Private sector development

© GIZ/Dirk Ostermeier

Small private enterprises are the driving force behind economic development in developing countries. Their role must therefore be strengthened. German development cooperation is primarily concerned with promoting the private sector in partner countries in line with the guiding principle of social-ecological transformation of the economy.

The liberalisation of world trade has changed the framework conditions for economic development in developing and emerging countries. Production, trade and investment are increasingly integrated into global value and supply chains.

The traditional competitive advantages of developing countries – low wages and natural resources – are no longer sufficient to prevail against international competition. Developing and newly industrialising countries must build up new strengths and score points with special offers in production and service.

Such offerings can only be developed in a dynamic, efficient and competitive private sector. In many developing and emerging countries, more than 90 per cent of private enterprises are small and medium-sized enterprises. They are the ones that provide employment and income as well as offer innovative products and services. Small and medium-sized private enterprises thus lay the foundations for the sustainable development of national economies.

The better the private sector develops in the partner countries, the easier it is to achieve development policy goals. This is because the state can use the tax revenue from entrepreneurial activity to finance social expenditure, for example.

GIZ supports a dynamic private sector in partner countries that enables economic participation for all people, especially women and other disadvantaged groups, and contributes to the decarbonisation of the economy. This can stimulate broad-based and sustainable growth. For example, GIZ strengthens micro and small enterprises, promotes business relationships with international medium-sized and large companies and supports companies in GIZ partner countries in introducing and complying with social and environmental standards. Resource-efficient production is essential to ensure that companies comply with environmental and climate targets and avoid negative impacts on local people and production conditions.

German development co-operation cooperates with large companies from the partner countries, from Germany or other countries to promote small businesses. The aim is to combine the innovative strength of the economy with the resources, knowledge and experience of international cooperation. This creates more jobs, local small businesses benefit from technology transfer, new markets are created and local value creation is improved.

GIZ works at three levels to promote the private sector:

  • Policy level - We advise our partner countries on the development and implementation of suitable regulatory frameworks and government support programmes for small and medium-sized enterprises in order to improve the business environment.
  • Ecosystem level - We advise our partner countries on strengthening entrepreneurial ecosystems and support service providers and intermediaries in improving support programmes for small and medium-sized enterprises and start-ups.
  • Enterprise level - At enterprise level, we promote the development and strengthening of sustainable and innovative business models through direct training and advice.

The economic empowerment of women and other vulnerable groups, environmental sustainability and the digital transformation of the economy