Context
In many developing and emerging economies, private-sector economic activity remains weak due to relatively low levels of productivity and competitiveness. Consequently, potential contributions of the private sector to create productive employment and income opportunities as well as to reduce poverty are not realized.
In order to create employment and income opportunities, approaches for private sector development (PSD) aim to strengthen the productivity of economic actors. In particular productivity of micro, small and medium enterprises (MSMEs) are promoted, as MSMEs form the backbone of the economy. Thereby, PSD seeks to improve innovation capacities of private enterprises, enabling them to increase productivity and competitiveness and to scale positive effects of successful business models. Moreover, PSD fosters political, regulative and administrative frameworks which provide the necessary prerequisites to increase private investment and innovation.
Objective
Strategies and instruments of PSD are well positioned in national and international processes as well as in development co-operation, particularly within the context of the implementation of the Sustainable Development Goals (SDGs).
Approach
The sector project supports the Federal Ministry for Economic Cooperation and Development (BMZ) in positioning and advocating topics in PSD in international processes, such as the G20, the 2030 Agenda for Sustainable Development and the Donor Committee for Enterprise Development (DCED). The sector project places a particular focus on the development of PSD instruments in the area of green and inclusive business models and in refugee contexts. These instruments are implemented in German development co-operation projects, enabling development actors to respond to current challenges and needs of their target groups. The sector project prepares case studies and best practices in the field of PSD and makes them available to German as well as international private and public actors in development co-operation.
Impact
The sector project has been successful in developing approaches for innovation promotion, inclusive business models, green PSD and PSD in fragile contexts and in implementing them in numerous development co-operation projects.
An excellent positioning of approaches to inclusive business models was achieved: With the support of the sector project, over the past five years the BMZ has continuously advocated the topic of promoting inclusive business models in the G20 Development Agenda. Next to a Policy Note for members of the G20, the sector project supported the creation of a G20 Inclusive Business Policy Platform. These initiatives exerted a significant influence on the international dialogue: ‘Inclusive Business’ has become a key concept drawn upon and implemented by actors in international development co-operation.
Moreover, on behalf of the BMZ the sector project has successfully positioned several approaches within the donor network DCED. Case studies and good practices of the German development co-operation in the areas of green business development services and the promotion of sustainable value chains were included in the mapping and DCED guidelines on PSD. On the subject of inclusive business, a first DCED donor-wide scoping paper ‘How to create an enabling environment for inclusive business?’ was conducted.