ABOUT THIS SECTOR
The economic and social impact of private sector development can be substantial. As a driver of inclusive growth and job creation, responsible for 84% of GDP and 90% of jobs in developing countries, the private sector is ideally placed to improve the lives of the poor and deliver on the promise of sustainable and socially inclusive economic development.
Over the last decade, European Commission support for private sector development has averaged EUR 350 million per year and the current Multiannual Financial Framework for 2014-2020 contains approximately EUR 2 billion for private sector development. This, combined with development assistance from Member States, makes the EU a key player in supporting local private sector development in partner countries.
Private sector development plays a key role in creating economic growth, employment and improved living conditions. It:
- incentivises people to invest in education and skills acquisition;
- improves people’s lives through increased access to goods and services, including basic ones such as clean water, sanitation and energy;
- enables governments in developing countries to generate increased tax revenues, thereby contributing to the funding of wider development strategies;
- encourages entrepreneurship and diversification of the economy.
In recognition of this, the European Commission supports governments’ efforts aimed at developing the private sector, with a particular focus on assistance to micro, small and medium-sized enterprises (MSMEs). This forms part of a new global approach, a new paradigm for sustainable development, in which the private sector plays a critical role.
The potential of the private sector to create enabling conditions for inclusive and sustainable economic growth has been noted, specifically:
- in the EU’s Agenda for Change in 2011;
- in the 2014 the Communication on "A Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Developing Countries", which places the private sector at the forefront of international development and identifies it as a key partner in achieving the Post-2015 Sustainable Development Goals, set out in the 2030 Agenda for Sustainable Development;
- in the 2015 Addis Ababa Action Agenda;
- at the Conference on Climate Change in Paris, in December 2015.