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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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From risk to results in working with and through the private sector in development co-operation

This chapter examines risk management, leverage, additionality and issues related to measuring private sector engagements – results as well as monitoring and evaluation. Government institutions must be willing to take risks if they want to encourage the private sector to do likewise. Risk management strategies used by DAC members include the use of clear partnership criteria, drawing on expertise and evidence-based analysis to inform decision making, due diligence processes and careful attention to private sector motivations. The chapter provides an extensive analysis on the question of additionality in private sector engagements. It highlights that the concept of additionality is understood in a number of ways by different stakeholders and suggests the need for DAC members to establish systematic approaches to additionality assessment, commensurate with the size of investments. The discussion on results points to the significant gap in results reporting among DAC members at project, mechanism and portfolio levels, and calls for the use of standardised results indicators to measure outcomes and allow for comparability across private sector engagements. Finally, good practice suggests the need for government institutions to prioritise monitoring and evaluation of private sector engagements and invest in the creation of knowledge systems that promote learning and facilitate course correction.

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