KAMPALA PRINCIPLE 5:DPs_SUBP 5.B

Sub-principle 5.B

Target specific locations, markets, value chains and investor types that are most likely to have a positive impact on those furthest behind

 

Why is it important?

 

Development partners have committed to putting the furthest behind first. However, evidence shows that most blended finance and private sector engagement (PSE) projects do not specifically target marginalised and vulnerable groups and sectors. It is thus important to refocus PSE projects to target and expand markets, goods and services that target social, economic and environmentally sustainable development that enhances the well-being and livelihood of those furthest behind. There are various ways to achieve this, such as through using concessional finance strategically to maximise its impact in areas that are most meaningful for the poorest and hardest to reach populations. This includes the mitigation of environmental and climate impacts that disproportionately affect marginalised groups. Remedies entail crowding in additional private finance for this purpose or deliberately creating markets for such underserved groups and sectors (though there is tension with the push towards privatising them).  More generally, development partners can support private investment that adheres to international standards and national rules in least developed countries, leading to the scaling up of solutions and long-term viability and impact of programmes and projects.

Self-reflection questions
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Policy Level Project Level
  • Does your government’s or organisation’s PSE strategy explicitly target countries, regions, sectors and contexts that are considered to be “left behind”?
  • Does your PSE strategy prioritise activities and modalities that are likely to have the greatest impact on the livelihoods of those who are, or are at risk of being, left behind? 
  • Does your PSE strategy identify provisions to avoid market distortions as a result of your interventions? 
  • Do you untie your aid and procure your services in ways that help build local supply chains and incentivise local companies to act responsibly? 
  • Does your PSE strategy commit to mobilising private sector investments in areas with the greatest need for development finance, such as climate adaptation and energy transitions?
  • Is your PSE strategy dedicated to enhancing the quality and targeting of private sector investments to areas with the greatest need for development finance?            
  • Is your project based on a theory of change that clearly identifies leave no one behind goals, i.e. how it can improve access to markets and ensure employment, services and goods for those left behind? Specifically, does the project create new outcomes for women, youth, indigenous peoples or other vulnerable population groups?
  • Do your projects also address climate change-induced vulnerabilities that require affected populations to build resilience and effective mitigation strategies? 
  • Does your project overcome, rather than accentuate, existing disparities and inequalities for your project’s beneficiaries?
  • How has the project’s target group been identified and selected? Are the beneficiary groups most in need of the development solution the ones the project is promoting?

            

Actions to consider
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Policy Level Project Level
  • Warrant coherence between your government’s or organisation’s overall and PSE policies to ensure investments are prioritised in underserved markets and sectors and incentivise other actors to align and raise financing for programmes targeting left-behind groups.
  • Use instruments like blended finance in line with existing related guidance to direct private investments to the areas furthest behind. 
  • Dedicate enough resources to measure the impact of investments on development outcomes for left-behind groups and sectors, as these data are much needed for attracting additional private investments.  
  • Provide support to partner countries in establishing sustainable exit strategies for all PSE projects once markets are functioning for left-behind and vulnerable populations.
  • Ensure regular feedback mechanisms from affected communities and relevant stakeholders at the local level to ensure that the project continues to target intended sectors/groups. 
  • If your intervention is the first provider-led PSE project in its target context or sector, invest upfront in additional analysis (political economy and other), consultation and care to test the ground and prevent causing harm, sharing its outcome also with others. 
  • Ensure that all PSE projects seek to work with and complement local markets – rather than against them – by co-operating with local sector actors where possible.

Pitfalls to avoid
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Policy Level Project Level

     DON’T...

  • Fail to co-ordinate with other providers operating in similar contexts (see Sub-principle 1.B) which contributes to provider fragmentation, the duplication of efforts and market distortions. 
  • Target countries/sectors where established markets can provide the necessary funding for development investments.
  • Not taking due care of additional preliminary consultations, especially within fragile and conflict-affected contexts.

      DON’T...

  • Employ a short-term approach to project planning that may cause long-term unintended harm to left-behind groups.
  • Produce market-distorting effects. For instance, through over-subsidising private sector actors.
  • Avoid conducting or seeking relevant background analysis and consultation. 

COUNTRY-LEVEL EXAMPLES

The German Agency for International Cooperation (GIZ) specifically assists companies with business models that target underserved sectors, locations and communities in the pursuit of leaving no one behind. In the case of LifeBank in Kenya and Nigeria, GIZ is supporting the company’s business model focusing on the rapid delivery of life-saving medical supplies to poor, rural and underserved regions. For promoting inclusive businesses like LifeBank, GIZ, in co-operation with the European Union, developed the Inclusive Business Action Network (iBAN). This global initiative offers a space for businesses to network; engage in peer learning; and access expertise, case studies and training programmes.

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