Aid agencies warn rich nations not to 'pawn off' $22bn promised to developing countries as leaders meet at Camp David
Barack Obama is to make a major speech in Washington announcing at least $3bn in private sector funding to tackle hunger in developing countries, mainly in Africa.
White House officials disclosed the figure in a briefing ahead of the president's speech on Friday, which marks the start of four days of talks with world leaders.
Aid agencies are likely to react with mixed feelings. While they accept the private sector can play a role in development, they are sceptical it can replace the kind of funding governments traditionally provide to the world's poorest countries.
Obama is hosting the leaders of the Group of Eight (G8), comprising the world's wealthiest countries, at Camp David on Friday evening and Saturday morning. Its past meetings at Gleneagles, Scotland in 2005 and L'Aquila, Italy in 2009 resulted in major spending commitments.
But given the present austerity measures in Europe and in the US these appear to be drying up and instead Obama is putting the focus on the private sector.
Raj Shah, adminstrator for the US agency for international development (USAid) who took part in the White House briefing, said 45 private companies would contribute more than $3bn to help small-scale agricutural projects.
The $3bn is part of a drive to lift 50 million people out of hunger by 2015.
Among the companies participating, according to Shah, is Vodafone, which will help provide 500,000 small farmers with text messages updating local market prices. This, he said, was an example of the private sector doing things governments could not and it would be effective.
"In previous studies we've found that that service alone helps farmers improve their incomes by 20% because they can negotiate better farm gate prices with middlemen when they have that data at their fingertips, and they wouldn't otherwise have that data. And it's highly unlikely that there's a public sector solution that could fill that gap," Shah said.
The $3bn amounts to a small proportion of the $22bn pledged by the G8 at L'Aquila in a three-year deal brokered by Obama.
The US, in an move aimed at greater transparency in dealing with aid, is to publish an accountability report on Saturday providing more detail than the G8 has ever before of how much of the $22bn has been raised and how much has been spent.
US officials signalled the $22bn target had been reached but the record on spending had been mixed, with some countries struggling to meet an end-of-year deadline that the US accelerated its programme to fulfill.
Obama will urge other countries to continue to support the L' Aquila initiative beyond 2012.
Oxfam and other aid agencies, anticipating the private sector announcement, this week put out advance statements expressing concern about how much the private sector can achieve. "The G8 leaders themselves need to take responsibility for fulfilling their commitments – they can't pawn it off on others," Oxfam said.
Michael Froman, Obama's deputy national security adviser for international economic affairs, who took part in the White House briefing, said: "It's not about replacing aid. It's about combining aid with private capital, tools to scale innovation and strategies for managing risk."
Asked to address the concerns of the aid agencies, Froman said: "We've seen, even in this sluggish environment, our commitment to food security go up, and even while other things have had to be cut. So I think it's absolutely clear that we stand behind the importance of the official assistance.
"And what this initiative is about is recognising that in addition to official assistance, there's an important role to play by the private sector in investing in sustainable efforts to increase agricultural productivity."
The US has identified three African countries that are models for development: Ghana, Tanzania and Ethiopia. Their leaders have been invited to join the G8 leaders at Camp David.