Sub-principle 5.A

Ensure that a private sector solution is the most appropriate way to reach those furthest behind


Why is it important?


Partnerships with the private sector bring about additional finance and expertise to solve development challenges. When planned well, with strong local ownership, agreed exit strategies and sound business cases, they can also ensure the sustainability of the intervention long after a project is finished. Nevertheless, not all development objectives require a partnership with the private sector. Prior analysis, based on a clear problem definition, a simple theory of change, and consultations with local actors and governmental partners, are critically important to identify where a private sector solution is more appropriate than a partnership with other actors or direct investment by the development partner to achieve the desired development outcomes. Clearly communicating the added value of business or private sector solutions is also vital to build trust and ensure transparency and accountability.

Self-reflection questions
Discover Tool
Policy Level Project Level
  • Do your government’s or organisation’s PSE strategy and/or country programmes identify sectors and areas of intervention where a private sector solution can be expected to bring long-term development outcomes that benefit those furthest behind? Are they aligned with country-specific priority sectors? 
  • Does your PSE strategy indicate the need for an ex ante development additionality assessment to identify whether such private sector solutions are more appropriate than other interventions to bring benefits to those furthest behind? 
  • Do your PSE strategy and/or country programmes propose to have a theory of change for additionality assessments that is aligned with the partner country’s national priorities? 
  • Is your project based on a (simple) theory of change that explicitly states the development challenge you are trying to address and how the involvement of the private sector will benefit those furthest behind?
  • In the design phase, does your project examine alternative solutions to the problem from actors other than the private sector? 
  • Does your project include an ex ante additionality assessment that highlights how the project will meet the needs of those furthest behind? 
  • Are there mechanisms in place to ensure course correction during the implementation phase of your project if the benefits to those furthest behind are not clear? 
  • Do independent project evaluations explicitly focus on the impact for those furthest behind to inform PSE strategy and future projects?

Actions to consider
Discover Tool
Policy Level Project Level
  • Use development objectives (Sustainable Development Goals and national priorities), dialogue with other partners and analysis (political economy, overview of potential partners if available) as a starting point for identifying potential partners, shared agendas and appropriate interventions. 
  • Consider producing guidance on development additionality for your government/organisation to assess, ex ante and ex post, how private solutions benefit those furthest behind.
  • Identify sectors and contexts where private sector solutions are most likely to meet the needs of those furthest behind while keeping national priorities front and centre. 
  • Communicate your rationale for collaborating with the private sector in specific contexts and projects to all partners and external actors.
  • Conduct an ex ante additionality assessment on what a private sector solution offers those furthest behind and review progress towards these ends on a regular basis.
  • Carefully assess whether potential private sector partners would engage and aim to attain the same development outcomes if you did not partner with them. If so, reconsider investing your resources in this partnership. 

Pitfalls to avoid
Discover Tool
Policy Level Project Level


  • Engage private sector companies and associations without a clear rationale and assessment on whether this is the best solution to achieve the desired development goals that benefit those furthest behind. 
  • Neglect clear communication towards external stakeholders on the selection and added value of partnering with the private sector in your policies and programmes. 
  • Omit adapting your PSE strategy in case of new insights from programmes and projects on their outcomes for those furthest behind.


  • Produce vague additionality assessments for large projects which require a robust justification and rationale for working with the private sector or overly detailed assessments for smaller projects. 
  • Create PSE projects without opportunities for course correction. 


The Swedish International Development Agency’s (SIDA) PSE approach is to identify development objectives first then find the best possible partners to realise these results. One approach to systematically assess different partners is the cascading approach suggested by the World Bank Group in the context of finance mobilisation. In the case of SIDA, private partners are only chosen when doing so would clearly be preferable to all other alternatives, and where a private sector solution is most likely to produce the intended development results (see p.58). SIDA does not consider partnerships with the private sector to be an objective unto itself, but rather a means to an important end in meeting developmental objectives.

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