This paper summarises issue areas emerging from country-specific analysis and consultations with stakeholders on concerns, challenges and opportunities in making private sector engagement (PSE), mobilised through development co-operation, more effective. Going forward, the paper will serve as the basis for inclusive consultations and dialogue to forge consensus around principles and guidelines in this policy area. This effort is grounded in the agreement reached at the 2016 High-Level Meeting of the Global Partnership for Effective Development Co-operation (GPEDC) to explore the effectiveness of PSE through development co-operation and to promote tracking of progress and the adaptation of practices and instruments for effective partnering with the business sector.
The scope and ambition of the 2030 Agenda for Sustainable Development call for the diverse private sector to apply its creativity, resources and potential to innovate to solve sustainable development challenges. Private sector actors are increasingly adopting approaches and business models that focus on profitable solutions to sustainable development challenges by targeting new markets and customers, redefining productivity and creating positive outcomes for the communities in which they work and for employees and customers. With this, the private sector has tremendous potential to contribute to sustainable development in its own right.
Development partners are providing new windows of support to engage the private sector through development co-operation. This is done on different levels – by providing support to creating enabling conditions, addressing market failures and harnessing creative solutions. This has led to a remarkable shift in how development co-operation is perceived and conducted. However, making best use of the opportunities of PSE through development co-operation requires an honest debate about how to harness its full potential and address underlying challenges and concerns raised by partner country governments, the private sector, civil society organisations and some development partners. For instance, development co-operation to the private sector is a subsidy and raises concerns about market distortions. The potential harmful effects of the private sector, a lack of safeguards, insufficient attention to results and impact, particularly for those furthest behind, and the potential for de facto tied aid are other recurring concerns. To ensure that scarce public resources are provided transparently and as effectively and efficiently as possible, principles and guidelines for effective PSE through development co-operation are needed.
Through the Global Partnership, a multi-stakeholder platform to advance the effectiveness of all types of development co-operation, an inclusive alliance of partners started analytical work in 2017 to evaluate the challenges, concerns and views of stakeholders involved in PSE through development co-operation through an explicit ‘development co-operation lens’. This group and the associated stakeholders undertook four country case studies in Bangladesh, Egypt, El Salvador and Uganda.