This page summarises some of the published PSD strategies (as
hyperlinked). The strategies do not necessarily represent fully what the agency
is actually doing in the field, particularly in agencies where decision-making
is either decentralised and/or largely made with or by partner governments. The
Note is intended as a resource for DCED members engaged in strategy
formulation; the summaries have not been reviewed by the agencies referred to.
Danida,
Business Growth and Development: Action
Programme for Danish Support to Private Sector Development in the Developing
Countries, 2006
Danida intervenes primarily at the policy level. Through
its investment climate programmes, the agency strives to update private sector
legislation, improve both company registration and customs processing, and make
corporate taxation more transparent. Similarly, Danida supports land titling
for the poor and instruments to speed up the handling of commercial disputes.
At the sector and enterprise levels, most of Danida’s PSD
work is in capacity development, business development services, training and
supply chain development. The agency also engages in infrastructure development
and finance. Going forward, Denmark
intends to give greater support to microfinance, and to leverage more Danish
and multilateral investment capital in its projects. Danida is looking to
incorporate PSD into other programme areas, notably agriculture, education
(training and materials) and healthcare (affordable medicines). Overall, PSD
has gained a higher profile in Danida following the report
of the Danish-led Africa Commission.
DFID
Private Sector Development Strategy – Prosperity
for all: making markets work, 2008
DFID’s PSD portfolio focuses on
areas in which it sees itself as having a comparative advantage: market
development, public-private partnerships, research and policy development. DFID
also supports business environment reform, where among other things it
contributes to the Investment Climate
Facility. DFID uses challenge funds (as does AusAID), along
with transparency initiatives and multilateral infrastructure facilities, to
engage directly with private sector actors.
DFID is reducing its funding for
microfinance. In addition, the Department is slimming its support for business
development services, opting instead for systemic ‘inclusive market
development’ interventions. Central to DFID new approach is the concept of
‘Making Markets Work Better for the Poor’ (M4P). M4P can involve growth
analytics, value chain development, investment climate reform, trade
facilitation, access to finance and land titling. In 2008, DFID had nine M4P
programmes in six countries.
GTZ, The Social and Ecological Market Economy – A
Model for Asian Development?, 2008
Germany’s Development Cooperation
is underpinned by the country’s unique development model. GTZ
defines the Social and Ecological Market Economy as ‘an open market economy
with in-built social security factors’. GTZ specialises in areas where the
German model has developed a leading edge, such as the strengthening of
national competition policies. Likewise, GTZ assists governments to actively
develop specific sectors, regions or localities where improved coordination,
innovation or inputs could unlock dynamic growth.
Business environment reform and
business development services are important parts of GTZ’s PSD programmes.
While many donors have separate programmes for value chain and business
environment interventions, GTZ tends to favour their integration. Increasingly, GTZ also integrates ecological
concerns into PSD, for example by helping enterprises to access carbon markets.
IFC,
Creating Opportunities for Small Business,
2007
IFC utilises its experience as an investor and provider of
business advisory services to support PSD in four ways. Firstly, IFC
collaborates with other World Bank agencies to improve the business environment
in partner countries. Within business environment reform (BER), IFC specialises
in regulatory simplification, alternative dispute resolution and investment
policy promotion. Secondly, IFC helps
SMEs and private sector-led infrastructure projects to access finance.
Thirdly, IFC promotes access to markets, business skills and
information. The agency’s SME Toolkit and Business
Edge
training packages have been rolled out extensively. The fourth area of IFC’s
engagement with PSD is what the agency calls ‘creating new opportunities
through innovation’. This includes the supply of credit to promote sustainable
business practices, technology transfer and the development of green sectors.
Results measurement is a priority at IFC, where standardised indicators have
recently been created to enable comparison across projects and the aggregation
of results.
Inter-American
Development Bank, Private Sector Development Strategy, 2004
IADB’s PSD Strategy has several notable features. Firstly, the
strategy focuses above all on business environment reform (BER). Secondly, IADB
channels a lot of its assistance to SMEs and disadvantaged ethnic groups.
Thirdly, IADB uses a broad range of instruments to deliver PSD. These include
technical assistance, guarantees, loans and investment facilities.
Alongside BER, IADB also intervenes at firm and sector level.
The Bank promotes business clusters, training, technology and innovation, and
quality enhancement. Similarly, IADB supports the private provision of
financial and business services to poor and disadvantaged entrepreneurs. IADB
also supports forums that foster public-private dialogue.
