Private sector activity continues even in the face of conflict – changing shape and direction, but remaining resilient to systemic shocks. The private sector is therefore a powerful and adaptable vehicle for reconstruction and regeneration in even the most difficult of situations.
This Review discusses the characteristics of the post-conflict private sector, and the ways in which the development community can engage with it. It gives an overview of current approaches and experiences across most agencies active in the field.
Key findings:
- It is now widely recognised that private sector development (PSD) has an important role to play in post-conflict contexts. While the value of post-conflict PSD is now generally accepted, the relative importance of PSD in relation to other forms of intervention is on less firm ground. Relief work, security, and nationbuilding are all vital areas for donor activity, and have sometimes been prioritised over PSD. It is argued here that PSD should not be a separate and isolated form of programming, but rather that PSD is most effective when integrated into other forms of intervention as well.
- While there are some key areas of consensus surrounding the principles of post-conflict PSD, there has been some difficulty in putting these into practice. Most would agree that post-conflict PSD needs to employ a wide range of different programming options to address the development of the private sector at different levels. However, there is some disagreement over which of these should be prioritised. The approach adopted towards post-conflict PSD therefore varies between donors. The menu of potential interventions is outlined, categorised by the broad approach to which they belong. While some donors favour programming which targets specific groups and individuals for direct assistance, others focus on reforming market structures and making broader systemic changes. Others again prioritise the investment climate, directing their efforts towards financial institutions and macroeconomics. Although most donors engage in a combination of these approaches, tailored to the specific situation at hand, these different ‘schools of development’ are nonetheless evident both in the current literature and on the ground.
- Post-conflict situations involve a broad range of different partners and stakeholders, and PSD must engage with these if it is to be conflict-sensitive and effective. Within the wider donor organisations, development bodies will need to work with humanitarian relief actors, diplomats, and military personnel, as part of ‘3D’ (Defence, Diplomacy and Development) or Whole of Government approaches. To produce the best results, donors will also need to work together, and there is much scope for increased donor coordination in post-conflict areas. Outside the donor community, potential partners in post-conflict PSD include bodies traditionally thought of as being suitable development partners (including host governments and NGOs), and some less familiar development partners (including MNCs and local conflict actors).
