Letter: Risky ventures in the Third World

Sir; Hamish McRae is quite right that Clare Short's post as minister for overseas development in a future Labour Cabinet brings with it great influence ("This really is the best job in the world", 16 August). But few in the developing world would agree with him that official development finance and private-sector "emerging market" portfolio investment are tantamount to the same thing. While the former brings with it a degree of public accountability, in the latter it is generally lacking.

London-based equity portfolio investors, for example, currently finance ecologically damaging timber companies engaged in the logging of biodiverse virgin rainforests in Brazil, Papua New Guinea, Guyana and the Solomon Islands. The financing of a private-sector project such as the Bakun dam in Sarawak (turned down by the World Bank) will involve the removal of 10,000 tribal people from their homelands. A deputation of City investors to the Bakun site was recently met from their helicopter by indignant local protesters.

Few social businesses involving water purification or health care are ever listed on emerging stock markets. In contrast, at least official flows can be targeted directly at the greatest need.

The future challenge for Clare Short is to ensure that public-sector finance is used to back private-sector mechanisms whose goals are sustainable development and social equity. The UK aid programme is best used to back micro-lending such as that undertaken by the Garmeen Bank of Bangladesh, or the transfer to "clean" technology.

MARK CAMPANALE

East Twickenham,

Middlesex