PSD in Conflict-Affected Environments

Introduction

While the DCED has published several papers on Private Sector Development (PSD) in conflict-afffected environments (CAE), it has not yet developed specific guidance on the theme. Below, you can find an outline of the DCED's current approach to PSD in CAEs, which may serve as a framework for future guidance.

for an overview of DCED publications on PSD in conflict-affected environments, and links to other resources on the theme

The DCED's Current Approach to PSD in Conflict-Affected Environments

The Donor Committee for Enterprise Development believes that Private Sector Development can be a vital tool in conflict-affected environments.

In the 2011 World Development Report and elsewhere, it is now recognised that low GDP per capita and unemployment are major drivers of conflict. This is supported by survey data cited in the WDR: Asked for the reasons why young people join rebel groups or gangs, the biggest share of respondents indicated unemployment as the main reason. The report concludes that the path to longer-term development and peace "is dependent on a healthy private sector". PSD is therefore crucial, "especially if creating jobs and incomes is to out-last donor-funded, short-term emergency works."

However, the report points out that donor agencies have "not paid as much attention to labor-intensive private sector development as is warranted by the importance of  [...] job creation for violence prevention. [...] International economic development assistance is easier to obtain for macroeconomic policy, health, or education capacities than for job creation.” 

The DCED seeks to address this relative lack of attention to the role of the private sector in peacebuilding. In fact, there is now increasing recognition in the international sphere of the relationship between private sector development and peacebuilding. Most recently, the High-Level Forum on Aid Effectiveness in Busan welcomed a ‘New Deal for Engagement in Fragile States’. This new deal identifies five peace- and statebuilding goals, including in particular economic foundations (generating employment and improving livelihoods) - and marks a new international consensus on the priorities of donors working with fragile states.

Building security, stability and trust:  The ability to move about freely and without fear of death or injury is obviously essential to a stable state. However, a peaceful society is one where there is sustained, durable stability and trust between different elements of society. As stated by the World Development Report 2011, private sector activity often cuts across ethnic and religious lines. PSD can contribute to this, for example by seeking to develop businesses that cross the ethnic or other divides which fracture society and threaten conflict.

Fostering good governance: Fostering good governance to ensure that the state is run for the benefit of all its people is obviously a key focus in conflict-prone zones, where poor governance frequently fans the flames of resentment that can lead to conflict. By ensuring that the private sector governs itself well, and adopts international norms of behaviour and reporting, PSD projects are able to reinforce the wider governance message that others in the development community are promoting.

Creating the infrastructure for modern society: Infrastructure is usually seen as meaning hard ‘stuff’ such as bridges, roads, and power supplies. Particularly in post-conflict environments, re-building the infrastructure that has been destroyed by fighting is an early priority of the development community. However, central also to a modern, peaceful society is ‘soft’ infrastructure including education, healthcare, commercial value-chains and banking. These elements of soft infrastructure can be provided by the private sector.

Economic Development:The famous Collier-Hoeffler model is stark in its assessment of the link between low rates of economic growth and levels of wealth and a propensity for violence. However, it is not simply economic growth per se that is required. Economic growth needs to be broad-based, and provide benefits across society. The private sector obviously has a pivotal role to play in this in generating jobs, wealth and prosperity.

To develop this model, the Steering Group on PSD in CAE is looking for examples of good PSD programming in conflict-affected zones that we can try to map to this 4-part framework. The aim is both to improve on this framework, and to develop a corpus of case-study research that can be used by PSD practitioners as a source of insight as to what aims they might realistically set for their programmes which can have the maximum beneficial impact across all dimensions of peace-building.

We would be delighted to hear from you with examples of case studies of good PSD practice in conflict-affected countries that we can then map to this framework, or use to improve the framework itself.

to get involved by contacting Melina Heinrich of the DCED Secretariat

for information on the meetings of the DCED Steering Group on PSD in Conflict-Affected Environments
for a two-page brief on why PSD is important in Conflict-Affected Environments