BANGKOK: The United Nations Development Programme on Tuesday announced new initiatives to help attract investors and jobs to developing countries, which are being rocked by crises outside their control amid a sharp drop in official development aid.
UNDP Administrator Alexander De Croo said the agency was increasing its cooperation with the World Bank, and forging new ties to the European Bank for Reconstruction and Development, the European Investment Bank, other financial institutions and private investors, to advance the investment and jobs agenda.
Developing countries needed to undertake reforms to improve governance, improve the rule of law and boost domestic revenues, but progress on that front had been slowed by a series of crises since the COVID pandemic, De Croo told Reuters.
“The way development is being financed is changing, and that’s a good thing, but we need to create some space for those countries to be able to implement those reforms,” De Croo added on the sidelines of the annual meetings of the IMF and World Bank in Bangkok, Thailand.
HIGH ENERGY COSTS, SUPER EL NIÑO
De Croo said the crises facing developing countries were worse in some aspects than the COVID crisis of 2020-2021, but it was premature to be talking about debt relief measures. Domestic central banks and regional institutions would need to address liquidity needs in countries struggling with high energy costs, rising interest rates and the worst El Niño weather effect since 1950. Only then could the issue of solvency be addressed, he said.
Countries had been shielding their populations from the energy price shock caused by the war in the Middle East through fuel subsidies and other measures, but at a huge cost, and the coming super El Niño posed another threat.
“The alarm lights are at least on orange, and if this continues for a few more months, countries will come into trouble,” he said, adding that UNDP was working with 46 countries to develop targeted subsidies that were less costly. Many countries were already pulling back from such measures as fiscal buffers ran dry, and no quick end to the war in the Middle East appeared in sight, De Croo said. If it dragged on, there was a risk that Gulf countries and others that had maintained support would curb their aid as well, he said. “We need to find a way to stop (the war), at least to get again safe access to the Gulf region ... and it’s the same in Ukraine,” he said. “At some point wars need to end.”
HUGE JOB GAP
The new UNDP investment and jobs initiatives came amid warnings about a huge job gap facing developing countries, with some 1.2 billion young people set to enter the workforce over the next decade but only 400 million jobs in sight.
One will focus on work to improve investment policies and regulations, develop specific projects and pipelines and move projects to implementation. The other will look for sectors with strong job-creation potential, align skills with employer demand and address barriers to business investment and hiring. UNDP said it already had pilot initiatives underway in Nepal, Yemen, Haiti, Lebanon and Ghana as part of its World Bank partnership, and was also working with Italy’s Generali on expanding insurance coverage for developing countries. This was crucial, De Croo said, noting that natural catastrophes in Asia caused $65 billion in economic losses in 2025, of which only $5 billion was insured.
“What insurance is doing is managing risk,” he said. “We see quite some margin in using insurance systems in a world that is becoming more turbulent than ever to try to manage that risk and help countries to become investable.”