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Evidence of Impact


Photographs courtesy of Chandan Dey, Charles Bodwell, Martin Edstrom, Russel Brott, Denny Herlambang

This webpage offers an overview of case studies reporting the value and benefits of Private Sector Development (PSD) for wider development goals. They not only provide lessons on what kind of interventions seem to have worked well, but also underscore the great potential of the private sector to improve the living conditions of the poor by creating jobs and income at scale.

Below, PSD programmes reporting success are classified by five main areas of intervention; some of them comprise a combination of different interventions.

Business Environment Reforms
Value Chain Development
Business Development Services and Financial Services
Public-Private Partnerships
Technology

Business Environment Reforms

The new Enterprise Law in Vietnam [The following information has been taken from UNDP.]
Vietnamese entrepreneurs used to face several hundreds of regulations, which made it difficult, if not impossible to start up a business, to create incomes and jobs. For example, businesspeople had to file a huge amount of paperwork to receive licenses, which in turn provided many opportunities for public officials to collect fees.
What has been done? UNDP, with financial support from Australia, provided technical and other support to the Vietnamese Parliament in drafting and implementing a new Enterprise Law. Enacted back in 2000, this law has helped to ease some of the key difficulties related to starting and operating a business.
What has been achieved? By 2003, the new Enterprise Law had already resulted in the registration of 55,000 new businesses, an increase of more than 350%. The new improved law led to the creation of more than one million jobs, and according to some estimates, to a continued creation of about 750,000 jobs per year. (more information).

Simplification of Business Registration in Peru [The following information has been taken from CIPE.]
In the 1980s, about 314,000 people in Lima's poor neighbourhoods depended on informal street vending. Informality involved high costs due to insecurity and the threat of eviction, yet the benefits of remaining informal remained compelling as the costs of accessing the formal sector were kept excessively high.
What has been done? The Institute for Liberty and Democracy (ILD) in Peru, in cooperation with the Center for International Enterprise (CIPE), implemented various activities to  allow poor entrepreneurs to enter the formal economy. Most importantly, it pushed the government to the create a Unified Business Registry in 1990.
What has been achieved? The new registry coordinated the procedures of different agencies under one roof and drastically reduced national registration requirements. Between 1991 and 1994 alone, 382,100 new business were registered. The registered businesses saved the Peruvian economy $692.5 billion and created 577,770 new jobs in the formal sector. Meanwhile government tax revenues increased by $1.2 billion. (more information)

Reforming Business Inspections in Uzbekistan [The following information has been taken from IFC.]
Business inspection systems represent a critical element of the business enabling environment. In Uzbekistan, the business inspection system used to hamper business activity through an excessive number of controls, regardless of the firm's risk to the environment or society, taking up nearly 14 days a year; intransparent inspection processes; a high level of fines and discretionary rights of inspectors to impose them and shut down businesses.
What has been done? Since 2003, IFC's Small and Medium Enterprise (SME) Policy Project, with funding from SECO, has championed reforms to reduce the number of inspections incurred by firms, and to educate firms about how to manage inspections.
What has been achieved? As a result of the project, businesses in Uzbekistan were able to save an estimated $21 million (net additional income), mainly from avoiding shutdowns for minor infractions. (more information)

Hydropower generation in Nepal [The following information has been taken from USAID.]
Nepal used to harness less than one percent of its potential hydropower energy and the country depends on biofuels for power generation, with serious consequences for the environment. However, biofuels have bot been sufficient to meet the country's energy demand.
What has been done? USAID has encouraged socially and environmentally sustainable hydropower generation by creating friendly conditions for policy reform, good governance and private sector development.
What has been achieved? Following new private investments into hydropower, access to electricity has 13 to 18 percent of the population, reaching 1.15 million more Nepalese. (more information)

Alternative Dispute Resolution in Serbia and Bosnia Herzegovia [The following information has been taken from IFC.]
In Serbia and Bosnia Herzegovina, regular judicial proceedings are a time-consuming and expensive way of dealing with commercial disputes, especially for smaller businesses.  While commercial mediation allows for a faster and cheaper resolution, unblocking assets previously caught  up in litigation, no such form of alternative dispute resolution used to exist in these countries.
 What has been done? Since 2003, IFC has supported the training and marketing of commercial dispute mediatiors in Bosnia and in Serbia. At the same time, IFC provided technical assistance to the drafting of Alternative Dispute Resolution legislation. IFC has helped to set up mediation centres and trained hundreds of people in mediation techniques.
What has been achieved? By 2006, about 4,500 mediations have been held. These mediation processes have reduced the backlog of cases at court and released $61 million to local businesses. (more information)

