Helpdesk

Question
Engaging Private Sector Actors in Delivering Development: Please identify best practice, advantages /disadvantages and lessons learned from the different approaches bilateral (and multilateral if necessary) donors use to engage private sector actors in delivering development. Approaches we are particularly interested in include; enterprise challenge funds, Markets for the Poor (M4P) and the M-PESA program in Kenya.

Helpdesk response
Key findings: Donors, both bilateral and multilateral, are using a range of creative approaches to encourage private sector actors to participate and invest in activities that help deliver development. Donor initiatives that engage private sector actors can help to provide better quality jobs, goods and services, and can innovative solutions to development challenges. However, more monitoring and evaluation is needed to measure the effectiveness and impact of such approaches, such as the distributional impact among poor groups.

In terms of best practice, seven 'leversā€˜ have been identified (Ashley, 2009) that can be used to harness core business for delivering development. These levers are: R&D/technology, retail/market development, distribution networks, employment, supply chain and subcontractors, investment/construction, and government contribution.

Donors need to treat private sector engagement as a high risk but essential investment. They need a healthy tolerance for failure and the flexibility to accommodate innovative and experimental ideas. An exit strategy that allows ownership by the public and private sector entities themselves is also important.

Full response: http://www.gsdrc.org/docs/open/HD748.pdf



Date query received by the Helpdesk: 16 February 2011

Enquirer:
Australian Government