ILO,
The Promotion of Sustainable Enterprises,
2007
Generation of Decent
Work is the over-arching goal of ILO’s PSD Strategy. To achieve it, ILO
views research as fundamental. The organisation designs and delivers training
courses to shares its research findings, and also uses local media for
dissemination. Prominent research themes include entrepreneurship development,
the investment climate, the labour market, value chains, gender, finance and
better workplace practices.
On the ground, ILO sees
public-private dialogue as important to PSD. The organisation aims to leverage
its tripartite structure to promote PPD. ILO also supports Local Economic
Development, where sets of interventions enable a region to develop new or
existing comparative advantages. ILO specifically seeks to support the various
stakeholders in the production process, not just entrepreneurs. This means that
job creation, social and environmental considerations are often emphasised.
Netherlands
Ministry of Foreign Affairs, Results in
Development: Report 2007-2008;
Ministry of Foreign
Affairs, Private Sector Development: the
key to economic growth, 2007
Ministry
of Foreign Affairs, Our Common Concern:
Investing in a Changing World (Policy Note on Dutch Development Cooperation
2007-2011), 2007
The Netherlands Ministry of
Foreign Affairs (MoFA), which oversees Dutch development cooperation, channels
most of its PSD support through non-governmental organisations, multilaterals
and multi-donor initiatives. The NGOs work mainly on market (value) chain
development, access to finance, advocacy, business skills and vocational
training. Multilaterals and multi-donor initiatives also play an important role
in The Netherlands’ PSD strategy, as do partnerships with the Dutch private
sector. Meanwhile, Dutch embassies work directly with partner governments to
improve the regulatory environment for business.
Across the various areas of
intervention, special emphasis is placed on support to disadvantaged groups and
regions. Fragile states have become a focal point of Dutch PSD efforts. Among
other things, the MoFA facilitates Dutch companies in making pro-poor
investments in conflict affected countries. Where partner governments have a
weak record of engagement with the private sector, the MoFA works to strengthen
domestic employers’, producers’ and workers’ organisations. Also within the
Dutch PSD portfolio are a number of substantial infrastructure development
programmes.
NZAID,
Economic Growth and Livelihoods: towards
a safe and just world, 2008
NZAID is primarily active in the
Pacific region, but also works in Asia, Latin America and Southern Africa. The
agency typically integrates PSD with its support for macroeconomic
reforms. Through regional and multilateral
organisations, the agency promotes legal, regulatory and investment environment
reform in partner countries. In its Pacific partner countries, NZAID also
supports the provision of key economic infrastructure. Here the agency remains
sceptical about direct private sector provision, however, given the limited
scope for competition in small markets.
NZAID promotes the Making Markets
Work for the Poor (M4P) and Livelihoods approaches. Among other things, New
Zealand’s M4P programmes strengthen producer associations, improve research and
extension services and build public-private development partnerships. NZAID
also supports training colleges and small business support schemes, centres and
facilities. Food security is another key concern. NZAID addresses food security
by aiming to raise quality and productivity in agricultural value chains.
OECD,
Accelerating Pro-Poor Growth through Support for Private Sector Development,
2004
This OECD report seeks to reconcile theories about whether
growth or direct poverty reduction should be the primary focus of PSD. At the
same time, it advocates a move away from enterprise level interventions,
towards systemic ones.
The report views institutions as essential to pro-poor
growth. A number of its key recommendations (e.g. ‘provide incentives for
entrepreneurship and investment’, ‘reduce risk and vulnerability’) reflect
this. Knowledge about business, access to markets and trade capacity are also
viewed as important to pro-poor growth. In addition, the report sees poor
people’s access to finance and insurance, and to the social services and
institutions that reduce risk, as essential.
SECO,
Private Sector Development: Towards
better access to finance and business conditions for the private sector,
2007
SECO works
on PSD in around twenty countries, most of which are middle-income. SECO’s PSD interventions cover three areas:
business environment reform, access to finance and direct support for SMEs
(technical assistance and capacity building). Many of SECO’s activities are
conducted in partnership; key partners include IFC, EBRD, FIAS, FUNDES,
Swisscontact and SDC. The Private
Sector Development division is one of four constituents of SECO’s Economic
Cooperation and Development Directorate. The others focus on infrastructure
financing, macroeconomic support and trade promotion.
