Photographs courtesy of Charles Bodwell, Ronny Bechmann, Katalyst
On this page, you will find information about all aspects of Private Sector Development, including links to recommended additional resources, managed by the DCED or other agencies.
Business Environment Reform
Where entrepreneurship and markets are stifled by inappropriate regulation, excessive taxation, lack of fair competition, lack of voice or an unstable policy environment, growth and poverty reduction are likely to suffer. Typically, donors first fund business environment analyses, such as the World Bank's Doing Business Reports
, identifying the major constraints to business growth. They then work with government and other stakeholders to implement reforms. Further information on business environment reform programmes can be found on the DCED's free online database, Business-Environment.org.
The private sector itself can play an important role in advocating for a better business environment. Many development agencies thus work to strengthen the capacity of businesses and business associations to engage in public-private dialogue
for the DCED's Business Environment database
for the Public-Private Dialogue resource website
Measuring the Results of Private Sector Development
Among other things, building vibrant private enterprises creates new
jobs and new income in the developing world. PSD programmes are under
pressure to measure such achievements in ways that are both credible and
practical. With this in mind, the DCED has developed a Standard for results measurement
which specifies the essential elements required to measure results. The DCED also holds further information about methodologies for measuring the results of PSD, including the approaches currently used by different donors.
for information about the DCED Standard for Results Measurement
for further information about results measurement methodologies in Private Sector Development
Private Sector Development in Conflict-Affected Environments
Conflict presents unique challenges and unique opportunities for Private Sector Development. One the one hand, conflict disrupts the regular functioning of markets and in their place creates a war economy. PSD practitioners must be sensitive to the impact of their activities on the conflict situation, e.g. PSD's effects on the distribution of resources. On the other hand, by delivering job creation and trade, Private Sector Development frequently plays a vital role in peacebuilding. Information on this topic from a wide range of sources is available on the DCED's Introductory Resources page
, as well as our more comprehensive library of resources on PSD in Conflict-Affected Environments
, organised by theme.
for the DCED's knowledge page on PSD in CAE
Value Chain Development and Strengthening Business Linkages
A value chain is a series of activities that enterprises undertake when they produce a good or service, adding value to the inputs at each stage. Value Chain Development thus seeks to maximise the value of any given type of product, whilst incurring the least possible cost to the producers, in the places along the production chain that give the most benefit to poor people. One way is to improve production processes. Another way is to increase the commercial linkages between the businesses that poor people own or work for, and businesses that can offer them new and more profitable opportunities as customers or suppliers. The DCED holds a large volume of information on programmes and approaches for Value Chain Development and Business Linkages in its online database Value-Chains.org.
for the DCED's database on Value Chains
Business Development Services (BDS)
This approach seeks to build markets in services that improve the performance of individual enterprises. Some of the most important BDS markets are in training, consultancy, marketing, market information, information technology and technology transfer. For many within the development community, donors should ideally not undertake BDS directly; instead they should facilitate commercial BDS providers to be self-sustaining, through the improvement of their techniques and the sourcing of new clients,. BDS markets can be sustainable where providers recover their costs via the fees they charge for services. A key source of further information on BDS is the DCED's online resource database.
for the DCED's resource database on BDS
Making Markets Work for the Poor (M4P)
This approach aims to understand how poor people interact with market systems, and how these systems can be changed to improve their lives. It aims for large-scale, sustainable impact by focusing on overall markets, rather than targeting individual actors within that market. In this sense, an M4P programme may incorporate various elements of value chain development, BDS and/ or business environment reform. Donors that have pioneered the M4P approach include the UK's Department for International Development (DFID), the Swedish International Development and Cooperation Agency (Sida) and the Swiss Agency for Development and Cooperation (SDC).
for links to key resources on Making Markets Work for the Poor
Women's Entrepreneurship Development (WED)
In many parts of the developing world,
women are systematically excluded from business opportunities.
