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Private Sector Engagement for Sustainable Development

Lessons from the DAC

image of Private Sector Engagement for Sustainable Development

Members of the OECD Development Assistance Committee (DAC) are increasingly working with the private sector in development co-operation to realise sustainable development outcomes. To learn from this experience, the DAC introduced a peer learning review on working with and through the private sector in development co-operation. Private Sector Engagement for Sustainable Development: Lessons from the DAC examines the politics, policies and institutions behind private sector engagement, the focus and delivery of private sector engagements, private sector engagement portfolios, effective partnership and thematic issues including risk, leverage and ensuring results. Drawing on the practical experiences of DAC members, the report highlights good practice, provides a typology of private sector engagement and outlines key lessons. It highlights the importance of aligning private sector engagements to overall development co-operation strategies and aid effectiveness principles. It also looks at investing in institutional capacities, developing a suite of flexible mechanisms for private sector engagement, and adopting appropriate systems to monitor, evaluate and report on the results of partnerships with the private sector.

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Building blocks for private sector engagement in development co-operation

This chapter examines the politics, policies and institutional dimensions of private sector engagement in development co-operation. Political drivers for private sector engagement include the need to harness other sources of finance to address sustainable development challenges, ambitions to benefit from private sector-inspired solutions to development challenges and the desire to support domestic commercial interests while realising development results in partner countries. The promotion of domestic commercial interests as part of private sector engagements in development co-operation has two implications. On one hand, it undermines aid effectiveness. On the other hand, the integration of policy objectives can create opportunities for better policy coherence and more policy coherence for development, with development considerations becoming a greater focus in trade and foreign policy. The review of policies for private sector engagement revealed the importance of a coherent narrative matched with clear communication of objectives, activities and results as an important success factor in implementation. Finally, with respect to institutional dimensions, the peer learning review showed that private sector engagement in development co-operation requires lead time, capacity development and the right incentives for the effective adoption and evolution of strategies and tools. Also, ensuring coherence and knowledge sharing between government implementing partners requires mechanisms for regular co-ordination.

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