Private sector development aims at creating incentives for private-sector activities.
Private
enterprises are the backbone of a national economy, and the private
sector is the most important driving force in the move to create jobs
and income opportunities. Stable framework conditions, a positive
investment climate and correctly functioning markets and institutions
are required in order to unleash the potential of the private sector.
When
promoting private sector development, SDC focuses its activities on
systematic approaches with the aim of encouraging the growth of properly
functioning markets. To this end, various policy components and
measures are typically combined, including: the reduction of obstacles
to economic activities in the formal sector, promotion of a reliable
financial sector (also adapted to the needs of small and micro
enterprises), strengthening public administration capacities, improving
the range of vocational training opportunities, or developing an
inclusive dialogue between the private and public sector.
The
SDC bases all its private sector development activities on a systematic
approach to market development, in line with strategies which are
summarized under the collective title
Making Markets Work for the Poor.
The common denominator of these strategies is that they define markets
as socio-economic systems and endeavor to influence these markets so as
to improve the opportunities of poor persons to take part in them,
whether as employees, producers or consumers. Depending on the context,
SDC applies different development approaches, such as:
Value chains:
SDC fosters the development of effective value chains. In particular,
SDC assists poor producers to position themselves better along local,
regional and global value chains with the goal to enable them to exploit
local, national or global market opportunities more effectively,
enhance added value and diversify into higher-value product lines.
Local economic development: SDC
supports participative processes in which the government, private
business and civil society of a region cooperate with the aim of jointly
developing and implementing a strategy for the region's economic
development and its positioning within the country and/or in the global
context.
SDC
concentrates its activities primarily at the regional and local levels,
in particular in rural areas. SDC puts much emphasis on result measurement in
its private sector development projects. A working group on result
measurement is about to define common guidelines for SDC's private
sector projects.