Discrimination can disadvantage women in their access to the knowledge
and skills needed to be successful in business. At the same time, laws
that disadvantage women in gaining access to property can make it hard
for women to raise the necessary capital. Many donors actively support
programmes that help women to overcome these and other barriers.
for the DCED's webpage on Women's Entrepreneurship Development
We need the active participation of the private sector if we are to tackle perhaps the greatest challenge of our time: mitigating and adapting to climate change
on the one hand, whilst reducing poverty on the other. Greater environmental sustainability requires new products, new markets and new production methods. Meeting these demands will be a challenge, but for many enterprises in the developing world, it also presents an opportunity. In fact investment in greening our economies is already a source of growth for many. DCED members are increasingly active in promoting private sector contributions to Green Growth,
supporting mitigation and adaptation in ways that benefit the world's poor.
for the DCED's webpage on Green Growth
Many development agencies are now working directly with businesses to deliver development impacts. Such partnerships cover a wide range of activities. One increasingly common approach is to create a Challenge Fund, whereby companies bid for donor funding, competing to maximise the development impact of the grant money made available. The DCED holds some further information on Public-Private Partnerships (PPP), including links to the various PPP mechanisms of member agencies, and a directory of PPP programmes for businesses. Meanwhile, Business Fights Poverty
provides an important forum for companies interested in development work.
for the DCED's Public-Private Partnerships webpage
Industrial policy is broadly defined as government intervention to promote a specific economic sector. It may target manufacturing, agricultural or services sectors. If and how donors should promote industrial policy is much debated in development circles. The DCED's webpage on the theme explores some of these debates and provides links to relevant resources.
for the DCED's Industrial Policy webpage
In the context of private sector development, innovation is considered as a commercially successful introduction or implementation of a new or improved product or process. It is often regarded as a key factor in raising the productivity and competitiveness of enterprises. Innovation policy generally focuses on strengthening innovation systems, i.e. the interaction between companies, research organisations and the state in generating innovation. This is done by increasing the capacities of individual actors in generating, applying and implementing knowledge, as well as their capacities for interaction. More information, and a list of relevant resources on the theme can be found on the DCED's Innovation Policy webpage.
for the DCED's Innovation Policy webpage
Local Economic Development (LED) and Clusters
LED typically starts by analysing the
economy of a particular region or municipality, identifying
opportunities to enhance its prospects. LED strategies may combine any
of the following: business environment reform, value chain development,
infrastructure development, innovation and technology policy, planning
and/ or skills development. LED programmes often involve local and
regional governments, the private sector and civil society in programme
design and implementation. LEDknowledge.org
has a range of publications on Local Economic Development. Cluster development refers to specific kind of LED strategies which focus
on encouraging and supporting sectoral (and geographic) agglomerations
of inter-connected companies, services and institutions.
for the DCED's webpage on Local Economic Development and Clusters
Building on the commitments made by political leaders and heads of development agencies at Paris and Accra
, PSD practitioners are taking coordinated steps to improve their overall effectiveness. Firstly, agencies are giving greater priority to the development strategies put forward by developing countries themselves. Donors are also seeking to improve their coordination, simplifying procedures and sharing information in order to avoid duplication. Greater emphasis is also being placed on measuring and managing for results. Finally, efforts are being made to ensure mutual accountability between development agencies and local partners. The Aid Effectiveness agenda is carried forward both by staff at head offices, and by various Country Groups
in the field.
for the DCED's overview of publications on aid effectiveness
for the DCED's webpages on PSD Donor Groups at country level
Private Sector Development Following the Financial Crisis
The global financial crisis has had a devastating impact on developing countries. For many people, it has also raised questions about the ways in which markets should be regulated in order to ensure long-term, sustainable development. At the same time, with many countries now faced with slower growth and higher unemployment, reviving economies by kick-starting the private sector is seen by many as at the heart of a global response. The DCED has compiled a list of resources on Private Sector Development and the Financial Crisis, which can be accessed here.
for a list of resources on Private Sector Development and the Financial Crisis
Access to finance
Access to finance is vitally important to private enterprises in the developing world. While some development agencies therefore see it as part of Private Sector Development, the DCED among others treats it as a separate field in its own right. The Consultative Group to Assist the Poor (CGAP), which was originally part of the Donor Committee, is a leading source of information in the microfinance field.
for the Consultative Group to Assist the Poor (CGAP)