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GIM Reports Informing OECD/DAC Report on ‘The Role of the Private Sector in the Context of Aid Effectiveness’

The Working Party on aid effectiveness hosted by the Organization for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) has initiated work on the private sector in the context of aid effectiveness with a view to better understand the role of aid as a catalyst to support effective private sector contribution to development. Building on nearly 50 qualitative interviews with different stakeholders – donors, for-profit private sector, private foundations, partner countries, civil society and independent experts – the report highlights the complexity and diversity of actors, tools, approaches and partnerships working with the private sector towards development objectives. The report provides recommendations for future actions to stimulate further dialogue on the topic towards the Fourth High-Level Forum on Aid Effectiveness in Busan (29 November-1 December 2011).

With regards to the roles the private sector (for-profit and foundations) plays in relation to aid processes, interviewees mentioned the following: mobilisers of resources, e.g. through innovative consumer or market-based mechanisms; contributors of financial and in-kind resources; providers of goods and services as implementers/contractors in aid projects; dialogue partners and advocacy, e.g. on how to enhance inclusive business and market approaches, or on how to address challenges in specific sectors, such as health and agriculture; partners in public-private partnerships; and drivers of innovation. Respondents in particular emphasized that for-profit private sector contributions to the development process are more sustainable if they are embedded in the core business strategy of a company, and that there is an increased commitment to cater for unmet societal needs through core business practices, as this also provides good business opportunities.

The GIM 2008 Report, “Creating Value for All: Strategies for Doing Business with the Poor”, serves as a reference for the definition of ‘inclusive business models’ and the five key market constraints that explain why more businesses haven’t taken advantage of opportunities at the base of the pyramid, namely: 1) limited market information; 2) ineffective regulatory environment; 3) inadequate physical infrastructure; 4) missing knowledge and skills; and 5) restricted access to financial products and services. The GIM 2010 Report, “The MDGs: Everyone’s Business”, is referred to as a source of cases of inclusive business models and their contribution to the Millennium Development Goals.

Please click here to access the OECD/DAC website on Private Sector and Aid Effectiveness and here to download the full report.