PSD in a changing global aid context

The context for traditional aid and development is rapidly changing with dramatic cuts to aid budgets, shifting aid priorities, widespread fragility, and increasingly unpredictable economic and trade policies globally. Beyond the reduction in financial support through traditional aid channels it is difficult to predict the precise impacts from these changes. There will be winners and losers based on economic sectors and geographies. Despite the valid concerns especially for the most vulnerable communities, it is critical for donor agencies supporting Private Sector Development (PSD) to understand and seize opportunities to keep PSD high up on political agendas and shape PSD efforts in light of new challenges and opportunities.

Read more: Why PSD remains a cornerstone of development in a changing aid context

  • Widespread budget cuts mean that the private sector is essential for addressing increasingly complex development agendas.
  • There is a growing realisation of the need for commercial finance for development, but that mobilising SME finance for emerging and frontier markets requires PSD-supported market creation activities.
  • There is a new ambition to align PSD with domestic benefits for donor countries. Implemented well, PSD can offer a route towards mutual economic and other benefits for donor and developing countries.
  • Fragility is the new development reality. PSD is essential to help economies recover from conflict and climate shocks, and provide long-term economic prospects to affected populations.
  • Preparing for an environmentally sustainable future for all requires private investment in innovative practices and technology at scale.
  • Inclusion is under growing pressure but remains a proven lever of sustainable growth; PSD can be a key tool to integrate and empower marginalised groups in economic systems

The DCED provides a space for funders and other development partners to learn from each other and define effective ways for navigating this new aid landscape – through its Working Groups, website, online and in-person events.

This webpage gathers resources on the various emerging strategic shifts in (private sector) development. It is being regularly updated to feature emerging analyses and thinking on the topic.

Contents

Future of aid and how donors might respond to the changing global context

The case for aid 

Aid priorities in a changing world

New approaches to address changing priorities

Ending engagement

 

Developing the private sector in challenging environments, including Ukraine

Role of the private sector in Ukraine’s reconstruction

PSD approaches in severely fragile and forced displacement contexts

For more resources on this topic, please also see the DCED’s dedicated pages on PSD in fragile and Forcibly Displaced Persons (FDP) contexts.

Working in challenging political authorising environments

Africa in a changing global context

New policy and partnership priorities for growth in Africa

Opportunities for African trade

Mobilising finance for development

Where have we got to and where might additional resources come from?

Donor – DFI collaboration

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