Human Rights and Private Sector Development: A Discussion Paper

Heather Gibb, John Foster, Ann Weston


How can development organisations integrate a rights-based approach (RBA) into private sector development (PSD) initiatives? While RBAs have historically been part of the good governance agenda, donor agencies have recently been exploring the possibilities for integrating human rights into economic development. This study by The North-South Institute suggests that future research needs to bring together the experiences of donor agencies, financial institutions and NGOs who have attempted to integrate rights with PSD. The role of the state and of transnational corporations in rights-based PSD needs to be more clearly defined.

Human rights standards relevant to private sector development strategies are set out in the International Bill of Human Rights (the Covenants) and other key UN conventions including CEDAW, and the ILO conventions. Commentaries on these conventions, as well as the work of the UN Secretary-General’s Special Advisor on human rights and transnational corporations and other businesses, provide guidance as to the content of rights.

In 1989 the UN Declaration on the Right to Development merged human rights and development agendas by determining that poverty is a violation of core rights. Following this, the 2003 UN Common Understanding provided an operationalised framework for the mainstreaming of human rights advocacy into the official development agendas of donor organisations.  However, there is a marked lack of a systematic method of rationalising a RBA with economic growth initiatives, particularly with relation to PSD.

While many agree that economic growth is the key to poverty reduction, there are different views about what kind of growth donor organisations should pursue. Moreover, RBAs broaden development agendas by focusing initiatives on the process of changing existing power structures. Programmatic RBA designs focus on issues such as holding governments to account for rights enforcement, ensuring meaningful, inclusive participation and developing mechanisms for addressing and redressing rights issues. 

Research on the RBA approaches to PSD taken by 10 major donor organisations, international financial institutions (IFIs) and civil society organisations (CSOs) reveals the lack of a unified and cohesive framework. Importantly:

  • Donor agencies’ PSD activities include macroeconomic strategies, governance issues, and policy, legal and regulatory frameworks. They also focus on promoting entrepreneurship at the grassroots level through microfinance, community-based development initiatives, and social entrepreneurship. Donors’ approaches to RBAs for PSD tend to reflect their own national experiences in terms of social attitudes, value systems and norms.
  • IFIs and CSOs are more likely to support PSD through macro, meso, and micro level interventions. These include creating a business-enabling environment, improving value chains, and providing business development services.
  • There is wide disagreement about the role and responsibilities of the state in PSD.

Policymakers need to recognise the need for a cohesive framework to connect PSD to rights-based development. Future research should focus on issues such as:

  • Monitoring of both outcomes and processes by international organisations and governments. This reveals a need for indicators for PSD projects to facilitate project monitoring and evaluation.
  • Providing resources to countries with capacity gaps to increase their ability to enforce laws that protect human rights.
  • Defining the role of the state and other actors in rights-based PSD.  This should involve defining the obligations of transnational corporations involved in communities in the host country.
  • Using internal organisational capacity building to develop a clear organisational message and codify long-term expectations.


Gibb, H., Foster, J. and Weston, A., 2008, 'Human Rights and Private Sector Development: A Discussion Paper', The North-South Institute, Ottawa