Donors, both bilateral and multilateral, are using a range of creative approaches to encourage private sector actors to participate and invest in activities that help deliver development. Donor initiatives that engage private sector actors can help to provide better quality jobs, goods and services, and can innovative solutions to development challenges. However, more monitoring and evaluation is needed to measure the effectiveness and impact of such approaches, such as the distributional impact among poor groups.
In terms of best practice, seven ‘levers‘ have been identified (Ashley, 2009) that can be used to harness core business for delivering development. These levers are: R&D/technology, retail/market development, distribution networks, employment, supply chain and subcontractors, investment/construction, and government contribution.
Donors need to treat private sector engagement as a high risk but essential investment. They need a healthy tolerance for failure and the flexibility to accommodate innovative and experimental ideas. An exit strategy that allows ownership by the public and private sector entities themselves is also important.
