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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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Tools for private sector engagement in development co-operation

This chapter begins with a presentation of a new typology for private sector engagements. Key lessons from the peer learning review are then presented on how DAC members establish private sector engagement mechanisms and the structure of private sector engagement portfolios, including the need for consultation and an examination of available human resources to implement such mechanisms. The critical need for DAC members to continue to support business-enabling environments alongside these mechanisms is highlighted. An overarching lesson for private sector engagement portfolios is that an effective approach is characterised by a mix of financial and nonfinancial private sector engagement mechanisms that are flexible, work together and are selected according to desired development results. This approach involves establishing and leveraging linkages between financial and non-financial engagement mechanisms, ensuring flexibility in implementation with balanced roles for headquarter and field staff to originate private sector engagements, and the selection of private sector mechanisms grounded in development priorities. Finally, experimentation and reflection on the effectiveness of such mechanisms is important since portfolios are being established and evolve over time.

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