The private sector as a development actor

“We recognize the central role of the private sector in advancing innovation, creating wealth, income and jobs, mobilizing domestic resources and in turn contributing to poverty reduction”. Busan Partnership for Effective Development Cooperation.

Donors have increased their engagement with the for-profit private sector to catalyse contributions to development objectives.

• The private sector may be a direct recipient of aid for their investments and activities such as subsidies and loans to SMEs;
• The private sector can be a contractor in implementing aid projects;
• The private sector can be a provider of aid-equivalent development resources in areas such as enterprise development, aid for trade, financial sector policy and investment climate reform;
• The private sector can be partners as in public-private partnerships to combine the strengths of different stakeholders.

However, a large agenda remains to draw lessons from past development experience with the private sector.

 

Evaluating support to private sector

Evaluating support to private sector development helps understand what works and what does not, and ensures accountability on the use of public ressources. But these evaluations can also help private sector entities demonstrate their contributions to development. Where consumers cannot be the evaluators because the market place does not function well, evaluators are there to help understand what works.

These evaluations also face specific challenges as private and public sectors rely on different drivers. Issues such as profitability, additionality, benefits for the host economy, job creation must be addressed by the evaluations.

Sharing evaluation findings should bring awareness among development agencies on the private sector potential.

 

First Network meeting on Evaluating support to private sector development in June 2013

In June 2013, the DAC Evaluation Network co-sponsored with IEG a workshop on “Evaluating support to private sector development”.

The participants agreed on the following conclusions:

• There is a relatively weak evidence base in areas such as development outcomes and effects on end-beneficiairies arising from SME financing and PPPs and efficiency.
• Increased collaboration with the private sector is necessary in order to improve measurement on development returns and its weight in the trade-offs with financial returns and risks; such measurements can then also be used as incentives for implementers.
• Standards to measure job creation are necessary.
• Approaches to assess additionalily of investments, and inclusive and green growth, should be developed.
• Further work and discussions are needed on methods and standards related to evaluation of private sector support .

 

Presentation of the Workshop on evaluating support to private sector development

 

 

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References: 

• IOB (2013), Public-Private Partnerships in developing countries, a literature review
• ITAD, UKAID (2013), Review of M4P Evaluation Methods and Approaches, DFID
• World Bank (2013), The little data book on private sector development
• Jim Tanburn and Nabanita Sen (2011) Why have a Standard for Measuring results?, DCED
• OECD (2006) Promoting Pro-Poor Growth - Private Sector Development

 

Some evaluation reports: 

• (2013) Private Sector Development of the Austrian Development Cooperation
• (2013) Evaluation of the European Union’s Support to Private Sector Development in Third Countries
• (2012) Youth Employment Programs: An Evaluation of World Bank and IFC Support
• (2012) Facility for New Market Development (FNMD) to Strengthen the Private Sector in the Occupied Palestinian Territories - DFID
• (2010) Evaluation of Norwegian Business-related Assistance

More evaluations on support to private sector development on DEReC