Value Chain Development

Kenya Maize Development Program [The following information has been taken from ACDI-VOCA.]
Maize is a staple food for millions of Kenyans. Yet inefficient maize production and marketing have led to some of the highest maize prices in Sub-Saharan Africa, a critical factor in perpetuating poverty in Kenya.
What has been done? The USAID-funded Kenya Maize Development Programme (KMDP) was set up in 2002 to improve household incomes by raising maize farmers' productivity, improving the effectiveness of smallholders' organisations, and increasing access to agricultural markets and business support services. The programme facilitated training for farmers, promotied bulk purchases and marketing through smallholder groups, established linkages with private sector business development services and set up market information centres.
What has been achieved? Among other things, KMPD's activities helped to increase the income of 370,000 smallholder farmers by $206 million. 30% of these were women. (more information)

 The Katalyst Programme in Bangladesh [The following information has been taken from Katalyst and DFID.]
Poor people in Bangladesh have very few income generation opportunities, especially in rural areas. This is partly related to a lack of skills and low productivity, limited access to market information and poor marketing, as well as an unconducive policy environment for doing business.
What has been done? Katalyst (funded by DFID, SDC, Sida) boosts jobs and incomes in sectors that have particular relevance for the poor and hold high growth potential. Katalyst, for example, promotes innovation and skills development in fish farming, works with rural information centers to provide services and brings together media and marketing businesses to provide improve poor businesspeople's marketing skills. In addition, the programme also supports businesses to dialogue more effectively with government, with a view to improve the overall policy environment for business. 
What has been achieved? In its first phase (2003-2008) alone, Katalyst created almost 200,000 jobs. Furthermore, the programme increased the income of 700,000 farmers and local enterprises, by at least $729 million. (more information: Katalyst and DFID PSD Strategy)

Horticulture Export Promotion in Ghana [The following information has been taken from CARE.]
Although export of fruit and vegetables provides jobs and incomes for thousands of people in Ghana, inefficiencies in the value chain structure are one of the key impediments to achieving export growth.
What has been done? The USAID-funded Trade and Investment Program for Competitive Export Economy (TIPCEE) aims to increase the productivity and earnings of smallholder farmers in the horticulture supply chain. To achieve this, it promotes policy reforms that increase the competitiveness of selected industries. Within the supply chain, TIPCEE focuses on quality standards, market linkages with exporters and production planning.
What has been achieved? The programme succeeded in increasing fruit and vegetable exports by $13 million in 2008, benefitting about 32,000 firms. (more information)
The Agribusiness Linkages Programme in Egypt [The following information has been taken from ACDI-VOCA.]
Lacking productivity due to inefficient technologies, poor access to credit and poor marketing strategies  causes many small- and medium scale enterprises in Egypts lifestock sector to be unable compete in the global economy.
What has been done? The Agribusiness Linkages (AgLink) Programme, funded by USAID, delivered technical assistance and training in technology transfer, marketing services and access to credit. It also facilitated strategic alliances between U.S. and Egyptian firms to promote technology transfer, trade and investment.
What has been achieved? AgLink's clients and beneficiaries adopted almost 17,000 new technolgies and established ongoing trade relationships. Over the life of the project,  AgLink helped to increase the income of core clients by $72 million and by $196 million for non-core clients. New technologies, increased standards, higher production levels also led to the creation of about 13,000 jobs. (more information)

The Enter-Growth Project in Sri Lanka [The following information has been taken from ILO.]
Sri Lanka's North Western and North Central provinces are two of the country's poorest, and were the most severely affected by the recent civil war. Despite a widespread lack of access to markets and business services for owners of small and medium enterprises (SMEs) and a generally unconducive policy environment, neither of the provinces had been targeted by market development programmes.
What has been done? ILO's Enterprise for Pro-Poor Growth (Enter-Growth) Project, funded by Sida, has  tackled sought to tackle obstacles facing SMEs, facilitating systemwide changes in sectors such as floriculture. Among other things, Enter-Growth provided training to service providers and established the national Tropical Floriculture Association which represents small-scale growers vis-á-vis the government.
What has been achieved? Between 2005 and 2009, Enter-Growth has succeeded in tripling the income of 16,400 enterprises and increased employment by 15% in targeted divisions. (more information)

