What is Private Sector Development and why is it critical in the changing aid context?

Private Sector Development (PSD) is the set of strategies aiming to establish markets that function vibrantly and fairly, providing inclusive and resilient economic opportunities at scale. It is a central means to achieve the Sustainable Development Goals. Read our two-page overview of PSD to learn more.

PSD remains a cornerstone of development in a rapidly changing aid context:

• Widespread budget cuts mean that the private sector is essential for addressing increasingly complex development agendas.
• There is a growing realisation of the need for commercial finance for development, but that mobilising SME finance for emerging and frontier markets requires PSD-supported market creation activities.
• There is a new ambition to align PSD with domestic benefits for donor countries. Implemented well, PSD can offer a route towards mutual economic and other benefits for donor and developing countries.
• Fragility is the new development reality. PSD is essential to help economies recover from conflict and climate shocks, and provide long-term economic prospects to affected populations.
• Preparing for an environmentally sustainable future for all requires private investment in innovative practices and technology at scale.
• Inclusion is under growing pressure but remains a proven lever of sustainable growth; PSD can be a key tool to integrate and empower marginalised groups in economic systems

The DCED provides a space for funders and other development partners to learn from each other and define effective ways for navigating this new aid landscape – through its Working Groups, website, online and in-person events.

Women’s Economic Empowerment Gateway

Check out the WEE Gateway from the DCED Women’s Economic Empowerment Working Group (2022); an interactive digital platform that compiles resources, evidence and information on how to design and implement more effective gender sensitive, responsive and transformative Private Sector Development programmes. It is useful for all levels of expertise, whether you are just beginning to understand the concepts, or whether you are already a gender expert looking for resources to help you at each step of the design and implementation process.