Sida,
Making Markets Work for the Poor: Challenges to Sida’s Support for Private
Sector Development, October 2003
Sida,
Policy Guidelines for Sida’s Support to Private Sector Development, October
2004
Sida’s
Portfolio within Private Sector Development, April 2008
Sida’s Disbursements to Market Development, May 2009
Sida’s approach to PSD is strongly influenced by Making
Markets Work for the Poor (M4P). Within they agency’s PSD portfolio, business
environment reform is the largest component. BER represented 46% of PSD expenditure
in 2007. In the same year, 42% was dedicated to strengthening value chains,
business development services and business organisations. Meanwhile, 10% was
allocated to employment and labour market development activities.
Geographically, Sida’s main focus is on Africa. The second
largest regional portfolio is that of Europe. Within Sida, PSD is led by the
Department of Infrastructure and Economic Cooperation. That said, the agency
aims to integrate PSD across departments and sectors. Sida also operates
partnerships, notably with the Swedish workers’ and employers’ organisations,
which come together to share Sweden’s unique experience in public-private
dialogue.
Spanish Ministry of Foreign
Affairs and Cooperation – Sector Strategy
Document: Promoting the Economy and Enterprise (Promoción del Tejido
Económico y Empresarial), Version 6, March 2008
The Spanish MoFAC
seeks to generate pro-poor growth in its partner countries by promoting access
to markets, finance, assets and employment. Spanish PSD programmes fall broadly
into three categories. These are Institutional Change, Economic and Enterprise
initiatives, and Public-Private Partnerships.
Institutional Change aims to
improve partner countries’ legal and regulatory systems, and to increase the
formalisation of businesses. Economic and Enterprise Initiatives include
business development services, business linkages, infrastructure, training,
technology transfer and women’s entrepreneurship. Through public-private
partnerships, the Ministry seeks to involve private sector actors in
development, and to foster constructive dialogue between states and enterprises
in partner countries.
The Spanish PSD strategy also
emphasises the role of social enterprise in poverty reduction. Support for Fair
Trade and for cooperatives is evident. Spain also contributes to multilaterals
involved in PSD, including the World Bank, IADB and several UN agencies.
UNDP,
Fast Facts: UNDP and the Private Sector,
2008
Leveraging
its outreach and research capacity, UNDP’s Private Sector Division encourages
businesses to invest in ways that serve the poor. The Growing Inclusive Markets initiative creates information products that demonstrate
how entrepreneurs can do business with the poor and combine profit with poverty
reduction. Meanwhile, the Growing Sustainable Business initiative assists with
feasibility studies, training and technical assistance to selected public-private
development partnerships. The Global Compact and the Business
Call to Action
are two related initiatives, also facilitated by UNDP.
In
addition, UNDP advises governments looking to improve their business enabling
environment. UNDP also operates market development programmes. As part of the
UNDP’s response to climate change, the Private Sector Division works to build
developing countries’ capacity to draw upon carbon markets for clean energy
development and sustainable land use practices.
UNIDO, Programme and Budgets 2010-2011, 2009
UNIDO’s approach to PSD includes
support for business environment reform, entrepreneurship, clusters and value
chain development. Equally, UNIDO engages in innovation and technology
promotion, human security and post-crisis rehabilitation. Where UNIDO is
distinct is in its level of engagement with industrial policy design.
The emphasis that UNIDO places on
each type of intervention varies substantially by region. In Africa, industrial
policy is arguably UNIDO’s central concern. In the Arab region meanwhile, job
creation and women’s entrepreneurship are particularly important. In Asia and
the Pacific, the business enabling environment is among UNIDO’s top priorities.
In the transition economies of Europe, policies to encourage diversification
take precedence. In Latin America, the promotion of SME clusters features among
UNIDO’s key interventions.
USAID, Securing the Future: A Strategy for
Economic Growth, 2008
USAID,
Microenterprise Results Reporting: Annual
Report to Congress FY 2008, 2009
Business environment reform is central to PSD at USAID. The agency
also conducts numerous “bottom-up” value chain interventions, contracting third
parties as implementers. Rebuilding the private sector in areas affected by
conflict has also emerged as a USAID priority, as has the harnessing of PSD for
improved food security.
USAID sees itself as a natural
leader in PSD: “Among donor programs that promote
private-sector-led economic growth, USAID has the strongest orientation toward
the private sector”. More specifically, USAID sees the size and relatively low turnover
of its in-country staff as a comparative advantage, along with its use
of grant funding.
PSD at USAID is carried out by
the Bureau of Economic Growth, Agriculture and Trade (EGAT).
Within EGAT, PSD is shared mainly among three Departments: Business
Enabling Environment, Microenterprise
Development and Enterprise
Development.