Business Development Services (and Finance)

Business Development trough FM Radio in Uganda [The following information has been taken from the Springfield Centre.]
The rural poor in Uganda face numerous policy, legal, regulatory and administrative constraints that prevent them from improving their incomes from doing business.
What has been done? FIT Uganda, a Ugandan Development Company, together with the FIT SEMA Project of the ILO, has worked with Ugandan radio stations to establish small enterprise-focused radio programmes. By providing business information and creating support for policy reforms, these programmes aimed to tackle issues that hamper business operation.
What has been achieved? About 12 radio stations have started to broadcast at least one small business-focused programme due to FIT's activities. 7 million adults across the country listen regularly to the programmes, 96% of whom state that the information has benefited their businesses. Research suggests that, among other impacts, 25,000 farmers had increased their income by nearly 200% as a result of the programme.
(more information)

Entrepreneur Training in Vietnam (The following information has been taken from GTZ.)
Entrepreneurs in Vietnam often lack the skills and qualifications to run competitive businesses.
What has been done? In Vietnam, GTZ has trained local businesspeople in "Competency-based Economics through the Formation of Enterprises" (CEFE). The course aims to  reduce poverty in Vietnam by improving commercial and entrepreneurial skills, fostering competitive businesses and generating jobs.
What has been achieved? Overall, 11,000 people have been trained in CEFE, leading to the creation of 80,000 jobs. Moreover, all entrepreneurs participating in the training confirmed that their sales, income and profit had risen as a result. (more information)

Quality Coffee Production in Rwanda [The following information has been taken from USAID.]
In Rwanda, coffee was until recently the country's leading export.  During the 1990s, coffee became a less  dependable source of income for farmers, because low producer prices and a lack of premiums for quality coffee provided  no incentives for investment in coffee production. The lack of coffee washing stations in Rwanda also served to decrease the product's export value.
What has been done? Since 2000, USAID has been the principal funder of technical assistance, training and targeted financial support to premium quality coffee production in Rwanda.
What has been achieved? The efforts of the programme succeeded in doubling the income of 50,000 households working in coffee production, creating 4,000 jobs in newly-established coffee washing stations.  As additional money flows into rural areas because of the USAID programme, microcredit services have sprung up near washing stations and primary school enrolment has increased, as heads of households are now better able to afford school fees. (more information)

Business and Financial Services in Bulgaria [The following information has been taken from UNDP.]
The lack of business and financial services is a major obstacle to starting up and operating a business in Bulgaria.
What has been done? Since 2000, UNDP and the Bulgarian Government have helped budding entrepreneurs to access business and financial services, using local business centres and business incubators.
What has been achieved? The programme has led to the creation of almost 40,000 sustainable jobs and the establishment of 42 autonomous and financially viable business service organisations which have benefited about 26,000 entrepreneurs. (more information)

Economic Assistance to Internally Displaced Persons in Colombia [The following information has been taken from SEEP.]
Life is often extremely tough for internally-displaced persons in conflict-affected countries such as Colombia, while opportunities for a sustainable income are scarce.
What has been done? USAID, in cooperation with CHF International, has provided various services to microenterprises in order to improve the income-generating potential of internally displaced persons (IDPs) n Colombia. These services included training and job placements tailored to meet the needs of individual businesses, along with seed grants and access to credit.
What has been achieved? The programme helped create 35,000 jobs for IDPs and funded about 14,000 business plans. Two years after the end of the programme, 94% of these businesses were still in operation, indicating that the jobs created are likely to be sustainable. (more information)

