DFID's Private Sector Development Work

DFID's Private Sector Development Work

DFID has been coherent and consistent in its view that developing the private sector in a country is central to its economic development and to poverty reduction. DFID sees its work in this area as helping countries graduate from a dependency on aid. The scale of the challenge, however, is immense and DFID’s approach is highly ambitious. This document reviews the coherence of PSD rather than rate the specific country programmes.

Findings from the review include that:

  • DFID’s private sector development work encompasses a wide range of different programmes. The impact of individual programmes is positive – particularly at the micro-level – and DFID has demonstrated its ability to assist the poor through a range of interventions.
  • DFID has not, however, turned its high ambitions into clear guidance to develop a realistic, well-balanced and joined-up country-level portfolio of programmes. 
  • DFID has demonstrated good learning by doing and by sharing lessons across different countries but could do more to build its relationships with the private sector.

The authors of the report make the following recommendations to support DFID’s future private sector development work:

  • DFID should clearly define and articulate where it can add most value in private sector development relative to other stakeholders. It should be more realistic in its ambitions and the impact it seeks to achieve.
  • DFID should provide clearer guidance to its staff on how to design a coherent and well-balanced private sector development country portfolio that matches its goals for an end to extreme poverty through economic development and transformational change.
  • DFID needs better to calibrate and manage the risks associated with private sector development and so innovate in a more informed fashion.
  • DFID needs to work harder to understand the barriers and business imperatives faced by the private sector in participating in development. Wherever it operates, DFID needs to be clear how and where its interventions can address these barriers.