By Ayesha Saba

Expanding cooperation between the United Nations Development Programme (UNDP), international development banks and private investors is opening new opportunities for developing economies to attract investment and generate employment, as development institutions increasingly focus on connecting financing with commercially viable projects and labour-market needs.

UNDP announced on October 13 that it was strengthening cooperation with the World Bank Group, European Bank for Reconstruction and Development, European Investment Bank, other financial institutions, private investors and insurers to help developing countries overcome barriers to investment and job creation.

The cooperation involves two complementary initiatives designed to address challenges that often prevent developing economies from converting available financing into productive investment and sustainable employment.

The first initiative, the Investment Accelerator, focuses on improving investment regulations and developing pipelines of commercially viable projects capable of attracting financing. The second, the Jobs for Prosperity Facility, aims to identify sectors with strong employment potential, align workforce skills with business requirements and remove obstacles to hiring.

Pilot activities under the UNDP–World Bank Group Cooperation Framework are being tested in Nepal, Ghana, Yemen, Haiti and Lebanon, providing an opportunity to assess how investment preparation and employment policies can be coordinated in countries facing different economic and development challenges.

The initiatives come amid a major global employment challenge. According to projections highlighted by World Bank President Ajay Banga, approximately 1.2 billion young people will enter the workforce in developing countries over the coming decade, while only around 400 million jobs are expected to be created under existing trends.

The figures underline the importance of attracting productive investment and developing industries capable of generating employment opportunities for a rapidly expanding workforce.

Talking to Wealth Pakistan, Dr Uzma Zia, Senior Research Economist at the Pakistan Institute of Development Economics (PIDE), said the employment-focused component of the UNDP initiative highlighted the need to assess economic development programmes by the quality and sustainability of jobs they generate.

“Pakistan's employment challenge is not only about creating more jobs but also ensuring that workers can access stable and productive opportunities. Sectors such as agro-processing, export-oriented manufacturing and digital services have employment potential, but each requires different technical skills and training arrangements,” she said.

Dr Zia emphasised that workforce development policies should respond to actual employer demand rather than focus solely on general training targets.

“Training institutions should work directly with employers to identify occupational shortages, update curricula and introduce practical workplace learning. Measuring graduate employment, job retention and earnings would help determine whether skills programmes are genuinely improving labour-market outcomes,” she added.

She said the investment mobilisation component of the initiative was equally relevant for Pakistan, where attracting private capital remained important for expanding productive economic activity and creating employment.

“Pakistan has considerable investment potential, but many projects struggle to attract financing because of inadequate feasibility studies, unclear risk-sharing arrangements and uncertainty over regulatory approvals. Development institutions can play an important role in helping governments prepare bankable projects and providing financial instruments that make private investment more attractive,” she said.

Dr Zia added that the involvement of development banks and insurers could be particularly useful in addressing risks that discourage long-term private investment.

“Guarantees, political-risk insurance and blended financing arrangements can help reduce investors' exposure to uncertainty. For Pakistan, the priority should be to develop a credible pipeline of projects that can attract private capital without placing excessive additional pressure on public finances,” she suggested.

According to the Pakistan Economic Survey 2025–26, the country's labour force reached 83.14 million in 2024–25, while the unemployment rate stood at 7.1%, highlighting the need for stronger investment-led employment opportunities.

Although Pakistan is not among the five countries participating in the Cooperation Framework’s initial pilot activities, the UNDP approach offers relevant lessons for strengthening investment preparation, improving workforce skills and encouraging private-sector participation in employment-generating industries.

The growing cooperation between development institutions and private investors highlights a shift towards linking development financing more closely with productive investment and sustainable job creation.

For developing economies such as Pakistan, the potential benefits will depend on their ability to prepare commercially viable projects, strengthen investment conditions and develop workforce skills that meet the requirements of expanding industries.

Credit: INP-WealthPk