created South-South Human Development Stock Exchange (SS-HDSX), as social entrepreneurs meet up with potential social investors on this online platform.

“It is a real marketplace which brings together offers for good investments in development and people who want to make social investments into those offers,” Francisco Simplicio from the Special Unit for South-South Cooperation (SU/SSC) within the United Nations Development Programme (UNDP) told IPS.

Celebrating the fifth United Nations Day for South-South Cooperation, SU/SSC’s director Yiping Zhou rang the bell launching the stock exchange’s pilot at U.N. Headquarters on Tuesday. So far, two projects are available for investment on the website www.ss-hdsx.org.

Based on experiences from India, 50 Sri Lankan women shall be trained in shrimp pickle making and food-processing in order to enable them to open up their own, sustainable small-scale enterprises.

The other project aims to train experts from Kenya in Brazil so that they can assist at least 100 Kenyan youth and adults in establishing small start-up businesses that produce apparel, arts and crafts, stationary and ornaments. A similar programme turned out to be successful in Brazil.

To provide the 32,000 and 45,000 dollars in funding, respectively, needed to carry out these projects, investors can buy shares at 25 dollars each. What distinguishes these investments from traditional donations is that shareholders receive regular updates on how their money is being spent and what impact it has. Thereby, beneficiary organisations are held more accountable.

By “walking the talk”, as Simplicio put it, the SS-HDSX is designed to overcome some of the obstacles that have often constrained deeper cooperation among developing countries.

While there is no shortage of networks to identify best practices and innovations for development, the actual transfer of knowledge or technology from one southern country to another turns out to be difficult due to a lack of mechanisms. Therefore, actors in the developing sector looked at instruments the market economy had to offer.

With social stock exchanges “we are picking up the best concepts of the capitalistic system – [like] governance and transparency that is proper to a stock exchange,” Celso Grecco told IPS. In 2003, Grecco created the world’s first social stock exchange in Brazil.

“But we are getting rid of the worst parts of the system – people who want to make lots of money in a very short time,” he added.

Experiences from Brazil, but also from other social investment marketplaces in South Africa, India, China and the United States, have shown that these facilities are making capital more accessible to poor communities in the South. Human development projects gain greater visibility and investor relations costs are reduced.

With diligent selection and oversight of supported projects, investments in a social stock exchange market are also more attractive than traditional donations. Smaller and non-traditional donors can more easily take shares in development projects.

“And your investments are really paid back with a better society,” Grecco said. In Brazil, 81 of 104 listed development projects have been fully funded through the social stock exchange since 2003, with a total funding of 7.5 million dollars. SS-HDSX is the first global attempt to establish a social stock exchange market.

Present at the launching event of SS-HDSX, a representative of World Bank, a major global development institution, also stressed the importance of South-South cooperation and the Bank’s commitment to further promote it.

However, Yuvan A. Beejadhur of World Bank did not confirm whether or not the institution will partner with UNDP in the newly created SS-HDSX. “The key question that remains to be seen is what implications those stock market initiatives will have for our bank’s operations,” Beejadhur told IPS.

Simplicio from UNDP told IPS that he sees the “top-down work” of the World Bank as a necessary complement to the new approach “which promotes development from the bottom up”.

Concluding his statements, Yiping Zhou from UNDP said that SS-HDSX “could be a reason for hope for a new inclusive development platform for the global south. But it must engage the active participation of the public, private and non-governmental sector.”