Why should Private Sector Development (PSD) be a core element of development strategies? Ultimately, the purpose of development aid is the ‘graduation’ from foreign assistance altogether. This is only possible where poor people earn a better living within their own economy, without the risk of depending on outsiders for continuous assistance.

By providing the poor with the capacity to find jobs and improve their incomes, PSD lays the foundation for their exit from charity. In addition, a growing private sector will ultimately enable governments in developing countries to generate the tax revenues needed to emulate government provision in more wealthy countries – of health care, education etc.

This is why aid agencies and governments are committed to working with and through the private sector as a key element of their development strategies.

In this area of the website, you can find successful examples and evidence in support of a strategic focus on private sector development and engagement in development cooperation.

^{Photo credit: Raj Kumar Das}