Time to Revisit U.S. Enterprise Funds?

In the early 1990s, President George H. W. Bush launched a series of country-focused “Enterprise Funds,” which are U.S. government dollars funding investment in developing countries. Enterprise Funds were given the unique and double mandate of making money and doing development---generating blended results. In some host countries, the range of goods and services were broadened; modern technologies were introduced; foreign investments were made in local markets; capital markets were developed; managerial groups received support and training; and the social responsibility of business and legacy activities were improved. For a variety of reasons, some funds were less successful than others and have somewhat of a mixed reputation in Washington D.C.

More recently, after the Arab Spring, Secretary Hillary Clinton initiated enterprise funds for Egypt and Tunisia. Though it is still early, both funds are doing well. The current landscape for Enterprise Funds is vastly different from what it was in the 1990s: private equity is better known today and most investors understand and appreciate opportunities in developing countries. The lessons over the past 25 years have produced valuable knowledge that needs to be harnessed into an updated discussion. Perhaps it is time to revisit Enterprise Funds as a tool for development and important foreign policy.