Public-Private Partnerships

Mobile Industry in Kenya [The following information has been taken from Jack/Suri (2009).]
In much of Sub-Saharan Africa, access to both telephone and banking services is either inadequate, unreliable or non-existent. Until recently, just 2 million out of around 40 million Kenyans had access to banking services.
What has been done? Mobile phones have fast begun to reduce communication costs in many of African countries. DFID also quickly spotted their potential as an inexpensive way to transfer money across wide distances. It therefore co-funded the development of M-Pesa, Kenya's first mobile banking service, in partnership with Vodafone's Safaricom subsidiary. M-Pesa is a branchless banking system, which draws upon a network of thousands of local retailers who sell calling credit vouchers. By using the vouchers as a form of currency, the retailers effectively become the branch network. M-Pesa customers can send their deposited cash to a mobile phone user on any network.
What has been achieved? M-Pesa has obtained 9 million customers in only 3 years, most of whom had never previously had access to banking services. The M-Pesa network has directly led to the creation of 7,000 enterprises and 12,000 jobs in Kenya. The subsequent increase in access to financial services is also likely to have generated many jobs indirectly. (more information)

Cotton Production in Malawi [The following information has been taken from DFID.]
In 2003, poor quality and low cotton yields, market-distorting subsidies and high transport costs posed serious challenges to Malawi's cotton industry, threatening livelihoods and the economy. Increased yields and quality of cotton could be achieved, through improved inputs and training. Processors, however, were reluctant to provide them on credit, fearing that poor farmers would not be able to repay the loans.
What has been done? With funding through DFID's Business Linkages Challenge Fund,  a private-sector led initiative entitled the Malawi Cotton Seeding Treatment Programme (MCSTP), invested a grant of £295,000 to provide capital and training to poor farmers, thereby reducing the risk to processors providing business development services to smallholders on credit.
What has been achieved? Following the launch of the programme, Malawi's national crop production increased by 265% in just three years, enabling smallholder farmers to increase their income. significantly. The successful increase in productivity also spurred processors to invest in the sector with greater confidence. (more information)
Coca-Cola's Distribution Chain in East Africa [The following information has been taken from IFC.]
Although cooperation between multinational enterprises and local businesses in developing countries offers numerous benefits for both sides, it is an often neglected business opportunity.
What has been done? In 1999, Coca-Cola SABCO has launched an innovative delivery-scheme to integrate low-income entrepreneurs into its core business operations by employing them to bring Coca-Cola products to local vendors in small, hand-pushed carts. Supported by $37 million in IFC funding, this aimed not only boost Coca-Cola's share in the informal sector, which makes up a large share of East Africa's Economy, but also to create jobs and income for the poor.
What has been achieved? Together, IFC and Coca-Cola have created more than 12,000 jobs and $500 million in additional revenue in Ethiopia and Tanzania. Around 50,000 local people now rely on income from Coca-Cola's distribution chain. (more information)

Technology

Water Pumps for Agricultural Businesses in Sub-Saharan Africa [The following information has been taken from the World Bank.]
Agricultural productivity in Sub-Saharan Africa is among the lowest in the World. Output growth in the last decades has been achieved through expansion of the cropped area rather than improvements in productivity. This poses particular risks for food security as population growth surpasses production growth. At the same time, poor farmers are unable to afford  high-quality equipment, such as new techologies in irrigation, to increase their productivity.
What has been done? Starting in 1991, KickStart, a nonprofit social enterprise, has sold 130,000 human-powered irrigation pumps at low cost to farmers in Burkina Faso, Mali, Tanzania, Kenya and other countries. Kickstart's pumps have enabled these farmers to increase their productivity and improve their households' incomes.
What has been achieved? About 440,000 people moved out of poverty using KickStart irrigation pumps. At the same time, 87,000 small-scale agricultural enterprises have been created across the target countries. (more information)

Rural Micro-Irrigation Markets in Nepal [The following information has been taken from USAID.]
Donor assistance in conflict-affected environments, such as the western and mid-western districts of Nepal, often focuses on relief activities, neglecting efforts to promote longer-term social and economic development.
What has been done? By strengthening income-generation opportunities in agricultural sub-sectors, USAID's Smallholder Irrigation Market Initiative (SIMI) seeks to reduce poverty. SIMI focuses in particular on creating income opportunities  for the most disadvantaged members of conflict-affected communities, promoting low-cost micro-irrigation technologies and expanding sales and job oppportunities by developing the markets for high-value crops.
What has been achieved? The adoption of micro-irrigation systems has benefited 250,000 people and increased the income of 40,000 households by almost 100 percent. Moreover, 8200 jobs have been created. (more information)